Book Reviews

Nairn's own experience in life has given him a unique perspective. He was born in Ireland, and raised on a cattle and sheep ranch in New Zea land. In World War II he enlisted as an RAF fighter pilot, and after the war he gravitated to Asian coun tries where he became fascinated by the ways which peasant societies adopted to cope with the problems of monsoons, drought, and the knowl edge that bureaucratic governments dominated .by city-bred mandari nates could be more terrible than ti gers. In between his Asiatic assign ments he took degrees at Yale University, and he established him self as an expert in agricultural management in Arizona. In his own way Mr. Nairn is an 247 248 THE FREEMAN April intellectual cousin to the French physiocrats. He believes that the ab olition of poverty begins with a proper individual respect for the soil which, in conjunction with the sun and water, is the source of human energy. Technology is important, money-or creditis important, but the human being, faced with the need to outwit the caprices of nature on the land, is, as Nairn puts it, ((the alpha and omega of all that happens to this planet."

Where tradition has been sup portive of free farming, whether by individuals or family units, the land has always yielded plenty. Land doesn't even have to be good to keep people alive if they make the right choices and are willing to work. Nairn, as befits someone who was born in Ireland, knows about the Aran islanders, who have literally created their own soil by mixing kelp and sand and using it to raise calo rie-rich potatoes. Freedomand Abundance In America, where the govern ment desisted from the temptation to impose continuing bureaucratic conditions on individuals who took advantage of the Homestead Act, enough people have made wise de cisions to create an agricultural abundance capable of feeding the world. But where ideologues have held sway, peasant populations have been unable to use native common sense to the end of keeping both themselves and their dependent city cousins alive.

It is the human being as a power seeker that prevents the creation of an agricultural plenty sufficient to sustain even the wildest sort of pop ulation explosion. Wars, provoked by politicians,· are the cause of con tinuing instability-and farming can't ((take off' when the rules of land tenure are in continual jeop ardy. The other big ((inhibitors" in the agricultural equation are ideol ogy, politics and bureaucracy. Cul ture itself can be an inhibitor, but it is not necessarily so where family tradition does not frown on individ ual experiment. The ideologue, supported by poli ticians and bureaucrats, thinks that mankind can be made over. But the peasant, who has to outguess the heavens and deal with nature's re calcitrance, knows better. Mr. Nairn has been a fascinated watcher of events in the two Chinas, the one that is limited to the small island of Taiwan and the bigger mainland territory that was conquered by Mao Tse-tung's Marxist-derived ideol ogy. The Taiwanese Chinese, reject ing ideology, solved their productive problems by deciding to refrain from creating continuing economic bur eaucracies. They used government in the first instance to finance the purchase of land from big landlords, selling it in turn to individual farm1981 WEALTH OF NATIONS IN CRISIS 249 ing families. The landlords were paid off in industrial securities, which satisfied their capitalistic instincts.

Thus the problem of setting up a na tion of free farmers was solved with out the class warfare that has wrecked the polity of the mainland Chinese. The ironical thing is that the mainland Chinese are now coming to recognize the superior wisdom of the Taiwanese. After all the debili tating spasms of the Cultural Revo lution and the Great Leap Forward, which produced only a misery that killed millions, the ideologues in Pe king have been forced to rehabili tate the primacy of the family on the soil. Family teams have been consti tuted as social and marketing units, and some seven per cent of the farmed land has been allocated to individual families for private gar dens. Smothering Productivity In Soviet Russia, Stalin and his successors were forced to permit some private gardening and the peasant retention of a few cows, pigs and chickens in order to put food on the tables of Communist Party func tionaries in the cities. But the per sistence of ideology in Soviet Russia leads to chronic grain shortages and deficient meat supplies. The low productivity of the state farms keeps half the Soviet population chained to the countryside.

In the western world it is the growth of bureaucracy that threat ens to inhibit the agricultural pro ducer. In 1975, so Nairn tells us, more than 8,000 new regulations were added to the U.S. regulatory lexicon. Simple arithmetic shows that no human being can keep up with this output. A dairy cattle feed additive was approved by one agency, but milk drawn from the cattle was condemned by other regulations. Milk was poured down the drains for almost a year until the conflict was resolved in favor of the additive. Luckily, says Nairn, a ttbenign ne glect" of the law has kept American agriculture from coming to a halt. But much damage has been done by the regulators. The development of natural biological pesticides (insect attacking bacteria and hormones) was halted by stupid rules-and so we have had to go back to using chemicals that do have undesirable side effects. Nobel Prize-winner Friedrich Hayek has been quoted as saying that Nairn's book is one of the most important economic treatises of re cent years. It raises a host of fasci nating questions, such as why is only 22 per cent of Africa's arable land farmed? The answers are political, not economic. , 250 THE FREEMAN April THE POLITICIZATION OF SOCIETY Edited by Kenneth S. Templeton, Jr.

(LibertyPress,7440 North Shadeland, Indianapolis, Indiana 46250), 1980 541 pages - $10.00 cloth; $4.50 paper back Reviewedby Tommy W. Rogers THE POLITICIZATIONOF SOCIETYcon sists of fourteen essays, plus an in troduction by Dr. R. M. Hartwell of Oxford, which focus on the central problem of modern society-the growth of the state-and its signifi cance for the individual. Politics, Dr. Hartwell observes, has become the modern religion, with the state being the arbiter of major decisions relat ing to working, living, and believ ing. Some highlights: Felix Morley's essay demonstrates cogently that state power, no matter how well dis guised by seductive words, is in the last analysis always coercive power. Murray Rothbard advises that since the natural inequality of ability and of interest among men makes elites inevitable, the only sensible course is to abandon the chimera of equal ity. The objective would be to permit the rise of what Jefferson described as ((natural aristocracies," but not the artificial aristocracies of coer cive oligarchs who rise to power by invading the liberties of their fel lowmen. In such a free society, all would be equal only in liberty, while diverse and unequal in all other re spects.

In an essay titled ((The New Despotism," Dr. Robert A. Nisbet re minds us that large-scale govern ment, with its passion for equalitarian uniformity, has pre pared our minds for uses of power, for invasions of individual privacy, and for the bureaucratization of spirit. ((Verycommonly in ages when civil rights of one kind are in evi dence-those pertaining to freedom of speech and thought in, say, the atre, press, and forum, with obscen ity and libel laws correspondingly loosened-very real constrictions of individual liberty take place in more vital areas: political organization, voluntary association, property, and the right to hold jobs, for example." Michael Oakeshott outlines the rise and fall of individualism since the Renaissance era; Donald Dozer and Herbert Butterfield warn against official history. An example given by Dozer is ((the so-called China White Paper, prepared under the supervision of the chief of the histor ical division of the state department in Washington and published in Au gust 1949. Its egregious omissions, its inaccurate paraphrases, and its tendentious editorializing expose it to be nothing but a propaganda doc ument."

The final essay is F. A. Hayek's ((Kinds of Order in Society." He ar1981 OTHER BOOKS 251 gues that a civilized society is not the deliberate result of conscious human design; it is a spontaneous order which emerges naturally in consequence of the peaceful actions of individuals. It is therefore not surprising, he concludes, that the consequence of modern democratic legislation is probably the most ir rational and disorderly arrange ment of affairs ever produced by the deliberate decisions of men. Although these essays were writ ten independently and at different times, they share common themes of focus on the origin of the state, why modern society has become politi cized' and the consequences of the growth of the state. i FUGITIVE ESSAYS: Selected Writings of Frank Chodorov Compiled,edited, and with an introduction by CharlesH. Hamilton (LibertyPress, 7440 North Shadeland, Indianapolis,Indiana46250), 1980 416 pages- $9.00cloth; $4.00 paperback Reviewed by Edmund A. Opitz I never sat in a class under Frank Chodorov, but he was nevertheless one of my more memorable teachers.

It began in 1947 with the Nock Me morial issue of analysis, given to me by a friend who knew of my interest in A.J .N. I subscribed to the paper, a monthly four page broadsheet written, edited, and published by one Frank' Chodorov. Each issue con tained a lead essay in prose as cere bral as Arnold's, but more visceral, pungent commentary on passing po litical foibles, a book review or two, occasional letters to the editor. I was hooked. Frank was a man with a cause, as dedicated as any prophet of old to the ideal of individual liberty and the free economy. Reading and ex perience had stocked his mind, teaching and debate had honed his rhetorical skills,his prose was pol ished, and his go-for-broke commit ment to his beliefs energized his words. He called himself an Individual ist, for every person in his eyes pos sessed a supreme worth no group could diminish. ttOne is a crowd," he would say, and thus he entitled one of his books. He appealed to all kinds of audiences, enjoying especially the give and take he had with students.

Speaking to clergymen, he came on like an Old Testament prophet. He charmed them by his salty account of Joseph as the Pharaoh's secretary of agriculture; he gave them a les son in political philosophy by retell ing the story of Saul's anointing as king of Israel. We shall not see his like again. It is too late to meet Frank in per son, but the reader will get to know 252 THE FREEMAN April the man in the pages of this book. The editor has selected wisely and virtually every theme of Chodorov's work is represented; God and natu ral law, the economic origin of the state, the erosion of social power by political power, the importance of private education, the evils of the progressive income tax, the insanity of war, the idiocy of socialism, the fundamentals of economics, the ex hilaration of joining the fight for freedom. And there is a· fine intro ductory essay by Mr. Hamilton. Chodorov reads well and, as I will attest, he rereads well. This collec tion will be welcomed by Frank's old friends, and I predict it will make new ones. . , THE COUNTER-REVOLUTIONOF SCIENCE:STUDIES ON THE ABUSE OF·REASON by F. A. Hayek (LibertyPress, 7440 North Shadeland, Indianapolis, Indiana 46250), 1979 415 pages- $9.00cloth;$4.00 paperback Reviewed by Bettina Bien Greaves THE late professor Ludwig von Mises, leading spokesman for many years of the UAustrian School" of econom ics, used to emphasize the impor tance of analyzing seriously any economic ~~fashion" or ~(fad," no mat ter how unrealistic or utopian it might appear. Mises' fellow-coun tryman, economist and personal friend, Nobel Prize Laureate F. A.

Hayek, has carefully analyzed one of the most ufashionable" and yet one of the most destructive doctrines of modern economic thought-the idea that the methods. of the physi cal sciences are applicable also to the study of society. In his The Counter-Revolution of Science, first published in 1952 and now reissued in a beautifully printed and bound new edition, Hayek care fully dissects and systematically analyzes positivism and histori cism-two sociological doctrines which helped provide the basis for modern socialistic theories. This cri tique is profound and well worth the while of anyone seriously interested in the methodology of the social sci ences and the history of economic thought. ManySocialScientists Turn Reason Upside Down Hayek's concern is with the way reason has been turned upside down by many social scientists. The pred ecessors of modern socialism, whose ideas Hayek criticizes, were writing in the early 19th century. Scholars had by then pretty well freed them selves from the restrictions and ta boos of mythology and medieval re ligious superstitions. Knowledge 1981 OTHER BOOKS 253 about the physical world. was being expanded by leaps and bounds. The Hindustrial revolution," with its many new inventions, was improv ing production, communication and transportation. With goods and ser vices more readily available, living conditions were improving notice ably for everyone, especially the ((common man" and the poor. More babies were surviving and people were living .longer and healthier lives. The increasing population fur nished eloquent testimony to the ad vances that could be made by apply ing the methods of the physical sciences to mechanics and technol ogy. It is not very surprising, there fore, that it became fashionable to try to adapt the physical science methods to almost every discipline.

However, they are completely inap propriate to the study of human ac tion and society. Explaining why this is the case is the subject of Hayek's book. Hayek points out that all science starts with classification. In the physical sciences, objects are classi fled by unchanging characteristics that are both measurable and dis tinguishable by controlled and ob jective tests. But not in the social sciences. The social sciences deal with the actions of men. And men are not automatons. Men think. They have different values, varied goals and many purposes. Men choose among alternatives. They act purposively. Their actions cannot be classified without reference to their subjective (personal) ideas, values and goals. The results of their actions cannot be quantified, measured or predicted in advance. Moreover, changes are always taking place. The ideas, val ues, aims, choices and actions of men vary from time to time, depending on actual conditions and the knowl edge available to them.

IndividualsIgnored Modem socialists, and their intel lectual predecessors whose doctrines Hayek examines, sought to analyze and plan society as a whole. In doing this, they ignored individuals and their ideas, values and purposes. And they also overlooked the inevitabil ity of change. Yet many professors and authors, whose teachings and books are widely respected today, are still influenced. by the fallacies Hayek criticizes, which stem from the belief that society may be ana lyzed and planned by using the methods of the. physical sciences observation, experimentation and measurement. Hayek devotes more than half of this book to several Iittle known Frenchmen who originated and ad vocated this theory. He considers their ideas influential in the intel lectual development of Karl Marx and, thus, responsible for practically all varieties of modern socialism. He examines, in some detail, this par254 THE FREEMAN April ticular phase in the history of eco nomic thought because he hopes that it may uhelp us become aware of much that governs our own thought without our explicitly knowing it . . . and perhaps assist us to purge our minds from influences which se riously mislead us on questions of our own day."

In addition to analyzing the errors in the methods of those· whose doc trines led to modern forms of social ism, Hayek also explains the origin of social institutions such as the market, prices, money, language, etc. Hayek points out that society itself, which provides many benefits to its individual members is the un planned outcome of the actions of many individuals. Their separate, independent, purposive and volun tary ideas and actions led uninten tionally to its formation. And changes are now going on that will be responsible for society's evolution into something very different in the future. Those who seek to reform so ciety and cope with social problems must learn to appreciate the role of freedom in the evolution of useful, if unplanned, social institutions. This book should help readers rec ognize the impossibility of success ful central planning and of trying to create social institutions by design.

It will also explain to serious schol ars the important distinctions be tween the methodologies of the physical and social sciences. , SOCIAL SECURITY: THE INHERENT CONTRADICTION by Peter J. Ferrara (CATO Institute, 747 Front Street, San Francisco, CA 94111),1980 484 pages - $20.00 Reviewed by Tommy W. Rogers SOCIALSECURITYabsorbs one-fourth of the federal budget. Its sacrosanct nature and mythology makes it vir tually immune from serious criti cism. It has long been misrepre sented and deceptively described by welfarist politicians and liberals to create a false impression among vot ers about the shortcomings of the program. As Milton Friedman has expressed it, social· security is the only institution that could take a tax structure no one would support on its own and a benefit structure no one would support on its own, slap them together, and emerge with a combined tax-benefit structure that is often highlighted as the show piece of America's welfare state!

Nevertheless, the glitter has been penetrated somewhat by the reali ties which have become apparent in recent years. Social Security is a pay-as-you-go system, not a system whereby (Ccontributions" are saved or invested~the government's as sertion that ((contributions" are in vested in interest-bearing securities means only that the government 1981 OTHER BOOKS 255 writes itself a promise to tax future production to cover benefits as they become due. A pay-as-you-go scheme in its initial phase will run huge sur pluses because there are many cur rent taxpayers but few or no current beneficiaries entitled to payments. Meeting the obligations of the pro gram is not a cause for concern be cause there are few obligations to be met. The system appears to be fi nancially sound. However, after the first generation of beneficiaries, the program builds up huge liabilities which require accelerated extrac tions from current production. The focus of concern is then switched from paying out surplus benefits to the raising of taxes to meet the ever accelerating benefit obligations.

In 1977 Congress passed one of the largest tax increases in U.S. his tory to save the system from bank ruptcy. Social Security taxes amounting to about sixty dollars an nually for the first fifteen years of the program-had turned into a monster gobbling up $3,000-$4,000 dollars yearly with escalations al ready built into the structure. To pay benefits currently being prom ised, tax rates will have to be raised to 25-33% of the taxable payroll, contrasted to 12% today. The rate of return from a pay-as you-go system comes not from in creased output but from· increased taxes. Social Security is sometimes described by its proponents as a ~~compact between generations." Here is what really happens. When a so cial insurance plan is first imposed, the current retired generation makes a deal to share a portion of the wealth produced by the current working generation, which saddles the next working generation with the re sponsibility for paying the resulting indebtedness. When the next work ing generation becomes the current working generation, they face a huge debt owed to the now current retired generation. Since they have to make good on these liabilities regardless of whether they continue in the pro gram, they decide to keep the pro gram and vote to tax the next gen eration even more to finance ever greater benefits to themselves. Fu ture generations have no way to prevent this ~~compact between gen erations" being imposed upon them.

As Ferrara observes, it is not sur prising that the decision to tax fu ture generations to provide benefits to current generations· can easily lead to the imposition ofa program that makes all future generations worse off than it makes the current gener ation better off! The social security compact be tween generations is, Ferrara writes, corrupted by self-dealing wherein the first generations take unfair advan tage of the generations to come. ~~Under traditional principles of eq uity, therefore, the social security 256 THE FREEMAN compact between the generations is unfair, immoral, fraudulent, and voidable." As the number of retirees increases in the future, the strain to meet the obligations will become enormous, and could provoke seri 0us taxpayer resentment if not sup port for programs of euthanasia. It is hardly questionable that the time is ripe for significant reform of the social security program. Ferrara advocates that the entire insurance portion of the social security pro gram be turned over to the private sector. Individuals would be allowed to provide for their old age and other contingencies by investing in pri vate insurance, savings, and pension plans with the funds they would have paid in social security taxes.

The stark reality of the current pro gram, the author contends, is that it ~~is simply not working" and that, as the public has already been warned in the words of the Wall Street J our nal, ~~The social security program will return like Banquo's ghost until really serious and courageous ef forts are made to solve it." There is no reason to believe that social se curity, with the persistence of the Egyptian sphinx, must remain in its present form for all time to come. It can and must be changed in manner which is consistent with greater in dividual choice and autonomy. @ HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $3.00 Order from: THE FOUNDATION FOR ECONOMIC EDUCATION, INC. IRVINGTON-ON-HUDSON, NEW YORK 10533 the Freeman VOL. 31, NO.5 • MAY 1981 Tensions in Poland Hans F. Sennholz 259 Of what significance to us is the revolt of Polish workers against Communist domination? Natural Law and the American Tradition Davis E. Keeler 272 The rights of individuals vs. the supremacy of Parliament.