Book Reviews

Other Success Stories From Hyatt, Lambro jumps to a cookbook author named David Liederman, an ex-lawyer who took a job as a chef in a French restaurant in preparation for starting his David's Cookies, with more than 130 stores in the U. S. and abroad. Liederman has eschewed dependence on high-priced marketing researchers. Instead, he goes directly to children for opinions about his product. His 4-year-old daughter and her friends were the "experts" who were called upon to pass on David's macadamia, chocolate chunk confections. Colonel Sanders and his Kentucky Fried Chicken are an old story. The Sanders success has inspired people who have nothing to do with the food business. Al Sutherland, a retired insurance salesman, was asked by his son to take care of his home during a vacation. After a few periods of house sitting, Sutherland told himself, "If chicken can have Colonel Sanders, house sitting can have me." Sutherland now franchises his Home Sitting Service for a min imum fee of $6,000 for a city of 100,000 popu lation.

Lambro goes on to tell how Morris Siegel built a big company on his wife's herbal tea. His Celestial Seasonings now produces twenty seven varieties of herbal tea and has branched out into herbal shampoo and conditioners. He refuses to install time clocks for his more than 200 employees. Space doesn't permit me to recite more of Lambro's stories of "little people" who have started successful businesses. It's a cornucopia that Lambro offers. 0 DECISION AT PHILADELPHIA: THE CONSTITUTIONAL CONVENTION OF 1787 by Christopher Collier and James Lincoln Collier Random House-Reader's Digest, 201 E. 50th St., New York, NY· 331 pages, $19.95 cloth Reviewed by Robert M. Thornton T en years ago we celebrated the 200th an niversary of the Declaration of Indepen dence in a spirited if not intellectual fashion. One hopes for a proper celebration in 1987 but I doubt there will be one because there is little "glamour" or excitement connected with constitution making. In contrast to revolu tions it is a dull affair-dozens of questions to be asked, studied, debated, and voted upon.

Many compromises were necessary to write a constitution which would be acceptable to the fifty-five participants and the voters of the thir teen colonies. Each general subject opened the door to specifics. There were the issues of slavery, foreign and interstate trade, voting, the chief executive, congress, judiciary, armed forces, foreign affairs, national/state relations - the list is almost endless. Perhaps the greatest problem for all the men in attendance was the challenge to form a gov ernment strong enough to enforce laws but not strong enough to become tyrannical. What de veloped was a system of checks and balances and a separation of powers to prevent any part of government from dominating the others. The authors of this very readable volume set the scene for The Grand Convention and offer biographical sketches of the major participants - Washington, Madison, Hamilton, Sherman, the Pinckneys, Gouverneur Morris, Edmund Randolph, Elbridge Gerry and others. Most were influential, prominent and well-to-do; many were lawyers. There was a great variety in their personalities and characters, but all were independent thinkers. They labored to produce a constitution which would contain government within proper bounds, as befits a free people.

Two points stand out: first, these were men willing to split their differences; they were not ideologues who would concede nothing. If these men had not made mutual concessions there would have been no Constitution and probably no United States of America as we know it today. The document is imperfect, of course, like everything in life. Second, the men at the Constitutional Convention understood human nature. As the book points out: "The Constitution, beyond all else, was forged in the heat of human emotion. In the end it reflected, for good or ill, the human spirit. It worked because it was made by human beings for the use of human beings, not as we might wish them to be, but as they really were." The Constitution of the United States was made flexible on purpose. To have spelled out everything in detail would have been to draw up a document that would have been outdated in a few years. Brilliant men put together the Constitution, but none is so wise as to foresee the future. What we need to recapture is the spirit and intent of the Founding Fathers whose love of liberty underlay their remarkable work during a long, hot summer 200 years ago. D (Mr. Thornton resides in Lakeside Park, Ken tucky.) THE ECONOMICS OF TIME AND IGNORANCE by Gerald P. O'Driscoll and Mario J. Rizzo New York University Press, 562 w. 113th Street, New York, NY 10025 . 1985 . 261 pages, $34.95 cloth Reviewed by Richard Ebeling A ustrian Economics, born a little more than a century ago, has always been ,'dynamic" and process-oriented in its approach. It has focused on man as actor and doer; it has emphasized the imperfection of human knowledge and the pervasive uncer tainty surrounding human choice; it has ana lyzed the market as a rivalrous competition through which the plans of market participants are brought into harmony; and it has drawn at tention to the problem of how market and social institutions emerge and evolve over time out of OTHER BOOKS 39 the actions of many people without anyone planning their development.

A new generation of Austrian economists is taking the field and a series of important books and articles is flowing from their pens. One of these is The Economics of Time and Ignorance by Gerald P. O'Driscoll and Mario J. Rizzo. The first five chapters, devoted to subjectivism, knowledge, time, and uncertainty, are a frontal attack on the predominant view among econo mists that human choice and action should be analyzed as if they were nothing more than ap plications of mathematics and Newtonian me chanics to a particular problem, Le., man as decision-maker in the social world. The authors argue that man is something more than a particle of matter moving through space along a geometric time axis. Man is a creative being who imagines and makes his fu ture in unexpected and unpredictable ways. As a result, man's future is inherently unknowable because its direction and path only emerge out of the actions of individuals as they are con fronted with new and unanticipated opportuni ties and obstacles.

Such things as uncertainty and possibility cannot be reduced to statistical probability alone; to be able to do so would imply that the knowledge that will emerge only through time can be known before it is experienced. Re placing the standard mathematical view of market equilibrium used by most economists with a concept of dynamic market coordination through time, O'Driscoll and Rizzo develop an analysis of how agents come to anticipate each other's behavior in terms of patterns or types of human activity that become institutionalized in the market order. The remaining four chapters apply these in sights to the problems of competition; mo nopoly and government policy; capital and pro duction in the market order; money and the business cycle. The central theme is Hayek's idea that the market order should be viewed as a dynamic and never-ending discovery process for the dissemination and acquisition of knowl edge and information needed for harmonizing the multitude of human plans being worked out under the social division of labor. In this con text, the authors criticize the standard theories of competition and monopoly and demonstrate 40 THE FREEMAN. JANUARY 1987 the harmful and perverse effects of government regulation, intervention, and control.

The chapter on capital theory (written by Roger Garrison) lucidly outlines the nature and complexity of the production process in a de veloped market economy and how both the uses of capital and the rate of interest emerge out of the choices and preferences of the market participants. The crucial and delicate nature of the production process then serves as the back ground for O'Driscoll and Rizzo to explain the role of money in facilitating the smooth working of the intricate web of market relation ships and to explain how monetary manipula tion can distort market price signals and bring about a business cycle. The Economics of Time and Ignorance both continues within and goes beyond the past con tributions of the Austrian School. Its original and thought-provoking quality demonstrates just how alive and vibrant the Austrian tradition remains in economics. The book is a challenge and a standard for mainstream and Austrian economists alike. D (Richard Ebeling is assistant professor of eco nomics at the University of Dallas, Irving, Texas.) POVERTY AND WEALTH: THE CHRISTIAN DEBATE OVER CAPITALISM by Ronald H. Nash Crossway Books, 9825 W. Roosevelt Road, Westchester, Illinois 60153 . 1986 . 223 pages, $8.95 paperback Reviewed by Richard A. White G ood intentions divorced from sound economic theory can produce disas . trous consequences, and, according to Professor Ronald Nash, this is precisely the trouble with ecclesiastical pronouncements on social issues.

Nash approaches economics almost exclu sively from the Austrian free market perspec tive, expounding such basic tenets as marginal utility, opportunity cost, and supply and demand. His chapter on value provides a fine cri tique of cost of production theories and stresses the importance of the subjective theory-the theory that individual preferences determine the economic value of a good, not the quantity of labor it took to produce it. Nash is quick to point out, however, that' 'The price of an eco nomic good reflects the extent to which indi viduals desire it; and this is something quite apart from the question of how desirable it is. ' , Subjective economic value does not exclude the possibility of objective moral precepts. After explaining the basic operation of the market, Nash describes the unworkability of socialism. Relying on the early work of Ludwig von Mises, Nash demonstrates the im possibility of "rational" economic calculation in a socialist society. He criticizes "liberation theologians" for their futile attempt to synthe size Christianity with Marxism, concluding that their program is neither liberating nor theolog ical.

In a later chapter, Nash discusses the biblical view of money and wealth. "Since the world is God's creation," he writes, "and since God placed us in such a close relationship to the ma terial world, the creation and use of wealth is a perfectly proper activity." Wealth is good, but as a means to other ends and not as an end in itself. Private ownership is necessary for the practice of Christian stewardship and the bib lical requirement of private charity. The Bible in no way sanctions the redistributionist poli cies of the modem state. Prosperity is better than poverty in God's material world, and the free market economy is the way to prosperity. But the market cannot thrive in a spiritual vacuum, nor in the absence of biblical stan dards of morality. Nash provides an excellent introduction to free market economics within a biblical frame work, as well as a penetrating and cogent study of liberation theology. In a day when socialist ideas are creeping into seminary classrooms and many church pulpits, Nash's Poverty and Wealth: The Christian Debate Over Capitalism is especially welcome. D (Richard White is a first-year student at Trinity Evangelical Divinity School, Deerfield, Illi nois.) THEFREE IDEAS ON LIBERTY 44 Goodbye, Mr. Chips: U.S. Creates a High..Tech OPEC Michael Becker A new government-enforced cartel will destroy competition in the semiconductor industry.