Economics Has the Answer; E. A. Opitz

The Question is: How may we achieve the free and prosperous commonwealth? To which The Answer is': Install the free market econ omy, as taught by Austrian-and some other economists. Trouble is, almost no one is asking The Question! Economic science does not tell John Doe how to make a million dollars on Wall Street, or a killing in real estate, or how to protect his assets. Entrepreneurship is an art, not a science; The Reverend Mr. Opitz is a member of the staff of The Foundation for Economic Education and is the author ofthe book Religion and Capitalism: Allies, Not Enemies. profitable investing likewise. Economic sci ence, like every other science, deals with ab stract principles and general rules. Economic science sets forth the general rules which mem bers of a particular society must apply in prac tice if the society is to enjoy maximum produc tivity and raise the general level of economic well-being. Economic science is a scholarly en deavor which shows what must be done to max imize the wealth of nations.

Economic science has The Answer for any one who asks how a society may advance from poverty toward affluence. But economic sci ence has no answer for those who ask: How can I make a fast and easy buck? This is the wrong question, so far as eco nomic science is concerned. How can people be persuaded to ask the right question? The ques tion people should ask might be phrased as fol lows: How can we create the social institutions which provide maximum opportunity for all of us to be more prosperous? Only a sense of moral obligation will generate such a question. The ordinary, decent, law-abiding citizen in his private dealings with his fellows would not use force or fraud to gain advantage over an other. But when force and/or fraud are legalized millions do seek some advantage for themselves at the expense of their fellows. When the State allocates resources and redistributes the wealth, it is using its power to deprive producers of what belongs to them, in order to dispense it to those who have not earned it. Everyone is forced to pay tribute for the benefit of the wield ers of power and their friends. Concerned with their own immediate well-being and looking to the State for handouts, tens of millions of Americans have no interest in working toward an economic order which would assure a rising level of prosperity for everyone-the free mar ket economy.

Austrian economics is The Answer, all right, but it is the answer to a question which only a few are asking. The reason: only a few have an ethical incentive to ask it. Millions are search ing for ways to increase their salaries, double their incomes, and enjoy the good life. Only a handful, by comparison, are working with any intensity to advance the free society-market economy way of life. Economic Fallacies We have it on the authority of Henry Hazlitt that "Economics is haunted by more fallacies than any other study known to man. " Who can deny it? Any reasonably bright high school stu dent can read Economics in One Lesson. Hav ing read the book, he can spot the fallacies in many textbooks of economics, in the speeches of public figures, in the commentaries of tele vision and radio pundits, in sermons and aca demic lectures, in almost any place he cares to look. The discipline of economics is not mired in simple ignorance; it is stalled by willful igno rance. Economic fallacies abound because ev ery economic fallacy in practice gives someone an economic or other advantage over someone else. Pocketbook motivations keep economic fallacies alive; slay them in one generation and they return from the dead in the next.

Virtually every economic fallacy that plagues us today has been demolished time and again over the past couple of centuries; but has this work of demolition diminished the number and power of economic fallacies? Hardly; they ap pear about as numerous and virulent as ever. There are few new economic truths, but new errors proliferate wildly. Demolishing fallacies and exposing errors may be exhilarating for a time, but it is negative work; it is to toil on a treadmill. The positive truths of a market econ149 omy-together with its supporting institutions and ideas-are reached only by taking a differ ent route. The celebrated classicist, Gilbert Murray, of fers some wise words on truth and error: "The great thing to remember is that the mind of man cannot be enlightened permanently by merely teaching him to reject some particular set of superstitions. There is an infinite supply of other superstitions always at hand; and the mind that desires such things-that is, the mind that has not trained itself to the hard discipline of reasonableness and honesty, will, as soon as its devils are cast out, proceed to fill itself with their relations. ' , There will always be a need to expose eco nomic error and demolish fallacies, but some thing more is needed if we wish to advance in the direction of a truly free society; and that something more is the sense of moral obligation which motivates persons to pursue the goals they perceive to be ethically right and good.

Economics needs ethics. Mises points out that economics "is a science of means, not of ends," and that science, fur thermore, is value-free. A science describes; but does not prescribe. "Science," Mises goes on to say, "never tells a man how he should act; it merely shows how a man must act if he wants to attain definite ends. . . . Praxeology and economics do not say that men should peace fully cooperate within the frame of societal bonds; they merely say that men must act this way if they want to make their actions more successful than otherwise. " Moral obligation, a sense of "oughtness," is not within the pur view of science; the sciences, basically, operate in a sector of the universe that is ethically neu tral. By the same token, there are no grounds in economic science per se for telling anyone that he ought to do this when he prefers to do that. Although every science is value-free, the uni verse is not value-free! We live in a rationally and ethically structured universe where some things are morally right and other things are morally wrong; there is genuine good, as well as real evil. Moral obligation, besides being a reality that presses on the sensitive conscience, is a potent incentive to strive to translate the reasoned truths of economic science into a go ing concern economy.

150 THE FREEMAN. APRIL 1989 Economics is the science of human action, and the actions of human beings are intimately implicated with ethical standards and moral ob ligation. In other words, economic science does not stand alone; it is a "means," and as a means economics needs to be hooked up with disci plines that deal with ends. What we have here is an IF-THEN situation. The economist cannot tell us that we ought to prefer a free and prosperous commonwealth; but IF that is what we want, THEN economic science can demonstrate that the market econ omy is the only means to achieve that end. Eco nomic science can only explain; the economic argument must therefore be joined to an ethical imperative which commands. Strengthening the Case Economic reasoning can demonstrate that the free market system is the most efficient way to produce goods and services, rewarding every participant according to his contribution to the productive process-as that contribution is judged by his peers. But the economic case for freedom is strengthened immeasurably when it is bolstered by moral reasoning which demon strates that the market economy is the only eco nomic order which embodies the ideas of liberty and justice for all. Capitalism is the only economic system that does not reward some at the expense of others.

The interventionist state provides cushy jobs for many a predator and parasite, people whose services would not be needed in a truly free economy. Many of these people, once they be come dependent on consumer choice, might, to begin with, be worse off economically than be fore. The pocketbook argument will not per suade them, but the moral argument might. The value-free science of economics is in complete; it is only a means, and it is the nature of a means to complete itself by combining with an appropriate end. Value-free economics needs the value-rich discipline of ethics. And it needs something more as well, the related idea of "equal rights" which so inspired our Whig and Classical Liberal forebears. This is the con viction that a portion of the divine is incorpo rated into the makeup of every man and woman, generating a sacred precinct within, which to invade is to violate. This is the domain of those Creator-endowed rights specified in our Declaration as rights to Life, Liberty, and the Pursuit of Happiness, which governments are instituted to secure. Equal freedom and equal justice under the law follow logically, and provide the legal, cultural, and moral frame work which demands the free economy as its natural corollary. 0 1988-89 Essay Contest "Why Choose Freedom?"

sponsored by The Foundation for Economic Education First Prize ($1500): David Beers, George Mason University, "Social Conscious ness and Individual Freedom" Second Prize ($1000): Matthew B. Kibbe, George Mason University, "The Unspoken Dialogue of the Market" Third Prize ($500): Roderick T. Long, Cornell University, "The Path of Lib erty" HonorableMention:Matthew E. Schramm, Augustana College (Illinois); Bobby Tay lor, University of Tennessee, Knoxville; Ellen Spertus, Massachusetts Institute of Tech nology; David M. Brown, Mercer County Community College (New Jersey); Darren R. Rice, University of Houston-Clear Lake; Richard Bostan, Simon Fraser University (Bur naby, British Columbia).