To Repair the Culture, Free the Market; L. H. Rockwell, Jr.

THEFREEMAN IDEASON LIBERTY To REPAIR THE CULTURE, FREE THE MARKET by Llewellyn H. Rockwell, Jr. T raditionalists and economic libertarians have more in common in the culture war than they might think, for capitalism helps create and sustain a conservative culture. The enemy, for all of the genuine Right, is government intervention. Today, our economy is a mixture of state planning and impaired markets that no nine teenth-century observer would have recog nized as free. Barely half of all new wealth survives the tax police. No part of the economy, from a grocery store in rural New Hampshire to a car dealership in urban California, is exempt from the toils of a hundred agencies. For all business, our planning apparatus is distinguished from the Soviets' only in degree. Our labor markets are crippled by anti discrimination laws, which punish old stan dards of merit and reward political power.

And the welfare state grows no matter which party is in power, further subsidizing the slothful and inept at the expense of the dwindling band of the productive and ener getic. "Of the many species of liberty which Mr. Rockwell is president of the Ludwig von Mises Institute in Auburn, Alabama. A much longer version of this article will appear in The Intercollegiate Review. compose the freedom we enjoy," Michael Oakeshott wrote in The Political Economy of Freedom, "we have long recognized the importance of two: the freedom of associa tion, and the freedom enjoyed in the right to own private property." It is these two areas where we have lost the most, with a heavy cultural as well as economic cost. The Welfare State Under the welfare state, the beneficiaries need not work. In fact, they cannot work if they want to keep getting the checks. Thus the condition that welfare is supposed to alleviate-poverty, illegitimacy, etc .-is also the condition required for a continued flow of benefits. The welfare state subsi dizes, and thus increases, the very problems it is supposed to solve.

What's more, welfare takes from earners and gives to non-earners. Thus it not only encourages a something-for-nothing atti tude, it also legitimatizes the idea that it is moral to take other people's property with out their consent-a lesson the government should not be teaching. The rigorous rules of the market-roughly akin to the New Testament admonition that he who doesn't work shouldn't eat-are circumvented in the welfare state. Add to 113 114 THE FREEMAN • MARCH 1994 this an effort to erase the just stigma of welfare, and the work ethic is overthrown. In the market economy, there is a hierar chy of success. But welfare increases the income and the status of the failures in society. It thus devalues the older signs of achievement and reduces the market class structure-especially at the lower end-to a jumble. Older forms of welfare were provided privately, usually through religious institu tions that were well aware of its potentially corrupting effects. Work was required from those who could do it, and the' 'undeserving poor" were treated appropriately. Most im portant, the rules of social advancement were the same for all.

Of course, the old order's free market was not footloose and fancy-free. It produced not what today's libertarians call "free dom," but a rigid environment of work and saving, and of punishments for those who failed to do both, as witness the disci pline of the company towns of the laissez faire era. Capitalism is as conspicuous for what it requires as for what it allows. As F. A. Hayek argued in The Constitution of Lib erty, "liberty not only means that the indi vidual has both the opportunity and the burden of choice; it also means that he must bear the consequences of his actions and . will receive praise or blame for them. Lib erty and responsibility are inseparable." Group Privilege The welfare state "produces the habit of complaining," said Ludwig von Mises, and in response, it long ago moved beyond redistribution of property. If certain groups have failed to get what they think of as their due, they are able to get themselves desig nated official victims. This is a culturally corrupting effect in itself, as if failure is always someone else's fault. The welfare state then forces society to treat these groups as if they had earned what they demanded, especially through anti-discrim ination law.

As Oakeshott said, "the freedom which separates a man from slavery is nothing but a freedom to choose and to move among autonomous, independent organizations, firms, purchasers of labor, and this implies private property in resources other than personal capacity." Yet today, from business to housing to schools to clubs, the free association that Oakeshott regarded as the difference be tween slavery and liberty is all but gone. The Family and the Free Market Not everyone can make his own way in society. Children, of course, require the help of parents, and the elderly require the help of the young. These, and many other needs, are met in the family. But the mixed economy has displaced private provision with welfare, dramatically weakening the family. For example, Social Security and Medicare have relieved children of the ob ligation to care for their elderly parents, as Allan Carlson has shown.

In the present system, the elderly feel betrayed and ignored by everyone but the government, while.grown children can dis regard their obligations with little earthly penalty. There is less respect for old people, which-combined with a culture that glori fies .immaturity-disrupts the natural hier archy of age. Largely because of state in tervention, each generation has become· more isolated, self-indulgent, and irrespon sible. One only has to contemplate the "baby boomers." In a free market, on the other hand, the family thrives. As G. K. Chesterton noted, the family' 'is at once necessary and volun tary, " and thus needs nothing from govern ment other than the rule of law. As Mises wrote in Socialism, however, leftist proposals "to transform the relations between the sexes have long gone hand in hand with plans for the socialization of the means of production. "To Mises, traditional marriage was reinforced by the institutions of capitalism, especially free contract, and because of the contractual nature of mar riage, he thought that divorce should be TO REPAIR THE CULTURE, FREE THE MARKET 115 allowed in only the most narrow circum stances.

It is interventionist government, said Mises, that undermines "age-old moral pre cepts, " and the battle for those precept~ is the "great fight" of our age. The greatest shock in recent decades to the traditional family has been the move of married women into the workforce. This puts a heavy strain on marriage (divorce rates have climbed) and especially on chil dren, for day care workers can have nothing like a mother's love or interest in the child. Why did married women enter the work force? For the vast majority, it was to maintain a decent standard of living amidst inflation, which, by dramatically lowering real incomes, destroyed the one-salary fam ily. And such inflationis no natural phenom enon, but the result of central banking. Time and the Market The most important cultural effect of the mixed economy has been to change the way we think of time. We all want to have our desires met sooner rather than later, but gaining wealth takes time, and successful people are able to put off immediate grati fication for future reward.

As mightbe expected, nineteenth-century America was a disciplined society of peo ple who knew how to wait and save. As T. Alexander Smith notes in Time and Public Policy, "the culture which the older bourgeoisie dominated and the values it forged within the social order were partic ularly favorable to lengthy time horizons." Moreover, "this culture was family cen tered." As Joseph Schumpeter noted, the "capitalist order entrusts the long-run inter ests of society to the upper strata of the bourgeoisie. " But interventionism has shortened soci etal time horizons, and inflation and easy credit are the villains. As Smith says, "cred it-created inflation, if it persists for a suffi cient period, shortens time horizons, as cus toms, values, and opinions begin to catch up with the growth of the money supply." In the nineteenth century, personal and installment loans were extremely rare. Debt of this sort was considered a sign of vice.

Credit based on the real savings of the American people went to the entrepreneurs who built the country. But a central bank that pushes down interest rates produces easy credit. It also creates the illusion of low time preference without the reality (a large pool of savings), encouraging business bor rowingthat cannot be sustainedthrough time, and even bringingabout the business cycle. . Other aspects of the mixed economy shorten the social rate of time preference as well. Welfare subsidizes immediate satis faction and discourages saving. Unemploy ment insurance discourages saving for possible job loss, lessens the fear of unem ployment and therefore the incentive to work hard, and underwrites indolence for longer and longer periods, thereby raising the unemployment rate. Social Security discourages people from saving for their retirement. The inheritance tax discourages saving for future genera tions. Income and property taxes penalize the accumulation of wealth. Taxes on busi nesses reduce their capital and thus their ability to sustain long-term projects.

As interventionism has rewarded short term thinking, the behavior and values of high time preference has become the cultural norm. The sexual mores, manners, clothes, and musicof the underclass, once seen as the evidence of immorality and failure, now at tract the favorable attention of middle-class youth. Instead of the bourgeoisie fulfilling their natural leadership role, the lower classes have begun to set the tone. Edward C. Banfield, in The Unheavenly City, persuasively analyzes classes almost solely in terms of time preference. The upper-class person "looks forward to the future of his children, grandchildren, great grandchildren (the family 'line'), and is con cerned also for the future of such abstract entities" as the community or nation. He is able and willing to sacrifice "present satis faction" ·so that he, his children, his com munity, etc., can "enjoy greater satisfac tions at some future time."

Middle-and working-class people are pro116 THE FREEMAN • MARCH 1994 gressively less future oriented, while the lower-class person "lives from moment to moment." Governed by impulse, he is "rad ically improvident: whatever he cannot con sume immediately he considers valueless. His bodily needs (especially for sex) and his taste for 'action' take precedence over everything else" -especially the "routine of work." And it is the welfare state that skews the time horizons of the upper, middle, and working classes toward the lower class's, a societally disastrous effect. Materialism and Greed Sometimes the word materialist is used as a synonym for capitalist. Yet capitalism, as a system of organizing resources, tends to encourage not a materialist ethic, but the prudence, thrift, and hard work that WilhelmRoepke identified (see below). The less free the economy, however, the more materialistic everyone must be. Under Communism, women had to stand in line all day to feed their families and be constantly on the lookout for the most basic items. The demand for material possessions tended to displace other values.

The welfare state also directs man's in terest to the least important material activ ities. Unlike the free market, as Alexander Shand notes in Free Market Morality, the welfare state "removes from the individual much of the responsibility for matters that would be a great concern to him-his fam ily's health care, old age, and education and leaves him with responsibility for choice only in comparative trivialities or luxuries." As for greed, capitalism can reward it. So can socialism, and so can the mixed econ omy. The temptation is unrelated to the degree of material opportunity. Whether one is striving for a grass hut in a primitive villageor a vacation penthouse in Florida, it is corrupting ifdone at the expense offamily and other deeper responsibilities. Dynamism and Technology It has often been objected that capital ism's dynamic nature, its tendency to pro duce technological advances, undermines what T. S. Eliot called the permanent things.

Yet this concern is misplaced. Old values do not require old technology. The permanent things do not refer to par ticular kinds of consumer goods or modes of production. The complex of moral stan dards and priorities that make up the good culture cannot be reduced to technical cat egories. Societal virtue has nothing to do with whether goods are delivered in trucks or horse-drawn carts. It is the social com mitment to traditional social institutions and patterns of living that matter.

TO REPAIR THE CULTURE, FREE THE MARKET 117 It is unfortunatethat the phrasedemocratic capitalismhas become widelyaccepted.Capitalism means an economy based on private property; modern democracy means the violation and redistribution of private property through political means. In previous eras, liberty and democracy were not thought to be synonymous or even necessarily related. The confusion that they are has led to a subtle assault on property and its resultant social hierarchy. It is thus unfortunate that the phrase democratic capitalism has achieved such status. Capitalism means an economy based on private property; modern democracy means the violation and redistribution of private property through political means. The term democratic capitalism is there fore confused, unless it is meant to describe the kind of mixed economy that passes for a free market in the U.S., and is therefore deliberately misleading. In fact, the re establishment of the market economy will require a curtailing of democracy as pres ently understood.

A Theory of Intervention Mises argues that any intervention in the economy must lead to others. Interference in the market, which substitutes political power for the price system, causes more problems. The state then uses these prob lems as an excuse for further interventions, which in turn lead to other interventions. The same is true of the cultural conse quences of the mixed economy. For exam pIe, the government will point to the failing family as justification for more government control, even though the failure is a result of previous interventions. Or the government will announce that because everyone is engaging in short-term thinking, it must direct investment toward what it claims is the long term. The state, in other words, uses and thrives off the short-term thinking it itself creates. The Culture War Anyone who prefers a society of families instead of easy divorce, of children instead of depopulation, of prudence instead of waste, of high culture instead of underclass values, of independence instead of group privilege, of saving instead of immediate gratification, of self-discipline instead of decadence-must favor the free market over the mixed economy.

Why, then, haven't capitalism and cul tural conservatism been happily linked? Unfortunately, the defense of capitalism sometimes has been associated with egali tarianism, anti-clericalism, and general cul tural Leftism. Although they reject government power, market liberals reject the authority of fam ily, church, and community, and thus ad vocate cultural values not only wrong in themselves, but antithetical to those encour aged by the free market. If we are to return to the values of the old republic, cultural traditionalists must lead the capitalist fight. Because economic in terventionism destroys the culture, that is exactly where traditionalists belong. 0 THEFREEMAN IDEASON UBERTY OUR OWN MAD CLOCKWORK by Robert Zimmerman M ulticulturalist educator Leonard Jef fries has charged that Jews were in strumental in the establishment of black slavery in America. Is this true? How did slavery establish itself in America?