American Competitivism; R. Heiner

The preeminence of this view is seen by its implicit reflection in most ethnic jokes (Le., the impli cation· being in certain jokes that the Polish are stupid, the Italians are lazy, the Germans are mili taristic' and so on) . Mr. Heiner is a third-year undergraduate in economics at the University of Washington. 164 Concomitant with this view is the belief that if order and civili zation are on the decline, if "times are bad," what is needed is a re commitment, a rededication, a re newed spirit of sacrifice on the part of the citizens and then all will be well again. In the last two centuries, how ever, a select group of thinkers has fundamentally challenged the correctness of these views con cerning civilization and social life. Beginning most recognizably with the writings of Adam Smith, The Wealth of Nations, there emerged an essentially new discipline later to be called economics, and with it sprang a different view of human civilization which was to revolu tionize subsequent thought. Two paragraphs from the opening pages of Ludwig von Mises' Hu man Action serve as a striking 1972 AMERICAN COMPETITIVISM: CAUSE OR RESULT? 165 introduction to this view and its significance: "Other philosophers . . . looked at human things from the view point of government. They were intent on establishing rules of political action, a technique, as it were, of· government and state manship. Speculative minds drew ambitious plans for a thorough reform and reconstruction of so ciety. The more modest were satis fied with a collection and systema tization of the data of historical experience. But all were fully con vinced that there was in the course of social events no such regularity and invariance of phenomena as had already been found in the op eration of human reasoning and in the sequence of natural phe nomena. They did not search for the· laws of social cooperation be cause they thought that man could organize society as he pleased. If social conditions did not fulfill the wishes of the reformers, if their utopias proved unrealizable, the fault was seen in the moral failure of man. Social problems were con sidered ethical problems. What was needed in order to construct the ideal society, they thought, were good princes and virtuous citizens. With righteous ·men any utopia might be realized.

"The discovery of the inescapa ble interdependence of market phenomena overthrew this opinion. Bewildered, .people had to face a new view of society. They learned with· stupefaction that there is an other aspect from which human action might .be viewed than that of good and bad, of fair and un fair, of just and unjust. In the course of social events there pre vails a regularity of phenomena to which man must adjust his ac tions if he wishes to succeed. It is futile to approach social facts with the attitude of a censor who approves or disapproves from the point of view of quite arbitrary standards and subjective judg ments of value. One must study the laws of human action and so cial cooperation as the physicist studies the laws of nature. Human action and social cooperation seen as the object of a science of given relations, no longer as a norma tive discipline of things that ought to be - this was a revolution of tremendous consequences for knowledge and philosophy as well as for social action."l In other words,· the belief in the sole primacy of ethics in social matters was fundamentally chal lenged: society. could not be or ganized according to any set of ethical norms; and further, there prevailed certain inescapable ef fects of. various social structures which could not be nullified re1 Ludwig von Mises, Human Action (3rd ed., Chicago. Regnery, 1966), p. 2.

166 THE FREEMAN March gardless of the sincerity and dili gence of those individuals attempt ing to reform the social system in terms of various desired ethical qualities (such as equality in all aspects of social life). Indeed, the view now developed that many of these qualities (viz., character, spirit, dedication, and so forth of the people) could more correctly be regarded as effects or results of certain patterns of social col laboration, rather than the cause of the specific social structure and the achievements of the people therein. Ethics Plus Organization Thus, one of the significant revelations derived through the development of economics is that the necessary conditions for the progression and "flowering" of a civilization include not only a sys tem of workable ethical values but also the appropriate system of BO cial organization, and that neither is sufficient without the other.

Moreover, if there prevails a set of ethical norms, the practice of which precludes the development of an appropriate system of social organization (for example, beliefs which consider merchants and lenders of money who demand in terest as people engaged in activi ties of low moral character), there can be no general advancement for that civilization; or, if the appIication of a set of political and economic doctrines also precludes the establishment and continuance of an appropriate system of social organization, then appeals and ef forts to revitalize the dedication and moral spirits of the populace cannot succeed in bringing about advancement (or preventing down fall) for that civilization. It could be argued, therefore, that the oft-cited American "com petitive spirit" and "rugged in dividualism" are consequences of that system of social collaboration characterized by the unhampered market economy, and that this competitive drive could not have developed without this system of social collaboration.

Very much related to the above discussion is a remarkable and significant series of events in re cent months most dramatically represented by the current "wage price freeze." In one of the state ments made by President Nixon shortly after the initiation of the "freeze," it was emphasized that, in the long run, what is needed to revitalize America (in addition to wage-price controls) is a rededica tion by Americans to that spirit of competitivism which made Amer ica great. In light of the preceding devel opment, however, this plea for a recommitment of the American "rugged individualist spirit" is 1972 AMERICAN COMPETITIVISM : CAUSE OR RESULT? 167 seen to be completely illusory. In fact, what has been done is to implement the most drastic form of restriction (general scale price controls) on that· system of social organization (viz., the un hampered market economy) which is the cause or necessary co-con dition which permitted the emer gence of the very spirit of com petitive individualism which the President deems as necessary for America's continued greatness.

This means that the President has embarked on a policy which, if continued and enlarged, will eliminate what is left of this com petitive spirit and render its re emergence impossible. Compounding Error All of this testifies to the words of Ludwig von Mises in the clos ing pages of Human Action 2 : "the study of economics is almost outlawed today. The public discus sion of economic problems ignores almost entirely all. that has been said by economists in the last two hundred years. Prices, wage rates, interest rates, and profits are dealt with as if their determination were not subject to any law. Gov ernments try to decree and to en force maximum commodity prices 2 Ibid., pp. 879-880. and minimum wage rates. States men exhort businessmen to cut down profits, to lower prices, and to raise wage rates as if these matters were dependent on the laudable intentions of individuals." In order to attain any end, ap propriate means must be used in order to effect the true causes of that which is sought. The ironic .aspect of the solely ethical inter pretation of economic affairs is that it fundamentally miscon ceives the operation of the social system in such a manner as to sup press and obscure the real work ings and true causes of the prob lems it seeks to remedy. In so do ing, the measures which are thus implemented themselves become causes of systematic distortions in the economic system; which are then interpreted as proof of the necessity for even more drastic extensions of those original poli cies - thus compounding and mul tiplying the distortions in a self justifying cycle.

All of these. considerations would be academic but for the reality that these measures and their. e~~ tensions adversely affect millions of lives in an essentially irrepara ble fashion, the ill effects possibly enduring for centuries. t) ;LUDWIG VON l\USES of ~bney and Credit, P. 249 Mr. North is a member of the staff of the Foundation for Economic Education. ntity of ato . An un Sta~ interven tenq~r. All th~t GARY NORTH PEOPLE ADVOCA?r~'''''''"id~ntical eco-intelinational monetary nomic policies for V~;Y"''di~tfe!~,,~~ transac Ions l~oUld set the prices reasons. The recent interest, bot'h"',Q{",various/ currencies, include practical and theoretical, in the ~'~Ii'et~,l:,!~Y~ - who would have subject of international monetary each goverhment manage its own exchange rates is a point in ques-nation's money supply - as well as tion. Advocates of flexible' ex-those who believe in a full gold change rates, in which a free mar-coin standard to preclude govern ment control. Opponents of flexi ble international exchange rates, 168 1972 FIXED EXCHANGE RATES AND MONETARY CRISES 169 on the other hand, include not only the creators of the Bretton Woods agreement that established the In ternational Monetary Fund but also a number of conservative economists.! How is it possible that the camps could be. divided in this fashion?