The Case for Economic Freedom; B. Rogge

I readily admit that I do not ex pect to see such an economy in my lifetime or in anyone's lifetime in the infinity of years ahead of us. I present it rather as the ideal we should strive for and should be dis appointed in never fully attaining. Where do we find the most pow erful an.d persuasive case for eco nomic freedom? I don't know; prob ably it hasn't been prepared as yet. Certainly it is unlikely that the case I present is the definitive one. How ever, it is the one that is persuasive with me, that leads me to my own deep commitment to the free mar85 86 THE FREEMAN February Benjamin Arnold Rogge, 1920-1980 WE miss the presence of this most eloquent spokesman and prac titioner of freedom but give thanks for the legacy of his ideals and example. Dr. Rogge had been at Wabash College in Crawfordsville, Indi ana since 1949, serving variously as teacher of economics, aca demic dean, director of the Wabash Institute of Personal Devel opment, and Distinguished Professor of Political Economy.

He was in international demand as a speaker and the author of numerous articles. Can Capitalism Survive? is a collection of his speeches and essays, published in 1979 by Liberty Press of Indi anapolis. Ben Rogge became a Trustee of The Foundation for Economic Education in 1958 and was Chairman of the Board from 1960 through 1962. He often lectured at FEE seminars. One of his fa vorite topics, "The Case for Economic Freedom," appeared in The Freeman in 1963 and is here reprinted as appropriate testament to his gUiding ideals. keto I present it as grist for your own mill and not as the divinely inspired last word on the subject. The Moral Case You will note as I develop my case that I attach relatively little impor tance to the demonstrated efficiency of the free-market system in pro moting economic growth, in raising levels of living. In fact, my central thesis is that the most important part of the case for economic freedom is not its vaunted efficiency as a system for organizing resources, not its dra matic success in promoting economic growth, but rather its consistency with certain fundamental moral princi ples of life itself I say, Uthe most important part of the case" for two reasons. First, the significance I attach to those moral principles would lead me to prefer the free enterprise system even if it were demonstrably less efficient than alternative systems, even if it were to produce a slower rate of economic growth than systems of central di rection and control. Second, the great mass of the people of any country is never really going to understand the purely economic workings of any economic system, be it free enter prise or socialism. Hence, most peo1981 THE CASE FORECONOMIC FREEDOM 87 pIe are going to judge an economic system by its consistency with their moral principles rather than by its purely scientific operating charac teristics. If economic freedom sur vives in the years ahead, it will be only because a majority of the peo ple accept its basic morality. The success of the system in bringing ever higher levels of living will be no more persuasive in the future than it has been in the past. Let me illustrate.

The doctrine of man held in gen eral in nineteenth-century America argued that each man was ulti mately responsible for what hap pened to him, for his own salvation, both in the here and now and in the hereafter. Thus, whether a man prospered or failed in economic life was· each man's individual respon sibility: each man had a right to the rewards for success and, in the same sense, deserved the punishment that came with failure. It followed as well that it is explicitly immoral to use the power of government to take from one man to give to another, to legalize Robin Hood. This doctrine of man found its economic counter part in the system of free enterprise and,hence, the system of free enter prise was accepted and respected by many who had no real understand ing of its subtleties as a technique for organizing resource use. As this doctrine of man was re placed by one which made of man a helpless victim of his subconscious and his environment-responsible for neither his successes nor his fail ures-the free enterprise system came to be rejected by many who still had no real understanding of its actual operating characteristics.

Basic Values Considered Inasmuch as my own value sys tems and my own assumptions about human beings· are so important to the case, I want to sketch them for you. To begin with, the central value in my choice system is individual freedom. By freedom I mean exactly and only freedom from coercion by others. I do not mean the four free doms of President Roosevelt, which are not freedoms at all, but only rhetorical devices to persuade peo ple to give up some of their true freedom. In the Rogge system, each man must be free to do what is his duty as he defines it, so long as he does not use force against another. Next, I believe each man to be ul timately responsible (or what hap pens to him. True, he is influenced by his heredity, his environment, his subconscious, and by pure chance. But I insist that precisely what makes man man is his ability to rise above these influences, to change and determine his· own destiny. If this be true, then it follows that each of us is terribly and inevitably and forever responsible for every88 THE FREEMAN February thing he does. The answer to the question, ((Who's to blame?" is al ways, ((Mea culpa, I am."

I believe as well that man is im perfect, now and forever. He is im perfect in his knowledge of the ulti mate purpose of his life, imperfect in his choice of means to serve those purposes he does select, imperfect in the integrity with which he deals with himself and those around him, imperfect in his capacity to love his fellow man. If man is imperfect, then all of his constructs must be imper fect, and the choice is always among degrees and kinds of imperfection. The New Jerusalem is never going to be realized here on earth, and the man who insists that it is, is always lost unto freedom. Moreover, man's imperfections are intensified as he acquires the power to coerce others; ((powertends to cor rupt and absolute power corrupts absolutely." This completes the listing of my assumptions, and it should be clear that the list does not constitute a to tal philosophy of life. Most impor tantly, it does not define what I be lieve the free man's duty to be, or more specifically, what I believe my own duty to be and the source of the charge to me. However important these questions, I do not consider them relevant to the choice of an economic system.

Here, then, are two sections of the case for economic freedom as I would construct it. The first section pre sents economic freedom as an ulti mate end in itself and the second presents it as a means to the pres ervation of the noneconomic ele ments in total freedom. Individual Freedom of Choice The first section ofthe case is made in the stating of it, if one accepts the fundamental premise. Major premise: Each man should be free to take whatever action he wishes, so long as he does not use force or fraud against another. Minor premise: All economic be havior is ((action"as identified above. Conclusion: Each man should be free to take whatever action he wishes in his economic behavior, so long as he does not use force or fraud against another. In other words, economic freedom is a part of total freedom; if freedom is an end in itself, as our society has traditionally asserted it to be, then economic freedom is an end in itself, to be valued for itself alone and not just for its instrumental value in serving other goals.

Ifthis thesis is accepted, then there must always exist a tremendous presumption against each and every proposal for governmental limita tion of economic freedom. What is wrong with a state system of com pulsory social security? It denies to the individual his freedom, his right to choose what he will do with his 1981 THE CASE FOR ECONOMIC FREEDOM 89 own money resources. What is wrong with a governmentally enforced minimum wage? It denies to the em ployer and the employee their indi vidual freedoms, their individual rights to enter into voluntary rela tionships not involving force or fraud. What is wrong with a tariff or an import quota? It denies to the indi vidual consumer his right to buy what he wishes, wherever he wishes. It is breathtaking to think what this simple approach would do to the apparatus of state control at all levels of government. Strike from the books all legislation that denies economic freedom to any individual, and three-fourths of all the activi ties now undertaken by government would be eliminated.

I am no dreamer of empty dreams, and I do not expect that the day will ever come when this principle of economic freedom as a part of total freedom will be fully accepted and applied. Yet I am convinced that un less this principle is given some standing, unless those who examine proposals for new regulation of the individual by government look on this loss of freedom as a ((cost"of the proposed legislation, the chances of free enterprise surviving are small indeed. The would-be controller can always find reasons why it might seem expedient to control the indi vidual; unless slowed down by some general feeling that it is immoral to do so, he will usually have his way. NoneconomicFreedoms So much for the first section of the case. Now for the second. The major premise here is the same, that is, the premise of the rightness of free dom. Here, though, the concern is with the noneconomic elements in total freedom-with freedom of speech, of religion, of the press, of personal behavior. My thesis is that these freedoms are not likely to be long preserved in a society that has denied economic freedom to its in dividual members.

Before developing this thesis, I wish to comment briefly on the im portance of these noneconomic free doms. I do so because we who are known as conservatives have often given too little attention to these freedoms or have even played a sig nificant role in reducing them. The modern liberal is usually inconsis tent in that he defends man's non economicfreedoms, but is often quite indifferent to his economic freedom. The modern conservative is often in consistent in that he defends man's economic freedom but is indifferent to his noneconomic freedoms. Why are there so few conservatives in the struggles over censorship, over de nials of equality before the law for people of all races, over blue laws, and so on? Why do we let the mod ern liberals dominate an organiza tion such as the American Civil Lib erties Union? The general purposes of this organization are completely 90 THE FREEMAN February consistent with, even necessary to, the truly free society.

Particularly in times of stress such as these, we must fight against the general pressure to curb the rights of individual human beings, even those whose ideas and actions we detest. Now is the time to remember the example of men such as David Ricardo, the London banker and economist of the· classical free-mar ket school in the first part of the last century. Born a Jew, married to a Quaker, he devoted some part of his energy and his fortune to eliminat ing the legal discrimination against Catholics in the England of his day. It is precisely because I believe these noneconomic freedoms to be so important that I believe economic freedom to be so important. The ar gument here could be drawn from the wisdom of the Bible and the statement that ttwhere a man's treasure is, there will his heart be also." Give me control over a man's economic actions, and hence over his means of survival, and except for a few occasional heroes, I'll promise to deliver to you men who think and write and behave as I want them to.

Freedom of the Press The case is not difficult to make for the fully controlled economy, the true socialistic state. Milton Fried man, professor of economics at the University of Chicago, in his book, Capitalism and Freedom, takes the case of a socialist society that has a sincere desire to preserve the free dom of the press. The first problem would be that there would be no pri vate capital, no private fortunes that could be used to subsidize an anti socialist, procapitalist press. Hence, the socialist state would have to do it. However, the men and women undertaking the task would have to be released from the socialist labor pool and would have to be assured that they would never be discrimi nated against in employment oppor tunities in the socialist apparatus if they were to wish to change occupa tions later. Then these procapitalist members of the socialist society would have to go to other function aries of the state to secure the build ings, the presses, the paper, the skilled and unskilled workmen, and all the other components of a work ing newspaper. Then they would face the problem of finding distribution outlets, either creating their own (a frightening task) or using the same ones used by the official socialist propaganda organs. Finally, where would they find readers? How many men and women would risk showing up at their state-controlled jobs car rying copies of the Daily Capitalist?

There are so many unlikely steps in this process that the assumption that true freedom of the press could be maintained in a socialist society is so unrealistic as to be ludicrous.

1981 THE CASE FOR E:CONOMIC FREEDOM 91 Partly Socialized Of course, we are not facing as yet a fully socialized America, but only one in which there is significant government intervention in a still predominantly private enterprise economy.Do these interventions POSE~ any threat to the noneconomic free·· doms? I believe they do. First of all, the total of coerciVE~ devices now available to anyadmin istration of either party at the na tional level is so great that truE~ freedom to work actively against thE~ current administration (whatever it might be) is seriously reduced. For example, farmers have become cap tives of the government in such a way that they are forced into politi cal alignments that seriously reduc.~ their ability to protest actions they do not approve. The new trade bill, though right in the principle of free trade, gives to the President enor mous power to reward his friends and punish his critics.

Second, the form of these inter ventions is such as to threaten seri ously one of the real cornerstones of all freedoms-equality before thE~ law. For example, farmers and tradE~ union members are now encouraged and assisted in doing precisely that for which businessmen are sent to jail (Le., acting collusively to ma nipulate prices). The blindfolded Goddess of Justice has been encour aged to peek and she now says, with the jurists of the ancient regime, ((First tell me who you are and then I'll tell you what your rights are." A society in which such gross inequal ities before the law are encouraged in economic life is not likely to be one which preserves the principle of equality before the law generally. We could go on to many specific illustrations. For example, the gov ernment uses its legislated monop oly to carry the mails as a means for imposing a censorship on what peo ple send to each other in a com pletely voluntary relationship. A man and a woman who exchange obscene letters may not be making productive use oftheir time, but their correspondence is certainly no busi ness of the government. Or to take an example from another country, Winston Churchill, as a critic of the Chamberlain government, was not permitted one minute of radio time on the government-owned and mo nopolized broadcasting system in the period from 1936 to the outbreak of the war he was predicting in 1939.

Each Step of Intervention Leads to Another Every act of intervention in the economic life of its citizens gives to a government additional power to shape and control the attitudes, the writings, the behavior of those citi zens. Every such act is another break in the dike protecting the integrity of the individual as a free man or woman.

92 THE FREEMAN February The free market protects the in tegrity of the individual by provid ing him with a host of decentralized alternatives rather than with one centralized opportunity. As Fried man has reminded us, even the known communist can readily find employment in capitalist America. The free market is politics-blind, re ligion-blind, and, yes, race-blind. Do you ask about the politics or the re ligion of the farmer who grew the potatoes you buy at the store? Do you ask about the color of the hands that helped produce the steel you , use in your office building? South Africa provides an interest ing example of this. The South Af ricans, of course, provide a shocking picture of racial bigotry, shocking even to a country that has its own tragic race problems. South African law clearly separates the whites from the nonwhites. Orientals have tra ditionally been classed as non whites, but South African trade with Japan has become so important in the postwar period that the govern ment of South Africa has declared the Japanese visitors to South Af rica to be officially and legally ((white." The free market is one of the really great forces making for tolerance and understanding among human beings. The controlled mar ket gives man rein to express all those blind prejudices and intoler ant beliefs to which he is forever subject.

Impersonality of the Market To look at this another way: The free market is often said to be im personal, and indeed it is. Rather than a vice, this is one of its great virtues. Because the relations are substantially impersonal, they are not usually marked by bitter per sonal conflict. It is precisely because the labor union attempts to take the employment relationship out of the marketplace that bitter personal conflict so often marks union-man agement relationships. The in tensely personal relationship is one that is civilized only by love, as be tween man and wife, and within the family. But man's capacity for love is severely limited by his imperfect nature. Far better, then, to econo mize on love, to reserve our depen dence on it to those relationships where even our imperfect natures are capable of sustained action based on love. Far better, then, to build our economic system on largely im personal relationships and on man's self-interest-a motive power with which he is generously supplied. One need only study the history of such utopian experiments as our Indi ana's Harmony and New Harmony to realize that a social structure which ignores man's essential na ture results in the dissension, con flict, disintegration,' and dissolution of Robert Owen's New Harmony or the absolutism of Father Rapp's Harmony.

1981 THE CASE FOR E:CONOMIC FREEDOM 93 The ttvulgar calculus of the mar, ketplace," as its critics have de, scribed it, is still the most humanE~ way man has yet found for solvin~~ those questions of economic alloca tion and division which are ubiqui tous in human society. By what must seem fortunate coincidence, it is also the system most likely to producE~ the affluent society, to move man kind above an existence in which life is mean, nasty, brutish, and short. But, of course, this is not just coincidence. Under economic free, dom, only man's destructive in stincts are curbed by law. All of hi8 creative instincts are released and freed to work those wonders of which free men are capable. In the con trolled society only the creativity of the few at the top can be utilized, and much of this creativity must bE~ expended in maintaining control and in fending off rivals. In the free so ciety, the creativity of every man can be expressed-and surely by nOVl7 we know that we cannot predict who will prove to be the most creative.

You may be puzzled, then, that I do not rest my case for economi4~ freedom on its productive achieve ments; on its buildings, its houses, its automobiles, its bathtubs, its wonder drugs, its television sets, its sirloin steaks and green salads with Roquefort dressings. I neither feel within myself nor do I hear in the testimony of others any evidence that man's search for purpose, his long ing for fulfillment, is in any signifi cant way relieved by these accom plishments. I do not scorn these accomplishments nor do I worship them. Nor do I find in the lives of those who do worship them any evi dence that they find ultimate peace and justification in their idols. I rest my case rather on the con sistency of the free market with man's essential nature, on the basic morality of its system of rewards and punishments, on the protection it gives to the integrity of the indi vidual. The free market cannot produce the perfect world, but it can create an environment in which each im perfect man may conduct his life long search for purpose in his own way, in which each day he may or der his life according to his own im perfect vision of his destiny, suffer ing both the agonies of his errors and the sweet pleasure of his suc cesses. This freedom is what it means to be a man; this is the God-head, if you wish.

I give you, then, the free market, the expression of man's economic freedom and the guarantor of all his other freedoms. i A common caricature ofthe "very rich." MILLIONAIRES are proliferating in Tennessee, and that is both good news and bad news. In 1979, according to the U. S. Trust Company of New York and its annual wealth survey, 11,705 mil lionaires resided in Tennessee. As of September 1, 1980 the survey has the number of millionaires bound ing up to 13,230, giving Tennessee more than its pro rata share of the 574,342 millionaires in the nation. In terms of millionaire density the number of millionaire residents per thousand of state population Tennessee has a 2.95 total-practi cally three millionaires for every thousand Tennesseans-man, woman and child. Dr. Peterson 18 director of the center for Economic Education and the Scott L. Probasco, Jr., Professor of Free Enterprise at the University of Tennessee at Chattanooga.