V. Of Law and Right

ACCORDING to one school of thought, government (or “society”) creates individual rights, and what government creates it may destroy.

This is the view of those Keynesian economists who want government to adopt a “compensatory fiscal and monetary policy” in order to control the spending and employment, the saving and investing, of individual citizens. This policy calls for taxes, not to raise revenue merely, but to redistribute income, to reduce saving, and to increase consumption, or sometimes to restrict consumption and increase saving. It calls for borrowing, not merely to meet emergency expenses of government, but to expand currency, increase total spending, and raise price levels. It calls for employing labor, not merely to perform the functions of government, but as a means of diluting the currency. All of these activities imply that individuals have no property rights which the government is bound to respect.

In fact, however, the moral rights of self-defense and private property are necessary to human life and to the cooperation we call “society.” Man can exist only as he asserts and defends these rights against violation by government or by private persons. He cannot cooperate with his fellows except as they respect these rights. As these rights are invaded, individuals fight or flee from one another, and to that extent society disintegrates and people perish.

For this reason, human rights are prior to society. As government protects these rights, society develops and prospers. Insofar as government infringes on human rights, including property rights, it destroys the cooperation (“society”) which supports it.

Majorities may violate individual rights

Some authors recognize that an autocracy may be unjust but appear to believe that a representative government, or democracy, by its very nature, must always be just. As the Keynesian economists, Nordin and Salera say, such a government “means all of us in the community.” Is this meant to imply that the lawful acts of an official in a democracy are agreed to by every citizen or that they are for the good of all?

A moment’s thought should show the fallacy of such a view. Democracy is not liberty and it does not guarantee liberty. For example, when the citizens “take the law into their own hands” and form a lynching mob, they may carry out the will of all the people except one, the victim, but they do not establish liberty. Similarly, representative institutions and voting may help to limit government and keep it lawful, but they do not necessarily prevent tyranny and injustice. Majorities may vote for government policies that are as tyrannical and collectivistic as those of a monarchy or dictatorship.

Progress starts with one person

Human progress always starts with ideas and acts of individuals who break away from the majority opinion or practice. Such an individual is often highly unpopular. Usually, at first, the majority look on him as dangerous, ridiculous, anti-social, reckless, or foolish. Almost always his actions or plans threaten the security of more people than seem likely to benefit. For this reason, when laws and the constitutions permit, majorities restrict liberty, especially liberty to do better.

Government must, therefore, restrain majorities, as well as individuals and minorities, from interfering with individual liberty. It effects this restraint by law and the constitution. Its officers must enforce the law and loyally uphold the constitution, even in the face of hostile majorities, if liberty is to survive.

To repeat, representative institutions are useful and necessary for good government, but democracy is not freedom and does not guarantee freedom. Majority rule is not “self government” in the sense of individual freedom.

What freedom means

The essential condition for human rights and freedom is non-interference. That is why all great moral codes consist mainly of prohibitions: “Thou shalt not kill!” “Thou shalt not steal!” “Thou shalt not bear false witness!” “Thou shalt not covet!” Within the family there is a positive injunction: “Thou shalt honor thy father and thy mother!” But this means, perhaps, that “Thou shalt not cast them off to be cared for by someone else when they are old!” Furthermore, it does not give parents a right to enslave their children.

Again, in the Constitution of the United States, especially in the “Bill of Rights,” we find that freedom means non-interference. The little word not is repeated again and again. The authors of these documents sought to make freedom secure by limiting government, rather than by making it easy for the majority to rule.

Keynesians propose unlimited government

Keynesian economists, along with all other advocates of government “planning,” tend to ignore the word NOT in human relations. They put no limit on government authority over the individual and his property except that of political expediency or majority opinion. This is what makes their doctrine essentially coercionist, collectivist, and socialist.

They regard the doctrine of natural rights as a superstition. They consider it quite proper, for example, that government should seize a citizen’s gold, fix its own price for it, and refuse to pay it out again except at its own pleasure and on its own terms. They consider it not in the least reprehensible for a government to announce a change in its paper price for gold, thereby arbitrarily redistributing property between millions of persons doing business in international trade and finance. Could any actions be more arbitrary or show greater indifference to individual rights? Yet, in the Keynesian view, such acts are matters merely of political expediency, no more to be judged moral or immoral than a decision to paint the courthouse gray instead of green.

Keynesians urge redistribution of wealth

Similarly, Keynesians propose that government seize (by taxation) the earnings of the well-to-do and give them to the poor in order to reduce the “propensity to save.” They consider this “progressive” or “liberal.” Instead, it is a return to the collectivist immorality of our cave-dwelling ancestors.

It was collectivism such as this that kept man for so long in savagery after he had attained reasoning powers. And even after he began to recognize the right of private property, reversions to collectivism again and again cast him back toward barbarism. Taxation that is designed to take from the rich to give to the poor or to discourage thrift is not progressive or liberal but essentially reactionary.

Disregard for property rights

The economists of the Keynes school show the same indifference to property rights in their proposals for manipulating price levels. For example, as mentioned above, Dr. Theodore Morgan suggests that it might be a good thing to have sufficient inflation to raise the general price level by 1 or 2 per cent a year in order to reduce the burden of interest on the national debt and to stimulate business and employment. This would be equivalent to a capital levy of that amount each year on all savings accounts, bonds, and insurance policies, besides an increase of 1 or 2 per cent each year in the tax rate on fixed incomes.

Likewise, these authors propose to redistribute property and income between debtors and creditors by reducing interest rates. Keynes suggested it might be possible and desirable in this way to liquidate the rentier class, that is, bondholders and other holders of fixed-income obligations.

In view of this indifference to property rights, one should not be surprised to find a Keynesian economist supporting almost any proposal for increased government authority and interference with individual liberty if he thinks it may help to reduce savings, raise or fix prices and wage rates, reduce interest rates, or “socialize” investment.

Saving requires planning and self-discipline

Conversely, the Keynesian economist has a low regard for the intelligence, responsibility, and integrity of individuals — unless they are in government employ! Since he regards savings for one’s old age or other future needs as a dangerous practice, he has little respect (in theory, at least) for what most people regard as essential elements in character, namely, the desire and ability to be responsible for one’s own welfare. Saving, according to the Keynesian, is not the result of foresight, planning, and self-control. It is not rational or purposive, he says, but varies with income and is the result of inertia in habits of spending, of outmoded Puritanism, or of neurotic fears.

The fact is that saving is never automatic. At every income level it takes thought, planning, and self-denial. It takes careful discrimination in one’s gifts and philanthropies. Persons with these abilities tend to invest their savings wisely and thus to increase their incomes. Such persons are likely also to earn more in wages and salaries than their less farsighted neighbors. For these reasons, it is not (as the Keynesians say) high incomes that cause saving. It is prudence and the “propensity to save” that cause some persons to have high incomes.

The Keynesian cannot admit this. It would make his impressive charts, tables, formulas, and graphs worthless. Once it is granted that his figures deal, not with automatons, but with self-determining and more or less rational individuals, who decide for themselves what they will do, his theories lose all value for purposes of prediction and control.

Little room for self-reliance in the Keynesian ideal

When the Keynesian is brought up against the fact of individual self-determination and variability, therefore, he proposes that government abolish these conditions which upset his calculations! He proposes that government abolish individual freedom and responsibility by means of social-security program.

This program he advocates, not alone on the ground that “we can’t let them starve,” but on the theory that government can stabilize business by taking over the function of saving. Of course, he is likely to use all of the other social-security arguments to reinforce his own. Consequently, we find Keynesian economists arguing for the social-security program on the ground that people can’t save, won’t save, and shouldn’t try to save.

They are hardly likely, therefore, to impress upon their students that thrift and self-reliance are important virtues in the modern scheme of living.

Keynesism is hostile to private enterprise

Keynesians usually represent profits as resulting from either or both of: (1) a difference between the rate of interest and the “marginal efficiency of capital,” (2) monopoly and high-pressure salesmanship. In either case, the recipient of profits is given little or no credit for earning them by useful service.

This Keynesian antipathy or indifference to the qualities developed in free markets arises from the belief that free markets are economically undesirable (e.g., the capital markets) and politically impracticable (e.g., the labor market).

Moreover, as difficulties arise in carrying out their proposals for “socializing” saving and investment, economists of this persuasion usually advocate more restriction of markets rather than less. Thus Dr. Lawrence Klein, for example, favors government price control to prevent inflation that might result from Keynesian “loan expenditures,” and he rationalizes this repudiation of freedom of exchange by the contention that “greedy profiteering” was the only liberty infringed by the Office of Price Administration in World War II.⁴⁹

For these reasons, Keynesism is of more than academic interest. It relates to every detail of one’s view of social relations. It teaches disregard for property rights. It belittles self-reliance, foresight, and enterprise. It disparages profits. In the name of political expediency, it abandons freedom of trade and free markets.

It is, therefore, antagonistic to the basic economic, moral, and political institutions of private enterprise, or freedom.