Internvention lead to Total Control; G. Velasco

Throughout the course of history we find various types of economic structures; however, humanity cannot, at a given moment, choose an economic system in the same Dr. Velasco has served as Dean of the Free Law School of Mexico, is former president of the Mexican Bankers Association, and founder of the Mexican Institute for Social and Econ omic Research. 44 way as a man with unlimited time or money might pick one of the trips offered by a tourist agency. The only alternative that exists for a serious thinker today is that between a free economy and a con trolled economy.1 But is there no third road? Is it not intolerable to attempt to push us into one or the other pigeonhole, that of supporters of economic freedom or of believers in state control ?The purpose of the present work is to submit this widely-held belief in a "middle way" to a critical examination. The name of the third road is interventionism. Its practical im1 Syndicalism, with its variant, corpo rativism, cannot be taken seriously nor has either passed beyond mere words.

Whoever believes that I reject them per emptorily may consult, among others, the confutation of the eminent German econ omist, Wilhelm Ropke, in his book, The Social Crisis of Our Time.

1970 INTERVENTION LEADS TO TOTAL CONTROL 45 portance derives from the fact that in Mexico as in the United States and in those European countries where debate is still pos sible, there are many people who reject communism, sometimes even with horror because of its excesses and persecutions, but who at the same time, deluded by a persistent and insidious propaganda, are un willing to declare themselves in favor of capitalism, which they be lieve to be the cause of poverty, or of crises, or of social inj ustice, or an order inferior from an ethi cal point of view. Whatever truth there may be in these strictures, and notwithstanding the fact that I believe each one of them to be the result of misinterpretation or of stark ignorance both of the facts and of economic theory, this is clearly not the occasion to ex pose and refute them. I would rather inquire into what lies be hind such broad but vague labels as "capitalism" or "socialism" and examine and evaluate the essential characteristics of each system.

Characteristics of Capitalism It will be found, for example, that capitalism is characterized by the existence of the following in stitutions: 1. freedom of enterprise, that is, freedom to engage in the work, activity, or business desired, to develop it and to reap the benefits which may result therefrom, as well as to suffer the losses which it may produce; 2. private ownership, not only of consumer goods, but also of nat ural resources, capital, and pro ductive goods; 3. competition; 4. a free market, with freedom of choice by the consumers, free dom to make any deal, and a price system. On the other hand, what dis tinguishes socialism and commu nism is centralized control of the means of production in the hands of the state. The essential thing is that, ultimately, under social ism only one will decides. This demonstrates its ineradicably dic tatorial character, the inanity of attempts to combine socialism with free competition and the price system, and the confusion of those people who imagine that a planned economy is compatible with liberty and democracy.2 As a 2 Socialism has attracted so many well-intentioned souls who sincerely ab hor the fatal consequences which I point out, that my use of the two terms "social ism" and "communism" as interchange able cannot help provoking an indignant protest. I admit that there exist differ ences between the two systems, the prin cipal ones being (a) one of scope: social ism would nationalize only basic indus tries; for communism, in principle, there are no limits to nationalization; (b) an other of method: socialism trusts to a gradual and peaceful process; commu nism believes in revolutionary and violent 46 THE FREEMAN January result, everyone of the institu tions listed above will vanish un der socialism, leaving us instead with bureaucrats and policemen behind each street corner, if not inside our very homes, as in George Orwell's novel, 1984.

An Attempt to Clarify Once the discussion is under taken on this more concrete ground, it will gain in clarity and objectivity. When it is realized that planned economy implies that we may be directed to do any work, if necessary as forced labor; that we can be deprived of all right to property; that all of us will become public employees; and that we may even be forbidden to decide what we shall eat, I am sure that believers in this system will be much fewer and that there action; (c) finally, socialism would like to proceed in accordance with accepted standards of morality and preserve free dom, especially civil and political free dom, and democracy; communism rejects traditional morality, and although it speaks, for tactical reasons, of "true lib erty" and "popular democracy," it is fundamentally antiliberal and antidem ocratic. These differences are secondary and are not sufficient to obscure the main question, which is that of the location of control over economic life. Moreover, the last difference, the most important, is no more than a pious hope. The road fol lowed by England, despite the extremely strong liberal. tradition of its people and the fact that it has not passed beyond the initial stages of socialization proves this quite conclusively.

will be a large number of men re solved to defend the system of economic freedom which has lifted great parts of humanity out of the misery in which they lived un til the eighteenth century. Even so, the complexity of modern life, the difficulty presented by eco nomic problems - especially those provoked by a third of a century of mistaken policies (since the First World War and especially since the Great Depression) - the fact that not everyone can analyze them and apply or follow the rea soning of economic theory, and other circumstances to which I shall refer later, leave more than one opportunity for the appear ance and espousal of intervention ist theories. In fact, in the dispute between the two opposing systems of liberty and regimentation, it is interventionism that has gained ground. Unlike capitalism and commu nism, which are well-defined forms of organization readily distin guishable from each other, inter ventionism does not constitute a third structure different from these two. Interventionism does not seek to destroy the fundamen tal institutions of a free economy or to displace it. Neither does it have as a declared purpose the establishment of centralized direc tion of the means of production.

Its object is a combination, a solu1970 INTERVENTION LEADS TO TOTAL CONTROL 47 tion intermediate between capital ism and communism, in which the disadvantages and abuses of the former would be eliminated with out falling into the evils and per nicious consequences of the latter. For this purpose, liberty is re stricted and all the resources of the state are put into play, with the threat or the ultimate appli cation of that power which it alone can wield, that is, coercion and violence. Since interventionism and socialism are in agreement insofar as both criticize a free economy, what characterizes and identifies the former is the feature which I have just noted and from which it derives its name: the interven tion by the state, the utilization of its apparatus and power in all cases where the functioning of the system of freedom produces a result different from that which the proponents of interventionism consider ethical or desirable.

What a noble purpose! What a neat solution! To preserve the advantages of individual initia tive without falling into any of the dangers of collectivism. To couple the energies of society and the unity of the state, and in one single harmonious effort, to attain justice, social peace, and prosper ity. It should not be surprising that this beautiful utopia has se duced generous and enlightened minds from the remotest times. In fact, although there are some who present it as the latest nov elty, interventionism is as old as history. In the first written legis lative compilation which has been preserved, the Code of Hammu rabi, we find laws which fix prices; and this form of intervention, to gether with innumerable others, persisted in Egypt, China, Greece, Rome, the Middle Ages, the Ren aissance, the Mercantile Age, and the French Revolution, and emerges in our day with greater pretensions than ever.

The Market in Operation A complete examination of in terventionism, which does not claim to be a substitute for the market system but simply a cor rective measure, should start with a study of the operation of the free market. In this way it would be possible to determine the accu racy of the two central arguments of the critics of the free market: the assertion, on the one hand, that even if the system of eco nomic freedom does tend toward the optimum application of pro ductive resources, and therefore toward the largest possible output, conditions never really correspond to the basic assumptions of lais sez-faire theory, and so the latter is, to that extent, limited and de ficient; and the emphasis, on the other hand, upon those results of 48 THE FREEMAN January the free play of individual inter ests which are deemed undesira ble. But let us grant those points to the opposing side, despite the fact that some are inaccurate and others are greatly exaggerated.

In any case, the conclusion which rightly follows when one finds an imperfection in the working of the free market is the need of im proving it and of achieving its efficient operation, not of disor ganizing and destroying it. Since interventionism bases all its claims on its alleged ability to accom plish better results than a free economy, let us investigate how it operates in its turn and, more concretely, whether it can attain the aims which the governments and the persons who resort to it declare that they pursue. In the economic field, these aims cannot but be greater abundance for the greatest possible number of the inhabitants of a country. In other words, the primary aim of interventionism is not different from that of capitalism or even of communism. 3 3 In all systems, in addition to eco nomic objectives, other ends are sought of a varied nature, moral humanitarian, nationalistic, and so forth. Nobody doubts that many can be attained by means of official action. But it is equally clear that from the economic viewpoint these meas ures represent an expenditure, not an income. Economic science neither ap proves nor disapproves of them. It con fines itself to throwing light upon their true nature.

In case there is any doubt about this, it is sufficient to call atten tion to the name with which the partisans of the latest brand of interventionism have baptized their creation: they call it the "welfare state," that is, a political body which has as its objective the welfare, of the masses. And the welfare which is promised is, in the first place, economic welfare. Classes 01 Intervention Although official intervention takes extremely varied forms, analysis permits us to classify them into three groups: (1) meas ures whose principal object is to divert the factors of production from the channels which they would have entered in a free mar ket, toward others preferred by their authors: (2) measures whose object is to modify the data which are a result of the market; (3) measures whose object is to change the distribution of production and, in general, of wealth. Intervention of the first class can be either direct (prohibition of certain industries, decrees to the effect that enough factories or firms exist in certain lines, pro duction quotas) or indirect (pro tective tariffs, subsidies). In or der to modify the indications of the market" recourse is had to price-fixing (only for the sake of brevity do I use this word, since 1970 INTERVENTION LEADS TO TOTAL CONTROL 49 the figures selected as a result of the decision of an entity with com pulsory force cannot be consid ered as prices, which, by defini tion, are the result of the. inter action of individuals in the mar ket). In practice we find both maximum prices (rents, consumer goods) and minimum prices (par ity prices for certain agricultural prod ucts, salaries), and we ob serve that sometimes the govern Inent decrees them and imposes them directly, while on other oc casions it permits this to be done by private groups (legalized mon opolies, labor unions), to which it lends the support of its authority, or permits them the use of physi cal force and violence (s,trikes, shutdowns of plants and offices).

In the three types of measures which I have mentioned, recourse is had to the fiscal powers of the government; nevertheless, it is in the case of the third group of measures that this kind of official activity (provision of free serv ices, progressive income' and in heritance taxes) is resorted to most frequently. R.estriction Invariably Diminishes Production of Goods and Services Based on this outline of the most frequent forms of interference, let us examine the results to be ex pectedfrom each one. As I pointed out above, its operation, its yield, are the only criteria with which to judge the socalled third road in the economic field, for it is in precisely this respect that it pre sents itself as superior to the capi talistic system which it criticizes. In other words, what intervention ism has to prove is that it can in crease production, raise the gen eral standard of living, and conse quently assure greater welfare to all the population.

rfhe deflection of production into channels different from those which it would enter in an un hampered market is so obviously restrictive that it is no exaggera tion to speak of restrictionism when designating the totality of measures which the state employs for this purpose. In every case it prohibits a certain kind of pro duction (in the broadest sense of the word and including, therefore, commerce, personal services, bank ing and transportation), or cer tain procedures are forbidden, or are made more difficult or more expensive. It could be stated a priori that, given the tendency of the free market to the optimum use of the factors of production and to the maximum satisfaction of the most urgent human needs, these shackles can result only in a deterioration of the productive process and in impoverishment of the community. A detailed exami nation of anyone of the restric50 THE FREEMAN January tive devices will fully corroborate this.

Let us suppose a restriction of the number of factories dedicated to a certain branch of production or .of the quantity of articles which they can manufacture. Let us suppose also that this restric tion is complied with or is en forced. Naturally, the price of the product concerned will go up; the profits derived from the industry in question will increase. Those "vho participate in it, salaried workers, investors, entrepreneurs, will be better off from receiving their respecti ve incomes more surely or even in greater propor tion than before. It ·would seem, therefore, that the measure is beneficial in general and that it should be approved. Gains Ollset by Losses Whoever believes this suffers from evident Inyopia. When the consumers find themselves obliged to pay more for the restricted item, they will automatically have less to spend for other articles. Consequently, what the interested parties in industry A gain, those who depend on industries B, C, andD will lose. No net advantage whatsoever exists for society. On the contrary, and since wealth is created through expending a cer tainquantity of the factors of pro duction and since restriction of that quantity cannot increase but only diminish the amount of goods produced, from the. general view point the result is a net loss, equal in amount to that of the produc tion which was prevented. One group gained, but at the expense of the community. Taken as a whole, the latter is poorer and not richer. Interventionism not only did not attain its objective, but produced a result exactly opposite to the one it sought.

Even easier is the demonstra tion in the case of price fixing, a demonstration which .has been given so many times that one feels reluctant to take up the reader's time with it. The function of prices is to achieve a balance be tween supply and demand. When the government immobilizes them at a level lower than the one de termined by the market, demand increases, since buyers will feel more inclined to acquire goods and since there will also be a great in crease in the number of those who could not do so. at. the previous price, but who find it possible-at the fixed price. If instead, prices are set at levels higher than those established on the market, it will be the sellers who will flock to it, and supply will exceed demand. In either instance, the market fails to fulfill its functions; a new prin ciple-for the-distribution of avail able goods becomes indispensable: 1970 INTERVENTION LEADS TO TOTAL CONTROL 51 and queues, rationing, and the black market appear in the one case, and overproduction and chronic unemployment in the other. This is due to the fact that in addition to allocating the arti cles already produced, prices fill a mediate but even more important function, that of guiding and di recting production.

Prices are signals, indications, to producers, of the fields in which there exists an unsatisfied demand and in which production·· should therefore be intensified; and of those others where supply cannot be wholly absorbed and in which future production .should con~e quently be curtailed. Producers respond to these stimuli to the fullest extent possible in each set of circumstances, because of their desire to obtain profits and to avoid losses. And the result for society is the employment of the factors of produr-ti. 'n in those di rections which will satisfy the most important and urgent needs of the consumers. 4 4 Obviously, in accordance with the scale of values of the consumers them selves. To this it is objected that the mar ket directs production toward the fields which bring highest profits and not to ward those most necessary to society or which are "truly useful." The fault does not lie with the market system, but with the desires of men. What is needed, there fore, is to instruct and convince the lat ter so that they will not want things of scant "social utility" (such as chewing Changing the Signals Let tis consider now what hap pens in a system in which the sig nals have ceased to function truth fully, that is to say, in which the government orders buyers and sellers to abide by certain amounts whose only likeness to· prices lies in the fact that they are expressed in legal tender currency. If the official figure is lower than the market price, marginal producers - those whose costs are highest will lose money and will be elimi nated. The other producers will continue their activities but will not increase their investments; on the contrary, they will divert to other ends the nonspecific factors at their disposal and will even re tire completely as .soon as they can do so, in order to engage in the production of goods which offer greater profits. As a result, the supply of the controlled com modity, the more important since it is generally a staple of life, will diminish instead of increasing as the government desired.

Exactly the same thing will hap pen, except in the opposite direcgum or bullfights) or which are even harmful or immoral (such as alcoholic beverages or the services of cabaret girls and prostitutes). But whoever criticizes a free economy on this account and shields himself behind supposedly eco nomic arguments in order to impose his personal preferences, reveals very little democratic spirit and a great deal of su periority and paternalism.

52 THE FREEMAN January tion, in the case of mInImum prices or salaries. When the au thorities discover that not all the farmers who cultivate a .. certain crop can earn sufficient money to continue producing it, they set a parity price below which it may not descend. Now, the unsatisfac tory former price was not capri cious; there was a reason for it and this could only be an excess of supply or a lack of demand. The imposition of minimum prices per petuates these conditions. and pre vents production from adjusting itself to consumption, by keeping marginal producers in business and by even attracting new pro ducers who, if they had been con fronted with a lower price, would have applied their resources to the production of different goods. And so, with controlled prices, as with restrictive ..measures, the real result that is attained is ex actly the opposite of the one sought by their proponents. The conditions that are created are not better, but worse, than those which existed prior to their estab lishment. Some groups may be benefited and enriched, but so ciety as a whole loses and is im poverished.

Not Income, but Expense I shall not attempt here to dis cuss the method of redistributing wealth represented by the inflationary and credit expansion poli cies followed by most contempor ary governments. As for the other measures aimed at achieving a distribution different from that determined by the capitalistic or der - for example, by organizing gratuitous or semi-gratuitous serv ices (low-cost housing programs, socialized medical services - it is so obvious that they entail an ex penditure rather than an income that when attempts are made in their defense the arguments re volve exclusively around the jus tice of providing them. In other words, the proponents of these measures avoid justifying them in the economic field, in which in terventionism boasts of its power to win the argument and in which it is the purpose of this documen1 to examine them. If we do so, i1 will be easy to verify that, sinCE the state cannot provide anybod:} with anything which it has no1 previously, and more or less sur· reptitiously, taken away from hin or which it does not take awa~ from other producers, the ne' effect of its absorption of all kind: of activities is to transfer fron the interested parties to the ad ministration the power to decidl and to spend.

On the whole, this must havi less efficient results and yield ; smaller return for the communit:y because to the less perfect satis 1970 INTERVENTION LEADS TO TOTAL CONTROL 53 faction (always from the point of view of the consumer) of the needs which one wants to fill must be added the disturbances originated by politics and the complications, mistakes and immoralities of bu reaucracy. Above all, the social re sources available for these pur poses do not increase just because the heavy body of the state is in terposed between them and their use, but rather diminish through having to bear the high and ever increasing cost of the services so deceptively called free. Saving Discouraged In general and independently, therefore, of the use to which the government puts the funds which it collects, there is no doubt but that taxation beyond certain lim its discourages the accumulation of capital, a& in the United States, or even has the opposite result of encouraging the dissipation and consumption of existing capital, as in England. Matters are, of course, much worse in the case of expropriations and confiscations, especially when· they are not iso lated and extraordinary acts, since they can· only be compared in their effects to those cataclysms which paralyze even the will"' to recon struct and after which recovery is as slow as it is painful.

Again, the failure of the am bitious interventionist program is confirmed; no country can make itself rich by taking away from some people in order to give to others and by terrorizing and de moralizing all of them. It is true that whoever cuts the cake - in this case, the state and, more con cretely, professional politicians, their friends, and the groups which support them or which they fa vor - gets the best share; yet neither does the total distributed become greater nor is the general mass of the population benefited, but rather it becomes more im poverished by such distribution. As a result of the foregoing, it can be stated with certainty that isolated interventionist measures do not produce wealth, but scarcity - not abundance, but poverty. This is not a value judgment; neither is ita case of condemning these measures because .they limit free dom and lead to totalitarianism.

In the field which belongs to eco nomic science, that of showing us the consequence of our actions and of enabling us to behave consist ently, it can be demonstrated that the results of state intervention ism are contrary to the aims that it seeks and that from the point of view of those who want inter vention - not from my point of view or in the opinion of the friends of capitalism - it ends in a situation which is worse than the one it set out to improve. In54 THE FREEMAN January terventionistpolicies must, there fore, result in failure and frustra tion, or else go on, extending both horizontally and vertically until they end in complete economic control and in socialism of the Nazi type. Mushrooming Intervention This course must offer great temptation to those who have em barked upon interventionist ad ventures and represents one of the greatest threats of such a pol icy. Upon observing that the maximum price fixed for milk, for example, causes this product to dis appear from the market, let us fix the prices of other activities and commodities, such as pasteuri zation, milk containers, transpor tation. If production has been di verted to butter and cheese, let us fix their prices and limit the amount which can be made of them. If this does not produce the desired result either, let us freeze the salaries of such persons as may be engaged in the milk in dustry or even of those connected with it, and go a step further and prevent the producers by force from abandoning this field. If the supply of milk grows less every day, let us follow the internal logic of interventionism and take. the ultimate step: let us control ev erything, without exception. Then we shall have eliminated the market completely, we shall find our selves at the opposite extreme from where we started, and we shall have established a system which is indistinguishable from the communism which we began by repudiating.

There is no doubt, therefore, that interventionism constitutes an extremely efficacious instru ment in the struggle begun some time ago for the purpose of de stroying the liberal society in which, in spite of everything, we still live. In the first place, it lends invaluable support to those who are working to establish· commun ism· but who realize that they would meet very strong opposition if they openly advocate that form of economic organization. Perhaps even more serious is the fact that interventionism complicates and aggravates economic problems to such a degree that the majority of people, among them the maj 01" ity of the classes which previously performed the most important of directive functions, that of sup plying the ideas which guide so ciety, are bewildered and per plexedand even come to believe that· these· problems admit of no perfect solution. But does not this situation cause surprise?

If, in the field of ideas, the failures of interventionism are indisputable, if not only the bank ruptcy of this policy but also its 1970 INTERVENTION LEADS TO TOTAL CONTROL 55 catastrophic effects and the dan ger which it presents are visible on all sides, especially in those countries which have carried it the furthest, why does it notpass forever into oblivion, ashamed of the confusion which it has wrought and of the countless ills which it has brought upon human ity? The explanation is compli cated, but in my opinion it should be attempted because it will help to dissipate the mental fog which has descended upon a great num berof our fellow men and left them irresolute and deprived of the will to respond to the. chal lenge of our times. Reasons for Confusion Let me list briefly some of the reasons for this: (a) .Man is by temperament a compromiser, especially when con fronted with matters which he does not understand and which he thinks do not affect him directly.

The majority believes that the de bate concerns only a mythical class, "the capitalist" or "the bankers," and the government. What is more natural than to think that each one must be partly right and that as between the freedom demanded by the form·er and the complete control which everyone instinctively fears, the solution must lie in the golden mean of interventionism? (b) Both in economic matters and in general, without the aid of science our. perception and in terpretation of phenomena are rough and misleading. Scientific knowledge aims precisely at broad ening our field of vision and our understanding and making them more accurate. But just as an ig norant person does not observe that the world is round, so also in economic matters he sees no further than the near and imme diate effects of an act or a policy. The masses are incapable of un derstanding the .secondary conse quences which those acts or poli cies generate in time or space; nor will they follow the long and rather complicated reasoning nec essary to explain them. Since in terventionist measures seem at first to be successful and may benefit special groups, a man with out economic knowledge needs no further proof to be convinced of their efficacy.

(c) In the economic process· we all have a dual personality: on the one hand, we are producers; on the other, consumers. Although frequently and with a notorious lack .of logic, government inter vention is asked against consum ers when prices decrease, and pro tests are· made and official aid in voked .against producers when prices increase, the predominant interest of the majority of people 56 THE FREEMAN January is their interest as producers. This is more direct and special ized, since the interests that con sumers have in common are dif fuse and lend themselves but little to the organization of groups which would further them. And thus we see that in the demo cratic countries the voters cast their ballots in favor of their in terests as producers and against the general welfare, which would usually coincide with their inter est as consumers. Interventionism Is Unstable Whether the explanations which I put forward are accepted or whether other causes are found for the regrettable blindness of our contemporaries in face of the disaster of interventionism, I re peat that this system has won ground since the First World War opened the door to it. Is it to be anticipated that it will continue, as it has up to now, to extend and intensify itself more all the time?

It is not to be believed. Inter ventionism has lived off the re serves accumulated under capital ism and thus has succeeded in hiding to some extent its excesses; but these reserves have already been dissipated in some countries, while in others, their exhaustion is only a question of time. Inter ventionism is essentially unstable as I believe I have demonstrated, because it is not a real third sys tem but a makeshift which fluctu ates between the capitalism from which it starts and the commu nism which it does not wish to reach. Consequently, either hu manity has a lucid moment and holds back at the edge of the abyss, or else it plunges into it and into the new dark age of which a terrifying prelude has been furnished us by Hitler's Germany and Stalin's Russia. What cannot be doubted is the danger in which we live. Let us not forget that interventionism constitutes a seeming, but in fact self-defeating and suicidal solu tion which does not raise the standard of living but lowers it, which does not create wealth but consumes it. Its basic philosophy is mistaken and pernicious. Like the collectivism to which it be lieves it is raising an obstacle, it mistrusts the individual and his innate capabilities, and seeks sal vation in an entity supposedly free from his limitations and weak nesses, which would be outside of society and superior to it. In prac tice, interventionism is nothing but statism. Moreover, by at tributing to the state an omnis cience and an omnipotence which nothing justifies - neither theo retical resasoning nor historical experience - interventionism pro fesses a true idolatry of the state 1970 INTERVENTION LEADS TO TOTAL CONTROL 57 and is even inferior in this aspect to communism, which at least in theory does not exalt the state and even speaks, deludedly, of its fad ing away.

In the same way, intervention ism is inimical to individual lib erty. It is not a question simply of the fact that its specific means of action are orders and prohibitions and that it necessarily implies a reduction of liberty and an in crease in compulsion. The evil stems from a much deeper source, from the fact that contrarily to the naive thesis that it is possible to separate what is economic from what is not, liberty is indivisible. Since there exist no purely eco nomic motivations which can be separated from the other objec tives which we seek in Iife, any diminution in the sphere· of eco nomic liberty results in a loss of freedom in other fields. In other words, there is no economic sector of life inferior to others and clearly marked off from them, in which it would be possible for the state to project itself without re sultant ill effects upon personal liberty. All intervention in the means implies an intervention in the ends. Automatically, the deci sion as to what objectives we must fulfill and as to the relative rank of the values which they tend to realize, is shifted to a great ex tent from the individual to the state, until it is completely ab sorbed by the latter in commu nism, which for this reason, is in escapably totalitarian.

The Greatest Danger: The Statification of Life What can be surprising, after the foregoing, about the necessary results, observable everywhere, of statism and of the abandonment of liberty? The state grows and hypertrophies until it assumes the proportions of a Leviathan or a Behemoth. Instead of being a cen ter of union and a representative of the general interest, it becomes a cause of conflict and an instru ment of private appetites upon which each group brings pressure or which it is anxious to dominate in order to apply governmental compulsion and strength for its own benefit. Political institutions become deformed and corrupt, be cause, having been conceived for other purposes and in a different atmosphere, they prove inade quate in a state which is impa tient of restrictions and hampered by law. Not only in public life and .in the' administration does immo rality increase as a result of the power which the organs of the stat~ acquire over economic mat ters, but the people as a whole become accustomed to the phe nomena which accompany inter ventionism: smuggling, bribery, 58 THE FREEMAN January black market, governmental fa vors; they cease to believe in self reliance and lose their sense of re sponsibility, seeking prosperity at the expense of others and chang ing from citizens to subjects and from free men to wards of the government.

The problem of interventionism is not, as may be seen, purely eco nomic, but much more general. Al though its political and social re percussions are undeniably of the utmost importance, I continue to believe that it is only after sub j ecting it to economic analysis that one can pass a decisive judg ment on it. And I would conclude, with Ortega y Gasset: "This is the greatest danger which threat ens civilization today: the statifi cation of life, state intervention ism, the absorption of all social spontaneity which, in the final in stance, sustains, nurtures, and im pels human destinies,"5 5 The Revolt of the Masses. Complete Works (in Spanish). Book IV, page 225. ® IDEAS ON LIBERTY A. Futile Life LIFE IS INFINITELY less important than freedom. A free man has a value to himself and perhaps to his time; a ward of the state is useless to himself - useful only as so many foot-pounds of energy serving those who manage to set themselves above him.

A people which has lost its freedom might better be dead, for it has no importance in the scheme of things except as an evil power behind a dictator. In our hearts we all despise the man who wishes the state to take care of him, who would not rather live meagerly as he pleases than suffer a fat and regimented ex istence. Those who are not willing to sacrifice their lives for their liberty have never been worth saving. MAXWELL ANDERSON, The Guaranteed Life A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN THE TROUBLE with the modern col lectivistic liberal is that he has forgotten to study the nature of man.' This is, the sum and sub stance, in capsule, of Clarence' B. Carson's 548-page book, TheFlight from Reality (Foundation for Economic Education, $5.00 cloth; $2.50 paperback). Since: the origins of our deep seated malaise can be put in a sentence, one might suppose that Dr. Carson, who teaches American history at Grove City College in Pennsylvania, could have covered his subject in fewer pages. Alas, the "flight from reality" has af fected so many millions of people and taken such incredibliy protean forms that Dr. Carson has barely scratched the surface. He has had to deal with religion, philosophy, law, literature', journalism, his tory, economics, psychology - you name it and it's here. It is obvious that each line of investigation could have' prod uced a whole book in itself, so, actually, Dr. Carson has been most succinct.