Book Reviews

He shifted as a New Republic editor in the de pression to do some first-rate reporting of the "American jitters" and going on from there to track Lenin's road to the Finland Station. But in late middle age he reverted to his origins as a man of letters. Leo Tolstoy's world-savingwas suspended in midstream to make way for the writing of War and Peace, possibly the world's greatest novel, and Anna Karenina. These were works of true genius. But Tolstoy thought less of them than of his efforts as a self-constituted messiah. Marx "howled gigantic curses" against those who would interfere with the revolution he saw coming, but he brought up his daughters in a thoroughly conventional way. He didn't want them to have vocations. He talked about sci ence, but he himself was incapable of good sci entific research. Engels had to supply him both with cash and information about the working classes.

Shelley could be heartless in his thinking, but his poetry was certainly not heartless. Ib sen, no collectivist,wrote plays about individu als. Sartre wrote under the influence of both drink and drugs. He hoped that Europe could be created as an entity, but he groveled to the Soviets and admitted lying about the things he had seen in Russia. Camus's gibe was that Sartre, as an existentialist, tried to make histo ry from his armchair. Rousseau, among the leftist intellectuals, is the main malefactor. His theory that society should be governed by a "general will" led in exorably to Lenin's totalitarianism. The Amer ican Founding Fathers wanted nothing of any "general will" beyond a commitment to plural ism and the safeguarding of minority rights.

One could wish that Senator Sam Nunn of Georgia, who has suggested that all adolescents should serve a compulsory term in doing good as defined by government, should read Paul Johnson on Rousseau. Nunn's own ideal "general will" would surely be humane, but no group of politicians can be trusted to formulate compulsory goals for a country. That should be left to individuals on a voluntary ba sis, subject to amendment as situations change. The egotism of Johnson's leftist intellectuals is almost incalculable. Johnson quotes a con tributor to a book on Rousseau's Social Con tract as saying that Rousseau was a "masochist, exhibitionist, neurasthenic, hypochondriac, onanist, latent homosexual afflicted by the typ ical urge for repeated displacements, incapable of normal or parental affection, incipient para noiac, narcissistic introvert rendered unsocial by his illness, filled with guilt feelings, patho logically timid, a kleptomaniac, infantilist, irri table and miserly." Johnson documents much, though not all, of this. Yet Tolstoy could say that "Rousseau and the Gospel" were "the two great and healthy influences of my life." John son professes himself to be baffled. He lets So phie d'Houdetot, Rousseau's last lover, sum things up by saying "he was ugly enough to frighten me and love did not make him more attractive. But he was a pathetic figure and I treated him with gentleness and kindness. He was an interesting madman."

The madness of some of Johnson's intellec tuals did not extend to Victor Gollancz, who packaged and sold Rousseauistic literature for his Left Book Club in London between the wars. Money-making is a rational objective. But the West, waiting for the evidence, might have been a little quicker than it was in noting that the Rousseauists were lovers of humanity who did not actually care for human beings. They treated their own wives, children, and friends and relatives abominably. Sartre boast ed he could "run" four mistresses beside Si mone de Beauvoir at a time. Paul Johnson sup plies the evidence with detail that is most amusingly stated. But he really owes us more than that. After all, we have had good conservative, classical liberal, and libertarian intellectuals, too. A counter book could be written around 371 Mises and Hayek, Albert Jay Nock and William Graham Sumner, Bastiat and Adam Smith, Carl Menger, Eugen von Boehm-Ba werk, and Leonard Read. The book would not be as titillating as Johnson's current work: fam ily life on the Right remains generally clear of the sort of scandal that Johnson gossips about so zestfully. But if it is ideas that we care for, the counter book should be forthcoming. D UNFAIRCOMPETITION:THE PROFITS OF NONPROFITS by James T. Bennett and ThomasJ. DiLorenzo Hamilton Press, 4720 Boston Way, Lanham, MD 20706 • 1989 • 214 pages • $17.95cloth Reviewed by Peter Frumkin A t first blush, the operation of a museum gift shop seems harmless enough. Who could care if a worthy institution like the Richmond Museummakes a little cash on the side by selling postcards and other small items?

Probably no one. But what about a nonprofit YMCA that serves young professionalsat a low er cost than a local private health club, driving the club out of business? In this case, the issues become less clear and the questions more com plex. Are some nonprofits using their nonprofit status to compete unfairly with their for-profit counterparts? Do nonprofit organizations enjoy subsidiesthat make true competition impossible? How can the need of nonprofits to raise funds be balanced with the concern of the business com munity that an unfair advantage existswhich dis torts the market? These are just some of the questions that James T. Bennett and Thomas J. DiLorenzo raise in their stimulatingnew study of the nonprofit economy,UnfairCompetition. Tax-exempt organizations are one of the fastest growing segments of the economy. In 1987, annual revenues exceeded $300 billion-or about 8 percent of the gross national product.

They have, however,only begun to attract signifi cant attention from researchers. The very fact that many nonprofits are actively engaged in for-profit commercial activities may come as a surprise to some. After all, thoughts of the nonprofit community hardly conjure up im372 THE FREEMAN • SEPTEMBER 1989 ages of profitable operations generating signifi cant revenues. In reality, however,many nonprof its are growing increasingly dependent on the funds which their various business ventures gen erate. Is this a development that should be greeted with enthusiasm as a harbinger of lower costs to consumers? If the analysis contained in UnfairCompetitionis correct, there may well be hidden costs-and stiff ones at that-which need to be weighed before we accept the continued profiteering by the nonprofits. Bennett and DiLorenzo argue in fact that the phenomenal growth of the nonprofit sector has been achieved on the back of private business, with small for profit firms suffering the most from the unfair competition of tax-exempt commercial organiza tions.

Nonprofits enjoy a whole host of advan tages-chief among them being tax-free status and reduced postal rates-that give them an un fair advantage in the marketplace: "The effect of these special privileges is that governmental poli cy not only reduces the costs of nonprofit organi zations, but it also raises the costs of doing busi ness for their for-profit competitors. Profit-seeking firms must pay higher taxes and postal rates to offset the subsidies accorded non profits. Thus, because of this preferential treat ment, competition between nonprofits and for profits is inherently unfair." Attempts by government to address the prob lem of unfair competition have been few and far between, and those few measures that have been taken have been largely ineffective.The Unrelat ed Business Income (UBI) Tax which was intend ed to level the playingfield by taxing the revenues of nonprofits has, for example, proven difficultif not impossible to enforce. Bennett and DiLoren zo explain that the courts have not been able to give a rigorous and consistent definition of just what constitutes an "unrelated" business activity by a nonprofit. And because the UBI tax was to apply only to "commercial activity which is not significantlyrelated to the purposes for which the nonprofit organization was established," enforce ment and collection by the IRS has been less than successful. For their part, nonprofits have taken an extremely expansiveviewof what constitutes a related purpose, making the under-reporting or non-reporting of revenues commonplace.