Book Reviews

"Nor," says Bandow, "is that all the money received by rural America. In 1986, the federal government spent another $3.8 billion on crop research, soil conservation, and similar programs. Sugar quotas, peanut quotas, and citrus marketing orders provide billions more dollars to producers through higher prices instead of higher taxes. At the same time, Uncle Sam has proved to be an incredible bungler as Farmer-In-Chief .... Despite several billion in export subsidies ... the American farmers' share of international food markets con tinues to shrink." Bandow knows that the traditional "family farm" is not lightly to be derided. But there is no reason, he insists, to force Americans to keep farms afloat "any more than to save any other uneconomic family business, whether dry cleaners or corner drug stores. Just 8 percent of America's full-time farmers produce two-thirds of the nation's food; there is no public interest in subsi dizingthe many small operations which contribute virtually nothing to the nation's food supply.... "

With sugar quotas being what they are, there is no danger that cane and beet growers will fail to satisfy America's sweet tooth at a price. So Bandow proceeds to remark upon the "sleazy" action of Congress's elimination of the $250,000 limit on loans to beekeepers. The beekeepers got on the Federal dole in 1949 and, like so many of their farming counterparts, have demonstrated an "uncanny knack" for loot ing the Treasury. As a result, the government became the world's largest beekeeper. Having had some testy fun with the beekeepers, Bandow passes on to the sunflower "crisis." He doesn't mind eating sunflower seeds, but sees no reason to send the bill for them to taxpayers just to please North Dakota. Moving on to the subject of marketing orders for citrus fruit,Bandow gets really serious. Just once in recent decades has a freeze in Florida resulted in a situation that made it possible for Californians to market navel oranges freely without "orders." The success of the brief free market in oranges has encouraged freemarket organizations to press for the perma nent elimination of all controls. Bandow would cheer, but he is afraid that reform will not comf easy. "Until conservative freemarket enthusiast: and liberal champions of the consumer place thei professed principles before the votes of agribusi ness," he says, "food will continue to rot in the fields."

Bandow is not only implacable about the farm situation, he is implacable about dealing with any protective theory or practice. Amtrak must go; the Postal Service must yield its monopoly of first class mail. Uncle Sam's extensive land hold ings-"six times the size of France"-must be made available to users by lease or sale. Airline deregulation must be preserved. OPEC is no long term menace if we proceed to "lease the oceans" off the coasts of Alaska and California. Bandow wants to make our judges "answer able" not only to people but to the Constitution. He would limit their terms of office. Bandow says it is time to repeal the Davis Bacon Act which stipulates that workers on Fed eral projects shall get "prevailing" (meaning union scale) wages. One wishes him luck. He has already had some luck in pushing the movement to allow knitters to work at home. The Reagan Adminis tration finally decided to lift constraints from home workers as long as the employer filed with the Labor Department and paid the minimum wage.

As for the minimum wage itself, Bandow thinks it is a job killer. But that is another story. D FREE MARKETMORALITY: THEPOLfiaCALECONOMY OF mE AUSTRIANSCHOOL by Alexander Shand Routledge, Chapman & Hall, 29 w. 35th Street, New York, NY 10001-2291e 1990 e 228 pages e $55.00cloth, $16.95paper Reviewedby Nick Elliott I n the past, Austrian economics has often been regarded as an obscure and arcane off shoot of the discipline, which has had little practical effect. More recently, the Austrian school -particularly Friedrich Hayek-has become an acknowledged influence on the government of Margaret Thatcher. A leading Labour Member of Parliament advised Mrs. Thatcher to stop listening to the "mad professor who is constantly whisper ing in her ear." Alexander Shand's first book was The Capital ist Alternative,a compact guide to the economics of the Austrian school. He follows it up in Free MarketMoralitywith an introduction to what the 439 Austrians have to say on political economy. After all, the Austrians have always referred to their dis cipline as "praxeology" -the science of human actionso it is perhaps inappropriate to pigeon hole their work as "economics."

In fact, the book dips into much more than Aus trian economics-it distills volumes of political economy into a digestible 228pages, covering writ ers from Descartes to Dostoyevsky, from Locke to Lenin. The Austrian economists have also been classi cal liberals, and they have deduced their libertari an political economy from the same principles that guide their economics. Methodological individual ism-the idea that the individual should be the starting point of analysis-also leads to political individualism. Austrians have always argued that holism-treating groups and aggregates as real-is bad economics. It is a short step to argue that holism can be despotic, because it teaches that the individual counts for nothing. Being "political" in no way compromises their scholarship, because their work displays every evi dence of rigorous social science. One striking example is Hayek's view that the market cannot be claimed to be "moral," because it doesn't conform to anyone's desired ends. This view obviously comes from an honest scholar in the pursuit of truth, rather than an ideologue willingto enlist any argument in his cause.

The most stimulating sections of the book are those on altruism and on equality. The Austrian argument that the discovery process of the market is the best means for improving the position of the worst off is one that isn't widely understood. This lack of understanding is especially evident in the political opinions of religious leaders. The case is put very crisply by Hayek, when he says of the cap italist that "He is led by the invisible hand to bring the succor of modern conveniences to the poorest homes he does not even know." There is one point of Shand's here with which I would take issue. This is where he describes the view that businessmen shouldn't be altruistic because this would divert them from the pursuit of profits. If we followthe subjectivism of the Austri ans, we must allow for altruism to enter into the preferences of individuals, and who is then to say that the outcome is "worse" than if profit were the only concern?

Murray Rothbard cleverly argues that a society 440 THE FREEMAN • NOVEMBER 1990 willbecome more charitable as it prospers. As peo ple become richer, and acquire more exchangeable goods (cars, televisions, and so on), the marginal utility of those goods falls. Concurrently, the marginal value of nonexchangeable goods-those things that "money can't buy," like the pleasure of helping others-goes up. Therefore, a growing economy encourages charity and good works. To an economist the book reiterates the distinc tions between Austrian and neoclassical eco nomics. The Austrians view society as highly com plex, such that it cannot usefully be reduced to demand and supply curves. In parts, though by necessity for such a book, it is tantalizingly brief on such points of distinction and debate. Shand com bines well the roles of chronologist and critic, with survey followed by comment. The author credits the Austrians with little influence, and indeed includes a section on "The Limited Acceptance of Austrian Ideas." He is too cautious, perhaps looking with the academic's eye for a complete transfusion of ideas into policies.

Several of the collectivist theories and para digms described in Free Market Morality have been thoroughly discredited, and this must in part be due to the robust and relentless challenges made by the Austrians. They have surely helped to bury the idea that there is a simple relationship between unemployment and inflation, and they must also have helped to drive unreformed Keyne sian economics into the fringes that it now occu pies. Both of these changes have had very definite results in actual policy. And, while far from popular, the Austrians have made considerable inroads into academic and political discourse. Shand reports that a Get Organized! prominent academic once scoffed at the these free-marketeers ~~preaching to the converted" in the Mont Pelerin Society, a charge that no one could fairly make today. Shand does credit the Austrians with some influence on British policy toward inflation and toward trade unions. One should add the caveat that Hayek's precise recommendation on inflation wasn't followed, but he did provide a new under standing of the problem.

More important, in my view,is the new appreci ation of the market economy that the Austrians have given to the Thatcher government. Some of the ideas explained in the book have frequently popped up in ministerial speeches over the last few years. Mrs. Thatcher caused a storm when she said that there is no such thing as "society," only indi viduals, but this is a prominent theme for the Aus trian school. Shand explains that the Austrians believe the welfare state to be based on the synop tic delusion-the idea that the relevant facts can be known to one mind. This idea has appeared in the recent fervid debates about the future of the National Health Service. And the Austrians dis parage macro-economics, arguing that attention should focus on the micro-foundations of the economy. This argument has often been invoked by Thatcherite Chancellors of the Exchequer. The book is a good introduction to Austrian political economy, and is particularly useful be cause it points out the relevance of the ideas to present-day politics. D Nick Elliott is a financial journalist with the London bureau of Dow Jones & Company, Inc., and an associ ate scholar of the Adam Smith Institute.

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