Thinking About Economics; E. Opitz

288 Edmund A. Opitz economic order of our own time: it is the human need to cope with scar city, to satisfy creaturely needs, to provide for material wellbeing. The visible signs of this endeavor are all about us; factories, stores, offices, farms, mines, power plants. These are the locations where work is performed, services rendered, goods exchanged, wages paid, mon ey spent, and so on. This is the economy, and in the free society the economy is not under government control and regulation. In the free society the law protects life, liberty and property of all men alike, ensuring peaceful conditions within the community. This lays down a framework and a set of rules, enabling people to compete and cooperate as they go about the job of providing for their material well being. When government performs THINKING ABOUT ECONOMICS 289 as an impartial umpire who inter prets and enforces the agreed upon rules, then the uncoerced economic activities of people display regular ity and harmony-as if guided by Adam Smith's invisible hand!

The Capitalistic Economy In a society where people are free, the economy is referred to as capital istic. Some prefer the term free en terprise; others like the private en terprise system, or the private prop erty system, or the market economy. Now, of course, no society has ever been one hundred per cent free, which means that we've never had a completely free market economy. Some people have always seized and misused political power to rig the market in their favor. Obviously, it is not the market's fault if SOfile people choose to break the rules. The appalling thing is that many intellectuals mistake these devia tions from free enterprise for free enterprise itself! And so they con demn ((capitalism." But the ((capitalism" they condemn is actually the failure of certain people to live up to the rules of capitalism-the system of voluntary exchange among un coerced people. We're aware of human frailties and shortcomings; we know that it's easier to preach than to practice, easier to announce a set of ideals than to live up to them. Economic theory provides us with a description of the way an economy would work among a peo ple who exercise individual liberty and practice voluntary association.

It is this theory we seek to under stand and explain, and it is the de viations from this ideal that we seek to correct. Every person of good will wants to see other people better off; better fed, better housed, better clothed, and well provided with the amenities. So everyone wants the economic order to function effi ciently. But how important is it that the economic order be free from bu reaucratic direction and political controls? Does it do any harm if we allow the economic order to be quar terbacked by government? Let's ex amine a concrete example to indi cate the serious secondary conse quences of government control. In the economic sector of our soci ety there is a multi-billion dollar industry engaged in the production of newspapers, magazines, and jour nals of· opinion. There is also the book trade. Those who publish and distribute the printed word consti tute The Press, and one of the im portant freedoms cherished in our intellectual heritage is Freedom of the Press. The concept is now ex tended to cover the media-radio and television-where the same principle applies.

Freedom of the Press means sim ply that the government does not tell editors what to print and what 290 THE FREEMAN May not to print-nor does it dictate to purveyors of television commentary. Some editors print stuff they think will sell. Some editors are men of strong conviction trying to promote a cause they believe in; others are party hacks thumping the tub for some ideological idiocy like com munism, or anarchism, or the New Left, or whatever. But not a single editor in the country is out crusad ing for government censorship of the press; except indirectly! Editorial Inconsistency A large number of editors, writers and commentators who demand freedom for themselves in one breath, demand government regula tion of business and industry with the next! If, at the urging of The Press, government continues to ex tend its controls over one business after another, how can anyone be lieve that government will respect the editorial room as a privileged sanctuary, and keep its hands off that section of business .known as The .Press? Socialize the economy and The Press becomes a branch of the government bureaucracy, free no longer.

The fact that The Press actively cooperates in its own entrapment makes the end result even more bit ter. It is one thing to go down fight ing; it is something else to cooperate in your own demise. Political control and regulation of the written and spoken word means excessive influ ence over the minds and thoughts of people. It means eventually a minis try of Propaganda and Information, and an Office of Censorship. If you get the impression that I don't think highly of some of the people involved with The Press, you'd be correct; they are-with notable exceptions-a sorry lot. They, along with their counterparts in the Uni versi ty and in the Church-with notable exceptions are guilty of that tttreason of the intellectuals" denounced by the French writer, Julien Benda, in his 1927 book of that title. The intel lectuals' treason in the modern world, wrote Benda, is to abandon the pursui t of truth and to seek political preferment instead.

Lest you think I am being unduly harsh on some of those who refer to themselves as Intellectuals, I shall quote a few words of C. S. Lewis: It is an outrage that they should be commonly spoken of as Intellectuals. This gives them the chance to say that he who attacks them attacks Intelligence. It is not so. They are not distinguished from other men by an unusual skill in finding truth nor any virginal ardour to pursue her .... It is not excess of thought but defect of fertile and generous emo tion that marks them out. Their heads are no bigger than the ordinary; it is the atrophy of the chest beneath that makes them seem SO.l lThe Abolition of Man, pp. 34-35.

1979 THINKING ABOUT ECONOMICS 291 A Vital Connection I use The Press to point up the vital relationship between intellec tual freedom and economic freedom. Freedom of thought, bound only by the rules of thought itself; freedom of belief, in terms of the mind's own energy;freedomofutterance, guided by logic and within reason-these spiritual freedoms are of the vE~ry essence of our being. When they are threatened directly all of us rush to their defense. My point is that they are threatened indirectly when ever-and to whatever degree their material and economic support is straitjacketed by government regulations and controls. The same analysis would apply to the Academy and to the Church. If the government owns the campus and pays the professor's salary, the teacher becomes a political flunky, no longer free to research, write, and teach according to his best insights and conscience. And when private property is no longer regarded as the sine qua non of a free people, when private property suffers increasing encroachments by government, then church properties, too, becoIne politicized. And, as taxes increase and disposable individual income diminishes, private voluntary fund ing of churches correspondingly de clines and religious programs suffer.

Accept economic controls, and what then becomes of Academic Freedom and Freedom of Worship? In short, freedom is all of a piece; philosophy is not the same as dig ging a ditch, but socialize the ditch digger and the philosopher begins to lose some of his freedom. Freedom of the marketplace and liberties of the mind hang together as one depends on the other. The great philosopher, George Santayana, reflected sadly that, in this life of ours, the things that matter most are at the mercy of the things which matter least. A bullet, a tiny fragment of common lead, can snuff out the life of a great man; a few grains of thyroxin one way or the other can upset the endocrine balance and alter the personality, and so on. But the more we think about this situation and the more instances of this sort we cite, the more obvious it becomes that the things Santayana declared matter least, actually matter a great deal.

They are so tied in with the things which matter most that the things which matter most depend on them! Economic Liberty Paramount In precisely the same way, economic liberty matters a great deal because every liberty of the mind is joined to freedom of the market, economic freedom. There's an old proverb to the effect that whoever controls a man's subsis tence has acquired a leverage over the man himself, which impairs his freedom of thought,· speech, and 292 THE FREEMAN May worship. The man who cannot claim ownership over the things he pro duces has no control over the things on which his life depends; he is a slave, by definition. A man who is not allowed to own becomes the property of whoever controls his means of survival, for ~~a power over a man's support is a power over his will," wrote Hamilton in The Federalist. Economic planning im plies the power to regulate the noneconomic sectors of life.

F. A. Hayek puts it this way in his influential book, The Road to Serf dom: ~~Economic control is not merely control of a sector of human life which can be separated from the rest; it is the control of the means for all our ends."2 In a totalitarian country like Rus sia or China the government acts as a planning board to assign people to jobs and direct the production and distribution of goods. The whole country is, in effect, a gigantic fac tory. In practice, there is bound to be a lot of leakage-as witness the in evitable black market. But to what ever extent the State does control the economic life of the Russian and Chinese people it directs every other aspect of their lives as well. The Masses Content to Drift The masses of people everywhere and at all times are content to drift 2The Road to Serfdom, p. 92. along with the trend; they pose no problem for the planner. But what happens to the rebels in a planned economy? Suppose you wanted to publish an opposition newspaper in a place like Russia or China. You could not go out and simply buy presses, paper, and a building; you'd have to acquire these from the State.

For what purpose? Why, to attack the State! You would have to find workmen willing to risk their necks to work for you; ditto, people to dis tribute; ditto people willing to be caught buying or reading your pa per. A Daily Worker may be pub lished in a capitalist country, but a Daily Capitalist in a communist country is inconceivable! Or take the orator who wants to protest. Where could he find a plat form in a country in which the State owns every stump, street corner, and soap box-not to mention every building? Suppose you didn't like your job, where could you go and what could you do? Your job is pretty bad, but it is one notch better than Siberia or starvation, and these are the alter natives. Strike? This is treason against the State, and you'll be shot. Listen to George Bernard Shaw, de fending Socialism, writing in Labor Monthly, October 1921: ((Compul sory labor, with death as the final penal ty, is the keystone of Socialism." Shaw was a vegetarian because he loved animals; perhaps 1979 THINKING ABOUT ECONOMICS 293 he was a Socialist because he hated people!

Point One: Economic freedom, is important in itself, and it is doubly important because every other free dom is related to it. To have economic freedom does not, of course, mean that you will be assured the income you think you deserve, nor the job to which you think you may be entitled. Economic freedom does not dispense with the necessity for work. Its only promise is that you may have your pick from among many employment oppor tunities, or go into business for yourself, and as a bonus the free economy puts a multiplier onto your efforts to enrich you far beyond what the same effort returns you under any alternative system. Under primitive conditions a fam ily grows its own potatoes, builds its own shelter, shoots its own game, and so on. But we live in a division of labor society where individuals specialize in production and then exchange their surpluses for the surpluses of other people until each person gets what he wants. Most of us work for wages; we produce our specialty, and in return we acquire a pocketful of dollar bills. The dollars are neutral, and thus we can use them to achieve a variety of pur poses. We use some of them to satisfy our needs for food, clothing and shelter; we give some to charity; we take a trip; we pay taxes; we go to the theater, and so on. The money we earn is a means we use to satisfy our various ends.

These interlocking events production, exchange, and consump tion-are market phenomena, and the science of economics emerged, as Mises put it, with ttthe discovery of regularity and sequence in the con catenation of market events." Economics Concerns the Means to Achieve Human Goals Economics has often been called a science of means. The economist, speaking as an economist, does not try to instruct people as to the na ture and destiny of man, nor does he try to guide them toward the proper human goals. The ends or goals peo ple strive for are, for the economist, part of his given data, and his busi ness is merely to set forth the means by which people may attain their preferences most efficiently and economically. Economics, as Mises says, uis a science of the means to be applied for the attainment of ends chosen." And a ttscience never tells a man how he should act; it merely shows how a man must act if he wants to attain definite ends."3 When people are free to spend their money as they please, they will often spend it foolishly-I mean other people, of course! As consum ers they will demand-and produc3Human Action, p. 10.

294 THE FREEMAN May ers will obediently supply-goods that glitter but are shoddy; styles that are tasteless; entertainment that bores; and music that drives us nuts. Nobody ever went broke, H. L. Mencken used to say, by under estimating the taste of the Ameri can public. But this, of course, is only half the story. The quality pro duct is available in every line for those who seek it out, and many do. The choices men make in the economic sector will be based upon their scales of values; the market is simply a faithful mirror of ourselves and our choices. Now, man does not live by bread alone, and no matter how much we might increase the quantity of available material goods, nearly ev eryone will acknowledge that there is more to life than this. Individual human life has a meaning and pur pose which transcends the social or der; man is a creature of destiny. As soon as we begin talking in these terms, of human nature and destiny, we move into the field of religion-the realm of ends. A sci ence of means, like economics, needs to be hitched up with a science of ends, for a means all by itself is meaningless; a means cannot be de fined except in terms of the ends or goals to which it is related. The more abundant life is not to be had in terms of more automobiles, more bathtubs, more telephones, and the like. The truly human life operates in a dimension other than the realm of things and means; this other di mension is the domain of religion using the term in its generic sense.

Or, call it your philosophy of life, if you prefer. If we as a people are squared away in this sector of life-if our value system is in good shape so that we can properly order our priorities then we'll be able to take economic and political problems in our stride. On the other hand, if there is wide spread confusion about what it means to be a human being, so that people are confused as to the proper end and goal of human life-some seeking power, others wealth, fame, publicity, pleasure or chemically in duced euphoria-then our economic and political problems overwhelm us. If economics is a science of means, that is, a tool, we need· some disci pline to help us decide how to use that tool. The ancient promise of ((seek ye first the Kingdom" means that if we put first things first, then second and third things will drop naturally into their proper places. Our actions will then conform to the laws of our being and we'll get the other things we want as a sort of bonus.

Point Two: Once we understand that economics is a science of means, we realize that economics cannot stand alone-it needs to be hooked up with li discipline which is concerned 1979 THINKING ABOUT ECONOMICS 295 with ends, which means religion or philosophy. There is no easy answer to ques tions about the ends for which life should be lived, or the goals proper for creatures of our species, but neither is the human race al together lacking in accumulated wisdom in the matter. Let me offer you a suggestion from Albert Jay Nock. Nock used to speak of ((man's five fundamental social instincts," and he listed them as an instinct of expansion and accumulation, of intellect and knowledge, of religion and morals, of beauty and poetry, of social life and manners. He then makes the charge that our civiliza tion, especially during the past two centuries, has given free reign only to the instinct of expansion and ac cumulation, that is, the urge to make money and exert influence; while the other four instincts have been disallowed and perverted. Our culture is lopsided as a result, an.d some basic drives of human nature are being thwarted.

Let's move to the next stage of our inquiry and ask: What is the distin guishing feature of a science, and in what sense is economics a science? Adam Smith entitled his great work The Wealth ofNations (1776); one of Mises' books is entitled The Free and Prosperous Commonwealth (1927). It is clearly evident that these works deal with national prosperity, with the overall wellbeing of a society, with upgrading the general welfare. These are works of economic science, insofar as they lay down the general rules which a society must follow if it would be prosperous. General Principles The distinguishing feature of a science, any science, is that it deals with the general laws governing the behavior of particular things. Sci ence is not concerned with particu lar things, except insofar as some particular thing exemplifies a gen eral principle. When we concentrate on a particular flower, like Tenny son's ((flower in the crannied wall,"

we move into the realm of art and poetry. Should we want the laws of growth for this species of flower, we consult the science of botany. These books by Smith and Mises lay down the rules a society must conform to if it wants to prosper, they do not tell you as an individual how to make a million in real estate, or a killing in the stock market. This is another subject. The question before the house in economic inquiry is: ((How shall we organize the productive activities of man so that society shall attain maximum prosperity?" And the an swer given by economic science is: ((Remove every impediment that hampers the market and all the obstructions which prevent it from functioning freely. Turn the market 296 THE FREEMAN May loose and the nation's wealth will be maximized." The economist, in short, establishes the rules which must be followed if we want a society to be prosperous; but no conceivable elab oration of these rules tells John Doe that he ought to follow them.

Economic science can prescribe for the general prosperity, but it cannot tell John Doe that he ought to obey that prescription. That job can be performed, if at all, by the moralist. The problem here is to bridge the gap between the economist's pre scription for national prosperity and John Doe's adoption of that prescrip tion as a guide for his personal con duct. A Science of Means Economics is a science of means. It abstains from judgments of value and does not tell John Doe what goals he should choose. If you want to persuade John Doe to follow the rules of economics for maximizing the general prosperity you must argue that he has a moral obligation to conform his actions to certain norms already established in his so ciety by the traditional ethical code. This code extols justice, forbids murder, theft, and covetousness, and culminates in love for God and neighbor. This is old stuff, you say; true, but it's good stuff! It's the very stuff we need when constructing a proper framework for economic ac tivity.

The market economy is not some thing which comes out of nothing. But the market economy emerges naturally whenever certain non economic conditions are right. There is a realm of life outside the realm of economic calculation, on which the market economy depends. Let me cite Ludwig Mises again, quoting this time from his great work, Socialism. Mises speaks of beauty, health, and honor, calling them moral goods. Then he writes: ttFor all such moral goods are goods of the first order. We can value them directly; and therefore have no diffi culty in taking them into account, even though they lie outside the sphere of monetary computation."4 In other words, the market economy is generated and sustained within a larger framework consisting of, among other things, the proper ethi cal ingredients. Point Three: The free market will not function in a society where the sense of moral obligation is weak or absent.

Nearly everything on this planet is scarce. There are built-in short ages of almost everything people want. For this reason we need a science of scarcity, and this is economics-a science of scarcity. Goods which are needed but not scarce, such as air, are not economic goods. Air is a free good. Economics 4Socialism, p. 116.

1979 THINKING ABOUT ECONOMICS 297 deals with things which are in short supply, relative to human deman.d for them, and this includes most ev erything we need and use. Our basic situation on this planet is an unbal anced equation with man and his expanding wants on one side, and the world of scanty resources on the other. Human Wants Insatiable The human being is a creature of insatiable wants, needs, and desires; but he is placed in an environment where there are but limited means for satisfying those wants, needs, and desires. Unlimited wants on one side of this unbalanced equation; limited means for satisfying them on the other. Now, of course, it is true that no man, nor the human race itself, has an unlimited capac ity fo~ food, clothing, shelter, or any other item singly or in combination. But human nature is such that if one want is satisfied the ground is prepared for two others to come for ward with their demands. A condi tion of wantlessness is virtually in conceivable, short of death itself.

.What does all this mean? The up shot of all this is that the economic equation will never come out right. It's insoluble. There's no way oftak ing a creature with unlimited wants and satisfying him by any organiza tion or reorganization of limited re sources. Something's got to give, and economic calculation is the human effort to achieve the maximum ful fillment of our needs while avoiding waste. Let me, at this point, offer you a little parable. This story has to do with a bright boy of five whose mother took him to a toy store and asked the proprietor for a challeng ing toy for the young man. The owner of the shop brought out an elaborate gadget, loaded with lev ers, buttons, coils of wire, and many movable parts. The mother exam ined the complicated piece of ap paratus and shook her head. uJack is a bright boy," she said, ((but I fear that he is not old enough for a toy like this."

((Madam," said the proprietor, Uthis toy has been designed by a panel of psychologists to help the growing child of today adjust to the frustrations of the contemporary world. No matter how he puts it together, it won't come out right." Relative Scarcity Economics is indeed the science of scarcity, but it's important to realize tha t the scarcity we are talking about in this context is relative. In the economic sense, there is scarcity at every level of prosperity. Whenever we drive in city traffic, or look vainly for a place to park, we are hardly in a mood to accept the economic truism that automobiles are scarce. But of course they are, relative to our wishes. Who would 298 THE FREEMAN May not want to replace his present car with a Rolls Royce if it were avail able merely for the asking? These simple facts make hash of the oft repeated remark that uwe have solved the problem of produc tion, and now we must organize politically to redistribute our abun dance." Economic production in volves engineering and technology, in that men, money, and machines are linked to turn out airplanes, or automobiles, or tractors, or type writers, or what not. But resources are limited, and the men, money, and machines we employ to turn out airplanes are not available for the production of automobiles, or trac tors, or anything else. The dollar you spend for a package of cigars is no longer available to you for a hamburger.

The economic equation can never be solved; to the end of time there will be scarce goods and unfulfilled wants. There will never be a mo ment when everyone will have all he wants. uEconomics," in the words of Wilhelm Roepke, Hshould be an anti-ideological, anti-utopian, disil lusioning science,"5 and indeed it is. The candid economist is a man who comes before his fellows with the bad news that the human race will never have enough. Organize and reorganize society from now till doomsday and we'll still be trying to 5A Humane Economy, p. 150. cope with scarcity. This truth does not set well with those who have the perfect solution in hand-and the woods are full of such. No wonder economists are unpopular! Point Four: Things are scarce, and therefore we need a science of scarcity in order to make the best of an awkward situation. The modern mind takes the dogma of inevitable progress for granted. Most of our contemporaries assume that day by day, in every way, we are getting better and bet ter, until some day the human race will achieve perfection. The modern mind is passionately utopian, confi dent that some piece of social machinery, some ideological gadget ry, is about to solve the human equa tion. Minds fixed in such a cast of thought, minds with this outlook on life, are immune to the truths of economics. The conclusions of eco nomics, in their full significance, are incompatible with the facile notions of automatic human progress which are part of the mental baggage of modern man-including many economists!

I'm not denying that there is genuine progress in certain limited areas of our experience. This year's color television set certainly gives a better picture than the first set you bought in, say, 1950. The jet planes of today deli ver you more rapidly and in better shape than did the old prop jobs-although there's some 1979 THINKING ABOUT ECONOMICS 299 truth in the remark of some come·· dian: ((Breakfast in Paris, luncheon in New York, dinner in San Fran·· cisco-baggage in Rio de Janeiro!" Automobiles are more luxurious, we have more conveniences around the house, we are better equipped against illness. There is real prog·· ress in certain branches of science, technology, and mechanics. But are the television programs improving year by year? Are the novels of this year so much better than the novels of last year, or last century? Are the playwrights whose offerings we have seen on Broadway this season that much better than Shakespeare? Has the contemporary outpouring of poetry rendered Homer, Dante, Keats and Browning obsolete? Is the latest book on the H new morality" superior to Aris-· totle's Ethics?

Are the prevailing economic doc·· trines of 1979, reflecting the Samuelson text, sounder than those of a generation ago, nourished on Fairchild, Furness and Buck? Are today's prevailing political doctrines more enlightened than those which elected a Grover Cleveland? Henry Adams in his Education observed that the succession of presidents from Washington, Adams and Jef.. ferson down to Ulysses Grant was enough to disprove the theory of progressive evolution! What would he say if he were able to observe the recent past? The dogma of inevitable progress does not hold.water. Perfect anthills may be within the realm of possibil ity; but a perfect human society, never! Utopia is a delusion. Man is the kind of a creature for whom complete fulfillment is not possible within history; unlike other or ganisms, he has a destiny in eter nity which takes him beyond biolog ical and social life. This is the world outlook of all serious religion and philosophy. The conclusion of economics-that life holds no perfect solutions-is just what a person who embraces this world view would ex pect. Economic truths are as accept able to the religious world view as they are unacceptable to the world view premised on automatic prog ress into an earthly paradise.

Another Dimension Transcends the Natural Order If there is another dimension of being which transcends the natural order-the natural order being com prised of the things we can see and touch, weigh and measure-and if man is really a creature of both orders and at home in both, then he has an excellent chance of establish ing his earthly priorities in the right sequence. He will not put impossible demands on the economic order, nor will he strive for perfection in the political order. Earth is enough, so he'll leave heaven where it belongs, beyond the grave! The effort to build 300 THE FREEMAN May a newfangled heaven on earth in countries like Russia and China has resulted in conditions that re semble an old-fashioned hell. Let us strive for a more moderate goal, let us work for a tolerable society -not a perfect one-and we may make it! Point Five: Economics tells us that the Kingdom of God is beyond history.