Book Reviews

He wants to establish what he calls a People's Project, a Hnational mobilization of resources to solve human problems using the same ap proach that placed astronauts on the moon." The ideas which he hopes to disseminate are based on the so called Third Force psychology of Dr. Abraham Maslow, who revolted against both Freudianism and Be haviorism on the ground that they are ~~cripple philosophies" which ig nore whole stretches of human his tory and endeavor. What Mr. Goble has to say about the ~~cripple philosophies" is perfectly true, but 244 his theory that one can apply the moon-shot approach to the solution of social problems ignores a host of difficulties. History is always a rag ged process, and great changes never come about overnight. Putting men on the moon was a purely physical process. Once the money had been approved to carry it out, a ~(task force" approach became feasible. The problem was to provide astronauts with oxygen to breathe and food and water to sustain them selves while riding a ballistic arc to a celestial destination. The technol ogy of rocket-launching was already in place when the task force tackled its mission. The personnel was ready: World War II had produced a resourceful air force whose adven turous pilots were yearning for something challenging to do. The HOW TO CURE A NEUROTIC SOCIETY 245 rest was simple, and its ac complishment involved little con troversy once it had been accepted as a national objective. Whether people should have been taxed for the job is, of course, another story. It was easy, however, compared to en gineering a big change in society.

Some Vital Adjustments as Prelude to Reform Before a task force could be as sembled to rout the devils of Freud and Behaviorist John B. Watson, not to mention B. F. Skinner, and to re-establish the Natural Law ideas of our Founding Fathers in the schools, a political sea-change of massive proportions would have to be brought about. The National Ed ucation Association would have to be deprived of its grip on American teachers. The big labor bosses would have to accept a formula for relating wage-increase demands to a well understood productivity standard. Congress would have to withdraw subsidies from a thousand angry pressure groups. And our Washing ton bureaucrats would have to abandon the Nanny approach to the institutions they are supposed to regulate. As for regulation itself, it would have to be dispensed with, sa ve in the few clear instances where the public health is involved.

Meanwhile, our educators would have to rehabilitate the American Ethic. They would have to begin teaching history again. Naturally, all of this would involve skirmishes on a thousand fronts, not a single dedication to a moon-shot-type ~~people's project." Mr. Goble is faced with the problem of setting in mo tion a Fabianism-in-reverse on a wide front before he can hope to see a fin~d victory. for what he calls Responsibility Theory. When he desists from his moon shot and Manhattan Project analogies, Mr. Goble talks eminent and inspiring common sense. His book is first-rate analysis. As he says, Freud erred by confusing neurotics with normal people: not everybody is bedeviled by aggres sive instincts or is helpless to control his libido. According to Richard LaPiere, a Stanford sociologist, the Freudian ethic resulted in the idea Hthat man cannot and should not be expected to be provident, self reliant, or venturesome, and that he must and should be supported, pro tected, socially maintained." The American Ethic, as defined by the Founding Fathers, had entirely op posite presuppositions, and it worked for several generations be fore Freud was ever heard of in this country.

"Responsibility Theory" The Maslow-Goble Third Force idea rejects Freud and the anti-free will Behaviorists in favor of Respon sibility Theory which assumes that 246 THE FREEMAN April human babies are born with socially constructive instincts that are con ducive to the survival of their species unless they are mistaught by permissive theorists to expect to have things handed to them on a platter. It is permissiveness, according to Goble, that has ruined our educa tional system. Where there is no truth, anything goes. The idea that science must be value-free or value-neutral has resulted in a preoccupation with averages. The ((well-adjusted person" won't quarrel with the average. The well developed person, on the other hand, will reject the idea that he must settle for mediocrity. He will insist on having values of his own. What our educational system should do, according to Maslow-Goble Respon sibility Theory, is to inculcate the idea not of Hadjustment," but of Hself-actualization," which is de scribed as ((the full use and exploita tion of talents, capabilities, poten tialities." Instead of studying the worst of humanity, as the Freudians do, Responsibility Theory would concentrate on ((the less than one percent of society that had achieved self-actualization." Dr. Maslow pre ferred to have his students read about Hpeak experiences" in the lives of heroes such as Lincoln, J ef ferson, William James, Albert Schweitzer, Jane Addams and, oddly, Eleanor Roosevelt.

Character Education There are the elements for a good Fabianism-in-reverse in the U.S., and Mr. Goble mentions a few. He tells about the Character Educa tion Projects sponsored by the American Institute for Character Education in San Antonio, Texas. One of these projects, at Public School 63 in Indianapolis, Indiana, has been active for six years and has restored both school and individual pride while reducing vandalism to a minimum. Such projects would have a bigger chance in private schools, where there would be less apathy to over come, but Mr. Goble presumably doesn't want to get into the public versus-private school fight. He wants to work through ((existing in stitutions." He hopes to see a non profit People's Project Corporation formed to push his ideas. The Cor poration, by ((mass-marketing" edu cational and motivational programs to existing institutions whether pub lic or private, would, he thinks, act as a catalytic agent to reduce costs of government, inflation, unemploy ment, crime, drug abuse, illegiti macy, welfare rolls and ((other de structive problems."

It is a grand idea, but since there aren't enough Gobles to go around, wouldn't it be more realistic to take a one-community-at-a-time ap proach? After all, nothing succeeds like one good example.

1978 OTHER BOOKS THREE NEW BOOKS by Ludwig von Mises Reviewed by Henry Hazlitt 247 NOTES AN'D RECOLLECTIONS by LUdwig von Mises (Libertarian Press, South Holland, Illinois) 181 pages. $9.95 WHEN Ludwig von Mises died on October 10, 1973, at the age of 92, even his· most devoted readers, and those privileged to know him per sonally, assumed that everything he had written, in German or English, had already been published. But his widow Margit now reveals that im mediately after they emigrated to this country in August 1940, Mises set to work on a manuscript that he turned over to her at the end of the year, with the simple instructions to ((take good care of it." It was not until some time after his death, thirty-three years later, that she remembered it. It turned out to be the present remarkable combination of autobiography and critique of the intellectual milieu in Mises' native Austria in the years when he was growing up.

He was ((devouring" articles on history when he was seven years old. When he graduated from high school he decided to study .law . But he was also reading in economics. In the German-speaking world Schmoller was then ((adored as the great maste'r on (political economy.' " But when Mises was still in high school, he tells us, he ((noticed a contradiction in the position of the Schmoller circle." When he entered the university he, too, he confesses, ((was a thorough statist. But in contrast to my fellow students I was consciously anti-Marxian. . . . When I finally engaged in an intensive study of the important works of Marx, Engels, and Lassalle, I was provoked to con tradict them on every page. It seemed incomprehensible to me that this garbled Hegelianism could exert such an enormous influence." Yet he continued to bean ardent interventionist and ((reformer" until one of his professors induced him to research housing conditions and another suggested he study the legal 248 THE FREEMAN April changes regarding domestic ser vants. (1t then dawned on me that all real improvements in the condi tion of the working classes were the result of capitalism; and that social laws frequently brought about the very opposite of what the legislation was intended to achieve."

In 1913 Mises was admitted to the faculty of law at the University of Vienna as an unsalaried lecturer, and in 1918 he received the title of Associate Professor. But that was as far as he was destined to go there. ((A university professorship was closed for me," he writes: HThe uni versities were searching for inter ventionists and socialists." He did receive a position in the Vienna Chamber of Commerce, however, and from there he began to exert his real influence. At his of fice, every two weeks, he conducted a small seminar consisting of 20 to 25 students. It was from this small group that such famous economists were to emerge as F. A. Hayek, the Nobel laureate, Gottfried Haberler, Fritz Machlup, Oskar Morgenstern, and Eric Voegelin. The "Austrian School" The great intellectual influences in Mises' own development were, of course, the founders of the HAus trian school," Carl Menger and Eugen von Boehm-Bawerk. Mises arrived too late at the University of Vienna to have Menger as a teacher, but he recalls that around Christ mas, 1903, he read Menger's Princi ples of Economics for the first time: HIt was the reading of this book that made an (economist' of me." Fortu nately, Mises was able to attend the seminars of the great Boehm Bawerk.

Mises' own outstanding contribu tions included his work on money, which finally unified monetary theory with economic theory in gen eral, his demonstration that socialism must fail because it cannot solve the problem of ((economic cal culation," and his recognition that economics is merely a part, though by far the greater part, of a wider science of Human Action. He was beyond question the foremost economist of his generation. Yet this is in the main a sad book. As Mises matured intellectually, he came to recognize that Austrian thought and culture were already in decline. Menger and Boehm-Bawerk were still alive; but they were being succeeded by mediocrities who failed to grasp their revolutionary in sights. Menger was Hdiscouraged" and ((silenced." ((The evening of Boehm-Bawerk's life was darkened by his fears for the future of Austria and its culture." He died a few months after the outbreak of World War I. Mises got the news when he was with his artillery battery at the front.

There was more misfortune to 1978 OTHER BOOKS 249 come. Mises lived to see the rise of Hitler. Driven from Vienna by the threat of a Nazi takeover, he spent six comparatively happy years as a professor at the Graduate Institute of International Studies in Geneva. But the outbreak of World War II made it seem to him once more ad visable to emigrate, this time to the United States, in August 1940... In the months when he was writing the present book, he had no knowledge of the future he would have in his new country. That future too, in its early years, was to prove full of anxiety and difficulties. With the help of Ameri can friends, he was finally, in 1945, appointed Visiting Professor at the Graduate School of Business Admin istration of New York University. Even then his salary did not come from-the university's own general funds, but had to be provided by friends and foundations.

Some of us may regret that Mises' great personal reticence kept him from telling ~ore about his early childhood and his emotional life, but we can still count ourselves fortu nate to have this important addition to his legacy. The book is preceded by the short Foreword by Margit von Mises, and followed by an admirable Postscript of thirty pages, describing Mises' later years and works, by his friend and student, and translator of this volume, Professor Hans F. Sennholz. A CRITIQUE OF INTERVENTIONISM by Ludwig von Mises (Arlington House, New Rochelle, New York) 164 pages. $8.95 Essays collected in A Critique of Interventionism were written in the early 1920's, and published in Ger man in 1929. They are now issued for the first time in an English translation by Professor Sennholz. The English title almost exactly fol lows the German-Kritik des Inter ventionism us. The American reader familiar with Mises' other work will find no ideological surprises. But what will probably impress him most is pre cisely this-that as early as the mid-1920's Mises' economic philoso phy, and his main conclusions, were already formed. He was astonish ingly immune from the then almost universal fashion in respectable economic circles, which rejected both laissezfaire capitalism and outright socialism, in favor of a so called ~~middle road," which accepted only qualified property rights, sub ject to overriding government inter ventions and controls.

In the 1920's Mises was not only keeping abreast of all the major out put on economics in Europe, but paying tribute to the contributions 250 THE FREEMAN April of such American writers as John Bates Clark, Taussig, Fetter and Davenport. But he had little pa tience with the work of the self styled American Institutionalists and he was unsparing, for example, in his dissection of the fallacies of such advocates of ~~social control" as John Maurice Clark. The main theme of this book, as its title makes clear, is not only the needlessness, but the immense harm done by government interven tion in economic affairs. He defines intervention as «a limited order by a social authority forcing the owners of the means of production and en trepreneurs to employ their means in a different manner than they otherwise would." More briefly, he defines interventionism as Uthe hampered market order." And he goes on to show why, in the long run, it can never achieve the objectives which the authorities aim to achieve.

All interventions consist of a pro hibition or compulsion or a combina tion of both. Among the outstanding examples are price controls and wage controls. What are usually prescribed are price ceilings or minimum wages. Price Controls,and Where They Lead In dealing with price ceilings, Mises begins by pointing out that the constellation of prices at .. any time is not haphazard or accidental, but has been determined pre cisely-or at least within narrow limits-by the interrelations of sup: ply, demand, costs, and similar, fac tors. But those who believe that the formation of prices is purely arbi trary easily arrive at the conclusion that they should be fixed by external regulation. When prices are held down by government edict, however, two. re sults inevitably follow. More of the price-fixed goods are bought, and less are produced. To limit consump tion, the government must resort to rationing. To restore profit margins and production, it must fix the price also of raw materials, and eventu ally wage rates, and force busi nessmen and workers to produce and labor at these prices.

In short, the government must proceed step· by step to comprehen sive control over labor and produc tion. But this was not what it started out to do. It wanted the buyers to enjoy the goods at lower prices, not to deprive them of the opportunity to buy the goods at all. When, on the other hand, gov ernment tries to fix minimum wages, it forces an increase in costs of production and also in prices. Either profit margins are wiped out or fewer goods are sold, and as a re sult workers are laid off. If the laid off workers are then paidunemploy ment compensation, the government 1978 OTHER BOOKS 251 creates a permanent body of un employed. In addition to interventionism properly so called, one or two of the essays in this book discuss such top ics as socialism, Marxism, anti Marxism, and the nationalization of credit. But the reasoning through out leads to the conclusion that in terventionism must disorganize production, and that in the long run there is only one alternative for economic organization: either capi talism or socialism. ((There is no third road."

ON THE MANIPULATION OF MONEY AND CREDIT by LUdwig von Mises (Free Market Books, Dobbs Ferry, New York) 296 pages. $14.00 We come now to the volume On the Manipulation of Money and Cre dit. In 1912 Mises published in German the first edition of The Theory of Money and Credit. There he first developed what has since become known as the ((Austrian" theory of the trade cycle. In 1928, he elaborated and perfected this theory in an essay of more than 100 pages. This essay is the main single item now for the first time translated into English and presented together with three other newly translated items. These are an article on ttStabiliza tion of the Monetary Unit" (1923), one on HCauses of the Monetary Crisis" (1931), and one published in 1933 on the then existing state of business cycle research. The trans lations are by Bettina Bien Greaves, and the book is edited with an Intro duction and an Epilogue by Percy L.

Greaves, Jr. Readers sufficiently acquainted with the work of Mises that has hitherto been available in English will already be familiar with the general outline of his business cycle theory. Even under a (fractional re serve) gold standard, governments and central banks permit or encour age an artificial lowering of bank interest rates. This stimulates the demand for bank loans beyond the amount of real savings available for lending. The increasing demand for bank loans is then met by inflation ary increases in the quantity of money and credit. The first recipi ents of the newly-created funds use them to launch or expand business ventures for which the required real factors of production must be with drawn from the particular pattern of production that would otherwise have been preferred by consumers. In other words, the pattern of pro duction becomes distorted and mis directed, and increasingly so the longer the credit expansion con tinues, until the boom ends in an inevitable bust and depression.

252 THE FREEMAN April Mises elaborated his. trade cycle theory both in subsequent editions of The Theory of Money and Credit (e.g., 1953) and in Human Action (1949). He also presented elsewhere much of the substance of the other papers translated in this volume. Nevertheless, Mises never repeated himself mechanically or by rote. Whenever he came back to the same problem he addressed it afresh, al most as if he were solving it for the first time. As a result each exposi tion threw its own special illumi nation on the problem, or supplied some connecting link that his other expositions may have omitted to make quite so explicit or clear. This the present trade cycle essay notably does. Consequently we owe the present translator and editor our gratitude for making these impor tant contributions at last available in English. * * * In spite of his great gifts for ex position, Mises' contributions were much misunderstood during his lifetime, and are still often mis understood today. A recent example is an article on Wilhelm Roepke by Patrick M. Boarman in the Autumn 1977 issue of The University Book man. Roepke, writes Boarman at one point, ~~remembered von Mises saying that if only the principles of free trade had been followed from the beginning, World War II might never have happened. I don't re member Roepke's exact reply to this, but he was, in effect, struck dumb.

And he remarked to me that it was incredible that anyone with a fair know ledge of German or of Euro pean history could reduce the Ger man question-the darkest and most sombre question of the age, with myriad roots reaching back hundreds of years-to a mere set of economic arrangements." Yet Mises was right. If free trade were a sort of isolated accident, Roepke might have been warranted in being ~~struck dumb." But free trade is a result of a state of public opinion within the country that has adopted it. It means that the people generally recognize the advantages of international trade (particularly of imports) and recognize equally the advantages of international co operation. In such an atmosphere the fanatic and belligerent nation alism that leads to war is very un likely to exist. To resume the quotation from Boarman: ~~For Roepke, this kind of economic determinism, though employed in defense of capitalism, is just as fallacious as the Marxian version of economic determinism, directed to the justification of the dialectic."

Equating Mises with Marx is something new. Mises was merely reasoning from cause to effect. Only in this sense were his remarks ~~de1978 OTHER BOOKS 253 terministic." But all science is ((de_ terministic" in this sense. Marx's economic determinism was of a dif ferent sort. It was mystical. It was a one-way determinism in which the ((material productive forces" deter mined everything else-even the ideology of the people-but it was it self not explained by any preceding cause. As Mises himself once pointed out-for he was, among other things, Marx's most devastat ing critic-nIt never seems to have occurred to Marx that the produc tive forces are themselves a product of human thought, so that one merely moves in a circle when one tries to derive thought from them." @ Editor's Note: Each of the above three vol umes is available, at prices listed, from The Foundation for Economic Education, Irvington-on-Hudson, New York 10533 IT'S NO SIN TO BE RICH: A DEFENSE OF CAPITALISM by William Davis (Thomas Nelson, Inc., 407 Seventh Ave., S., Nashville, Tenn. 37202) 264 pages • $8.95 Reviewed by David A. Pietrusza WILLIAM DAVIS is well known in the United Kingdom as an influential financial editor and columnist and as the sprightly editor-in-chief of the famed humor magazine, Punch. He combines economic expertise with an eye for the absurd to provide a self-confident, breezy, often anec dotal look at modern economic thought, focusing on the prejudices which bias the public attitude against achievement, success, and private profit in business.

Ironically enough, he opens his counterattack by quoting Marx himself on the value of the capitalist in history: ~~The bourgeoisie has been the first to show what man's activity can bring about. It has ac complished wonders far surpassing Egyptian pyramids, Roman aque ducts and Gothic cathedrals . . . the bourgeoisie ... draws all nations ... into ... civilization it has created enormous cities and thus rescued a considerable part of the population from the idiocy of rural 254 THE FREEMAN April life . . . the bourgeoisie, during its rule of scarce one hundred years, has created more colossal productive forces than have all the preceding generations together." Davis rips apart the myth ofwor sening conditions at the beginnings of the Industrial Revolution, dis sects the glaringly inaccurate pre dictions of Marx and Engels in re gard to the inevitable crumbling of capitalism, scores the results of Marxist theorizing in both its Com munist and Socialist offshoots, and even ventures so far as to heartily defend the nineteenth-century Cap tains of Industry that today are popularly derided as ((Robber Ba rons."

In most countries of the world today business is under attack; it must propitiate the politically pow erful in order to survive. Black mailed by officials, it pays protec tion money and is accused of brib ery. Davis does not excuse or con done bribery, but merely describes the situation in which certain businessmen find themselves. He quotes an oil company executive as saying, ~(I would like to ask some of the people who are becoming close to sanctimonious humbugs just what they would do if they had two hundred million dollars invested in a country, and a politician, with a death warrant in his pocket, came along and said, (give me ten million or else'-and the (or else' can take several forms. Would they pay it or would they refuse to pay it? And if they did pay, would they say it was a bribe or would they not call it by its proper name-extortion?" Then there is the menace of unionism in Davis' Britain. Eng land's labor movement fanatically attempts to wring the last remain ing shilling out of that nation's in dustrial establishment, while dis claiming any responsibility for the country's economic health or even its survival. Through compulsory unionism, big labor's grip on even the highly-individualistic profession of journalism grows more vise-like every day. Strikes have shut down the printing trades and thus en dangered press freedoms: but also, incredibly, unions have gained con trol of access into the reportorial and editorial fields themselves.

~(An eighteen-year-old beginner," says Davis, ((however talented, now has little or no chance of joining a national newspaper. The closed-shop system, as applied in the seventies, deliberately prevents many poten tially good journalists from getting into the profession-and keeps many bad ones in it. It also presents a quite genuine threat to the free dom of the press. It is intolerable that editors should no longer be permitted to employ the best avail able talent and equally intolerable that the opinions ofjournalists-and cartoonists-should be subject to the 1978 OTHER BOOKS 255 censorship of trade-union mili tants." Like an efficient and personable tour guide, Davis touches all major points of interest, provides new in sights, and yet maintains a leisurely and amiable pace. It's No Sin To Be Rich provides a sturdy defense of the diversity, prosperity, and freedom that a market economy makes possible.

THE PEOPLE SHAPERS by Vance Packard (Little, Brown & Company, 200 West St., Waltham, Mass. 02154, 1977) 398 pages. $12.50 Reviewed by Th9mas L. Johnson IN order to win a battle one must know the enemy and understand his tactics. This is just as true of the battle for freedom as for any other struggle. This book describes ~~the enemy's" various techniques of people-control: Skinnerian be havioral conditioning, brain washing and reprograming, mood managing, hypnosis, imprinting, person ali ty altering via brain surgery or electric shock, and others. A well-known psychologist is quoted: ~~We can choose to use our growing knowledge to enslave peo ple in ways never dreamed of before, depersonalizing them, controlling them by means so carefully selected that they will perhaps never be aware of their loss of personhood." It is a startling and frightening ac count. Some of·these techniques are al ready in use, to a far greater extent than generally realized. Packard cites Science Digest as his authority for saying that an estimated 500,000 to 2,000,000 school children have been put on amphetamines or Rita lin in· order to drug these children into a more passive state. And ~~in some cases, there appears to have been a clear element of coercion: threats to hold back a child or put him in some class with a disabled label" if parents refused to allow hinl to take the recommended drug.

Packard reminds his readers that schools are institutions of govern ment and then asks: ~~Are schools in general exerting, however subtly, any kind of governmental pressure to get children on behavior-modify ing drugs?" Good question, and one which would be answered in the affirmative by certain parents who are currently involved in a lawsuit in which they contend that, for some children, the taking of Ritalin was made a condition of attending public school. The author goes on to describe forced drugging in other societal in256 THE FREEMAN April stitutions such as prisons, mental institutions, homes for the aged, and the like. Part II of The People Shapers dis cusses the many and varied techniques, mainly biological, which are being used now or will be used in the near future in order to reshape man. This section reads like science fiction except for the fact that it reveals many possibilities, such as that of cloning man or resetting his biological clocks, that are on the verge of happening.

Packard ends his enlightening, thought provoking, and sometimes shocking book by discussing some new trends that can enhance indi vidual self-direction, and how it may be possible to control the would-be controllers. One may not agree with some of his suggestions for im provement or for safeguarding indi vidual rights, but the reader is cer tainly prodded into thinking about many difficult and serious matters that every believer in liberty will want to ponder. @ HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $3.00 Order from: THE FOUNDATION FOR ECONOMIC EDUCATION, INC. IRVINGTON-ON-HUDSON, NEW YORK 10533 ttle Freeman VOL. 28, NO. 5 • MAY 1978 The Free Lunch Myth E. C. Pasour, Jr. 259 Why the individual should beware of all offerings of "free lunches." Walking into a Trap Gary North 265 How business and professional groups are baited to become victims of regulations and control. Inflation in One Page Henry Hazlitt 276 Printing money to cover government deficits is curable: slash spending to balance the budget.