Book Reviews

What was important about all this was that it set up a hundred excuses for an Adolf Hitler to build his case against Versailles. Senator Henry Cabot Lodge the Elder could not foresee Hitler. And he knew little about economics. But he knew that the American people had not really been weaned away from a traditional isola tionism tempered by the continentalism of the Monroe Doctrine. It did not bother him that, when Wilson left Europe, we were tentatively committed to an active role throughout the world. Our troops were policing the eastern shores of the Adriatic . We had regiments on the Rhine. We had subsidized equipment for the White Russian armies. Herbert Hoover was committed to feeding east central Europe, and Washington had supplied the credits to move the food. All of this compounded the tre mendous letdown in Europe when Lodge pre vailed upon his fellow Republicans to reject the League of Nations and to refuse to sign the German peace.

It could be accounted a strange thing that Wilson, who had written on constitutional gov ernment in a federated system, missed the point that in a world of differing local traditions and languages, to say nothing of religious commit ments, federalism is the only possible free uni fying force. Clarence Streit, the New York Times correspondent at Geneva, the home of 117 the League, caught on to this in the twenties. The contrast between the League and its host government of Switzerland was too striking to be ignored. Beyond the question of a feder alism that might have provided the Paris peacemakers with a better model for the Western democracies, Wilson underestimated the portent of Lenin's Bolsheviks. A free Ger many was needed as a bulwark against the spread of Leninist doctrine. But Wilson was right on the central issue: a vindictive peace would prove to be no peace at all. The peacemakers of 1815 did not hold a defeated France responsible for Napoleon's wars, with the result that Europe was able to live for 99 years without a major war. The his tory of the 19th century might have been re peated if there had been more willingness on the part of Lloyd George and Clemenceau to let Social Democratic Germany live. It was the German inflation forced on a truncated country by wholly unrealistic reparations that prepared the soil for the Nazis.

The organization of the United Nations, un fortunately, doesn't seem to be much better than the League. But at least the U. S., in making peace in 1945, had benefited by the lesson of Versailles. In letting Germany and Japan live without crippling encumbrances, the era of civil wars in the West was brought to a close. The Soviet face-off is another matter. 0 ANTITRUST POLICY: THE CASE FOR REPEAL by D. T. Armentano Cato Institute, Washington, D.C. • 1986· 78 pp. •$7.95 paperback Reviewed by Sylvester Petro T hiS little book covers a lot of ground, thinly, of course, for there is only so much you can do in 78 pages, but well enough to kill most of the weeds parading under the name "antitrust theory." Professor Armentano takes up one by one the main con tentions of the "trustbusters" and shows them all to be mythic and wrongheaded. Since the antitrust laws thus serve no useful purpose, but Dr. Petro is the author of The Labor Policy of the Free Society and numerous other scholarly books and articles.

118 THE FREEMAN. MARCH 1987 on the contrary have done considerable eco nomic and ideological harm, he concludes that they all should be repealed. Armentano places the antitrust idea among the other accusations of "market failure" which have premised virtually all the noxious interventionist legislation of the last hundred years, beginning with the Interstate Commerce Act. This is an important perception, but it is too bad that he has not rounded out the anal ysis. He might have gone on, if only briefly, to spell out the deeper truth that ultimately dooms the "market failure" idea: Human nature and the structure of the universe are such that free markets and personal freedom, properly under stood, are optimizing institutions. Values being subjective in origin and char acter, however widely shared, there is no way that limiting personal freedom, as all interven tionist legislation seeks to do, can avoid re ducing human welfare. Policies designed to correct alleged "market failures" thus are themselves bound to fail-from the point of view of the general welfare. Armentano more than likely shares these convictions, for he says that' 'because individual costs and benefits are ultimately subjective and personal, they cannot be added up or subtracted to calculate net social efficiency or welfare. " (p. 71) However, his demonstrations of the errors of antitrust policy are loaded with the language and the overtones of the positivist "empiri cism" of the so-called "Chicago School,"

which seems to have replaced Keynesianism as the obligatory dress length in that most fashion conscious of all occupations, university teaching. Armentano is better than some. He does cite Hayek, Kirzner, and even Rothbard once or twice, But there is no citation to Mises, a serious omission, since the monopoly anal ysis in Human Action is the most seminal cri tique of "antitrust theory" in the literature. And for Armentano, judging from his refer ences, the "Chicagoans," Bork, Posner, Stigler, and Demsetz, are the authorities to reckon with. Surely they are worthy writers and thinkers, but it is unsound scholarship and poor form to grant them precedence over Mises. We certainly agree with Armentano that the anti trust policies are noxious and that they should be abandoned. But it is important to the future of liberty that the grounds be established as clearly as possible. And this can be done only in the manner advanced by Mises, the Austrian a priori.

Antitrust theory holds with Karl Marx that an unhampered economy produces monopoly con centrations of "economic power" which de stroy competition, exploit labor and con sumers, and thus certainly also fail to allocate resources optimally. Mises has shown that there is no way to prove or disprove this propo sition empirically. Even though the historical evidence has suggested time and again that the Marxian predictions are wrong, socialism springs up anew time and again, and it does so because people continue to believe that the lib erty of entrepreneurs is not only dispensable, but even dangerous and noxious. It is the same with such interventionism as the antitrust poli cies embody. UntiI freedom of economic ac tion-human action-is regarded as the essen tial human liberty, the optimal method of social organization, there never will be an end of ef forts to correct "market failures." But only logical deduction from self-evident premises, together with a steady barrage of uncompro mising exposition of the truths thus derived, can hope to achieve and to spread the necessary understanding. Statistics are inadequate, both epistemologically and rhetorically. Some day, perhaps, students of freedom will count the title of Mises' great work, Human Action, as the ul timate excellence of this ~ in the current idiom, it says it all.

Armentano's refutation of antitrust theory is at bottom logical. For example, he says that "by definition, a free market is always compet itive and tends to eliminate inefficiency" (p. 59). But he is given to the funny "empiricist" jargon of such statements as "the only objec tive ex post test of the correctness of entrepre neurial decisions is the market process itself." I suppose that if one wants to belong to the club of current academic economists one must talk like that, but such expressions as "ex post" and "ex ante" are not helpful. They also grate on the nerves. Finally, they really do not con vince anyone of anything important. . . . For all that, this is a good book, with sound and good ideas on every page, and readable for the most part, too. 0 A BASIC HISTORY OF THE UNITED STATES (five volumes) by Clarence B. Carson. I. The Colonial Experience, 1607-1774 (1984) 184 pages II. The Beginning of the Republic, 1775-1825 (1984) 262 pages III. The Sections and the Civil War, 1826-1877 (1985) 224 pages IV. The Growth of America, 1878-1928 (1985) 300 pages v. The Welfare State, 1929-1985 (1986) 346 pages Published by the American Textbook Committee, P.O. Box 8, Wadley, Alabama 36276 • Paperback $9.00 per volume; $32.50 per set. • Also available from The Foundation for Economic Education, Irvington-on-Hudson, New York 10533.

Reviewed by Bettina Bien Greaves T hese five volumes are probably the best available survey history of the United States. They cover almost four cen turies-from the arrival of the first European settlers through Ronald Reagan's first adminis tration. Dr. Carson, frequent Freeman author and former college history professor, has formed a richly woven tapestry of events and the ideas that spawned them. For Carson, history is not merely a collection of facts and dates, an account of explorations, settlements, westward expansion, wars, Presi dents, and elections. History is the product· of the actions of countless individuals, each under the influence of certain ideas. And Carson ex plores those ideas, ideologies, and "isms." He shows how they were responsible for the settle ment of this continent, the struggle for freedom, the westward expansion, the con struction of schools, churches, factories, and the founding of new religious denominations.

He explains why our ancestors fought for their beliefs, and strove to create a government, lim ited in scope, with checks and balances, that would not have the power to oppress the people. As the late Ludwig von Mises wrote, "The genuine history of mankind is the history of ideas. . . . Ideas engender social institutions, political changes, technological methods of production, and all that is called economic conOTHER BOOKS 119 ditions .... New ideas ... are the response offered by a man's mind to the ideas developed by his predecessors." (Theory and History, p. 187) This is Carson's approach. He explores the ideas from which events spring, explains their complex interrelationships, and makes them understandable. He discusses at length the 19th-century authors, romanticists, utopians, and religious crusaders who sought to make so ciety over according to their own plans. He shows how the views of some of these idealists served in time to undermine the rule of law and to limit the freedom of individuals. He deals with radicalism, Marxism, populism, and pro gressivism, and shows how each has contrib uted to the growth of government.

Volume I backtracks to discuss the intellec tual climate in Europe before Columbus sailed west. Carson then reports on the influences that led the several colonies to struggle for indepen dence from England. Volume II carries the chronicle through the years when the colonies were becoming unified into a single nation and beginning to expand westward. Volume III describes the development of north-south dissension, the Civil War, the dev astation of the south, and its painful recovery. Carson shows how Congress violated constitu tional principles during the post-Civil War re construction period, rode roughshod over the rights of individuals, and thus contributed to the expansion of government. In Volume IV, which deals with the latter half of the 19th century, we begin to see the origin of the ideas and "isms" that spawned 20th-century government intervention. Here Carson explores the germs of socialism, com munism, international imperialism, World War II, and the monetary manipulation that led to the artificial boom of the 1920s.

Volume V brings the narrative to times within the memory of many of us. We read here of the depression, FDR's New Deal, World War II, welfarism, the "cold war," Korea, the radical 1960s, Vietnam, and Water gate. Carson considers the 1960s, under the Warren Court (1953-1969), to have been a second period of "reconstruction. " Once more 120 THE FREEMAN. MARCH 1987 the Constitution was ignored and the rights of individuals violated. To wipe out the remnants of racial segregation, and to assure voting rights, religious freedom, and the rights of the criminally accused, the Court altered the system of constitutional checks and balances. This contributed to the breakdown of law and order, and the attack on family values. Carson's final chapter, "The Conservative Response," credits writers such as Ludwig von Mises, F. A. Hayek, George Orwell, Ayn Rand, Henry Hazlitt, Leonard Read, Robert Welch, Bill Buckley, Russell Kirk, and others for the recent shift toward "conservatism." He gives Reagan credit for helping to revive patri otism and confidence in America. However, the welfare state is so thoroughly entrenched that government continues to grow in both size and scope.

Carson earned his Ph.D. at Vanderbilt Uni versity. As the author of books on this nation's early years (The American Tradition and The Rebirth of Liberty), 19th-century America (Throttling the Railroads and The Fateful Turn), the ideological turn toward socialism (Flight from Reality and The World in the Grip of an Idea), and recent government intervention (The War on the Poor and Organized Against Whom?), he is well equipped to write a survey of U.S. history. Whatever the future brings for this country, Carson's overview will help us to better understand how it came about. These five volumes are profusely illustrated. Each contains portraits and biographical vi gnettes of leading figures, and is indexed and footnoted. The footnotes, which are numbered in sequence from the beginning to the end of each volume, make it easy to locate a specific reference. At the end of each volume there are "Suggestions for Additional Reading." Thus these volumes are not only "storybook his tory, " but they can lead the reader to further exciting reading. D Now complete-a rich narrative account of our country's history . ..

A BASICHISTORYOF THE A UNITED STATES ) **I*rt by Clarence B. Carson U, Volume 1, The Colonial Experience $9 ...~~ Volume 2, The Beginning of the Republic $9 ~ - Volume 3, The Sections and the Civil War $9 Volume 4, The Growth of America $9 Volume 5, The Welfare State $9 The first general history of the United States to come out of the Conservative Movement. • Broad in perspective, yet rich in detail • More than 1300 pages in all, illustrated • Recaptures the spirit and values that made America great • Lest we forget: a history you will want for your chil dren and grandchildren If volumes are purchased separately, total price is $45.00. Order the set now and save $12.50. $32.50 per set THEFREE IDEAS ON LIBERTY 124 Entrepreneurs and Their Gifts Jane S. Shaw Consumers reap the rewards of entrepreneurial effort. 126 Liberty and Individual RespoltSibility Dwight R. Lee The inextricable link between responsibility and individual liberty.