Book Reviews

BOOKS The Future and Its Enemies by Virginia Postrel The Free Press • 1998 • 265 pages. $25.00 Reviewed by George C. Leef "~ t G.E., progress is our most important ftproduct." So ran the concluding line from dozens of General Electric ads from the 1960s. Back then, progress was revered in the United States. For the last few decades, how ever, there has been a rising tide of doubt. Today, we are more likely to hear hand wringing lamentations over the destruction of the planet supposedly wrought by our exploitation of resources, or frightful predic tions that technology is driving us headlong into dystopia. As the late Robert Nisbet wrote in The History of the Idea of Progress, "The skepticism regarding Western progress that was once confined to a very small number of intellectuals in the nineteenth century has grown and spread to not merely the large majority of intellectuals in this last quarter of this century, but to many millions of other people in the West."

The battle between those who want progress to continue and those who want to stop or even reverse it is the subject of this clarion call by Reason magazine editor Vir ginia Postrel. The Future and Its Enemies fills a desperate need. It's a book that illuminates the anti-progress philosophy (although that is too dignified a word) and tactics of, as she calls them, the "stasists." The inroads that the enemies of progress have been making in the United States should throw readers of this magazine into a cold sweat. Stasists are not a homogeneous lot, but they all share a fear of change. Their camp includes violent technophobes like the Unabomber; "small is beautiful" intellectuals who pine for a simpler, more "natural" exis tence (not just for themselves, but for every one); and opponents of particular innovations that might cause them losses-labor unions 55 for instance. They are well funded, resource ful, and intent on locking in their view of the ideal world.

We have always had enemies of progress, but for most ofAmerican history,they couldn't really do anything except complain. Govern ment had virtually no power to prevent indi viduals and firms from trying new products, technologies, and techniques. On the contrary, government power was committed to the defense of liberty and property rights. Coer cive interference with others' experiments would land you in prison. Jefferson warned, however, that the natural order of things is for liberty to yield and gov ernment power to gain. That has certainly been the case, especially in the last 70 years. As state power has grown, so has the ability of the stasists to put it to their ends, delaying or prohibiting changes that don't fit into their vision. Postrel correctly observes that the United States today "provides numerous opportunities for resourceful reactionaries: urban planning and endangered species laws to keep out Wal-Mart and new housing; envi ronmental impact statements to limit business development and, if used by someone as clever as [Jeremy] Rifkin, to bar genetic engi neering; Food and Drug Administration reviews to deter high-tech medical products ... and on and on."

This constant growth of government has changed the rules of the game. People with new ideas can't just go ahead and give them a try. Often there is some board or commission whose approvalmust be obtained first. Even if not, we now have many vague statutes that provide cover for harassing lawsuits. Govern ment power is of no use to innovators, but it means everything to the stasists, for the change they fear can only be halted by its use. Issuing scary manifestoes against, for exam ple, biotechnology, won't stop it-but regula tions and lawsuits can. Postrel mentions Joseph Schumpeter's famous prediction that capitalism would col lapse because of its very success, creating so much wealth and leisure that it would spawn a large class of idlers who would spend their time decrying its imperfections and destroy ing its foundations. Postrel puts a new twist 56 THE FREEMAN/IDEAS ON LIBERTY. APRIL 1999 on Schumpeter's gloomy prediction. He feared the ascendancy of the redistributionist intellectual, but she shows that the greater menace is turning out to be the anti-progress intellectual.

But this isn't just an attack on the stasists. It is also a powerful argument in favor of the dynamic worldview. Postrel quotes Hayek's line that dynamism represents "the party of life, the party that favors free growth and spontaneous evolution," and then backs his assertion up. If I have any criticism of this exceptional book, it is that the wake-up call isn't even louder and longer. It would have had a stronger impact had it gone into more detail on instances of stasist obstructionism. But of course, you can't say everything in a book. The Future and Its Enemies is, in my opinion, the most important book of the year. It needs to be widely read and discussed. D George Leef is book review editor of The Freeman. The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor by David S. Landes W.W. Norton & Company. 1998 .650 pages • $30.00 Reviewed by Randall G. Holcombe E conomic historian David Landes explains in this book why some nations are rich and some poor by appealing to the historical record. The history is fascinating, and Landes does a good job of relating the facts.

His explanation of the wealth and poverty of nations is simple: rich nations are once poor nations that developed market economies; poor nations are once-and still poor nations that did not. Market economies require governments that do not interfere with people's economic affairs except to protect property rights. Landes builds his case by recounting the history of world economic development. Landes maintains that western European, and especially British, culture is superior to others at promoting people's well-being. He makes the same case for the virtues of Protes tantism. The Roman church found truths about nature in the scripture, so new ideas were potentially subversive. Protestant culture gave individuals more freedom to think for themselves, to innovate, and to keep the rewards of their successes. The notion that one culture is as good as another is wrong, Landes argues, at least if one judges a culture by its ability to enhance the well-being of its practitioners.

This is a big book, so as you might expect, his argument is far more involved than this. Landes notes that geographical factors played a large role in the patterns of development, and that some areas had advantages due to cli mate and natural resources that enabled them to develop sooner than others. But he also argues that geographical advantages, in the long run, can be disadvantages, because if wealth comes too easily, people do not have as much incentive to work hard and to use their wealth productively. When the Europeans began settling the Americas, for example, the Spanish and Portuguese gained easy wealth through territory rich in gold and silver, whereas the British territory required more work and investment. That investment, how ever, produced a much greater long-run pay off. Similarly, Landes argues that the oil-rich countries in the Middle East today are squan dering their wealth because they came by it too easily.

The same argument applies to the industri alization of Britain, which had some natural advantages, such as coal deposits, but lacked others and in"any event could capitalize on its advantages only by hard work and innovation. Before the Industrial Revolution, many areas of the world were at least as wealthy as Britain and had developed at least as much scientific and technical knowledge. China, in particular, was far ahead of Britain in many respects, but the British had one crucial advantage over the Chinese-a culture that encouraged com merce, risk-taking, and innovation. The British culture produced the Industrial Revo lution, and Landes argues that no place in the world was able to industrialize without British influence.

Landes's argument is generally convincing, but not entirely so. For example, he notes that the Japanese culture once lacked the work ethic of western Europe and was hampered by an institutional rigidity and isolationism similar to China's. But Japanese culture changed, permitting industrialization, eco nomic growth, and wealth. Thus, culture is not unchangeable. Moreover, "religious" aspects of culture are not tied to particular religions. The Japanese adopted the Protes tant work ethic without adopting the religion. Landes's view of culture appears tautologi cal; the culture he champions really amounts to anyone that leads to the adoption of mar ket capitalism. Europe was characterized by many govern mental jurisdictions, creating an environment of intergovernmental competition, whereas China and Russia were vast regions without that competition. Landes notes this fact, but fails to see its importance. Is it not plausible that industrialization developed first in Europe because governments faced the prospect of losing people and capital to rival governments, thus tempering the rulers' inter ference with freedom? Culture has some explanatory power, but it shouldn't be regard ed as the only factor determining the extent to which the market is free to work.

Landes's conclusion that the ultimate path to wealth is the adoption of a market economy is unassailable. Despite his questionable assertion that culture is the key determinant in the choice between the market and govern ment domination, his book has much to offer in its recounting of the history of world eco nomic development and its insights on the dif ferences among nations and cultures. D Randall Holcombe is DeVoe Moore Professor of Economics at Florida State University. BOOKS 57 From Wealth to Power: The Unusual Origins of America's World Role by Fareed Zakaria Princeton University Press • 1998 • 199 pages • $29.95 Reviewed by Robert Higgs T hroughout history strong nations have often expanded beyond their borders, establishing military or trading outposts, exerting influence on other nations, and some times pushing out their own borders by subju gating neighboring peoples. The United States, which began as a union of 13 small states east of the Mississippi River, pushed to the Pacific and ultimately took control of extensive overseas territories, provides a clear example. For a quarter-century after the Civil War, however, the United States exhibited lit tle interest in expansion, and that peaceful interlude seems anomalous to Fareed Zakaria, who finds it "a highly unusual gap between power and interests."

From Wealth to Power began as Zakaria's dissertation, and its origins still show, espe cially in the repetitious commentary on its theoretical underpinnings. Without these trap pings, an already short book could have been even shorter with little loss of substance. Still, the author, managing editor of Foreign Affairs magazine, writes well, and readers will have no difficulty understanding his argument. Zakaria regards his study as a contest between two theories of international rela tions. "Classical realism" asserts that a nation expands whenever it can. Rich nations have many resources, which they use as the means of expansion-for example, by supporting large armies engaged in foreign conquest. "Defensive realism" asserts that a nation seeks security rather than influence and there fore expands when it perceives an external threat. Rich nations expand only when threat ened by potentially powerful aggressors.

Zakaria tweaks classical realism to create what he calls "state-centered realism," posit ing that rich nations do not necessarily expand but do so only when their central governments have sufficient strength to extract from soci58 THE FREEMAN/IDEASON LIBERTY • APRIL 1999 ety the resources required to support the expansion. From 1865 to 1889, Zakaria argues, the U.S. central government had little strength. The executive branch, where foreign policy initiative normally resides, played second fid dle to Congress; and the state and local gov ernments took responsibility for many more functions and took in much more revenue than the national government. In those cir cumstances the United States declined to act on numerous opportunities for foreign expan sion. Of 22 cases considered by Zakaria, only six resulted in expansion, the most important of those being the acquisition of Alaska in 1867 and the beginning of the construction of a blue-water navy in the 1880s. In other words, our relatively weak government was a hindrance to those who wanted to spread American power globally.

By the 1890s, however,the national execu tive branch had begun to exert itself more forcefully vis-a-vis Congress and the states. That enhanced power gave rise to greater international expansiveness beginning as early as Benjamin Harrison's administration (1889-93) and culminating in Theodore Roo sevelt's flaunting of his Great White Fleet. Between 1889 and 1908, of 32 cases consid ered as opportunities for foreign expansion, 25 resulted in expansion, the most important of those cases being the annexation of Hawaii and the taking of Puerto Rico, Cuba, and the Philippines from Spain in 1898. Although Zakaria's argument is interesting and suggestive, it is less than compelling. Surely, to mention just one piece of conflict ing evidence, the robustly expansionist administration of James K. Polk presided over a far weaker national government than did, say, Grover Cleveland (even in his first term, 1885-89). Nor will Zakaria's shaky command of economic history reassure readers. He makes a number of outright factual or con ceptual mistakes, for example, asserting that the Civil War tariffs were reduced or eliminat ed after the war, and confusing the national government's debt with its annual budget deficit or surplus.

Zakaria views his study as representative of the "bringing the state back in" school of social studies. "Nations," he insists, "do not formulate and implement foreign policy and extract resources to those ends; governments do." He does not seem aware that some of us, backed by generations of intellectual fore bears, have appreciated that reality and based our analysis on it for a long time. Obviously, the ability of a central govern ment to appropriate the requisite resources is a precondition for external expansion. But whether a nation-state will project force abroad depends on the dominant ideology of those who control the government. Classical liberals have always understood that limited government, peace, and free trade form a coherent policy assemblage. To sacrifice any one of those elements is to jeopardize the others. [] Robert Higgs is a senior fellow in political economy at the Independent Institute, a visiting scholar at Seattle University, and the editor ofThe Independent Review.

American Abundance: The New Economic and Moral Prosperity by Lawrence A. Kudlow Forbes-American Heritage • 1997 • 212 pages • $22.95 Reviewed by William H. Peterson O ver the last 15 years, the U.S. economy has experienced a 3 percent real average rate of growth in gross domestic product (with only one minor recession), declining inflation, falling interest rates, and a stock market since 1982 that has increased in value sixfold in real terms. Still, good times usually give rise to a cot tage industry of pessimism. Browse through a bookstore or peruse the newsletters of some investment gurus and you will find chilling predictions of the. imminent collapse of an economic house of cards. Or you could read Larry Kudlow's Ameri can Abundance. This book is as robustly bull ish as anything in the economic soothsaying literature. Kudlow was one of Reagan's budget econ omists. These days he devotes his time to frequent TV appearances, alwayswisely and wit tily defending the superiority of the free mar ket, and to writings that blast gaping holes in the plans of the interventionists to improve our lives through increased government spending and control. He also serves as chief economist to an investment advisory group.

Surveying the economic landscape, he comes to some very optimistic conclusions about our future. Despite the obvious falsity of the notion that "the era of big government is over," Kudlow sees irresistible forces at work to advance America's market society. The era of the growth of big government may be over. One reason for his optimism is the fact that over 40 percent of the population-almost the same number as in the work force-are in the stock market through employee stock owner ship plans, brokerage accounts, bank deposit plans, lRAs, Keogh Plans, 401(k) plans, mutual funds, variable annuities, and other private retirement systems. Kudlow reasons that this "investor class," a vast and growing army of corporate owners, is bound to prevail on Washington and push it toward freemarket policies. Contrary to the predictions of Marx, the workers have become capitalists-owners of the means of production. In the contest between the invisible hand of the market and the clenched fist of Marxism, as Kudlow says, "It was Marxism that withered away."

The idea that spreading investment via pen sion plans will cause the masses to jettison their anticapitalistic biases is appealing, but there are grounds for skepticism. The invest ment trend has been going on for decades, but where's the growing opposition to Social Security,Medicare, "public education," subsi dies, import restrictions, rent control, and the rest? Most people are too ill informed to see the connection between government interven tionism and the size of their portfolios. Kudlow courageously calls for wiping out more than a trillion dollars of federal spend ing, including the abolition of the Environ mental Protection Agency, the Commerce Department, and other worse-than-useless agencies. That certainly would be good, but I fear that instead of foreseeing gains in their BOOKS 59 investments from lower spending and inter ventionism, the typical American would fall for the rhetoric of the politicians and their spinmeisters that the sky would fall if we didn't continue squandering money on such follies.

Kudlow also sees a big plus in the great technological wave that has been sweeping the economy,boosting productivity (which he thinks is understated in official statistics). Thanks to revolutionary knowledge and infor mation technology-microchips, micro processors, cell phones, personal computers, fiber optics, bioengineering and so forth-we are entering a Second Industrial Revolution, he maintains. There is no denying that technology has given the economy a tremendous surge and will probably continue to do so as long as we can keep the government from upsetting the apple cart. The forces of "green" reactionary statism dislike technological progress and will do everything they can to slow or stop it. In the course of the book, Kudlow pays homage to several of the great economists of the twentieth century, including Ludwig von Mises, Joseph Schumpeter, F. A. Hayek, and Milton Friedman, whose philosophies, he believes, will help make the 21st century one of growth-both economically and morally.

"We are in a period of great change and trans formation," he writes. "Our evaporating infla tion rate and our rising economic growth rate are mirrored in the phenomenal increase in the stock market, which is a metaphor for our times. We can look forward to improving social, spiritual values; an era of global peace and prosperity is upon us." Whether Kudlow's optimism about Ameri ca's future is warranted; whether American attitudes will move back toward individual liberty and free enterprise, only time will tell. Stay tuned. D William Peterson, a Heritage Foundation adjunct scholar, is the Distinguished Lundy Professor Emer itus ofBusiness Philosophy at Campbell University in North Carolina.

60 THE FREEMAN/IDEAS ON LIBERTY • APRIL 1999 Africa in Chaos by George B. N. Ayittey 81. Martin's Press • 1998 • 399 pages • $35.00 Reviewed by Mwangi S. Kimenyi G eorge Ayittey is one of a few African scholars committed to advancing the ideals of classical liberalism. This is clearly demonstrated in his previous books, Indige nous African Institutions and Africa Betrayed. In Africa in Chaos, Ayittey advances the argu ments made in those books, provides a detailed report on the chaos in Africa, and pro poses various reforms to deal with the crisis. It is an excellent chronicle of events that have led to the demise of civil society in Africa. A clear indicator of the chaotic state of affairs is the economic condition of Africa. The continent-more specifically sub-Saharan Africa-is richly endowed with some of the most valuable natural resources. Its potential for economic growth is enormous, yet coun tries in this region have the lowest standard of living in the world. Malnutrition and even starvation are widespread. African countries rank lowest in all measures of economic well being, such as the proportion of population below poverty, infant mortality, life expectan cy, and caloric intake. Infrastructure, which includes government buildings, roads, rail ways, and telephone and electricity facilities, is in a sad state of disrepair. The evidence shows that political independence has not advanced the material well-being of Africans in general.

What explains this dismal condition? Ayittey's book provides a detailed account of government policies that stifle the functioning of markets. Instead of building on indigenous markets that prevailed in the past, African leaders adopted policies that involved heavy handed intervention. The primary result of government intervention has been to under mine the incentive to produce. In many coun tries property rights are insecure and leaders often engage in arbitrary expropriation. While many Africans remain destitute, political allo cation of resources has provided rulers with copious opportunities to get rich. Another reason for Africa's economic crisis has been the mistaken belief that large modern projects are equivalent to progress. Supported by foreign governments and inter national organizations, numerous capital intensive proj ects divert resources from consumer-driven purposes. Further contribut ing to the instability has been the reliance on the many public enterprises that are inefficient and largely dependent on subsidies.

But if political independence has done little to advance the material well-being of the majority of Africans, it has proven disastrous for their liberty. Ayittey demonstrates that independence in Africa has been character ized by some of the most oppressive govern ments in history. The first wave of civilian leaders adopted oppressive laws that prohibit ed political competition and empowered rulers to detain opponents without trial. These "leaders" were replaced in many instances by military officers who were even more corrupt and tyrannical. With every coup, things have usually gotten worse. To compound the problems, many coun tries have experienced internal conflicts. Armed clashes such as those in Somalia, Zaire (Democratic Republic of Congo), Liberia, Uganda, Rwanda, Burundi, Angola, Sudan, and many others have resulted in mil lions of casualties. Internal conflicts are exac erbated by the fact that government is geared more to plunder than to protecting rights and keeping peace.

Ayittey is critical of the commonly pro posed solutions to the crisis in Africa. He argues that foreign aid and loans such as those advanced by the international organizations have no benefit in the long run. Ayittey pro poses reform policies that key on the restora tion of civil and economic liberties, building on traditional African systems of governance. In sum, Africa in Chaos is informative, well written, and rich in detail. This book advances our understanding of African institutions and should be particularly helpful to those "devel opment experts" who prescribe policies to Africans and yet have limited understanding of the continent. D Mwangi Kimenyi is associate professor ofeconomics at the University of Connecticut.

Swimming Against the Tide by Clarence B. Carson American Textbook Committee. 1998 • 562 pages • $29.95 Reviewed by Norman S. Ream N o one who has regularly, or even periodi cally, read The Freeman for the past 40 years will be unacquainted with Clarence B. Carson. In this book, subtitled "Memoirs and Selected Writings," one can discern how Car son's philosophical position has developed through the years, from the time he departed his birthplace in Alabama, through his teach ing career, and eventually to his connection with the Foundation for Economic Education. The title of this volume is eminently appro priate, for all through those years he certainly was swimming against the tide of popular and academic opinion. Clarence Carson is a pithy opponent of all your standard left-wing fads and fantasies, but also finds himself in dis agreement with some of his allies. His eco nomic and political philosophy is firmly grounded in the moral and ethical principles the author derives from his Christian faith.

Because of that faith, Carson takes issue with Ludwig von Mises and other heroes of the freemarket movement for their purely secular defenses of private property and the market order. Agree or disagree, Carson stands his ground. The first section of the book is purely auto biographical and may be a bit too detailed for the average reader. Born and educated in the South, with advanced degrees from Vander bilt and Auburn, Carson spent the major peri od of his life teaching in several colleges. During his early education he had moved toward what is today called "liberalism," but by the time he earned his Ph.D., his doctoral dissertation was titled "Embattled Individual ists: The Defense of the Idea of Individualism, 1890-1930." Although Carson was a college professor by vocation, he was mainly interested in writ ing and has published over 19 books, many of them designed to be textbooks. Three of his books, Basic Economics, Basic Communism, BOOKS 61 and Basic American Government have been main selections of the Conservative Book Club. His six-volume A Basic History of the United States is certainly his magnum opus; it is an excellent survey of American history without, of course, any hint of the common leftist biases.

Carson began contributing to The Freeman in 1961. Forty of his articles became a book entitled The World in the Grip ofan Idea. The author describes it as follows: I believed that in my studies and writing I had reached a plateau above and beyond the ideologies of the 19th century which had fueled the conflicts of this century. I saw, or believed I saw, the underlying similarities and failings of these ideologies. I saw those things about Com munism, Fascism and gradualist socialism. But I believed I saw the role and weaknesses of cor porate capitalism as well.... What all these ide ologies had in common was the justification of the use and abuse of organizations to control men's minds and actions to their own ends. Every one of these collectivisms fails to grasp the fact of the superiority of the individual in all constructive activity and fails to understand that collectives are only superior in the use of destructive force on individuals.

Most of Carson's wide-ranging memoir is taken up with stories, essays, articles, philo sophical musings, economic ruminations, and more. A brief sampling: "The Constitution of Paper Money," "The Dilemmas of Public Education," and "Beyond the Christmas Story." The author has strong opinions and deep convictions. As noted, he objected to Mises's secularism. Yet perhaps surprisingly, he includes a fine memorial to Ayn Rand. The book has its weaknesses. The autobio graphical section was not adequately edited and contains numerous errors of punctuation and sentence structure. Also, the volume would have benefited from an index. Still, Freeman readers old and new will find a lot of provocative and enjoyable writing in this book. D Norman Ream, a longtime Freemancontributor, is a retired minister living in Estes Park, Colorado.

The Taxman Cometh! T .s. Eliot was right: April really is the cruelest month, and not because of its wrenching mix of memory and desire but, instead, because of the discouraging annual ritual of filling out our 1040 forms. Rather than calling to mind "chestnuts in blossom," thoughts of April are much more likely to focus on hours hunched over our desks, desperately sorting receipts. Although we may (for now) be stuck with the Byzantine system, this doesn't mean we can't rail against it. This month's sale offers books that investigate taxation and money. We hope they'll provide relief from the stresses and strains of tax preparation. What Has Government Done to Our Money? by Murray Rothbard, 4th ed. Bad enough that one quarter to forty percent of our incomes are taken in taxes, but to add insult to injury, the people in charge of the money supply often debase it by turning the printing presses on full steam. This small book discusses why groups of people come to rely on money - rather than cows, for example - as a medium of exchange. After considering what a free market in money might entail, Rothbard discusses the many ways in which government officials meddle with money. Finally, he investigates how the international gold standard of the 19th century broke down in the wake of the Great War. Very interesting from both a historical and theoretical perspective.

119 pages, paper $7.95 Sale: $4.00 Taxation and Confiscation, a Freeman Classic This anthology of articles provides an excellent overview of the general issue of taxation. Taxes may be used as the means to a number of different ends: filling the purses of the politically powerful, redistributing income to achieve some alleged equity, or encouraging or discouraging some particular behavior (sin taxes). These articles examine taxation as a means to the ends of social justice and social reform. Tax rates have an important impact upon what is produced and when. Five essays look at this problem. Finally, a number of essays discuss taxation as a destructive force. This is a lucid investigation of an issue intimately connected to liberty. 206 pages, paper $12.95 Sale: $6.00 Death & Taxes by Hans F. Sennholz Should people's property be taxed at their death? Presumably, the property was taxed at least once during their lifetime, so why should these assets be taxed again? This book takes a brief general look at taxes and the justifications offered for their continuation. Focusing on estate taxes, Dr. Sennholz investigates the claim that death taxes are a wealth equalizer. He looks at the effects such taxation has on predecessors and successors, why people avoid these taxes, and how trusts minimize tax burdens. The volume concludes with suggested reforms.

105 pages, paper $5.95 Sale: $3.00 Special Offer for April Orders!! Order any book on sale this month and we'll waive normal postage charges! Mail orders to: FEE, 30 S. Broadway, Irvington-on-Hudson, NY 10533;call 914.591.7230or fax 914.591.8910.We accept Visa, Me, Discover and American Express ($10 minimum on credit cards).