Book Reviews

First, as an Austrian economist who believes that individual choices are unpredictable, Car son rejects the idea that mathematical certainty in economics is possible. Statistics tell you what happened yesterday. "All attempts to reduce the complexity of what occurs in the market and the diversity of human motives in acting in the market to some one explanation or to mathe matical precision must ultimately fail . . . ," says Carson. Still, Carson believes there are economic principles. Men have natures, and na tures may be studied with an eye to determining likely uniformities. One of the uniformities of behavior is that men try to establish their own monopolies. "The most basic of all monopolies," says Car son, "is the exclusive right of free men to dis pose of their services. Indeed, it is the specific difference between freedom and slavery. It is a natural right, hence a natural monopoly, in that the individual is the only one who can direct the constructive use of his services." Land, of course, is a monopoly of its owner. So are shares in corporations, copyrights, patents, au tomobiles, and currencies.

But, having established these points, Carson finds himself in semantic trouble. Most of our historic debate about monopoly has not been cast in these terms. Carson has already said that one of the definitions of monopoly is the grant by government of an exclusive privilege to carry on the traffic in some good or service. Force enters the picture here. If an individual should attempt to deliver a first-class letter, he might find himself under arrest. When govern ment, with its monopoly of legal force, intrudes into the market, "it tends to bring habits formed in another arena with it." The Sherman Antitrust Act quickly became unenforceable because no one could be sure of what it meant. The Clayton Act, which suppos edly exempted labor organizations from the provisions of the antitrust laws, declared that labor is not a commodity. But labor is nonethe less bought and sold in the marketplace. Con gress, in its attempt to help the unions, was, so Carson writes, "caught once again in the illogic of trying to prevent what does not so clearly exist, i.e., private monopolies, and doing it by hampering competition." The National Labor Relations Board, as the constituted clarifier, was supposed to bring order out of chaos by insisting on bargaining in good faith. Alas, the phrase "good faith" eludes easy quantification.

Land, labor, and capital are correctly ac cepted by Carson as the basic factors of produc tion. They are all scarce to varying extents. It is Basic Economics by Clarence Carson is available at $12.00 paperback from The Foundation for Economic Education, Irvington-on-Hudson, NY 10533. when one turns them into "isms" that semantic troubles begin. Landism was particularly im portant in the Middle Ages, when feudal over lords kept their serfs from moving about. But towns persisted, often on old Roman and Greek sites, so there were avenues of escape from serf dom. The Black Death gave laborism its big opening. But labor needed tools. Its guilds tried to monopolize tools. But fluidity had come to stay in Western economic systems. The capital ist, in his first guise as a mercantilist, had ar rived with the eighteenth century. Karl Marx is described by Carson as a "cosmic thief." He advocated stealing both the land and all important tools from their owners, his justification being that all property is theft anyway. But the cosmic thief was deficient as a cosmic thinker, as were Lenin, Trotsky, and Stalin after him. The Russian peasants thought they were going back to a peasant-owned land ism. Bolshevik Party members, with their union adherents, thought the new day would be one of laborism. They were all fooled. What happened was that capitalism, in the form of state capi talism, took over in the developed or develop ing parts of the world.

It is at this point that Carson falls back on his remarkable descriptive powers. The last part of his book goes into detail to explain the various formulations of mercantilism (in which the new nation-states vied with each other to comer gold and silver) and the big breakout in Adam Smith's Britain when mercantilism gave way to free trade. With the lowering of tariffs and the repeal of the Com Laws, Britain became, for the nineteenth century, the workshop of the world. Carson goes to T. S. Ashton, among other historians, for his knowledge of the "workshop" period. The tremendous growth of population in Britain during the Industrial Rev olution is explained by the "substitution of wheat for inferior cereals . . . the use of brick instead of timber in the walls. . . ." There was 43 more soap and cheap cotton underwear. The "larger towns were paved, drained and sup plied with running water. . . ." Many more people were surviving birth and childhood dis eases.

From England Carson moves on to America, where the British experience was repeated at a much faster tempo. Carson includes a look at Sweden, where capitalism fuels the welfare state, which "keeps the cow fat in order to in crease the amount of milk it can get from it. " A general description of welfarism throughout the West, and a scathing chapter on Communism as a centrally planned economy, conclude a book whose biggest audience may want to tackle it at the end before going to its beginning. D IN PURSUIT OF HAPPINESS AND GOOD GOVERNMENT by Charles Murray Simon and Schuster, 1230 Avenue of the Americas, New York, NY 10020· 1988 • 301 pages •$17.95 cloth Reviewed by Joan Kennedy Taylor T he 1988 national election campaign of fered a contest over whether Republi cans or Democrats could create more and better social programs to help the family, educate and care for children, and above all, alleviate poverty. ' 'Poverty, " writes Charles Murray, "has in recent years been to policy analysts what damnation is to a Baptist preacher. . . . It is the generic standin for the social problems of our age. Solve the riddle of poverty, we have often seemed to hope, and the rest of our problems will solve themselves."

Murray's first successful book, Losing Ground, argued persuasively the now widely accepted thesis that poverty programs are part of the problem rather than the solution. Now, in this new book, he suggests that, in an even wider sense (no matter what the politicians say) the failure of social policy is not a failure of compassion or human feeling-it is a failure to connect cause and effect; a failure to have real izable goals and standards; a failure to see that all policies have unintended outcomes, but that 44 THE FREEMAN. JANUARY 1989 those unintended outcomes can be positive rather than negative, if they are policies that restrain government and maximize individual choice. Adam Smith, Bastiat, Mises, Hayek, and Milton Friedman have explained unintended outcomes in economics. Now, Charles Murray details for us how both the invisible hand and the invisible foot work in that vast spider web of regulation, redistribution, and indoctrination that we call "social policy" today--coming to many of the same conclusions as these freedom philosophers, although his argument doesn't build on theirs.

"First, I will associate myself with a partic ular set of views," he says bluntly. "Reduced to their essentials, these views are that man act ing in his private capacity-if restrained from the use afforce-is resourceful and benign, ful filling his proper destiny; while man acting as a public and political creature is resourceful and dangerous, inherently destructive of the rights and freedoms of his fellowmen. I will explain these views using the language and logic of the American Founding Fathers. Next, I will sug gest that if one accepts that set of views of man, the way we assess social policy is pushed in certain directions. ' , He starts this book by asking, "What consti tutes success in social policy?" and goes on: ,'For most of America's history, this was not a question that needed asking because there was no such thing as a 'social policy' to succeed or fail. . . . As late as the 1930s, there was still no federal 'policy' worthy of the label affecting the family, for example, or education, or religion, or voluntary associations."

Murray finds complex answers to his ques tion by going back to the beginning, to the Dec laration of Independence, and re-examining that little-understood phrase, "the pursuit of happiness." He starts by asking, "What is happiness?' , There is a long philosophical tradition, or rather, there are two long philosophical tradi tions that assumed the question could be an swered definitively and attempted to do so. The first stemmed from Aristotle, focused on the nature of the good life, and attempted to define and rank all aspects of happiness. The second, which arose in the eighteenth century, stressed individual psychological satisfaction, but both traditions agreed substantially on how men should pursue happiness--develop those talents you have, do your job well, raise a family, con tribute to the community---even though they disagreed profoundly on such issues as whether or not an outsider could rank "happiness" for others.

"It was not until the twentieth century, " says Murray, "that social science dispensed with the intellectual content of both traditions and began to define happiness by the response to question naire items." Despite this refreshing irrever ence, he proceeds to examine more modem ap proaches to the question also, and summarizes a wealth of argument, experiment, and data col lected by contemporary social scientists, to show that there is hard evidence out there that there are objective criteria for the pursuit of happiness. Government, he says, can provide the "en abling conditions" for this pursuit, a frame work that has little or nothing to do with the distribution of material resources other than to protect a functioning market economy. The wrongheaded focus on poverty has obscured the importance of such things as safety from crim inals, dignity and self-respect (Murray presents persuasive evidence that self-respect cannot be faked, but results from the successful response to challenge), and finally, the possibility of self-actualization.

Happiness, of course, pertains to individu als-groups, whether united by class, race, creed, or special interest cannot properly be said to be happy. So taking the pursuit of hap piness seriously as a standard exposes as mean ingless all the aggregate statistics that social policy analysis relies on, statistics showing that a particular policy creates so many jobs, or saves so many lives, or raises so many income levels. Murray hopes to tum the whole field of social policy analysis on its head, by persuading analysts that they should ask instead, what ef fect will this social policy have on the happiness (properly understood) of the individuals af fected by it? By this standard, our social policies are found sadly wanting. The training program that produces such hopeful aggregate statistics is found overwhelmingly more likely to teach any individual in it that he cannot succeed-only one in 25 trainees actually finds a job. The speed limit that "saves thousands of lives" is, on examination, only infinitesimally raising the chances that anyone individual will escape an accident caused by someone else, but it exacts a measurable price in time and money from that same individual. And happiness, properly understood, Murray shows, requires the oppor tunity to build a self-respect based on effica cious individual action and choice-but those are precisely what most social programs limit or eradicate.

For all its theoretical bent In Pursuit is full of facts, findings in sociology and social psychol ogy, summaries of the differing views of schol ars and thinkers, and hardheaded, real world arguments, as well as wonderful "thought experiments" on how associations (" little platoons") can take the place of government action-how, for instance, people might join together to hire teachers to educate their chil dren, or to limit the depredations of crime. This is a book to treasure for a number of reasons. Primarily, it is a rare example of a modem liberal arguing himself into a classical liberal stance. Never mind that in the beginning the author seems to imply, for instance, that everyone thinks that food stamps are good-the more you read, the more you will realize that this is a book written by someone who has been a professional policy analyst, for the policy analysis community as well as the general reader, using language and data that can reach that community. Never mind that, like the pa tron saint of this book, Thomas Jefferson, Mur ray's standard for the pursuit of happiness seems to leave room for some government role in fields such as education. A book that begins with the Declaration of Independence and ends by quoting Jefferson on the need for some form of severely limited government is a valuable weapon in the fight for freedom, especially when it is by a fine and original mind whose argument is a pleasure to follow. 0 Joan Kennedy Taylor is a former Contributing Editor of The Freeman and the editor of the FEE anthology, Free Trade: The Necessary Foundation for World Peace.

OTHER BOOKS 45 PUBLIC CHOICE AND CONSTITUTIONAL ECONOMICS edited by James D. Gwartney and Richard E. Wagner JAI Press, Inc., 55 Old Post Road, No.2, Greenwich, Connecticut 06830· 1988 •422 pages, $56.50 (Available at $29.95 from Laissez Faire Books, Department F, 532 Broadway, New York, NY 10012-3956: Telephone: 212-925-8992) Reviewed by Robert W. McGee T his book is a compilation of eighteen ar ticles written by authors from slightly different perspectives. There are essays by James D. Gwartney and Richard E. Wagner, James Dorn, James M. Buchanan, Knut Wicksell, Gordon Tullock, Roger Pilon, Richard Epstein, Terry Anderson and P. J. Hill, Peter Bernholz and Malte Faber, Gale Ann Norton, Peter H. Aranson, Forrest McDonald, Robert Bish, Robert Higgs, Dwight R. Lee and Richard B. McKenzie. But unlike most compilations, there are few gaps or overlaps, and the authors are writing from a common viewpoint-public choice, broadly defined. They all agree that government has overstepped its bounds. Their discussions range from how things got out of hand to how we can get back on course.

The first two chapters provide an especially good backdrop for those who are new to pU~lic choice theory. Gwartney and Wagner do a fIne job of outlining public choice theory in non technical language. Over the last 200 years, the Constitution has protected political rights fairly well, but economic rights have been seriously eroded. Politicians act in their own interests rather than those of their constituents. Voters choose candidates who promise them the most. The result is that democracy takes from the ma jority, whose power is dispersed, and gives to concentrated special interest groups. A few people benefit a lot, while every~ne else ha.s to pay just a little bit. But the effect IS cumulatIve. Everyone is trying to live at the expense of ~v eryone else. As the eighteenth-century ScottIsh historian Alexander Tytler said: A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote 46 THE FREEMAN. JANUARY 1989 themselves largess out of the public treasury.

From that moment on, the majority always votes for the candidate who promises them the most benefits from the public treasury, with the result being that democracy always collapses over a loose fiscal policy. While government is not supposed to take property for public use without just compensa tion, it now "takes" as a matter of course, for both public and private use, seldom thinking of compensating the individuals whose property has been taken. Rent control laws are but one of many examples given. One of the most out rageous instances is the 1984 Supreme Court case of Hawaii Housing Authority v. Midkiff, wherein the court permitted the State of Hawaii to use eminent domain to take land and apart ments from their owners and sell them to the previous tenants. This action not only was a taking, but a taking for private rather than public use. Yet the action was declared consti tutional, even though the Constitution grants authority to government to take only for "public" use. The definition of "public" has become so twisted over the years that it has come to the point where just about anything government does is for the "public."

Federal spending is supposedly limited to common defense and the "general welfare." Yet many Federal expenditures go to benefit very small groups, such as sugar farmers, artists at state universities, or any other group that can line up at the Federal trough. But gov ernment control over our lives isn't limited to government spending. Government can take our tax dollars and give them to others, al though tax rates can be raised only to a certain point without generating a backlash. Our elected representatives get around this by regu lating businesses and forcing them to pay for things that otherwise would be paid for with tax dollars. Other constitutional protections of economic rights have been seriously eroded over the years. The contract clause has withered and died on the vine. Parties no longer can enter into a contract without worrying about violating a minimum wage law, antitrust law, civil rights law, labor law, or numerous other statutes and regulations. The equal protection clause has been massaged to the point where it now means whatever the court says it means. None of the clauses in the Constitution still can be taken at face value. To learn what each sentence means, we now must look to case law rather than the original wording. It is almost as though the Constitution is void where prohibited by law.

Government is no longer restrained by the chains of the Constitution. The only limits are those in the eyes of our elected and unelected officials. People are now using government to do what they would be prohibited from doing as private citizens. How did we get into this position? Several of the authors provide answers. As I read each chapter I could see a multi-layered mosaic being woven before my eyes that, on the whole, gives a good, detailed, and scholarly explanation. One of the most interesting inter pretations is given by Robert Higgs. Govern ment power (and abuse of individual rights) ex pands during times of crisis, and never fully re treats after the crisis has passed. Our various wars, as well as the Great Depression, have given rise to new governmental powers. Over the centuries, the power of government has ex panded to the point where it now permeates every aspect of our lives.

How can we get out of this mess? Higgs is not optimistic. Electing better public officials is not enough. Neither is appointing better judges. Things will start to tum around when public sentiment demands that things be turned around. In the words of Abraham Lincoln, "With public sentiment nothing can fail; without it, nothing can succeed. Consequently, he who molds public sentiment goes deeper than he who enacts statutes or pronounces decisions." . This book is one of the better ones on public choice theory. Its scholarly approach, detailed footnotes, and case, name, and topical indexes provide a wealth of references for further study. The fact that it was written by numerous authors does not detract much from the unity of the presentation because the editors did a good job in selecting the articles to be included. D Professor McGee, who holds doctorates in both accounting and law, teaches accounting at Se ton Hall University.

THE PRESENT AGE: PROGRESS AND ANARCHY IN MODERN AMERICA by.Robert Nisbet Harper & Row, Keystone Industrial Park, Scranton, PA 18512· 1988 • 145 pp. • $17.95 cloth. Reviewed by Richard M. Ebeling R obert Nisbet is one of the most re spected sociologists in America. His works, The Sociological Tradition and Sociology as an Art Form, have long been clas sics in the field. Professor Nisbet also stands out because, unlike many in his discipline, he is neither a socialist nor a welfare statist. He views himself in the tradition of Edmund Burke and Alexis de Tocqueville, and espouses a conser vatism that blends a deep respect for spontane ous social order and cultural tradition with a strong belief in the dignity and autonomy of the individual. This blending makes Professor Nis bet a powerful and eloquent defender of the free society and individual liberty. Two of his best works in this defense are The Twilight of Au thority (1975) and Conservatism (1986).

In his latest book, The Present Age: Progress and Anarchy in Modern America, Professor Nisbet takes critical stock of the political, eco nomic, and cultural status of the United States 200 years after the founding of the Republic. He argues that a fundamental break occurred in American history with the entrance of the United States into the First World War in 1917. Prior to that, he explains, America was a land of limited government with a small Federal pres ence. Americans believed in and practiced po litical and economic liberty. The U.S. had a "small town" orientation in which the individ ual saw himself primarily as a member of a local community to which he gave his alle giance and from which he received support through a variety of voluntary, religious, and traditional associations. This environment (and the social psychology that went with it) was shattered by America's entry into the war. Woodrow Wilson's ideal was of a "national community" that would be guided by strong governmental leadership em anating from Washington and manned by a new intellectual elite that would regulate and mold OTHER BOOKS 47 economic and cultural affairs. The goal was the creation of a new state-managed society for a higher "moral good."

Seventy years later, Professor Nisbet says, the United States has become a moralizing world policeman, a vast bureaucratic state in which government intrudes into practically ev ery comer of our economic and personal affairs, and a culturally bankrupt society in which pur suit of short-run monetary rewards has increas ingly replaced loyalty and fidelity to all ethical standards in personal and social conduct. Since Wilson's crusade to "Make the World Safe for Democracy," Professor Nisbet insists, America has been armed with the vision that it has a duty not only to offer a moral example to the world, but also to take upon itself the re sponsibility actively to intervene in the affairs of other nations to "teach them" good govern ment. This policy has bred a vast military es tablishment, fostered an often-corrupting sym biotic relationship between the Pentagon and sizable segments of the business community, and produced disastrous outcomes in foreign policy. (As an example, Professor Nisbet dis cusses Franklin Roosevelt's naive fawning over Stalin at the Tehran and Yalta Conferences, all in the name of getting "Uncle Joe" on "our side" in making a better and more moral post war world.) Domestically, the emergence of a state managed' 'national community" has politicized every facet of economic and social life. While Americans constantly complain about the bur den and irritations of the new bureaucratic state, practically everyone wants to see it expandin the direction that materially benefits them. Pro fessor Nisbet explains that this has arisen from a subtle shift in the meaning of freedom. As he expresses it, freedom no longer means "au tonomy from power but participation in power. " In the new lexicon, a free society is one in which each individual has an equal op portunity to plunder all the others.

But it is in the social and cultural realm that Professor Nisbet sees the worst effects of the new America that has grown up since 1917. The omnipresent state has created "the loose individual. " It has intruded upon, disrupted, and, in many instances, fostered the demise of the cultural webs of spontaneous social order 48 THE FREEMAN. JANUARY 1989 and stability. In so doing, the bureaucratic state has severed both individuals and groups from the traditional networks of family, community, and religion that have historically taught, rein forced, and protected the ethical and social val ues essential for a sound, healthy, and growing society. Today the individual has fewer and fewer attachments to these traditional institu tions. The individual has been increasingly ,'atomized" as the State has destroyed or weak ened the intermediary social institutions that historically separated and protected him from political authority. Man in modem American society has lost an Archimedean point to stand on outside of himself. Hence, modem man col lapses into an unending introspection about himself and how he "feels" about things, with nothing greater or more worthy outside·himself to which he should aspire. His values have been reduced to a narrow "cash nexus" and the plea sures money can buy.

The critical reader can find many points upon which to disagree with either the emphasis or the argument in Professor Nisbet's analysis. For example, his conception of the "cash nexus" in a market economy ignores the positive role the anonymity of money transactions has played in enhancing and protecting individual liberty and freedom of choice. His conception of the work ings of trading deals, and corporate takeovers in financial markets, likewise, suffers from a fun damental misunderstanding of how a· competi tive market establishes avenues for shifting con trol of capital resources to more competent hands. But it is the general focus and orientation that make Professor Nisbet's reflections an insight ful contribution to our understanding of late twentieth-century America. The America of the 1980s would have been radically different from the America of 1917 even without two World Wars and the introduction of the Welfare State.

What Professor Nisbet shows is that many of the most repellant features of the present age are the unintended consequences of the plans of those in the political arena who wished to im plement an American "new order" at home and abroad. The question now is, how do we undo what has been done? 0 Professor Ebeling holds the Ludwig von Mises Chair in Economics at Hillsdale College. r\e"'\ Basic Economics by Clarence B. Carson "Economics does not ... attempt to answer the question of why things are the way that they are. It does, however, give help in answering a whole range of other questions. It deals with an essential and pressing aspect of life. Its subject matter is the production and distribution of goods and all that is entailed in it. Economics deals with such ques tions as who gets what, with how prices are deter mined, with the operation of production, and even why goods are goods. Since this is its field, it also treats of many matters that have to do with public policy. Indeed, no single subject appears to oc cupy more attention in the issues that arise in this century than economic questions."

-CLARENCE B. CARSON Basic Economics Order from: The Foundation for Economic Education bvington-on-Hudson, New York 10533 Basic Economics, unlike most present-day books on economic principles, is written in the Anglo-American and natural law traditiona tra dition which provided the foundations for the United States Constitution, which provided the premises for full-fledged private property, free en terprise, free trade, and individual responsibility. paperback $12.00 (The cloth edition of Basic Economics is available @ $24.95 from the publisher, The American Text book Committee, P.O. Box 8, Wadley, Alabama 36276.) THEFREE IDEAS ON LIBERTY 52 Lessons in a Supermarket John A. Baden and Ramona Marotz-Baden Voluntary transactions lead to peaceful interaction. 54 Growth Controls and Individual Liberties Jonathan Sandy and Dirk Yandell The personal and economic costs of government control of private property.