The Case for Willing Exchange; L.E. Read

We cannot dispense with classi fications without doing away with communication; we couldn't even think without them. But we can aid and abet our own thinking as well as our powers to communicate by dropping loose, sloppy classifi cations in favor of more refined ones. In short, we can try to say more precisely what it is we really mean. For instance, in the politico-eco nomic area, we carry oversimplifi cation to an absurd extreme by putting all of humanity into two categories: (1) those we roughly think of as on "our side," and (2) those we regard as ideological ad versaries. Such, of course, is the ultima te in erroneous classifica tion. And to continue the error is to promote suspicion, misunder26 THE FREEMAN September standing, dissension, hate - yes, even wars. We should, insofar as possible, be done with this non sense! The Confusing Labels We Use for One Another The sloppy labels employed de pend on which of the two imagi nary sides is doing the classifying.

Those on one side will call the others collectivists, lefties, stat ists, communists, interventionists, state planners, welfare staters, Fabians, traitors, nazis - each term used derisi vely. There is another label - the favorable one these "collectivists" call them selves: "liberals." But those who call themselves "liberals" will, with no less self righteousness, refer to their so called adversaries as extremists, reactionaries, rightists, profiteers, enemies of the poor, and even fas cists. One also hears muttered epithets such as dog-eat-dog, law of the jungle, and the like. These are some of the ways the "lefties" label the "rightists." Observe, now, how the "right ists" label themselves: conserva tives, patriots, libertarians, indi vidualists, constitutionalists; some will say they stand for capitalism, many for private enterprise. There are other favored labels - terms to indicate where they stand: the rule of law, free enterprise, free competitive enterprise, the market economy, the exchange economy, voluntarism, the profit and loss system, the incentive system, limit ed government.

What a babel of nondefinitive classifications from both imagin ary camps! And who among us is exempt from this looseness? Most - not all-of these labels are mean ingless and utterly confusing un less one is aware of the author's thinking, motivations, prejudices, predilections; they're no aid to clarity. Reflect, for instance, on "capi talism" as used by Karl Marx, a term of opprobrium and, then, by Ludwig von Mises, a term. of ap probation. We do, of course, de rive some idea of what is meant when "capitalism" is employed by such well-known authors, but most people who use the term are total strangers and, thus, we haven't the slightest idea as to what is implied. "Capitalism," on its own, is nondefini tivee We are at the mercy of the define'rs, few of whom agree. Or, to further illustrate, take "private enterprise." To some minds this conjures up privately owned businesses honestly compet ing for consumer favor, an eco nomic ideal. To others, everything from embezzlement to piracy is suggested, both of these enter prises being quite private.

1966 THE CASE FOR .WILLING EXCHANGE 27 A Fundamental Difference All politico-economic classifica tions in current usage have their faults. Nor is it possible to con struct a term that is precisely de finitive. However, there is one that seems to be an improvement over the others: willing exchange. I have used this term for some years as a means of identifying my own position, and, while little if any adoption by others has been noted, it is significant that no one has taken issue with me for using it. Perhaps if the implications of "willing exchange" were high lighted, it might be more widely employed. If clarity can be served, it's worth trying to make the case for its inclusion in our vocabulary. The first step is to recognize how deeply exchange extends into human affairs. It goes to the very roots of and is fundamental to earthly existence. This is more or less apparent, as related to goods and services, in a division-of-Iabor society. Specialists exchange - or perish! But more: man, individ ualistic as he is, remains a social being. Even were an individual in comparative isolation, he can exist only by reason of his heritage an exchange process in knowledge and ideas extending back to the harnessing of fire, even to the dawn of human consciousness.

So far, so good - no argument. In a word, we can declare ourselves in favor of exchange and arouse no more controversy than announcing a favoritism for life. And for good reason: exchange, without any modifiers, isn't mean ingfully definitive. It's at the next step - when modifiers are introduced - that controversy has its genesis. Shall it be willing or unwilling exchange? Free or Forced I wish to suggest that standing for willing exchange, on the one hand, or for unwilling exchange, on the other, more nearly accents our ideological differences than does the employment of the terms in common usage. It is when using these terms to distinguish our selves that we can openly, honest ly, logically part company, and with considerable clarity. Willing or unwilling exchange makes sub terfuge not impossible but diffi cult; to side with one or the other is to declare one's meaningful po sition more or less unequivocally and unmasked; there is a mini mum of verbal fa~ade to hide be hind.

Willing exchange, uncommon and thus not in the trite or cliche category, immediately provokes reflection, a big mark in its favor. The term has not yet been saddled with emotional connotations, such as those built around free trade, 28 THE FREEMAN September for instance. Further, its antithe sis, unwilling exchange, comes to mind, and no one, not even a pro tagonist, proudly acknowledges he favors that; it does offense to his idealism. Unw'illing exchange, at the very least, is a semantic jolter; it suggests to any sensitive spon sor that he take another look at his position.! While I use w'ilMng exchange and the free market synonymously, the word market, to most people, conjures up no more than a swap ping place for produce or the little understood and much maligned stock market; they see in market only crass materialism, no spirit ual or cultural qualities, none whatsoever. 2 Frederic Bastiat used the term, Ziberte des transactiDns, 1 The forcible collection of income (taxes) to defray the costs of govern mental activities must, when the activi ties are beyond the principled scope of government, classify as unwilling ex change. But taxes to defray the costs of activities that fall within the principled scope of government are in neither the willing nor unwilling category; they are the payment of an obligation as, for in stance, a just debt. See my Government: An Ideal Concept (The Foundation for Economic Education, Inc., Irvington-on Hudson, N. Y.) pp. 11-49.

2 I insist that the free market is a spiritual phenomenon and that its ap prehension is a greater cultural achieve ment than are poetry, music, or what ever. See the chapter, "The Miraculous Market," in my The Free Market and Its Enemy (The Foundation for Eco nomic Education, Irvington-on-Hudson, N. Y.) pp.6-21. a good-image phrase but, to my way of thinking, not quite as thought-provoking as willing ex change. The full antithesis of w'illing exchange encompasses more than forced or coercive exchange which unwilling so clearly implies. No exchange at all-the absolute pro hibition of exchanges - must also be included as the antithesis of willing exchange. One of many ex amples: the prohibition of ex changing dollars for gold. Instances of Coercion If we cut through all the ver biage used to report and analyze political and economic controversy over the centuries, we find that much of it boils down to a denial of willing and the insistence upon unw'ilZing exchange. What were the Crusades but an attempt for cibly to substitute the "true faith"

for the beliefs of the "infidels"! Napoleon attempted to substitute his authoritarianism for someone else's rule, armies and guns being his method of persuasion. The looting, of neighboring nations was only a coercive exchange of some people's property for the invaders' satisfactions. Robbery, an ex change device, was the first labor saving scheme. Feudalism was a coercive exchange of the serfs' labor for the serfs' and lord of the manor's protection. Mercantilism 1966 THE CASE FOR WILLING EXCHANGE 29 forcibly controlled and/ or pro hibited exchange. However, it is not necessary to draw on ancient history for ex amples of unwilling exchange. To day, the fruits of one's labor are forcibly exchanged to put men on the moon, to pay farmers not to grow numerous crops, to rebuild deserted downtowns. The list of coercive activities that go beyond the principled scope of government runs into the thousands. 3 Nor does one have to be much of a po litical economist to see that mini mum wage laws, labor union com pulsions, social security, medicare, free lunches, foreign aid, and a host of other governmental activi ties are the antithesis of willing exchange.

Unwilling exchange has its gen esis in an objective theory of val ue, that is, in the forcible imposi tion on the individual of a value standard not of his choice but of someone else's making. It's Na poleon's, or a labor union's, or a bureaucracy's value judgment not the individual's value judg ment - that determines how the individual shall employ himself, what his hours and wages shall be, what and with whom he shall ex change, and what shall be the dis3 See Encyclopedia of u.s. Govern ment Benefits. (Doubleday Book Shop, 724 Fifth Avenue, New York, N. Y.) 1,000 pp. position of his income. Through out the ages, right up to the pres ent moment, unwilling exchange has been conspicuous, and for a simple reason: most people haven't known any better! The Subjective Theory of Value It wasn't until a few years ago - 1870 - not long enough to be widely apprehended, that Austria's Menger, England's Jevons, and Switzerland's Walras, almost si multaneously, made the greatest discovery in economic science: the subjective theory of value, some times called the "marginal utility theory of value." Until this time, no one had ever formulated a valid theory of value. Then these econo mists, by merely observing how ordinary people exchange when unrestrained, discovered that the value of anything was what others would give for it in wilUng ex change. The value of a painting, for instance, is whatever others will forego in order to obtain it.

That's marginal utility, pure and simple, which can be only subjec tively determined. In short, no one else but you can determine the relative <>r marginal utility of anything to you. Here, for the first time in his tory, the concept of willing ex change unseats Napoleonic be havior - all forms of authoritar ianism - and enthrones the indi30 THE FREEMAN September vidual. The consumer becomes king. Individual freedom of choice rules economic affairs. Whether I plow the fields or pilot a plane, or whether I exchange the fruits of my labor for some corporation's stock or for a bungalow by the seashore is for me, and a willing seller, to decide; it is no one else's business! In good theory this is true; in practice it faces opposi tion. Most individuals favor subjec tive evaluations as applied to self but will, at the same time, insist on objective evalutions as applied to the millions who "don't know what's good for them." In a word, very few will accord that liberty to others which they so much cherish personally. These inconsistent peo ple are the victims of a historical momentum - the darkened millen nia of mankind's past - and thus have not apprehended the newest politico-economic fact on the face of the earth: individual liberty.

This slowness to apprehend may, in turn, deri ve from our poor choice of descriptive terms. Positive Identification Admittedly, making the case for the use of willing exchange as a means of identifying one's posi tion, is going to raise the question, "Well, if I am not to single out as descriptive of myself such terms as conservative, patriot, capitalist, libertarian, free enterpriser, or some other loosely definitive label, what then? Are you suggesting that I call myself 'a willing ex changer'?" Indeed not! The best answer to "What are you?" is your own name. If one be a Marx or a Mises, whose repu tations precede them, the name alone suffices. If one be neither in famous nor famous, and another is interested in the details, let him inquire and listen. A personal ex perience will help with my point: 1 4 was invited to lecture at a clergymen's seminar in Texas. Just before the affair got under way, a gentleman 'proffered his hand, announcing, "I am Charles Hemphill from Cisco."

My response, "I am Leonard Read." "Where are you from, Mr. Read ?" "The Foundation for Economic Education at Irvington-on-Hud son, New York." "Oh! You're Leonard Read. My ideological position was un known until identified with FEE. Immediately, Mr. Hemphill knew of my beliefs, and in considerable detail. Now, suppose my answer to the question, "Where are you from?" had been, "Right here in Mineral Wells." That would have given him no tip-off as to my position. This new friend, an inquiring 1966 THE CASE FOR WILLING EXCHANGE 31 spirit, would have wanted to know how to classify me. My capsule answer, today, would go some thing like this: No man can contrive or blue print a good society any more than any individual can make such a simple thing as a wooden lead pencil. 4 'The pencil, or any other artifact, for that matter, is a man ifestation of infinitesimal and var ied creativities flowing through the minds of men in complex in terchange since well before the harnessing of fire. Once the pencil comes into existence, we can, to some extent, observe and write about what took place, the most significant deduction being the un obstructed flow of creativities, that is, creativities in free and willing exchange.

Similarly, the good society is a manifestation, not of a prede signed blueprint - not of a mass blindly following some person's scheme of organization - but, rather, the natural out-cropping of the efforts of a goodly number of people in pursuit of Truth. In a word, a good society, like a pen cil, is a configuration of the tiny wisdoms men come upon when seeking, above all else, what is right and righteous. 4 See the chapter, "Only God Can Make a Tree - Or a Pencil" in my Any thing That's Peaceful (Foundation for Economic Education, Inc., Irvington-on Hudson, N. Y.) pp. 136-143. Whenever a good society shows forth, we can, to some extent, ob serve and write about what took place, the most significant deduc tion being the unobstructed flow of millions of individually ac quired wisdoms, that is, flashes of enlightenment in free and willing exchange. The Truth Will Out No man set about inventing willing exchange. Instead, some men were in pursuit of Truth.

Their numerous findings and in sights combined to make of them the kind of men who understood the advantages of willing or free exchange. But whenever the pur suit of Truth has not been upper most among the aims of a consid erable number of people, the un derstanding recedes to the point where unwilling exchange is be lieved in and practiced. No man preconceived and set about designing and writing the Declaration of Independence, the Constitution, and the Bill of Rights as a "means of erecting a good society. These political docu ments were really a configuration of beliefs that achieved dominance through a pursuit of Truth quite extraordinary in its intensity. The seeking of Truth was the seed; a good society, perhaps the best that has existed, was the bloom; these documents were but a re32 THE FREEMAN Sevptember cording of the beliefs. To confirm this, merely note that when the beliefs changed, the documents be came commensurately meaning less.

When we entertain the idea that political documents and laws cause a good society, we are wont, in adversity, to repair and revise the documents and laws. This is not only useless but seriously di verting. For nothing counts but Truth, and Truth comes to us only when we are seeking what is right and righteous. This, to my way of thinking, is the most im portant and practical of all politi cal· facts. Reflecting on what the pursuit of Truth has divulged, I believe that no person, or any combination of persons, regardless of numbers, or any agency they may contrive be it a labor union, trade associa tion, or government - has any right of control over any other person that does not exist or in here as a moral right in each in dividual. The only moral right of control by one indi vid ual over another or others is a defensive right, that is, the right to fend off aggressive or destructive actions. Governments, therefore, should go no further in controlling people than the indi vid uals who organize it have a moral right to go. For, if government does not obtain its power of control from those who establish it, from where then does its power derive? In short, limit governmental power to codifying the do-nots consonant with the defense of life and liveli hood, to the protection of all citi zens equally. No special privilege for anyone!

This is by way of saying that, ideally, government should be lim ited to inhibiting and penalizing all violence, fraud, predation, mis representation, that is, to keeping the peace. Insist that it tolerate no unwilling exchange and that it never indulge in what it is or ganized to prohibit. Let govern ment do only this; leave all else, including welfare and prosperity, to willing exchange. I believe we are fully agreed as to the quality of liberty we cherish for ourselves. The question is, are we agreed to allow this same qual ity of liberty to all others? If so, the spirit of liberty may be on the move again. ~ SOCIALISM IJ. ~. STYLE HENRY HAZLITT NEW YORK CITY'S first subway opened in 1904. The fare was 5 cents. The subways remained un der private ownership until 1940. The fare was still 5 cents. But meanwhile wholesale prices had gone up 32 per cent; wage rates had tripled; the lines were granted tax exemption by the city. They petitioned for higher fares. But the 5-cent fare was sacred. The city fathers decided that the only way to keep it was to eliminate private profit and run the trains themselves.