Book Reviews

The quotation, which is from memory, is from Rebecca West's essay on the Four Uncles, written for the old New York Herald-Tribune. I cite it here because it did much to fix in peo ples' minds the idea that Fabian Socialism had taken over in England for good. The two Uncles who contributed to the Fabian essays, Shaw and Wells,were powerful voices. Russell Kirk, author of The Conservative Mind, was an early objector to the idea that Eng land, under Fabianism, was lost to the West. Bid ing his time, he has projected the idea of·a series of books to be published under the general head ing of the Library of Conservative Thought. "Our Library of Conservative Thought," he says, "will not amount to a corpus of infallible writings from which zealots might derive a con servative Thirty-Nine Articles; rather, we mean to recognize the diversity of conservative ideas-if you will, the varieties of the conserva tive experience."

As the first book in his series, Kirk has picked A Critical Examination of Socialism by William Hurrell Mallock (New Brunswick, N.J.: Transac tion Books, 302 pages, $37.95 cloth). "This book," Kirk writes in his introduction, "grew out of a series of lectures that William Hurrell Mal lock delivered in the United States during 1907. Mallcickwas an English man of letters, of an old Devonshire family; he had risen to celebrity as a wit at the age of twenty-eight, when he published The New Republic, or Culture, Faith, and Phi losophy in an English Country House. He had been born a year after the Communist Manifesto was published; he would live to see the destruc tion of the old order in eastern Europe and other lands this Critical Examination has been selected because the debate into which Mallock entered more than eighty years ago has not yet ceased, and because the book is a good example of Mallock's polemical skill."

Mallock crossed swords with all the theorists who believed in some variant of the labor theory of value. To him, the theory only accounted for muscle work, not brain work. The principal pro ducer of wealth, according to Mallock, was abili ty. "Ability," he wrote, "is a kind of exertion on the part of the individual which is capable of af fecting simultaneously the labour of an indefinite number of individuals, and thus hastening or per fecting the accomplishment of an indefinite num ber of tasks." It is, adds Kirk, "the faculty that di rects labor; that produces inventions, devises methods, supplies imagination, organizes produc tion and distribution, maintains order." Labor without ability,says Kirk in his interpre tation of Mallock, "is simply the primitive effort of natural man to obtain subsistence. Recogniz ing that mankind cannot prosper by mere labor, society hitherto has endeavored to encourage Ability by protecting Ability's incentives. In de stroying those incentives, the Marxists would bring down civilization. So Mallock told his American audiences in 1907, and so, in much of the world, it has come to pass."

Socialiststhink that men of ability should work out of pure idealism. But the man of ability pre sumably has a family and the prospect or reality of heirs. What chance does idealism toward an abstraction called the State have in competition with the family? Kirk finds sustenance for these opinions in a very odd place. Mikhail Gorbachev, in his book Perestroika,says, "Equalizing attitudes crop up from time to time, even today. Some citizens un derstand the call for social justice as 'equalizing everyone.' But society persistently demands that the principle of socialism be firmly translated into life. In other words, what we value most is a citi zen's contribution to the affairs of his country. We must encourage efficiency in production and the talent of a writer, scientist, or any other upright and hardworking citizen. On this point we want to be perfectly clear: socialismhas nothing to do with equalizing."

Gorbachev, says Kirk, "unlike Shaw, finds it necessary to take into account the claims of Abil ity, so strenuously advanced by Mallock eighty years ago." Maybe "capability" would be a better word to use when talking about the subject-it has a slightly broader sound. But it makes no real difference. There is an implicit bargain between the man of organizing ability and the ordinary muscle worker. Neither can do without the other. The or ganizer must have someone to organize. Just to keep things happy the organizer, after his own family has been cared for, will allow a portion of brain-work profit to go to the muscle worker. Socialists, according to Mallock, do not have the mental qualifications to understand machin ery. "They have never made two blades of grass grow where one blade grew before. They have never applied chemistry to the commercial manu facture of chemicals. They have never organized the systems or improved the ships and engines by which food finds its way from the prairies to the cities which would else be starving .... They would never set themselves to devise, as was done in the English midlands, some new com modity, such as the modern bicycle, which was not only a means of providing the labourers with a maintenance, but was also a notable addition to the wealth of the world at large. They fail to do these things for the simple reason that they can not do them; and they cannot do them because they are deficient alike in the interest requisite for understanding how they are done, and in the concentrated practical energy which is no less requisite for the doing of them."

Mallock does not use such terms as "en411 trepreneur," or even "enterpriser." The words change; the realities remain the same. Capable men will seize opportunities without worrying about definitions of the word "ideology," which has some strange uses in the dictionary. Kirk doesn't like the word, and he offers Mallock's book as helpful to freeing us "from the chains of ideology." Whatever those "chains" may be, it is good to be reminded that the man of ability need not respect them. D HONG KONG by Jan Morris Random House, 400 Hahn Road, Westminster, MD 21157 • 1988 359 pages • $19.95cloth Reviewedby RussellShannon ,'H ong Kong," says British writer Jan Morris in her new book, "has always been the brazen embodi ment of free enterprise." Although Hong Kong has existed on the principle of laissez faire as a British colony for 150 years, it is only since the 1949 revolution in China sent hordes of refugees to this tiny place that it has truly flourished.

That, of course, is ironic. At the same time that Mao Zedong in mainland China was proving that Communism simply doesn't work, industrious Chinese people in Hong Kong were eagerly showing how effectively capitalism does. While China with its vast natural resources stagnated, Hong Kong, with almost nothing to boast of·but an excellent harbor, proved the assertion that American economist Julian Simon makes so well in his book, The UltimateResource:"Our cornu copia is the human mind and heart," he wrote, "and not a Santa Claus environment." As Simon puts it further on, "The ultimate resource is peo ple-skilled, spirited, and hopeful people who will exert their wills and imagination for their own benefit, and so, inevitably, for the benefit of us all." Ironically,politically speaking, the government Britain provided for Hong Kong is scarcely more democratic than the one provided for one billion Chinese by Beijing. As Morris points out, the population of Hong Kong "enjoys freedom of speech and opportunity, but no freedom at all to choose its rulers."

How all this came about is the subject of Mor ris's fine book. Skillfully alternating chapters on 412 THE FREEMAN • OCTOBER 1989 Hong Kong's historical development with por traits of its present people, procedures, and prob lems, she offers the reader both great delights and much insight. The picture she paints is certainly not all pret ty. Initially, Hong Kong was a focal point for the opium trade. Over the years, it has been plagued by piracy,corruption, counterfeiting, and discrim ination. In one particularly poignant tale, the au thor points out that Chinese coolies were not al lowed to use the tram to carry heavy supplies of items such as coal and ice to British homes nes tled in the upper elevations. "In 1921 a compas sionate clergyman discovered that one small la borer, aged six, spent twelve hours a day, six days a week, carrying fifty-eight-pound loads of coal from the waterfront to a house of lofty emi nence."

Nor is Hong Kong's capitalism pure. Confront ed by massive influxes of refugees in recent years, the government has felt obliged both to establish public housing and to provide low-cost medical care. But throughout its existence, private enterprise has been the prevalent factor in this British colony. Most notable, of course, were great British merchants, such as Jardine, Matheson, and Swire. Yet the extent of private enterprise is truly astonishing. A century ago, even "public lavatories were run by private contractors." In more modern times, elements of public trans portation, such as the underwater tunnel which connects the island of Hong Kong with Kowloon on the mainland, are profit-making enterprises. What will happen when Hong Kong reverts to Chinese control in 1997? The question arose on my own brief visit to the area two years ago when, with a group of American economists, I visited a joint American-Thai feed mill in Shen zhen, one of the flourishing new enterprises just inside the Chinese border north of Hong Kong.

In response to this question, the young American finance officer who had been our able and out spoken guide responded that he believed the question should be reversed: we really should be asking what will happen when Hong Kong takes over China! The return of Hong Kong to Chinese control, Morris feels, is inevitable, because it was taken under what the Chinese consider the "unequal treaties" imposed on a declining Chinese empire by emerging Western empires during the last cen tury. Yet while noting that once-prosperous Shanghai, under Communist domination, has been reduced to "dingy impotence," to a large extent the author echoes the young American fi nance officer.Rapid commercial and manufactur ing developments not only in Shenzhen btlt also northward to Guangzhou (Canton) already be speak Hong Kong's strong influence on its great northern neighbor. The reader who completes the tour through Morris's pages will not put the book down with a heavy heart. Rather than lament the plight con fronting Hong Kong's residents, one is more in clined-to take comfort from the success of the Chinese in Hong Kong (as well as in nearby Tai wan) which amply demonstrates that prosperity is not a uniquely Western phenomenon. Further more, the success of the Chinese expatriates may have had more than a little to do with turning the present regime in Beijing away from the pathetic failure of Marxism and toward the principles of the free market. That may well be the most im portant achievement of this tiny but remarkable colony. D ProfessorShannon teachesin the EconomicsDepartment at ClemsonUniversity.

THE FATALCONCEIT:THE ERRORSOF SOCIALISM by F. A. Hayek The Universityof ChicagoPress, 5801 South Ellis Avenue,Chica go, IL 60637 -1989 -180 pages- $24.95cloth Reviewedby RobertTaylor A t the ripe old age of 90, Nobel Laureate Friedrich von Hayek has loosed one fi nal curve ball at the academic world. While intended as a capstone work to summarize his lifelong contributions to the social sciences, this book takes a somewhat novel tack by exam ining the origin and nature of ethics. Like Marx, Hayek sees an inherent contradic tion in Western capitalistic societies. Unlike Marx, however, Hayek sees this contradiction in terms of an ethical dualism, not a materialistic di alectic, and he also feels that this contradiction is both necessary and beneficial-though nonethe less problematic. Hayek approaches ethics from an entirely different angle from most philosophers. While philosophical ethics usually entail rationalistic system-building from certain assumptions about human nature or from bits of empirical data, Hayek's ethics are nonrationalistic and based upon the historical process. Hayek rejects the ex plicit, rationalistic construction of most ethical systems because such constructions rest upon the "fatal conceit" of human reason. Reason, Hayek argues, is incapable of commanding the informa tion necessary to design an ethical system.

Hayek believes that ethics lie somewhere be tween instinct and reason. Ethics-like language, the marketplace, and the common law-are a spontaneous order that, in the words of Adam Ferguson, is the product of "human action, but not human design." Our ethical system was not designed by any one; it is traditional, handed down from genera tion to generation, and learned by imitation. Its progress and development were achieved by a process of social evolution: those cultures which adopted "good" ethical systems survived and flourished, while those with "bad" ones either floundered or adopted more successful ethical systems. This subtle process of trial-and-error has produced Western ethics, a highly successful system. In what way do Western ethics contain a "con tradiction"? To understand this proposition, one must examine Hayek's theory of the actual his torical development of ethics. Hayek holds that the original human ethical system was that of the small group-the hunter/gatherer tribe. These "small group" ethics were both solidaristic and altruistic. The primitive tribes at the dawn of hu man history were each united by a shared pur pose-rudimentary survival in an uncontrollable, hostile environment-that superseded the differ ent purposes of the tribes' individual members.

As time passed, agricultural techniques were developed and cities were founded. These events provided a basis for two further developments that made "small group" ethics untenable: eco nomic trade and population growth. Trade placed members 9f closed communities in constant con tact with "foreigners" who usually did not share the group's purposes or beliefs. Population growth, spurred by relative economic security, made the small group rather large, with the result that members of the same group were often OTHER BOOKS 413 strangers to one another and often pursued dif ferent ends. These social changes were matched by changes in the ethical sphere. "Small group" ethics were not applicable to diverse, cosmopolitan commu nities; groups that failed to adapt became isolated and economically stagnant. Through the social evolutionary process, "small group" ethics were gradually replaced by what Hayek calls "extend ed order" ethics. "Extended order" ethics aban doned commands that sought collective ends in favor of abstract, generally applicable rules that facilitated varied individual ends. These ethics served as an impersonal mechanism for the coor dination of individual actions and plans, whereas "small group" ethics were dependent upon the highly personal rule of the tribal leader, who di rected the group to a common goal.

While "extended order" ethics replaced "small group" ethics as the dominant system, "small group" ethics continued to exist side by side with their more successful counterparts. Families, friendships, and businesses continued to operate according to the solidaristic principles of "small group" ethics for obvious reasons. Love, cama raderie, and shared purpose-so necessary to hu man fulfillment-are possible only within the small group. Thus, contemporary Western ethics area heterogeneous mixture: "extended order" ethics tell individuals and groups how to act with in the larger social order, while "small group" ethics instruct individuals how to behave within the confines of the various voluntary organiza tions to which they belong. But, as Hayek notes, individuals have only a "limited ability to live simultaneously within two orders of rules." The dividing line between the two ethical structures often becomes fuzzy in ap plication, leaving individuals confused concerning their obligations. For instance, one would clearly have an obligation to assist a friend or family member in financial need. But what about a needy stranger who accosts one on the street? Or a fellow businessman, teetering at the edge of bankruptcy, with whom one is competing in the marketplace of the extended order?

Hayek warns that, as strong as the tension may be, the balance between the two systems of ethics must be maintained. Both systems serve vitally important functions within their own spheres: "small group" ethics provide for warmth and 414 THE FREEMAN • OCTOBER 1989 compassion essential to man as a social animal, while "extended order" ethics provide a coordi nation function necessary to maintain economic security and further growth in both population and wealth. While no one (with the possible exception of Ayn Rand's followers) is calling for an extension of "extended order" ethics into the realm of the small group, there is an influential intellectual group, the socialists, calling for just the opposite: the reconquest of the West by "small group" ethics. Needless to say, Hayek looks upon this prospect unfavorably. Hayek, while admitting that such an event might initially satisfy our in stincts, points out its long-range consequences: poverty, starvation, and widespread death. "Ex tended order" ethics, Hayek notes, are chiefly re sponsible for making possible our present level of population and economic well-being; their aban donment would lead to chaos and primitive trib alism, a tribalism which, lacking large-scale coor dinating capabilities, would be unable to sustain Earth's population.

The ethical dualism Hayek sees in Western so ciety is ultimately incapable of resolution. The so cialist alternative, argues Hayek, is reactionary and inapplicable to the complex yet subtle ex tended order of the modern world. Hayek's final message in The Fatal Conceit is wise counsel that should be pondered by all: the maintenance of a classical liberal society, an extended order com posed of individuals and voluntary organizations freely interacting, is, without exaggeration, a mat ter of life and death. D Robert Taylor is a junior studying political science and economicsat the Universityof Tennesseeat Knoxville.This reviewis adaptedfrom a columnin the campusnewspaper, The DailyBeacon. ROOSEVELTAND STALIN: THE FAILED COURTSIDP by Robert Nisbet RegneryGateway,1130 17th Street NW, Washington,DC 20036. 1988 -120 pages- $14.95cloth Reviewed by Richard M. Ebeling O nee at a press conference in the 1930s,a reporter asked President Franklin Roo sevelt what his political philosophy was-was he a communist, a fascist, a liberal?

Roosevelt seemed bewildered by the question, and after hesitating for a few moments replied, "Why, I am a Christian and a Democrat." Roo sevelt's bewilderment seems never to have left him. He just did not think in terms of ideologies. For Roosevelt, Hitler and Mussolini were merely "gangsters," and the law-abiding nations of the world were using their police to take them off the streets. The same naivete hovered over Roosevelt's re lationship with Joseph Stalin. World politics seemed to be nothing more to Roosevelt than lo cal ward politics writ large-a matter of alliances, horse-trading, personalities, and power. Personal loyalties and relationships were the heart of poli tics for the President. The same methods that got things done in Albany or Washington would work with Stalin at Teheran and Yalta, Roosevelt believed. The absurdity of Roosevelt's view of how to deal with the Soviets, and the disastrous results that followed, are the themes of this book.

While the personal relationship of ward poli tics was to be Roosevelt's means of dealing with Stalin, what were the ends he wished to attain? Nisbet explains that the President viewed himself as fulfilling the mission Woodrow Wilson began in World War I: to take upon himself the moral leadership of making the world safe for democra cy, of molding the world in his own image of American freedom. Having given the nation a New Deal at home, Roosevelt wanted to give the entire world a New Deal. But the attainment of this goal was going to require the leadership and prodding of the two great powers, the United States and the Soviet Union. What made Roosevelt see the Soviets as the natural partner for this task? In Nisbet's words, "Somehow in Roosevelt's vision all the ugly [of Soviet brutality] was squeezed out and what was left was a system in Russia not extremely different from his own New Deal.... the Soviet Union, with all warts conceded in advance, was still constitu tionally· pledged to its people to provide jobs, medical care, and welfare very much on the order of his own New Deal.... There was also the constitutional pledge to build a classless soci ety.... the Soviet Union was forward-looking,pro gressivein thrust." Stalin and the Soviets,in other words,were just like us, only a bit more uncouth.

In Roosevelt's mind, the enemy of peace and order in the postwar era.wouldn't be Soviet Com munism, but the imperialism and colonialism of the European empires, particularly Great Britain's. This was the threat to a future of Sovi et-American "democracy." But Stalin was suspiciousof the capitalist West, Roosevelt argued. He had to be coaxed into trusting the West and working for the worldwide "New Deal." This was the motiye. behind Roo sevelt's infamous remark that "I think if I give [Stalin] everything I possibly can, and ask noth ing from him in return, noblesseoblige,he won't try to annex anything and will work with me for a world of peace and democracy." (Roosevelt's dreams were reinforced by leftist intellectuals and government employees-a handful of whom later were found to be Soviet agents-who sur rounded the President during the New Deal days and the war years.) Stalin didn't have to worry about pushing his own postwar demands. At the November 1943 Teheran Conference, where Roosevelt and Stalin met for the first time, the President held infor mal, secret meetings with the Soviet dictator.

Roosevelt himself suggested that the Baltic states of Estonia, Latvia, and Lithuania, and the eastern portion of Poland that Stalin had seized as part of his 1939-1941 nonaggression pact with Hitler, should remain under Soviet rule. All he asked of Stalin was that he remain quiet about it so Roo sevelt could get the Polish vote in the 1944 elec tion. Roosevelt also accepted the idea of postwar eastern European governments that would be "friendly" to the Soviet Union. And Stalin was promised vast territorial gains in the Far East, if he. would agree to join in the war against Japan once Hitler had been defeated. All Roosevelt asked in return was Stalin's participation in the President's dream of a peace-keeping United Na tions in the postwar era. As Nisbet demonstrates, the Yalta Conference of February 1945 only formalized what Roosevelt had promised at Teheran. The importance of this later conference, Nisbet explains, was that "Yalta performed a service to the Soviets that was al most as important to Stalin as the occupied areas themselves. This was the invaluable service of giving moral legitimation to what Stalin had ac quired by sheer force."·Yalta legitimized and jusOTHER BOOKS 415 tified the Soviet domination of Poland, Czechoslovakia, Hungary, Romania, Bulgaria, East Germany, and Mongolia. It gave moral standing to the Soviet Empire.

At the Yalta Conference, Roosevelt felt moral ly bound to legitimizeStalin's claims.As the Pres ident's confidant, Harry Hopkins, wrote Roo sevelt at the conference, "The Russians have given us so much at this conference that 1 don't think we should let them down." What had Stalin given? He agreed that in the new United Na tions, the Soviet Union would have only three votes-one for the U.S.S.R., one for the Soviet Ukraine, and one for Soviet White Russia-in stead of 16 votes, one for each of the Soviet Re publics. And what did Stalin think of his own Yalta promises to work for a new Rooseveltian world order, and to guarantee free elections in the east ern European nations that the Red Army had conquered on its way to Berlin? In early April 1945, less than two months after the signing of the Yalta agreements, a Yugoslav Communist delegation led by Tito was in Moscow. At a late night banquet in their honor, Stalin ruminated on the postwar era. In his book, Conversationswith Stalin,Milovan Djilas recounts that Stalin at one point explained, "This war is not as in the past; whoever occupies a territory also imposes on it his own social system." And as for the future, Stalin assured his guests, "The war shall soon be over. We shall recover in fifteen or twenty years, and then we'll have another go at it."

Here was the true Stalin, the real "Uncle Joe," as Roosevelt and Churchill affectionately used to call him. And was his own postwar vision limited to eastern Europe? At the Potsdam Conference in July-August 1945, President Truman went up to Stalin and congratulated him on the successes of the Red Army, successes that had brought So viet power to Berlin in the heart of Europe. Stal in glumly replied, "Czar Alexander reached Paris" during the war against Napoleon in the 19th century. It appears that Stalin had dreams, ~~ D Professor Ebeling holds the Ludwig von Mises Chair in Economics at Hillsdale College.

THE FOUNDATION FOR ECONOMIC EDUCATION, INC. Irvington-on-Hudson,New York 10533 Essays shouldpresentthepositivemoralcasefora freesociety.Toassistcontestants,wehave prepared a packet that includes literature, bibliography, and essay guidelines. COLLEGE DIVISION First prize - $1,500 Second prize - $1,000 Third prize - $500 HIGH SCHOOL DIVISION First prize - $1,500 Second prize - $1,000 Third prize - $500 Sponsor: The Foundation for Economic Education is publisher of The Freeman, a monthly journal of ideas on liberty. Founded in 1946, FEE is a nonprofit, nonpolitical educational and research organization offering books, lectures, and seminars that promote an understanding of the free market, private property, limited government philosophy. Eligibility: Any high school student may enter the high school division. The college division is open-to college students 23 years old or younger. Essays may not exceed 2,500 words in length and must be postmarked on or before January 15, 1990.