Book Reviews

This was no easy task, given the fact that some 30 million people, Red Guards included, had died in famines that might have been mitigated. Mao and Zhou were as culpable in trying to hide evi dence of famine as Stalin had been in the case of the Ukraine. It took two huge planes to carry White House and State Department personnel and 87 print and TV journalists to Beijing with Nixon in 1972. Included among the journalists were Bill Buckley and Theodore White. Walter Cronkite, Dan Rather, and Barbara Walters were also aboard. It was Buckley who provided the inspiration for Mosher to take a close look at "the deci~edly gentle treatment accorded Mao's China by Nixon's press corps." Buckley should have been well aware of Nixon's long-term goal of separating Red China from Red Russia. But Nixon's effusiveness in greeting Mao and Zhou was gagging.And the deference paid by Nixon to the "revolutionary opera ... the brain child of Mao's wife, Jiang Qing, who became Chi na's de facto cultural czar during the Cultural Rev olution," was strange. Nixon had called the radical leftist SDS, or Students for a Democratic Society, "campus bums." But that was in America. Now, in his determination to ingratiate himself with Mao and Jiang Qing, he found himself "warbling" that the operatic play The Red Detachment of Women, which had been staged for Nixon's benefit, was "great." "It was a powerful message and intended for that ... excellent theater and excellent dancing and music," Nixon told a reporter. And what was the "message"? Only that poor peasant daughters should run off to join the Red Army.

Theodore White of Time and Bill Buckley sat next to each other on the way over to China. "As White's ideological opposite," says Mosher, "... Buckley brought a different set of presuppo sitions to bear on the People's Republic of China. ... unlike White, he believed that Nixon's overture to China was not only not in the best interests of the United States, it was positively immoral given the enormity of the crimes of those with whom Nixon would be meeting." So who was "misper ceiving" what? If you believed in the fellow travel er's picture of the world, you would be on White's side. But if Red China, despite Tiananmen Square, is destined to go capitalist with the rest of the world, the big long-term "misperception" will be with the Deng Communists. Mosher goes back to beginnings. Throughout the Middle Ages Marco Polo's tales of the "myste rious East" fascinated Europe. But it was not until Jesuit missionaries went to China at the turn of the 17th century that the West learned anything about China. The Jesuits hoped to convert the Chinese to Christianity. But the conversions seemed to work in reverse.

The prestige of missionaries was revived after 1928, when Kuomintang leader Chiang Kai-shek married Wellesley graduate Soong Mei-ling and announced his conversion to Methodism. With a Christian couple running China, Protestant mis sionaries seemed to have succeeded where the Jesuits had failed. Pearl Buck, the daughter of missionaries, did more than anyone else to provide a picture of Chi na acceptable to Americans. Her best-selling novel The Good Earth, and the movie that was made of it, reached tens of millions. Buck, says Mosher, created "a new stereotype of rural Chi nese as a strong and attractive people of the soil, kind and generous toward the young, respectful toward the elderly, and dignified, even cheerful, in misfortune." This image of the Chinese was consonant with what became known as the Yenan picture. Mao had led his long march to Yenan in northern China, a place that was duly mythologized as the capital of an agrarian people who were about to rescue China from Chiang, who had to flee the Maoists to Taiwan.It was in Yenan that the Communist Party of China perfected "the array of techniques to handle short-term visitors-parachute journal ists-which they later used to such effect during Nixon's visit."

Guenther Stein of the Christian Science Moni tor described "the men and women pioneers of Yenan" as "new humans.... " They constituted "a brand new well integrated society, that has never been seen before anywhere." Harrison Forman of the New York Herald Tribune and London Times was so impressed by small-scaleprivate enterprise in Yenan that he said the Chinese Communists did not practice Communism at all. Theodore White spoke of "agrarian liberals" in his dispatches, only to have the malapropism edited out by the percep tive Whittaker Chambers, then the foreign editor of Time. The Nixon trip, even with all its nonsense, was justified, but things have changed with the collapse of Communism in most of the world. There is no 435 callfor the U.S. to worry about a war on two fronts as long as the Soviets are distracted by trouble in the Baltic states and in the Ukraine and Great Russia itself. George Bush is playing it cagey-he does not make excuses for Deng and Tiananmen Square. But he does not assume the right to con demn Deng as long as there is a chance for signifi cant change in China under Deng's successor,who ever he may be.

All things considered, Mosher has written a fascinating book. D THE CAPITALISTSPIRIT: TOWARDA RELIGIOUSETHICOF WEALTHCREATION edited by Peter L. Berger ICS Press, 243 Kearny Street, San Francisco, CA 94108 1990 • 192 pages • $18.95cloth Reviewed by Raymond J. Keating T heologiansusuallyoverlookthe creationof wealth when discussingthe ethics of socio economic issues. They focus instead on wealth distribution, or more accurately redistri bution. Since distribution, however, doesn't occur in a vacuum, the ethics of distribution have been deficient and largely distorted. After all, wealth distribution is meaningless without wealth cre ation first taking place. This book takes some initial steps in redressing this neglect of creativity and production. Bringing together some prominent free market thinkers, sociologist Peter Berger has created a volume dedicated to forming a strong ethical case for cap italism.

Berger sets the tone when he states in the intro duction that "[e]xcept under the most primitive conditions (a subsistence economy in a tropical paradise, for example), wealth is never given-it must be created." Such a theme is in stark contrast to the anti-capitalist, pro-socialist, zero-sum thinking prevailing among many theologians, for example, the National Council of Churches, the American Catholic bishops, and various liberation theologians. Set against the dismal, statist philoso phies of such groups, The Capitalist Spirit is a col lection of insightful and sometimes even inspiring essays.

436 THE FREEMAN • NOVEMBER 1991 Professor David Novak, in his essay "Economics and Justice: A Jewish Example," sagaciously expounds upon the distribution/production rela tionship: "Those who produce more of what is needed by the society are given more than those who produce less. These rewards, even more than being recompense for past productivity, are incen tives for future productivity. It would seem that anyone who does not at least partially correlate the economics of distribution and the economics of production is operating under an illusionof infinite supply and immediate availability." David Novak also illustrates a very delicate and significant balance struck by the Jewish tradition. He summarizes: "By emphasizing the covenantal necessity of human mutuality before God, Jewish t(adition affirmed the value of individual incentive without the glorification of individual human self ishness, and it affirmed the value of communal restraints without the glorification of collective human power." Indeed, this has been an important legacy in the West.

Perhaps the most complete exposition of a cap italist ethic in this text, however, is given to us by author Michael Novak in his "Wealth and Virtue: The Development of Christian Economic Teach ing." He notes a too-often disregarded, yet critical aspect of the ethical nature of capitalism: "Many intellectuals ignore the evidence of.the immense benefits, in the form of prosperity, liberty, and sig nificant moral progress, that the capitalist economies ushered into history." In particular, Michael Novak turns to the great Scottish Enlightenment thinkers for a moral basis of the free enterprise system. He cites the argu ments of David Hume and Adam Smith "in favor of the turn toward a capitalist economy": • "First, life in premodern rural society was cir cumscribed not only by poverty but also by the absence of possibilities for self-improvement and action. The Scottish intellectuals saw such possibil ities in commerce."

• "Second, by ending dependency, the rise of commerce and industry would awaken the rural poor out of the slumbers of idleness." • "Third, a commercial society is less warlike." • "Fourth, the practices of commerce bring people together in more frequent and more com plex interactions." • "Fifth, a commercial society would mix together the ancient social classes." • "Sixth, as market activities grow, so also do popular knowledge, skills, and specializations." • "Seventh, markets require forms of civilized behavior: patient explanation, civil manners, a willingness to be of service, and a willingness to reach satisfactory mutual consent." • "Eighth, the replacement of agrarian ways (with their relative isolation and taciturnity) by commercial ways (with their city bustle and rapid talk) tends to awaken one of the most precious, high, and rare forms of moral development: the civicneed for the virtue of sympathy."

• "Ninth, pursuing this ideal [i.e., sympathy] helps the person of commerce to be a little more objective than others, to see a little farther, and to discern needs and possibilities that have not yet been served." Novak recognizes a need for some "practical moral guidance" in the realm of commerce, and declares that the "best moral instruction ... begins by raising aloft the ideal to be pursued: the exercise of God-given talents to imagine, invent, discover, and bring into widespread use the resources that God has hidden in the natural world." In "Private Property, Ethics, and Wealth Cre ation," economist Walter Block also declares that the capitalist system no longer can continue to concede "the moral high ground to its detractors." He asserts that the answer lies with the libertarian philosophy. The libertarian emphasis on self ownership, private property, voluntarism over coercivism, entrepreneurial capitalism over state capitalism, and negative rights, is intrinsic in estab lishing an ethic of wealth creation. Block also lays to rest the destructive belief held by some libertar ians that religious belief and libertarianism are incompatible.

Due to space considerations, I merely will men tion that "Early Christianity and the Creation of Capital" by Robert M. Grant and "Camels and Needles, Talents and Treasure: American Catholi cism and the Capitalist Ethic" by George Weigel are well worth reading also. Finally, in "Wealth and Whimsy: Being Rich, Producing Riches," Richard John Neuhaus, editor in-chief of First Things, seeks to put this entire debate over a religiousethic of wealth creation into proper perspective. He warns that those who take wealth too seriously-both those "captive to their possessions" as well as "religiously driven ideo logues [who promote] designs for a just economic order"-"are in danger of attributing an ultimacy to something that is, at most, prepenultimate." Neuhaus holds to an intriguing interpretation of the Reformation as it relates to this ethical conun drum: "[I]t may be suggested that the reformers' articulation of the Pauline doctrine of grace assist ed economic enterprise chiefly by underscoring the truth that worldly success does not matter that much, it does not matter ultimately. In the Calvin ist tradition, economic achievement may have been motored less by its being viewed as a token of election than by the fact that a grace-based Pauline lightheartedness about worldly achieve ments created free space within which a variety of callingscould be exercised in good conscience."

Neuhaus also comments on creativity, growth, and the discovery of possibilities, and how these relate to free persons and their participation in "God's continuing education." In this vein, he cites Dietrich Bonhoeffer, the Lutheran theologian who was put to death by the Nazis in 1945. For Christians, however, I believe that Neuhaus would have sealed his case by referring to an additional quote from Bonhoeffer's Ethics: "There are ... certain economic or social attitudes and conditions which are a hindrance to faith in Christ and which consequently destroy the true character of man in the world. It must be asked, for example, whether capitalism or socialismor collectivismare econom ic forms which impede faith in this way." The editor and contributors of The Capitalist. Spirit have answered this question. Entrepreneuri al capitalism, with its emphasis on freedom, cre ativity, and industry, is indeed no impediment to faith. D Mr. Keatingis New York Directorof Citizensfor a Sound Economy.

-:"~~??;';c~~';-,_ OTHER BOOKS 437 ECONOMICPOLICYAND THE MARKET PROCESS:AUSTRIANECONOMICSAND MAINSTREAMECONOMICS edited by K. Groenveld, J. A. H. Maks, and J.Muysken North-Holland, P.O. Box 882, Madison Square Station, New York, NY 10159• 1990 •304pages. $69.50cloth Reviewed by Jeffrey Tucker A ustrian economics, with a tradition dat ing back over 100 years, distinguishes itself by its insistence on using strict rules of logic to deduce economic laws that govern human action. But that isn't the source of the worldwide attention the Austrian school is now receiving. Instead, it is its association with economists who steadfastly declare that the free market is the most stable and rational means for ordering economic society.This book is a new col lection of articles by leading freemarket Austri ans debating conventional interventionists. For most of this century, Austrians have argued that socialism, and the endless variants of the mixed economy (democratic socialism, social democracy, planned markets), prove deficient in providing a coherent mechanism for ensuring that economic resources are used by society in the most optimal way. What's more, the Austrian case for the free market has an intellectual power that is unavoidably attractive, since it insists that eco nomic laws apply to all societies at every stage of economic development.

The editors of this volume are all professors of economics at universities in the Netherlands and are highly sympathetic with policy positions of the Austrian school. And they enlist some well-known Austrians to help make their case. Most of their Dutch colleagues who also con tribute essays are not sympathetic-they are dif ferent breeds of social democrats. Whether they regard themselves as post-Keynesian, neoclassical, or institutionalist, they see a need for a market, but a limited one, heavily regulated, taxed, and restricted. They favor a wide variety of social wel fare programs to promote "equality" and "social justice," antitrust laws, labor market restrictions, and so forth. When these two world views clash-the free market versus social democracy-sparks some438 THE FREEMAN • NOVEMBER 1991 times fly. Other times, the contributors just talk past each other. Although this book neither initiates nor closes the debate, the exchange here in, enlisting 20 economists in all, is a fruitful one.

Israel Kirzner launches the debate with a mas terful presentation of the case for viewingthe mar ket as a process of learning, depending on a free price system, and driven by entrepreneurial dis covery.Interventions in this market may generate "unanticipated side-effects," substitute "the pref erences of legislators or officials in place of the wishes of the consuming public," and limit "the exploitation of opportunities for pure entrepre neurial profits." Angus Maddison responds with bewilderment: "Kirzner's description of the market process is somewhat extreme or even mystical." He dismiss es much of Kirzner's history of the 1930seconomic calculation debate between Ludwigvon Misesand Oskar Lange as "not very relevant." It's unfortu nate that Kirzner has no opportunity to rejoin the debate. Although not an Austrian, Yale Brozen pre sents one of the best empirical cases against gov ernment intervention seen in years. He covers monopoly policy,wealth redistribution, taxes, the negative consequences of an inflationary mone tary policy on saving and investment, and more.

It was a strategic decision to include this essay, given both Austrian tendency to rely on high the ory and mainstream economists' skepticism about abstraction. YetBrozen's respondent, Arnold Heertje, is not impressed: "We must go back to economic theory ... it would not be too difficultto produce evidence which just 'proves' the opposite of what Brozen likes to indicate." This kind of methodological cir cularity can be frustrating, for it raises the ques tion: Exactly what kind of argument for free mar kets, if any, will a social democrat accept? Austrian economist Don Bellante weighs in with an outstanding case for free labor markets, pointing out the bad effects labor unions and wage controls have on labor market coordination. In the process he points.to the embarrassing reality (for market opponents anyway) that unions cartelize the labor market at the expense of nonunion employees. Legislation enacted on behalf of a union has negative consequences for the entire economy.

Bellante's respondent, E Keizer,pleads for cost benefit appraisals of labor market intervention, although he fails to provide persuasive evidence on the benefit side of the calculus. His main argu ment favors a kind of democratic collectivism:The voters tolerate labor interventionism, so what's the problem? The problem is that voters are prone to vote their parochial interests at the expense of the common good, and economists are supposed to rise above that. Moving to issues of macro-economic stability, Austrian economist Pascal Salin presents an out standing case for dropping the entire interven tionist apparatus of fiscal and monetary manipu lation, on grounds that it is de-stabilizing. Especially impressive is his argument for the Austrian theory of the origins of business cycles. It points to central bank credit expansion as the source of interest rate manipulation that distorts investment decisions. His respondent, J. C.

Siebrand, is aghast at Salin's policy proposals and tosses out a series of one-liners against the mar ket that have the ring of cliches rather than scien tific analysis. Another exchange occurs between free banking advocate Roland Vaubel and central banker G. A. Kessler. And again the substantive arguments are on Vaubel's side, and his opponent doesn't seem up to the task of refuting his case against central banking. The volume also contains an interesting discus sion of the merits and flawsof European economic integration. Part of the difficulty in such debates is that the two sides use different vocabularies. For example, when Austrians speak of competition, they mean an open-ended and unrestricted process of discov ery. The social democrats see competition as an end-state to which the market must be made to conform. One wishes that the editors had taken notice of such difficultiesand insisted on more dis cussion of this issue. These problems are com pounded by the ideological rigidity of the main stream economists presented here. But this doesn't detract from the merits of the debate. Let's hope the future presents opportunities for many more such exchanges,and that the Austrian school economists continue to win. D Mr. Tuckeris afellowofthe Ludwig von MisesInstitute.

THE CULTURE OF SPENDING: WHY CONGRESS LIVES BEYOND OUR MEANS by James L. Payne ICS Press, 243 Kearny Street, San Francisco, CA 94108 1991 • 221 pages • $24.95cloth Reviewedby WilliamH. Peterson H arry L. Hopkins, adviser to F.D.R., reportedly said in 1938, "We will spend and spend, and tax and tax, and elect and elect." Hopkins' thought is masterfully mirrored in this work by political analyst James L. Payne. Payne, who has taught political science at Wesleyan, Yale, Johns Hopkins, and Texas A&M, is a research fel low at the Independent Institute in Oakland, Cal ifornia, and head of his own Sandpoint, Idaho, research firm, Lytton Research and Analysis. Payne sees Congress as sinking in a whirlpool of "spend and spend" with the taxpayer drowning along with the Congressmen, with the nation and the media pretty much in the dark as to whys and wherefores, and with the aftermath of a long ongoing spending orgy reflected in nine post World War II recessions and a 90 percent drop in the value of the dollar in the last half-century.

One thing wrong, says the author, is the widespread belief in government efficacy. Most people and Congressmen believe that government can solve any social or economic problem that comes along. Call it faith in government omnipo tence. For however misplaced that faith, Payne's examples of government inefficacy, including the boomerang effects of farm subsidies and the War on Poverty, add up to proof positive of the bed rock incompetence and tragic human waste of the Welfare State. Still, perhaps Payne's most surprising argument is his observation that blind faith in government has deep historical roots. Payne recalls what hap pened after 313 A.D. when Constantine made Christianity a lawful religion. Church leaders preached that rulers were always right and should be obeyed. As a reward, the government subsi dized church leaders and carried out persecutions of dissenters on their behalf. The pattern repeated itself in the 16th century in the Geneva theocracy under John Calvin.

To be sure, modern separation of church and state has somewhat ameliorated the creed of govOTHER BOOKS 439 ernment omnipotence. Nonetheless, the Ameri can clergy, apart from the American people, is hardly noted for its libertarianism. In any event, what the people and Congress ought to hear again and again is Payne's refreshing opposite con tention to notions of government efficacy: "Gov ernment makes problems worse." Similarly refreshing is Payne's play on opportu nity costs as a means of getting at the deep-seated idea that government money is somehow "free," almost manna from heaven. Thisfree-lunch dream helps explain the proliferation of Washington offices and high-priced lobbyists maintained by many states and cities. Governors and mayors want to be sure that they get their cut of the swag, from new post office buildings to "free" harbor dredgings-not counting grants-in-aid to states and localities already running in excessof $100bil lion year after year.

What to do? Be wary of legalisms, says the author, noting how a Colombian constitutional provision for a balanced budget has long been blithely ignored by the politicians in Bogota. Similarly, he calls attention to our own Congressional Budget and Impoundment Control Act of 1974 with its cre ation of a watchdog Congressional Budget Office, all of which has come to naught in terms of arrest ing our ingrained culture of spending. By the same token, Dr. Payne recalls George Bush's 1988 campaign pledge of "no new taxes." He also recollects the Gramm-Rudman-Hollings Act of 1985that bravely promised a balanced bud get by 1991.Alas, 1991is here with more than $600 billion piled onto the national debt in fiscal 1991 and 1992, with that debt officially projected to exceed $4 trillion by December 1992. Our red ink runneth over. Well, if legalisms aren't the answer to undoing the spending culture, what is? James Payne's main response is term limitations in Congress. He thinks senior Congressmen by fastening themselves into key committee chairmanships wield too much power. He cites 25-termer Jamie Whitten, chair man of the House Appropriations Committee, as a case in point.

The Payne response is welcome but it stillleaves unanswered the power of legions of Washington lobbyists, armed with oodles of PAC (political action committee) money. Too, there's the power of that unelected fourth branch of government, the 440 THE FREEMAN • NOVEMBER 1991 bureaucracy, two-million strong, with highly influ ential tenured agency officials who survive one Administration after another. I recommend this Payne book for its probing look inside dark fiscalclosets atop Capitol Hill. Yet I wish he had expanded on his call for a "Second Madisonian Revolution." For it takes two to tan go: The problem is not just the free-spending, dev il-may-care Congressman but, as the late Lem Boulware drummed into me, his freely receiving, vote-giving constituent or, by the same token, that constituent's interest group, from the organized worker to organized farmer to organized teacher to organized veteran to organized doctor to organized lawyer to organized Hispanic to organized senior citizen to organized ... what-have-you.

Our WelfareState tango glides along to the beat of spend-and-spend, which means get-and get, with the tax-and-t3;xpart woefullyforgotten or misunderstood under the seductive music of tax the-rich. The need, in sum, is education, essentially eco nomic education on the iron law of no free lunch. Educational mission impossible? Let's begin. There's too much at stake. D Dr. Peterson,adjunctscholarat the HeritageFoundation,is the Lundy Professorof BusinessPhilosophyat Campbell University,BuiesCreek, North Carolina. The Freedom Philosophy METHODOF PAYMENT • Check or money order payable to The Foundation for Economic Edu cation • Credit card-VISA or MasterCard. Please give your full credit card num ber' expiration date, and signature. The 14 essays in this anthology exam ine, in turn, the economic, moral, and polit ical aspects of freedomand point the way to an enriched life through the personal practice of freedom.

A number of all-time "FEE favorites" appear in this collection-including "I, Pen cil," "Not Yours to Give," and "Isaiah's Job." The Freedom Philosophy is ideal for use in study groups or to introduce friends to FEE's work. It's also a perfect refresher course in basic principlesa great antidote for feelings of hopelessness that may beset any freedom devotee from time to time. Quality paperback, sturdily bound. 152 pages single copy $5.95 FEE pays all postage on prepaid orders. ORDER TODAY The Foundation for Economic Education 30 South Broadway Irvington-on-Hudson, NY 10533 Phone: (914) 591-7230 FAX: (914) 591-8910 THEFREE IDEAS ON LIBERTY 444 A Toast to the Holidays Donald G. Smith A seasonal messageof hope. 446 "When My Country Is Free" RobertA. Peterson An exilefrom Angola puts his faith in freedom. 448 New G.O.A.L.s at Work in Michigan MichaelW Fanning Hillsdale College'sunique community-servicescholarshipprogram.