Civil Disobedience - Henry David Thoreau

Civil Disobedience - Henry David Thoreau



  Under a government which imprisons any unjustly, the true place for a just man is also a prison. The proper place today, the only place which Massachusetts has provided for her freer and less desponding spirits, is in her prisons, to be put out and locked out of the State by her own act, as they have already put themselves out by their principles. It is there that the fugitive slave, and the Mexican prisoner on parole, and the Indian come to plead the wrongs of his race should find them; on that separate, but more free and honorable, ground, where the State places those who are not with her, but against her- the only house in a slave State in which a free man can abide with honor. If any think that their influence would be lost there, and their voices no longer afflict the ear of the State, that they would not be as an enemy within its walls, they do not know by how much truth is stronger than error, nor how much more eloquently and effectively he can combat injustice who has experienced a little in his own person. Cast your whole vote, not a strip of paper merely, but your whole influence. A minority is powerless while it conforms to the majority; it is not even a minority then; but it is irresistible when it clogs by its whole weight. If the alternative is to keep all just men in prison, or give up war and slavery, the State will not hesitate which to choose. If a thousand men were not to pay their tax-bills this year, that would not be a violent and bloody measure, as it would be to pay them, and enable the State to commit violence and shed innocent blood. This is, in fact, the definition of a peaceable revolution, if any such is possible. If the tax-gatherer, or any other public officer, asks me, as one has done, "But what shall I do?" my answer is, "If you really wish to do anything, resign your office." When the subject has refused allegiance, and the officer has resigned his office, then the revolution is accomplished. But even suppose blood should flow. Is there not a sort of blood shed when the conscience is wounded? Through this wound a man's real manhood and immortality flow out, and he bleeds to an everlasting death. I see this blood flowing now.
I have contemplated the imprisonment of the offender, rather than the seizure of his goods- though both will serve the same purpose- because they who assert the purest right, and consequently are most dangerous to a corrupt State, commonly have not spent much time in accumulating property. To such the State renders comparatively small service, and a slight tax is wont to appear exorbitant, particularly if they are obliged to earn it by special labor with their hands. If there were one who lived wholly without the use of money, the State itself would hesitate to demand it of him. But the rich man- not to make any invidious comparison- is always sold to the institution which makes him rich. Absolutely speaking, the more money, the less virtue; for money comes between a man and his objects, and obtains them for him; and it was certainly no great virtue to obtain it. It puts to rest many questions which he would otherwise be taxed to answer; while the only new question which it puts is the hard but superfluous one, how to spend it. Thus his moral ground is taken from under his feet. The opportunities of living are diminished in proportion as what are called the "means" are increased. The best thing a man can do for his culture when he is rich is to endeavor to carry out those schemes which he entertained when he was poor. Christ answered the Herodians according to their condition. "Show me the tribute-money," said he;- and one took a penny out of his pocket;- if you use money which has the image of Caesar on it, and which he has made current and valuable, that is, if you are men of the State, and gladly enjoy the advantages of Caesar's government, then pay him back some of his own when he demands it. "Render therefore to Caesar that which is Caesar's, and to God those things which are God's"- leaving them no wiser than before as to which was which; for they did not wish to know.
When I converse with the freest of my neighbors, I perceive that, whatever they may say about the magnitude and seriousness of the question, and their regard for the public tranquillity, the long and the short of the matter is, that they cannot spare the protection of the existing government, and they dread the consequences to their property and families of disobedience to it. For my own part, I should not like to think that I ever rely on the protection of the State. But, if I deny the authority of the State when it presents its tax-bill, it will soon take and waste all my property, and so harass me and my children without end. This is hard. This makes it impossible for a man to live honestly, and at the same time comfortably, in outward respects. It will not be worth the while to accumulate property; that would be sure to go again. You must hire or squat somewhere, and raise but a small crop, and eat that soon. You must live within yourself, and depend upon yourself always tucked up and ready for a start, and not have many affairs. A man may grow rich in Turkey even, if he will be in all respects a good subject of the Turkish government. Confucius said: "If a state is governed by the principles of reason, poverty and misery are subjects of shame; if a state is not governed by the principles of reason, riches and honors are the subjects of shame." No: until I want the protection of Massachusetts to be extended to me in some distant Southern port, where my liberty is endangered, or until I am bent solely on building up an estate at home by peaceful enterprise, I can afford to refuse allegiance to Massachusetts, and her right to my property and life. It costs me less in every sense to incur the penalty of disobedience to the State than it would to obey. I should feel as if I were worth less in that case.
Some years ago, the State met me in behalf of the Church, and commanded me to pay a certain sum toward the support of a clergyman whose preaching my father attended, but never I myself. "Pay," it said, "or be locked up in the jail." I declined to pay. But, unfortunately, another man saw fit to pay it. I did not see why the schoolmaster should be taxed to support the priest, and not the priest the schoolmaster; for I was not the State's schoolmaster, but I supported myself by voluntary subscription. I did not see why the lyceum should not present its tax-bill, and have the State to back its demand, as well as the Church. However, at the request of the selectmen, I condescended to make some such statement as this in writing:- "Know all men by these presents, that I, Henry Thoreau, do not wish to be regarded as a member of any incorporated society which I have not joined." This I gave to the town clerk; and he has it. The State, having thus learned that I did not wish to be regarded as a member of that church, has never made a like demand on me since; though it said that it must adhere to its original presumption that time. If I had known how to name them, I should then have signed off in detail from all the societies which I never signed on to; but I did not know where to find a complete list.
I have paid no poll-tax for six years. I was put into a jail once on this account, for one night; and, as I stood considering the walls of solid stone, two or three feet thick, the door of wood and iron, a foot thick, and the iron grating which strained the light, I could not help being struck with the foolishness of that institution which treated me as if I were mere flesh and blood and bones, to be locked up. I wondered that it should have concluded at length that this was the best use it could put me to, and had never thought to avail itself of my services in some way. I saw that, if there was a wall of stone between me and my townsmen, there was a still more difficult one to climb or break through before they could get to be as free as I was. I did not for a moment feel confined, and the walls seemed a great waste of stone and mortar. I felt as if I alone of all my townsmen had paid my tax. They plainly did not know how to treat me, but behaved like persons who are underbred. In every threat and in every compliment there was a blunder; for they thought that my chief desire was to stand the other side of that stone wall. I could not but smile to see how industriously they locked the door on my meditations, which followed them out again without let or hindrance, and they were really all that was dangerous. As they could not reach me, they had resolved to punish my body; just as boys, if they cannot come at some person against whom they have a spite, will abuse his dog. I saw that the State was half-witted, that it was timid as a lone woman with her silver spoons, and that it did not know its friends from its foes, and I lost all my remaining respect for it, and pitied it.
Thus the State never intentionally confronts a man's sense, intellectual or moral, but only his body, his senses. It is not armed with superior wit or honesty, but with superior physical strength. I was not born to be forced. I will breathe after my own fashion. Let us see who is the strongest. What force has a multitude? They only can force me who obey a higher law than I. They force me to become like themselves. I do not hear of men being forced to have this way or that by masses of men. What sort of life were that to live? When I meet a government which says to me, "Your money or your life," why should I be in haste to give it my money? It may be in a great strait, and not know what to do: I cannot help that. It must help itself; do as I do. It is not worth the while to snivel about it. I am not responsible for the successful working of the machinery of society. I am not the son of the engineer. I perceive that, when an acorn and a chestnut fall side by side, the one does not remain inert to make way for the other, but both obey their own laws, and spring and grow and flourish as best they can, till one, perchance, overshadows and destroys the other. If a plant cannot live according to its nature, it dies; and so a man.
The night in prison was novel and interesting enough. The prisoners in their shirt-sleeves were enjoying a chat and the evening air in the doorway, when I entered. But the jailer said, "Come, boys, it is time to lock up"; and so they dispersed, and I heard the sound of their steps returning into the hollow apartments. My room-mate was introduced to me by the jailer as "a first-rate fellow and a clever man." When the door was locked, he showed me where to hang my hat, and how he managed matters there. The rooms were whitewashed once a month; and this one, at least, was the whitest, most simply furnished, and probably the neatest apartment in the town. He naturally wanted to know where I came from, and what brought me there; and, when I had told him, I asked him in my turn how he came there, presuming him to be an honest man, of course; and, as the world goes, I believe he was. "Why," said he, "they accuse me of burning a barn; but I never did it." As near as I could discover, he had probably gone to bed in a barn when drunk, and smoked his pipe there; and so a barn was burnt. He had the reputation of being a clever man, had been there some three months waiting for his trial to come on, and would have to wait as much longer; but he was quite domesticated and contented, since he got his board for nothing, and thought that he was well treated.
He occupied one window, and I the other; and I saw that if one stayed there long, his principal business would be to look out the window. I had soon read all the tracts that were left there, and examined where former prisoners had broken out, and where a grate had been sawed off, and heard the history of the various occupants of that room; for I found that even here there was a history and a gossip which never circulated beyond the walls of the jail. Probably this is the only house in the town where verses are composed, which are afterward printed in a circular form, but not published. I was shown quite a long list of verses which were composed by some young men who had been detected in an attempt to escape, who avenged themselves by singing them.
I pumped my fellow-prisoner as dry as I could, for fear I should never see him again; but at length he showed me which was my bed, and left me to blow out the lamp.
It was like travelling into a far country, such as I had never expected to behold, to lie there for one night. It seemed to me that I never had heard the town clock strike before, nor the evening sounds of the village; for we slept with the windows open, which were inside the grating. It was to see my native village in the light of the Middle Ages, and our Concord was turned into a Rhine stream, and visions of knights and castles passed before me. They were the voices of old burghers that I heard in the streets. I was an involuntary spectator and auditor of whatever was done and said in the kitchen of the adjacent village inn- a wholly new and rare experience to me. It was a closer view of my native town. I was fairly inside of it. I never had seen its institutions before. This is one of its peculiar institutions; for it is a shire town. I began to comprehend what its inhabitants were about.
In the morning, our breakfasts were put through the hole in the door, in small oblong-square tin pans, made to fit, and holding a pint of chocolate, with brown bread, and an iron spoon. When they called for the vessels again, I was green enough to return what bread I had left; but my comrade seized it, and said that I should lay that up for lunch or dinner. Soon after he was let out to work at haying in a neighboring field, whither he went every day, and would not be back till noon; so he bade me good-day, saying that he doubted if he should see me again.
When I came out of prison- for some one interfered, and paid that tax- I did not perceive that great changes had taken place on the common, such as he observed who went in a youth and emerged a tottering and gray-headed man; and yet a change had to my eyes come over the scene- the town, and State, and country- greater than any that mere time could effect. I saw yet more distinctly the State in which I lived. I saw to what extent the people among whom I lived could be trusted as good neighbors and friends; that their friendship was for summer weather only; that they did not greatly propose to do right; that they were a distinct race from me by their prejudices and superstitions, as the Chinamen and Malays are; that in their sacrifices to humanity they ran no risks, not even to their property; that after all they were not so noble but they treated the thief as he had treated them, and hoped, by a certain outward observance and a few prayers, and by walking in a particular straight though useless path from time to time, to save their souls. This may be to judge my neighbors harshly; for I believe that many of them are not aware that they have such an institution as the jail in their village.
It was formerly the custom in our village, when a poor debtor came out of jail, for his acquaintances to salute him, looking through their fingers, which were crossed to represent the grating of a jail window, "How do ye do?" My neighbors did not thus salute me, but first looked at me, and then at one another, as if I had returned from a long journey. I was put into jail as I was going to the shoemaker's to get a shoe which was mended. When I was let out the next morning, I proceeded to finish my errand, and, having put on my mended shoe, joined a huckleberry party, who were impatient to put themselves under my conduct; and in half an hour- for the horse was soon tackled- was in the midst of a huckleberry field, on one of our highest hills, two miles off, and then the State was nowhere to be seen.
This is the whole history of "My Prisons."

Henry Hazlitt

Understanding Austrian Economics, Part 1

Understanding Founder Carl Menger's Contributions to the Field

Austrian economics owes its name to the historic fact that it was founded and first elaborated by three Austrians—Carl Menger (1840–1921), Friedrich von Wieser (1851–1926), and Eugen von Böhm-Bawerk (1851–1914). The latter two built upon Menger, though Böhm-Bawerk, in particular, made important additional contributions.

Menger’s great work, translated into English (but not until seventy-nine years later!) under the title of Principles of Economics, was published in 1871. (Carl Menger, Principles of Economics, trans. James Dingwall and Bert F. Hoselitz (New York: New York University Press, 1981).

In the same year, by coincidence, W. Stanley Jevons in England published his Theory of Political Economy. Both authors independently developed the concept now known as “marginal utility.” (Menger never used the term. Jevons called it “final degree of utility.” It was Wieser who first employed the German term Grenz-nutzen, which translates as “marginal utility.”)

But as few American or British economists read German in the original, it was years before the real extent of the revolution begun by Menger was realized outside of German-speaking countries. For it was Menger, by recognizing most fully the implications of the marginal-utility concept, who opened up new paths and, so to speak, turned the old classical economics upside-down.

Menger insists throughout his work that value is essentially subjective, and that therefore economics must be in the main a subjective science. Goods have no inherent value in themselves. They are valued because they help to satisfy some human want or need. A given quantity or unit of a certain good will satisfy a man’s most intense desire or need. He may also want a second, third, or fourth increment. But after each unit consumed or employed, his desire or need for a further unit of that good may be less intense, and may finally become completely satisfied.

It follows that each increment of that good at his disposal will have a reduced value to him. But as no unit of the total available quantity of that good can have a greater value in exchange than any other (of the same quality), it follows further that no other unit will be worth more in the market than the “final” unit of the supply. Thus in a given community the exchange value of a given increment of each good will be determined by the relation between its total available quantity and the intensity of the human need or want that it fills.

So far this may seem like little more than a refinement on the old classical doctrine that value and price are determined by supply and demand. It seems merely to state that doctrine in subjective rather than objective terms. But then Menger comes to point out some of its implications. The values of goods are mutually interdependent. Bread is valued because it meets a direct consumption need. Flour is valued because it is needed to bake bread. Wheat is valued because it is needed to produce flour. Plows, seed, land, and labor are valued because they are necessary to produce wheat, and so on.

Values are also interdependent because, for example, if one raw material necessary in combination for the production of a final product is missing, that lack reduces the usefulness and value of the other raw materials needed.

Goods wanted and ready for direct use or consumption are called by Menger “goods of the first order.” Raw materials and other factors necessary to produce these are called “goods of the second order.” Materials, machinery, labor, and other factors needed in turn to produce these goods of the second order are called goods of the third order, and so on. These goods of the second, third, and other “higher” orders are valued because of the consumption goods that they produce.

Thus while the classical Ricardian doctrine held that the “normal” value of consumption goods was determined by their “cost of production,” the Austrian doctrine holds that the “cost of production” itself is ultimately determined by the value of consumption goods.

These two doctrines can be partly reconciled in the statement that though what a good has cost to produce cannot directly determine its value, what it will cost to produce determines how much of it will continue to be made. It is the limit that cost of production puts upon the total quantity of a good produced that determines its marginal value and therefore its market price. Thus there is a constant tendency for marginal cost of production and market price to equal each other, though not because the first directly determines the second.

Opportunity Costs

Something should be said also about the sharp distinction between the Ricardian and the Austrian concept of “cost.” The Ricardian (and the modern businessman) thinks of cost as a money outlay. But the Austrian economist has a much wider concept, what economists now call “opportunity” costs, or “forgone opportunity” costs. Such costs exist, of course, not only in business but in all our decisions and actions in life. The cost of learning French in any given period is to forgo learning German, or to learn less mathematics, or to give up some tennis or bridge, and so on.

Menger emphasizes the importance of time and the role of uncertainty in the whole productive process. He also points out that no single good, no matter how abundant, can maintain life and welfare, but that these depend upon the production of combinations of goods of different kinds in the proper proportions. And he points out, finally, that the process of production cannot be expected to go on at an adequate rate unless there is adequate protection of property.

The economic value of goods, to repeat, depends upon their respective quantities in relation to the human needs they meet. It does not necessarily depend upon the amount of labor expended in their production. To quote from Menger’s Principles of Economics: “Hence, if there were a society where all goods were available in amounts exceeding the requirements for them, there would be no economic goods nor any ‘wealth.’ . . . Hence we have the queer contradiction that a continuous increase of the objects of wealth would have, as a necessary final consequence, a diminution of wealth” (pp. 109–10).

(In other words, Menger pointed out more than a century ago a basic fallacy in the now-fashionable national income statistics.)

“The value of goods arises from their relationship to our needs, and is not inherent in the goods themselves . . . . Objectification of the value of goods, which is entirely subjective in nature, has nevertheless contributed very greatly to confusion about the basic principles of our science. . . . The importance that goods have for us and which we call value is merely imputed” (pp. 120–21, 139).

“There is no necessary and direct connection between the value of a good and whether, or in what quantities, labor and other goods of higher order were applied to its production. . . . Whether a diamond was found accidentally or was obtained from a diamond pit with the employment of a thousand days of labor is completely irrelevant for its value” (p. 146).

Menger goes on to discuss further how higher goods, including capital goods, get their value: “[I]t is evident that the value of goods of higher order is always and without exception determined by the prospective value of the goods of lower order in whose production they serve” (p. 150).

He outlines a theory of interest, but he leaves it vague. On page 156 of Principles of Economics he tells us: “[W]e have reached one of the most important truths of our science, the ‘productivity of capital.’” But he emphasizes that this productivity occurs only through the passage of time, and that therefore the market value of presently existing and available goods is at a “discount” compared with the expected value of equivalent goods in the future.

A Time-Preference Theory

This suggests that Menger leaned more toward a “time preference” than a “productivity” theory of interest, though the distinction between these theories was not sharpened and made explicit until the publication of Böhm-Bawerk’s Capital and Interest in 1884 and his Positive Theory of Capital in 1888. Böhm-Bawerk laid great emphasis upon the superior productivity of “roundabout” processes of production, and therefore (after a brilliant demolition of productivity theories of interest) ended by himself offering a theory of interest that combined productivity and time preference. Nearly all “Austrians” today, however, following the lead of Frank A. Fetter and later of Ludwig von Mises, support a pure time-preference theory.

To return to Menger: His Principles of Economics next presents a “theory of exchange.” In this he points out that men do not buy from or sell to or exchange with each other merely because of a “propensity of men to truck and barter,” as implied by Adam Smith, but because each man seeks to maximize his satisfactions by exchanging what he values less for what he values more. In this way the satisfaction of all is increased. Exchange is thus an integral part of the whole process of production. What is being produced is value. Menger’s whole theory of price, to repeat, is developed on the basis of “the subjective character of value.”

The final chapter of Menger’s Principles is on “The Theory of Money.” This does not explicitly discuss such subjects as interest rates or inflation, but deals solely with fundamentals, especially the origin and evolution of money. “Money is not the product of an agreement on the part of economizing men nor the product of legislative acts. No one invented it” (p. 262). It developed out of barter. Because it so seldom happened that A and B each had and was willing to offer exactly what the other wanted, triangular and indirect barter began to take place. Men first offered their specialized goods for more “marketable” goods more widely wanted, in the hope that they could exchange these, in turn, for the particular goods that they themselves wanted. As a result these more “saleable” goods became still more saleable because of this extra demand. The most saleable of all finally became “money.” Historically, all kinds of goods have served as money, though it later came down to coins of precise weights of copper, silver, or gold.

Money is not a “measure of value,” though it is legitimate to call it a measure of price. It is the only commodity in which all others can be evaluated without roundabout procedures. It is the most appropriate form in which people can save and store part of their wealth. The right of coinage has generally been left to governments, even though “they have so often and so greatly misused their power” (p. 283).

I may have seemed to devote a disproportionate amount of space to Menger, but the special contributions of Austrian economics can be most clearly realized, it seems to me, if we begin by dwelling in some detail on those of its originator.

Menger’s first important successor as an “Austrian” economist was Friedrich von Wieser, who, beginning in 1884, published several books elaborating, rounding out, and refining Menger’s theory of value, clarifying especially problems of cost, “imputation,” and distribution.

The next great successor was Eugen von Böhm-Bawerk, whose trailblazing contributions in Capital and Interest,in 1884, and the Positive Theory of Capital, in 1888, have already been referred to. In addition, Böhm-Bawerk wrote a brilliant demolition of Marx’s Das Kapital in 1896, in a comparatively short work first translated into English under the title Karl Marx and the Close of His System. In this essay Böhm-Bawerk exposed particularly the fallacies in Marx’s labor theory of value and his “exploitation” theories, which the latter had derived as a supposed corollary from errors of Ricardo. It should be emphasized that it was the analysis of Austrian economics that made Böhm’s refutation of Marx so conclusive. No refutation based on the assumptions of the old classical economics could have been as devastating.

understanding-austrian-economics-part-2

Henry Hazlitt (1894-1993) was a noted economist, author, editor, reviewer, and columnist. His best-known books are Economics in One Lesson, The Failure of the “New Economics,” The Foundations of Morality, and What You should Know About Inflation

The Freeman online.org

Civil Disobedience - Henry David Thoreau

Civil Disobedience - Henry David Thoreau



  All voting is a sort of gaming, like checkers or backgammon, with a slight moral tinge to it, a playing with right and wrong, with moral questions; and betting naturally accompanies it. The character of the voters is not staked. I cast my vote, perchance, as I think right; but I am not vitally concerned that that right should prevail. I am willing to leave it to the majority. Its obligation, therefore, never exceeds that of expediency. Even voting for the right is doing nothing for it. It is only expressing to men feebly your desire that it should prevail. A wise man will not leave the right to the mercy of chance, nor wish it to prevail through the power of the majority. There is but little virtue in the action of masses of men. When the majority shall at length vote for the abolition of slavery, it will be because they are indifferent to slavery, or because there is but little slavery left to be abolished by their vote. They will then be the only slaves. Only his vote can hasten the abolition of slavery who asserts his own freedom by his vote.
I hear of a convention to be held at Baltimore, or elsewhere, for the selection of a candidate for the Presidency, made up chiefly of editors, and men who are politicians by profession; but I think, what is it to any independent, intelligent, and respectable man what decision they may come to? Shall we not have the advantage of his wisdom and honesty, nevertheless? Can we not count upon some independent votes? Are there not many individuals in the country who do not attend conventions? But no: I find that the respectable man, so called, has immediately drifted from his position, and despairs of his country, when his country has more reason to despair of him. He forthwith adopts one of the candidates thus selected as the only available one, thus proving that he is himself available for any purposes of the demagogue. His vote is of no more worth than that of any unprincipled foreigner or hireling native, who may have been bought. O for a man who is a man, and, as my neighbor says, has a bone in his back which you cannot pass your hand through! Our statistics are at fault: the population has been returned too large. How many men are there to a square thousand miles in this country? Hardly one. Does not America offer any inducement for men to settle here? The American has dwindled into an Odd Fellow-one who may be known by the development of his organ of gregariousness, and a manifest lack of intellect and cheerful self-reliance; whose first and chief concern, on coming into the world, is to see that the almshouses are in good repair; and, before yet he has lawfully donned the virile garb, to collect a fund for the support of the widows and orphans that may be; who, in short, ventures to live only by the aid of the Mutual Insurance company, which has promised to bury him decently.
It is not a man's duty, as a matter of course, to devote himself to the eradication of any, even the most enormous, wrong; he may still properly have other concerns to engage him; but it is his duty, at least, to wash his hands of it, and, if he gives it no thought longer, not to give it practically his support. If I devote myself to other pursuits and contemplations, I must first see, at least, that I do not pursue them sitting upon another man's shoulders. I must get off him first, that he may pursue his contemplations too. See what gross inconsistency is tolerated. I have heard some of my townsmen say, "I should like to have them order me out to help put down an insurrection of the slaves, or to march to Mexico;- see if I would go"; and yet these very men have each, directly by their allegiance, and so indirectly, at least, by their money, furnished a substitute. The soldier is applauded who refuses to serve in an unjust war by those who do not refuse to sustain the unjust government which makes the war; is applauded by those whose own act and authority he disregards and sets at naught; as if the state were penitent to that degree that it differed one to scourge it while it sinned, but not to that degree that it left off sinning for a moment. Thus, under the name of Order and Civil Government, we are all made at last to pay homage to and support our own meanness. After the first blush of sin comes its indifference; and from immoral it becomes, as it were, unmoral, and not quite unnecessary to that life which we have made.
The broadest and most prevalent error requires the most disinterested virtue to sustain it. The slight reproach to which the virtue of patriotism is commonly liable, the noble are most likely to incur. Those who, while they disapprove of the character and measures of a government, yield to it their allegiance and support are undoubtedly its most conscientious supporters, and so frequently the most serious obstacles to reform. Some are petitioning the State to dissolve the Union, to disregard the requisitions of the President. Why do they not dissolve it themselves- the union between themselves and the State- and refuse to pay their quota into its treasury? Do not they stand in the same relation to the State that the State does to the Union? And have not the same reasons prevented the State from resisting the Union which have prevented them from resisting the State?
How can a man be satisfied to entertain an opinion merely, and enjoy it? Is there any enjoyment in it, if his opinion is that he is aggrieved? If you are cheated out of a single dollar by your neighbor, you do not rest satisfied with knowing that you are cheated, or with saying that you are cheated, or even with petitioning him to pay you your due; but you take effectual steps at once to obtain the full amount, and see that you are never cheated again. Action from principle, the perception and the performance of right, changes things and relations; it is essentially revolutionary, and does not consist wholly with anything which was. It not only divides States and churches, it divides families; ay, it divides the individual, separating the diabolical in him from the divine.
Unjust laws exist: shall we be content to obey them, or shall we endeavor to amend them, and obey them until we have succeeded, or shall we transgress them at once? Men generally, under such a government as this, think that they ought to wait until they have persuaded the majority to alter them. They think that, if they should resist, the remedy would be worse than the evil. But it is the fault of the government itself that the remedy is worse than the evil. It makes it worse. Why is it not more apt to anticipate and provide for reform? Why does it not cherish its wise minority? Why does it cry and resist before it is hurt? Why does it not encourage its citizens to be on the alert to point out its faults, and do better than it would have them? Why does it always crucify Christ, and excommunicate Copernicus and Luther, and pronounce Washington and Franklin rebels?
One would think, that a deliberate and practical denial of its authority was the only offence never contemplated by government; else, why has it not assigned its definite, its suitable and proportionate, penalty? If a man who has no property refuses but once to earn nine shillings for the State, he is put in prison for a period unlimited by any law that I know, and determined only by the discretion of those who placed him there; but if he should steal ninety times nine shillings from the State, he is soon permitted to go at large again.
If the injustice is part of the necessary friction of the machine of government, let it go, let it go: perchance it will wear smooth- certainly the machine will wear out. If the injustice has a spring, or a pulley, or a rope, or a crank, exclusively for itself, then perhaps you may consider whether the remedy will not be worse than the evil; but if it is of such a nature that it requires you to be the agent of injustice to another, then, I say, break the law. Let your life be a counter-friction to stop the machine. What I have to do is to see, at any rate, that I do not lend myself to the wrong which I condemn.
As for adopting the ways which the State has provided for remedying the evil, I know not of such ways. They take too much time, and a man's life will be gone. I have other affairs to attend to. I came into this world, not chiefly to make this a good place to live in, but to live in it, be it good or bad. A man has not everything to do, but something; and because he cannot do everything, it is not necessary that he should do something wrong. It is not my business to be petitioning the Governor or the Legislature any more than it is theirs to petition me; and if they should not bear my petition, what should I do then? But in this case the State has provided no way: its very Constitution is the evil. This may seem to be harsh and stubborn and unconciliatory; but it is to treat with the utmost kindness and consideration the only spirit that can appreciate or deserves it. So is an change for the better, like birth and death, which convulse the body.
I do not hesitate to say, that those who call themselves Abolitionists should at once effectually withdraw their support, both in person and property, from the government of Massachusetts, and not wait till they constitute a majority of one, before they suffer the right to prevail through them. I think that it is enough if they have God on their side, without waiting for that other one. Moreover, any man more right than his neighbors constitutes a majority of one already.
I meet this American government, or its representative, the State government, directly, and face to face, once a year- no more- in the person of its tax-gatherer; this is the only mode in which a man situated as I am necessarily meets it; and it then says distinctly, Recognize me; and the simplest, the most effectual, and, in the present posture of affairs, the indispensablest mode of treating with it on this head, of expressing your little satisfaction with and love for it, is to deny it then. My civil neighbor, the tax-gatherer, is the very man I have to deal with- for it is, after all, with men and not with parchment that I quarrel- and he has voluntarily chosen to be an agent of the government. How shall he ever know well what he is and does as an officer of the government, or as a man, until he is obliged to consider whether he shall treat me, his neighbor, for whom he has respect, as a neighbor and well-disposed man, or as a maniac and disturber of the peace, and see if he can get over this obstruction to his neighborliness without a ruder and more impetuous thought or speech corresponding with his action. I know this well, that if one thousand, if one hundred, if ten men whom I could name- if ten honest men only- ay, if one HONEST man, in this State of Massachusetts, ceasing to hold slaves, were actually to withdraw from this copartnership, and be locked up in the county jail therefor, it would be the abolition of slavery in America. For it matters not how small the beginning may seem to be: what is once well done is done forever. But we love better to talk about it: that we say is our mission, Reform keeps many scores of newspapers in its service, but not one man. If my esteemed neighbor, the State's ambassador, who will devote his days to the settlement of the question of human rights in the Council Chamber, instead of being threatened with the prisons of Carolina, were to sit down the prisoner of Massachusetts, that State which is so anxious to foist the sin of slavery upon her sister- though at present she can discover only an act of inhospitality to be the ground of a quarrel with her- the Legislature would not wholly waive the subject the following winter.

Civil Disobedience - Henry David Thoreau

Civil Disobedience - Henry David Thoreau



  How does it become a man to behave toward this American government today? I answer, that he cannot without disgrace be associated with it. I cannot for an instant recognize that political organization as my government which is the slave's government also.
All men recognize the right of revolution; that is, the right to refuse allegiance to, and to resist, the government, when its tyranny or its inefficiency are great and unendurable. But almost all say that such is not the case now. But such was the case, they think, in the Revolution Of '75. If one were to tell me that this was a bad government because it taxed certain foreign commodities brought to its ports, it is most probable that I should not make an ado about it, for I can do without them. All machines have their friction; and possibly this does enough good to counterbalance the evil. At any rate, it is a great evil to make a stir about it. But when the friction comes to have its machine, and oppression and robbery are organized, I say, let us not have such a machine any longer. In other words, when a sixth of the population of a nation which has undertaken to be the refuge of liberty are slaves, and a whole country is unjustly overrun and conquered by a foreign army, and subjected to military law, I think that it is not too soon for honest men to rebel and revolutionize. What makes this duty the more urgent is the fact that the country so overrun is not our own, but ours is the invading army.
Paley, a common authority with many on moral questions, in his chapter on the "Duty of Submission to Civil Government," resolves all civil obligation into expediency; and he proceeds to say that "so long as the interest of the whole society requires it, that is, so long as the established government cannot be resisted or changed without public inconveniency, it is the will of God... that the established government be obeyed- and no longer. This principle being admitted, the justice of every particular case of resistance is reduced to a computation of the quantity of the danger and grievance on the one side, and of the probability and expense of redressing it on the other." Of this, he says, every man shall judge for himself. But Paley appears never to have contemplated those cases to which the rule of expediency does not apply, in which a people, as well as an individual, must do justice, cost what it may. If I have unjustly wrested a plank from a drowning man, I must restore it to him though I drown myself. This, according to Paley, would be inconvenient. But he that would save his life, in such a case, shall lose it. This people must cease to hold slaves, and to make war on Mexico, though it cost them their existence as a people.
In their practice, nations agree with Paley; but does any one think that Massachusetts does exactly what is right at the present crisis?

"A drab of state, a cloth-o'-silver slut,
To have her train borne up, and her soul trail in the dirt."

Practically speaking, the opponents to a reform in Massachusetts are not a hundred thousand politicians at the South, but a hundred thousand merchants and farmers here, who are more interested in commerce and agriculture than they are in humanity, and are not prepared to do justice to the slave and to Mexico, cost what it may. I quarrel not with far-off foes, but with those who, near at home, cooperate with, and do the bidding of those far away, and without whom the latter would be harmless. We are accustomed to say, that the mass of men are unprepared; but improvement is slow, because the few are not materially wiser or better than the many. It is not so important that many should be as good as you, as that there be some absolute goodness somewhere; for that will leaven the whole lump. There are thousands who are in opinion opposed to slavery and to the war, who yet in effect do nothing to put an end to them; who, esteeming themselves children of Washington and Franklin, sit down with their hands in their pockets, and say that they know not what to do, and do nothing; who even postpone the question of freedom to the question of free trade, and quietly read the prices-current along with the latest advices from Mexico, after dinner, and, it may be, fall asleep over them both. What is the price-current of an honest man and patriot today? They hesitate, and they regret, and sometimes they petition; but they do nothing in earnest and with effect. They will wait, well disposed, for others to remedy the evil, that they may no longer have it to regret. At most, they give only a cheap vote, and a feeble countenance and God-speed, to the right, as it goes by them. There are nine hundred and ninety-nine patrons of virtue to one virtuous man. But it is easier to deal with the real possessor of a thing than with the temporary guardian of it.

What Spending and Deficits Do - Henry Hazlitt

The direct cause of inflation is the issuance of an excessive amount of paper money. The most frequent cause of the issuance of too much paper money is a government budget deficit.

The majority of economists have long recognized this, but the majority of politicians have studiously ignored it. One result, in this age of inflation, is that economists have tended to put too much emphasis on the evils of deficits as such and too little emphasis on the evils of excessive government spending, whether the budget is balanced or not.

So it is desirable to begin with the question, What is the effect of government spending on the economy–even if it is wholly covered by tax revenues?

The economic effect of government spending depends on what the spending is for, compared with what the private spending it displaces would be for. To the extent that the government uses its tax-raised money to provide more urgent services for the community than the taxpayers themselves otherwise would or could have provided, the government spending is beneficial to the community. To the extent that the government provides policemen and judges to prevent or mitigate force, theft, and fraud, it protects and encourages production and welfare. The same applies, up to a certain point, to what the government pays out to provide armies and armament against foreign aggression. It applies also to the provision by city governments of sidewalks, streets, and sewers, and to the provision by States of roads, parkways, and bridges.

But government expenditure even on necessary types of service may easily become excessive. Sometimes it may be difficult to measure exactly where the point of excess begins. It is to be hoped, for example, that armies and armament may never need to be used, but it does not follow that providing them is mere waste. They are a form of insurance premium; and in this world of nuclear warfare and incendiary slogans it is not easy to say how big a premium is enough. The exigencies of politicians seeking re-election, of course, may very quickly lead to unneeded roads and other public works.

Welfare Spending

Waste in government spending in other directions can soon become flagrant. The money spent on various forms of relief, now called “social welfare,” is more responsible for the spending explosion of the U.S. government than any other type of outlay. In the fiscal year 1927, when total expenditures of the federal government were $2.9 billion, a negligible percentage of that amount went for so-called welfare. In fiscal 1977, when prospective total expenditures have risen to $394.2 billion-136 times as much–welfare spending alone (education, social services, Medicaid, Medicare, Social Security, veterans benefits, etc.) comes to $205.3 billion, or more than half the total. The effect of this spending is on net balance to reduce production, because most of it taxes the productive to support the unproductive.

As to the effect of the taxes levied to pay for the spending, all taxation must discourage production to some extent, directly or indirectly. Either it puts a direct penalty on the earning of income, or it forces producers to raise their prices and so diminish their sales, or it discourages investment, or it reduces the savings available for investment; or it does all of these.

Some forms of taxation have more harmful effects on production than others. Perhaps the worst is heavy taxation of corporate earnings. This discourages business and output; it reduces the employment that the politicians profess to be their primary concern; and it prevents the capital formation that is so necessary to increase real productivity, real income, real wages, real welfare. Almost as harmful to incentives and to capital formation is progressive personal income taxation. And the higher the level of taxation the greater the damage it does.

Disruption of the Economy

Let us consider this in more detail. The greater the amount of government spending, the more it depresses the economy. In so far as it is a substitute for private spending, it does nothing to “stimulate” the economy. It merely directs labor and capital into the production of less necessary goods or services at the expense of more necessary goods or services. It leads to malproduction. It tends to direct funds out of profitable capital investment and into immediate consumption. And most “welfare” spending, to repeat, tends to support the unproductive at the expense of the productive.

But more importantly, the higher the level of government spending, the higher the level of taxation. And the higher the level of taxation, the more it discourages, distorts, and disrupts production. It does this much more than proportionately. A 1 per cent sales tax, personal income tax, or corporation tax would do very little to discourage production, but a 50 per cent rate can be seriously disruptive. Just as each additional fixed increment of income will tend to have a diminishing marginal value to the receiver, so each additional subtraction from his income will mean a more than proportional deprivation and disincentive. The adjective “progressive” usually carries an approbatory connotation, but an income tax can appropriately be called “progressive” only in the sense that a disease can be called progressive. So far as its effect on incentives and production are concerned, such a tax is increasingly retrogressive or repressive.

Total Spending the Key

Though, broadly speaking, only a budget deficit tends to lead to inflation, the recognition of this truth has led to a serious underestimation of the harmfulness of an exorbitant level of total government spending. While a budget balanced at a level of $100 billion for both spending and tax revenues may be acceptable (at, say, 1977′s level of national income and dollar purchasing power), a budget balanced at a level above $400 billion may in the long run prove ruinous. In the same way, a deficit of $50 billion at a $400 billion level of spending is far more ominous than a deficit of the same size at a spending level of $200 billion.
An exorbitant spending level, in sum, can be as great or a greater evil than a huge deficit. Everything depends on their relative size, and on their combined size compared with the national income.

Let us look first at the effect of a deficit as such. That effect will depend in large part on how the deficit is financed. Of course if, with a given level of spending, a deficit of, say, $50 billion is then financed by added taxation, it ceases by definition to be a deficit. But it does not follow that this is the best course to take. Whenever possible (except, say, in the midst of a major war) a deficit should be eliminated by reducing expenditures rather than by increasing taxes, because of the harm the still heavier taxes would probably do in discouraging and disorganizing production.

It is necessary to emphasize this point, because every so often some previous advocate of big spending suddenly turns “responsible,” and solemnly tells conservatives that if they want to be equally responsible it is now their duty to “balance the budget” by raising taxes to cover the existing and planned expenditures. Such advice completely begs the question. It tacitly assumes that the existing or planned level of expenditures, and all its constituent items, are absolutely necessary, and must be fully covered by increased taxes no matter what the cost in economic disruption.

We have had 39 deficits in the 47 fiscal years since 1931. The annual spending total has gone up from $3.6 billion in 1931 to $394.2 billion-110 times as much–in 1977. Yet the argument that we must keep on balancing this multiplied spending by equally multiplied taxation continues to be regularly put forward. The only real solution is to start slashing the spending before it destroys the economy.

Two Ways to Pay

Given a budget deficit, however, there are two ways in which it can be paid for. One is for the government to pay for its deficit outlays by printing and distributing more money. This may be done either directly, or by the government’s asking the Federal Reserve or the private commercial banks to buy its securities and to pay for them either by creating deposit credits or with newly issued inconvertible Federal Reserve notes. This of course is simple, naked inflation.

Or the deficit may be paid for by the government’s selling its bonds to the public, and having them paid for out of real savings. This is not directly inflationary, but it merely leads to an evil of a different kind. The government borrowing competes with and “crowds out” private capital investment, and so retards economic growth.

Let us examine this a little more closely. There is at any given time a total amount of actual or potential savings available for investment. Government statistics regularly give estimates of these. The gross national product in 1974, for example, is given as $1,499 billion. Gross private saving was $215.2 billion-14.4 per cent of this–of which $74 billion consisted of personal saving and $141.6 billion of gross business saving. But the Federal budget deficit in that year was $11.7 billion, and in 1975 $73.4 billion, seriously cutting down the amount that could go into the capital investment necessary to increase productivity, real wages, and real long-run consumer welfare.

Sources and Uses of Capital

The government statistics estimate the amount of gross private domestic investment in 1974 at $215 billion and in 1975 at $183.7 billion. But it is probable that the greater part of this represented mere replacement of deteriorated, worn-out, or obsolete plant, equipment, and housing, and that new capital formation was much smaller.

Let us turn to the amount of new capital supplied through the security markets. In 1973, total new issues of securities in the United States came to $99 billion. Of these, $32 billion consisted of private corporate stocks and bonds, $22.7 billion of state and local bonds and notes, $1.4 billion of bonds of foreign governments, and $42.9 billion of obligations of the U.S. government or of its agencies. Thus of the combined total of $74.9 billion borrowed by the U.S. government and by private industry, the government got 57 per cent, and private industry only 43 per cent.

The crowding-out argument can be stated in a few elementary propositions.

1. Government borrowing competes with private borrowing.
2. Government borrowing finances government deficits.
3. What the government borrows is spent chiefly on consumption, but what private industry borrows chiefly finances capital investment.
4. It is the amount of new capital investment that is chiefly responsible for the improvement of economic conditions.

The possible total of borrowing is restricted by the amount of real savings available. Government borrowing crowds out private borrowing by driving up interest rates to levels at which private manufacturers who would otherwise have borrowed for capital investment are forced to drop out of the market.

Why the Deficits?

Yet government spending and deficits keep on increasing year by year. Why? Chiefly because they serve the immediate interests of politicians seeking votes, but also because the public still for the most part accepts a set of sophistical rationalizations.

The whole so-called Keynesian doctrine may be summed up as the contention that deficit spending, financed by borrowing, creates employment, and that enough of it can guarantee “full” employment. The American people have even had foisted upon them the myth of a “full-employment budget.” This is the contention that projected Federal expenditures and revenues need not be, and ought not to be, those that would bring a real balance of the budget under actually existing conditions, but merely those that would balance the budget if there were “full employment.”

To quote a more technical explanation (as it appears, for example, in the Economic Report of the President of January, 1976): “Full employment surpluses or deficits are the differences between what receipts and expenditures are estimated to be if the economy were operating at the potential output level consistent with a 4 per cent unemployment” (p. 54).

A table in that report shows what the differences would have been for the years 1969 to 1975, inclusive, between the actual budget and the so-called full employment budget. For the calendar year 1975, for example, actual receipts were $283.5 billion and expenditures $356.9 billion, leaving an actual budget deficit of $73.4 billion. But in conditions of full employment, receipts from the same tax rates might have risen to $340.8 billion, and expenditures might have fallen to $348.3 billion, leaving a deficit not of $73.4 billion but only of $7.5 billion. Nothing to worry about.

Priming the Pump

Nothing to worry about, perhaps, in a dream world. But let us return to the world of reality. The implication of the full-employment budget philosophy (though it is seldom stated explicitly) is not only that in a time of high unemployment it would make conditions even worse to aim at a real balance of the budget, but that a full-employment budget can be counted on to bring full employment.

The proposition is nonsense. The argument for it assumes that the amount of employment or unemployment depends on the amount of added dollar “purchasing power” that the government decides to squirt into the economy. Actually the amount of unemployment is chiefly determined by entirely different factors–by the relations in various industries between selling prices and costs, between particular prices and particular wage-rates; by the wage-rates exacted by strong unions and strike threats; by the level and duration of unemployment insurance and relief payments (making idleness more tolerable or attractive); by the existence and height of legal minimum-wage rates, and so on. But all these factors are persistently ignored by the full-employment budgeteers and by all the other advocates of deficit spending as the great panacea for unemployment.

One-Way Formula

It may be worth while, before we leave this subject, to point to one or two of the practical consequences of a consistent adherence to a full employment-budget policy. In the twenty-eight years from 1948 to 1975 inclusive, there were only eight in which unemployment fell below the government target-level of 4 per cent. In all the other years the full-employment-budgeteers (perhaps we should call them the fulembudgers for short) would have prescribed an actual deficit. But they say nothing about achieving a surplus in the full-employment years, much less about its desirable size. Presumably they would consider any surplus at all, any repayment of the government debt, as extremely dangerous at any time. So a prescription for full-employment budgeting might not produce very different results in practice from a prescription for perpetual deficit.

Perhaps an even worse consequence is that as long as this prescription prevails, it can only act to divert attention from the real causes of unemployment and their real cure.

Perhaps a word needs to be said about the fear of a surplus that has developed in recent decades–ever since about 1930, in fact. This of course is only the reverse side of the myth that a deficit is needed to “stimulate” the economy by “creating purchasing power.” The only way in which a surplus could do even temporary harm would be by bringing about a sudden substantial reduction in the money supply. It could do this only if the bonds paid off were those held by the banking system against which demand deposits had been created. But in 1976, out of a gross public debt of $620.4 billion, $92.3 billion were held by commercial banks and $94.4 billion by Federal Reserve banks. This left $433.7 billion, or about 70 per cent, in nonbanking hands. This could be retired, say over fifty years, without shrinking the money supply in the least. And if the public debt were retired at a rate of $5 billion or $10 billion a year, private holders would have that much more to invest in private industry.

The Phillips Curve

A myth even more pernicious than the full-employment budget, and akin to it in nature, is the Phillips Curve. This is the doctrine that there is a “trade-off” between employment and inflation, and that this can be plotted on a precise curve–that the less inflation, the more unemployment, and the more inflation the less unemployment. But this incredible doctrine is more directly related to currency issue than to government spending and deficits, and can best be examined elsewhere.

In conclusion: Chronic excessive government spending and chronic huge deficits are twin evils. The deficits lead more directly to inflation, and therefore in recent years they have tended to receive a disproportionate amount of criticism from economists and editorial writers. But the total spending is the greater evil, because it is the chief political cause of the deficits. If the spending were more moderate, the taxes to pay for it would not have to be so oppressive, so damaging to incentive, so destructive of employment and production. So the persistence and size of deficits, though serious, is a derivative problem; the primary evil is the exorbitant spending, the Leviathan “welfare” state. If the spending were brought within reasonable bounds, the taxes to pay for it would not have to be so burdensome and demoralizing, and politicians could be counted on to keep the budget balanced.

Henry Hazlitt, noted economist, author, editor, reviewer and columnist, is well known to readers of the New York Times, Newsweek, The Freeman, Barron’s, Human Events and many others. Best known of his books are Economics in One Lesson, The Failure of the “New Economics,” The Foundations of Morality, and What You should Know About Inflation.

February 1977 • Volume: 27 • Issue: 2

Complements of The Freeman

http://www.thefreemanonline.org/

"Free" Enterprise and Competitive Order F. A. Hayek

IF DURING the next few years, that is, during the period with 

which practical politicians are alone concerned, a continued movement toward more government control in the greater par t of the world is almost certain, this is due, more t ha n to anyt hi ng else, to the lack of a real program, or perhaps I had better say, to a consistent philosophy 

of the groups which wish to oppose it. Th e position is even worse than 

mere lack of program would imply; the fact is that almost everywhere 

the groups which pret end to oppose socialism at the same time support 

policies which, if the principles on which they are based were general- 

ized, would no less lead to socialism than the avowedly socialist poli- 

cies. The r e is some justification at least in the taunt that many of the 

pret endi ng defenders of "free enterprise" are in fact defenders of privi- 

leges and advocates of government activity in their favor rather than 

opponents of all privilege. In principle the industrial protectionism 

and government-supported cartels a nd the agricultural policies of the 

conservative groups are not different from the proposals for a more 

far-reaching direction of economic life sponsored by the socialists. It is 

an illusion when the more conservative interventionists believe t hat 

they will be able to confine these government controls to the particular 

kinds of which they approve. In a democratic society, at any rate, once 

the principle is admitted t hat the government undertakes responsibil- 

ity for the status a nd position of particular groups, it is inevitable that 

this control will be extended to satisfy the aspirations a n d prej udices 

of the great masses. There is no hope of a return to a freer system 

until the leaders of the movement against state control are prepared 

first to impose upon themselves that discipline of a competitive mar ket 

which they ask the masses to accept. Th e hopelessness of the prospect 

for the near fut ure indeed is due mainly to the fact that no organized 

political gr oup anywhere is in favor of a truly free system. 

It is more than likely t hat from their point of view the practical poli- 

ticians are right and that in the existing state of public opinion nothing 

else would be practicable. But wha t to the politicians are fixed limits of 

practicability imposed by public opinion must not be similar limits to 

us. Public opinion on these matters is the wor k of men like ourselves, 

the economists a nd political philosophers of the past few generations, 

who have created the political climate i n whi ch the politicians of our 

time must move. I do not find myself often agreeing wi t h the late Lord 

Keynes, but he has never said a t r uer t hi ng t han when he wrote, on a 

subject on which his own experience has singularly qualified him to 

speak, that " the ideas of economists and political philosophers, both 

when they are right and· when they are wrong, are more powerful 

t han is commonly understood. Indeed the world is ruled by little else. 

Madmen i n authority, who hear voices i n the air, are distilling their 

frenzy from some academic scribbler of a few years back. I a m sure 

t ha t the power of vested interests is vastly exaggerated compared with 

the gr adual encroachment of ideas. Not , indeed, immediately, but 

after a certain interval; for in the field of economic a n d political philos- 

ophy there are not many who are influenced by new theories after they 

are twenty-five or thirty years of age, so t hat the ideas whi ch civil ser- 

vants a nd politicians a nd even agitators apply are not likely to be t he 

newest. But, soon or late, it is ideas, not vested interests, whi ch are 

dangerous for good and evil."

It is from this long-run point of view that we must look at our task. 

It is the beliefs whi ch must spread, if a free society is to be preserved, or 

restored, not what is practicable at the moment , which must be our 

concern. But, while we must emancipate ourselves from t hat servitude 

to cur r ent prej udices i n whi ch the politician is held, we mus t take a 

sane view of wha t persuasion and instruction are likely to achieve. 

Whi l e we may hope that, as regards the means to be employed a nd t he 

methods to be adopted, the public may i n some measure be accessible 

to reasonable ar gument , we mus t probably assume t ha t many of its 

basic values, its ethical standards, are at least fixed for a much longer 

time a n d to some ext ent entirely beyond the scope of reasoning. To 

some extent i t may be our task even here to show t ha t the aims whi ch 

our generation has set itself are incompatible or conflicting a n d t hat 

t he pur s ui t of some of t he m will endanger even great er values. Bu t we 

shall probably also find t hat i n some respects d u r i n g t he last h u n d r e d 

years certain moral aims have firmly established themselves for the 

satisfaction of which i n a free society suitable techniques can be found. 

Even i f we shoul d not altogether share the new importance attached 

to some of these newer values, we shall do well to assume t hat they will 

determine action for a l ong time to come a nd carefully to consider how 

far a place can be found for t hem i n a free society. It is, of course, main- 

ly t he demands for greater security a n d greater equality I have here in 

mi nd. I n both respects I believe very careful distinctions will have to be 

d r a wn between t he sense i n whi ch "security" a n d "equality" can and 

cannot be provided i n a free society. 

Yet i n anot her sense I t hi nk t ha t we shall have to pay deliberate 

attention to the moral t emper of contemporary ma n if we are to suc- 

ceed i n canal i zi ng his energies from the har mf ul policies to which they 

are now devoted to a new effort on behalf of individual freedom. Un- 

less we can set a definite task to the reformatory zeal of men, unless we 

can poi nt out reforms which can be fought for by unselfish men, wi t hi n 

a pr ogr a m for freedom, t hei r moral fervor is certain to be used against 

freedom. I t was probably the most fatal tactical mistake of many nine- 

teenth-century liberals to have given the impression t ha t t he abandon- 

me nt of all har mf ul or unnecessary state activity was t he consumma- 

tion of all political wisdom a n d t hat the question of h o w t he state 

ought to use those powers whi ch nobody denied to i t offered no serious 

a n d i mpor t ant problems on which reasonable people could differ. 

Th i s is, of course, not t rue of all nineteenth-century liberals. About 

a hundr e d years ago John St uar t Mill, t hen still a t r ue liberal, stated 

one of our present mai n problems i n unmistakable terms. " Th e prin- 

ciple of private property has never yet had a fair trial i n any country," 

he wrote i n the first edition of his Political Economy. " Th e laws of 

property have never yet conformed to the principles on which the jus- 

tification of private property rests. They have made property of things 

which never ought to be property, and absolute property where only a 

qualified property ought to exist . . . if the tendency of legislators ha d 

been to favour th~ diffusion, instead of the concentration of wealth, to 

encourage the subdivision of the large units, instead of striving to 

keep t hem together; the principle of private property would have been 

found to have no real connection wi t h the physical a n d social evils 

which have made so many minds t u r n eagerly to any prospect of relief, 

however desperate."2 But little was i n fact done to make the rules of 

property conform better to its rationale, a nd Mill himself, like so many 

others, soon t ur ned his attention to schemes involving its restriction 

or abolition rat her t ha n its more effective use. 

Whi l e it woul d be an exaggeration, i t would not be altogether un- 

t rue to say t hat the interpretation of the fundament al principle of 

liberalism as absence' of state activity rat her t han as a policy which de- 

liberately adopts competition, the market, and prices as its orderi ng 

principle a n d uses the legal framework enforced by the state i n order 

to make competition as effective a nd beneficial as p o s s i b l e - a n d to 

supplement it where, and only where, it cannot be made ef f ect i ve- i s 

as much responsible for the decline of competition as the active sup- 

por t which governments have given directly and indirectly to the 

gr owt h of monopoly. I t is the first general thesis which we shall have 

to consider t hat competition can be made more effective and more 

beneficent by certain activities of government t han it would be wi t hout 

them. Wi t h regard to some of these activities this has never been 

denied, al t hough people speak sometimes as if they had forgotten 

about them. Th a t a functioning mar ket presupposes not only preven- 

tion of violence and fraud b u t the protection of certain rights, such as

property, a nd the enforcement of contracts, is always taken for granted. 

Whe r e the traditional discussion becomes so unsatisfactory is where i t 

is suggested that, wi t h the recognition of the principles of private 

property a nd freedom of contract, which indeed every liberal must 

recognize, all the issues were settled, as if the law of property a n d con- 

tract were given once a nd for all i n its final a nd most appropriate form, 

i.e., i n the form which will make the mar ket economy work at its best. 

I t is only after we have agreed on these principles t hat the real prob- 

lems begin.