1. Introduction: Praxeological Criticism of Ethics

PRAXEOLOGY—ECONOMICS—PROVIDES NO ULTIMATE ethical judgments: it simply furnishes the indispensable data necessary to make such judgments. It is a formal but universally valid science based on the existence of human action and on logical deductions from that existence. And yet praxeology may be extended beyond its current sphere, to criticize ethical goals. This does not mean that we abandon the value neutrality of praxeological science. It means merely that even ethical goals must be framed meaningfully and, therefore, that praxeology can criticize (1) existential errors made in the formulation of ethical propositions and (2) the possible existential meaninglessness and inner inconsistency of the goals themselves. If an ethical goal can be shown to be self-contradictory and conceptually impossible of fulfillment, then the goal is clearly an absurd one and should be abandoned by all. It should be noted that we are not disparaging ethical goals that may be practically unrealizable in a given historical situation; we do not reject the goal of abstention from robbery simply because it is not likely to be completely fulfilled in the near future. What we do propose to discard are those ethical goals that are conceptually impossible of fulfillment because of the inherent nature of man and of the universe.

We therefore propose to place a restriction on the unlimited validity of anyone’s ultimate ethical valuations. In doing so, we still are not pushing beyond the bounds of praxeology to function as ethicists, for we are not here attempting to establish a positive ethical system of our own or even to prove that such a system is attainable. We believe only that praxeology should have the right of veto, to discard any ethical propositions that fail to meet the test of conceptual possibility or internal consistency.

Furthermore, we maintain that whenever an ethical goal has been shown to be conceptually impossible and therefore absurd, it is equally absurd to take measures to approach that ideal. It is illegitimate to concede that X is an absurd goal, and then to go on to say that we should take all possible measures to approach it, at any rate. If the end is absurd, so is the approach toward that end; this is a praxeological truth derived from the law that a means can obtain its value only by being imputed from the end.1 A drive toward X only obtains its value from the value of X itself; if the latter is absurd, then so is the former.

There are two types of ethical criticisms that can be made of the free-market system. One type is purely existential; that is, it rests on existential premises only. The other type advances conflicting ethical goals and protests that the free market does not attain these goals. (Any mixture of the two will here be placed in the second category.) The first type says: (1) The free market leads to consequence A; (2) I don’t like consequence A (or consequence A is objectively unlikable); (3) therefore, the free market should not be established. To refute this type of criticism, it is necessary only to refute the existential proposition in the first part of the argument, and this is, admittedly, a purely praxeological task.

The following are brief summaries of very common criticisms of the free market that can be refuted praxeologically and that, indeed, have been refuted, implicitly or explicitly, in other writings:

(1) The free market causes business cycles and unemployment. Business cycles are caused by the governmental intervention of bank-credit expansion. Unemployment is caused by unions or government keeping wage rates above the free-market level. Only coercive intervention, not private spending, can bring about inflation.

(2) The free market is likely to bring about monopoly and monopoly pricing. If we define “monopoly” as the “single seller of a product,” we founder on insoluble problems. We cannot identify homogeneous products, except in the concrete day-to-day valuations of consumers. Furthermore, if we consider such monopoly as wicked, we must regard both Crusoe and Friday as vicious monopolists if they exchange fish and lumber on their desert island. But if Crusoe and Friday are not wicked, how can a more complex society, one necessarily less monopolistic in this sense, be at all wicked? At what point in the reduced scope of such monopoly can it be considered evil? And how can the market be held responsible for the number of people inhabiting the society? Moreover, every individual striving to be better than his fellows is thereby trying to be a “monopolist.” Is this bad? Do not both he and the rest of society benefit from his better mousetrap? Finally, there is no conceptually identifiable monopoly or monopolistic price on the free market.

Hence, a monopoly price and a monopoly by any usable definition arise only through the coercive grant of exclusive privilege by the government, and this includes all attempts to “enforce competition.”2

(3) The government must do what the people themselves cannot do. We have shown that no such cases can exist.

There are other criticisms, however, which infuse various degrees of ethical protest into the argument. This chapter will be devoted to a praxeological critique of some of the most popular of these antimarket ethical contentions.

• 1In short, we are saying that the means must be justified by the end. What else but an end can justify a means? The common conception that the doctrine, “the end justifies the means,” is an immoral device of Communists, is hopelessly confused. When, for example, people object to murder as a means to achieve goals, they are objecting to murder, not because they do not believe that means are justified by ends, but because they have conflicting ends—for example, the end that murder not be committed. They may hold this view as an end-in-itself or because it is a means to other ends, such as upholding each man’s right to life.
• 2For further discussion, see Man, Economy, and State, chapter 10.

This criticism of the market is more existential than ethical. It is the popular argument that laissez faire, or the free-market economy, rests its case on the crucial assumption that every individual knows his own self-interest best. Yet, it is charged, this is not true of many individuals. Therefore, the State must intervene, and the case for the free market is vitiated.

The free-market doctrine, however, does not rest on any such assumption. Like the mythical “economic man,” the Perfectly Wise Individual is a straw man created by the critics of the theory, not implied by it.

First, it should be evident from our analysis of the free market and government intervention throughout this work that any argument for the free market rests on a far deeper and more complex doctrine. We cannot enter here into the many ethical and philosophical arguments for freedom. Secondly, the laissez-faire or free-market doctrine does not assume that everyone always knows his own interest best; it asserts rather that everyone should have the right to be free to pursue his own interest as he deems best. Critics may argue that the government should force men to lose some ex ante or present utility in order to gain ex post utility later, by being compelled to pursue their own best interests. But libertarians may well reply in rebuttal: (1) that a person’s resentment at coercive interference will lower his ex post utility in any event; and (2) that the condition of freedom is a vital, necessary prerequisite for a person’s “best interests” to be attained. Indeed, the only lasting way to correct a person’s errors is by persuasive reasoning; force cannot do the job. As soon as the individual can evade this force, he will return to his own preferred ways.

No one, certainly, has perfect foresight into the uncertain future. But free entrepreneurs on the market are better equipped than anyone else, by incentive and by economic calculation, to foresee and satisfy the needs of the consumers.

But what if the consumers are mistaken with regard to their own interests? Obviously, they sometimes are. But several more points must be made. In the first place, every individual knows the data of his own inner self best—by the very fact that each has a separate mind and ego. Secondly, the individual, if in doubt about what his own true interests are, is free to hire and consult experts to give him advice based on their superior knowledge. The individual hires these experts and, on the market, can continuously test their helpfulness. Individuals on the market, in short, tend to patronize those experts whose advice proves most successful. Good doctors or lawyers reap rewards on the free market, while poor ones fail. But when government intervenes, the government expert acquires his revenue by compulsory levy. There is no market test of his success in teaching people their true interests. The only test is his success in acquiring the political support of the State’s machinery of coercion.

Thus, the privately hired expert flourishes in proportion to his ability, whereas the government expert flourishes in proportion to his success in currying political favor. Moreover, what incentive does the government expert have to care about the interests of his subjects? Surely he is not especially endowed with superior qualities by virtue of his government post. He is no more virtuous than the private expert; indeed, he is inherently less capable and is more inclined to wield coercive force. But while the private expert has every pecuniary incentive to care about his clients or patients, the government expert has no incentive whatever. He obtains his revenue in any event. He is devoid of any incentive to worry about his subject’s true interests.

It is curious that people tend to regard government as a quasi-divine, selfless, Santa Claus organization. Government was constructed neither for ability nor for the exercise of loving care; government was built for the use of force and for necessarily demagogic appeals for votes. If individuals do not know their own interests in many cases, they are free to turn to private experts for guidance. It is absurd to say that they will be served better by a coercive, demagogic apparatus.

Finally, the proponents of government intervention are trapped in a fatal contradiction: they assume that individuals are not competent to run their own affairs or to hire experts to advise them. And yet they also assume that these same individuals are equipped to vote for these same experts at the ballot box. We have seen that, on the contrary, while most people have a direct idea and a direct test of their own personal interests on the market, they cannot understand the complex chains of praxeological and philosophical reasoning necessary for a choice of rulers or political policies. Yet this political sphere of open demagogy is precisely the only one where the mass of individuals are deemed to be competent!3 ,4

• 3Interventionists assume the political (but no other) competence of the people even when they favor dictatorship rather than democracy. For if the people do not vote under a dictatorship, they still must accept the rule of the dictator and his experts. So the interventionists cannot escape this contradiction even if they give up democracy.
• 4Ludwig von Mises has been active in pointing out this contradiction. Thus, see hisPlanning for Freedom (South Holland, Ill.: Libertarian Press, 1952), pp. 42–43. However, the remainder of Mises’ criticism of this anti-market argument (ibid., pp. 40–44) rather differs from the one presented here.

Some writers are astute enough to realize that the market economy is simply a resultant of individual valuations, and thus they see that, if they do not like the results, the fault lies with the valuations, not the economic system. Yet they proceed to advocate government intervention to correct the immorality of individual choices. If people are immoral enough to choose whiskey rather than milk, cosmetics rather than educational matter, then the State, they say, should step in and correct these choices. Much of the rebuttal parallels the refutation of the knowledge-of-interests argument; i.e., it is self-contradictory to contend that people cannot be trusted to make moral decisions in their daily lives but can be trusted to vote for or accept leaders who are morally wiser than they.

Mises states, quite rightly, that anyone who advocates governmental dictation over one area of individual consumption must logically come to advocate complete totalitarian dictation over all choices. This follows if the dictators have any set of valuational principles whatever. Thus, if the members of the ruling group like Bach and hate Mozart, and they believe strongly that Mozartian music is immoral, they are just as right in prohibiting the playing of Mozart as they are in prohibiting drug use or liquor consumption.5 Many statists, however, would not balk at this conclusion and would be willing to take over this congenial task.

The utilitarian position—that government dictation is bad because no rational ethics exists, and therefore no person has a right to impose his arbitrary values on someone else—is, we believe, an inadequate one. In the first place, it will not convince those who believe in a rational ethics, who believe that there is a scientific basis for moral judgments and that they are not pure whim. And furthermore, the position involves a hidden moral assumption of its own—that A has no right to impose any arbitrary values on B. But if ends are arbitrary, is not the end “that arbitrary whims not be imposed by coercion” just as arbitrary? And suppose, further, that ranking high on A’s value scale is the arbitrary whim of imposing his other values on B. Then the utilitarians cannot object and must abandon their attempt to defend individual liberty in a value-free manner. In fact, the utilitarians are helpless against the man who wants to impose his values by coercion and who persists in doing so even after the various economic consequences are pointed out to him.6

The would-be dictator can be logically refuted in a completely different way, even while remaining within Wertfrei praxeological bounds. For what is the complaint of the would-be dictator against free individuals? That they act immorally in various ways. The dictator’s aim, therefore, is to advance morality and combat immorality. Let us grant, for the sake of argument, that an objective morality can be arrived at. The question that must be faced, then, is: Can force advance morality? Suppose we arrive at the demonstrable conclusion that actions A, B, and C are immoral, and actions X, Y, and Z are moral. And suppose we find that Mr. Jones shows a distressing propensity to value A, B, and C highly and adopts these courses of action time and again. We are interested in transforming Mr. Jones from being an immoral person to being a moral person. How can we go about it? The statists answer: by force. We must prohibit at gunpoint Mr. Jones from doing A, B, and C. Then, at last, he will be moral. But will he? Is Jones moral because he chooses X when he is forcibly deprived of the opportunity to choose A? When Smith is confined to a prison, is he being moral because he doesn’t spend his time in saloons getting drunk?

There is no sense to any concept of morality, regardless of the particular moral action one favors, if a man is not free to do the immoral as well as the moral thing. If a man is not free to choose, if he is compelled by force to do the moral thing, then, on the contrary, he is being deprived of the opportunity of being moral. He has not been permitted to weigh the alternatives, to arrive at his own conclusions, and to take his stand. If he is deprived of free choice, he is acting under the dictator’s will rather than his own. (Of course, he could choose to be shot, but this is hardly an intelligible conception of free choice of alternatives. In fact, he then has only one free choice: the hegemonic one—to be shot or to obey the dictator in all things.)

Dictatorship over consumers’ choices, then, can only atrophy morality rather than promote it. There is but one way that morality can spread from the enlightened to the unenlightened—and that is by rational persuasion. If A convinces B through the use of reason that his moral values are correct and B’s are wrong, then B will change and adopt the moral course of his own free will. To say that this method is a slower procedure is beside the point. The point is that morality can spread only through peaceful persuasion and that the use of force can only erode and impair morality.

We have not even mentioned other facts that strengthen our argument, such as the great difficulty in enforcing dictatorial rules against people whose values clash with them. The man who prefers the immoral course and is prevented by the bayonet from acting on his preference will do his best to find ways to circumvent the prohibition—perhaps by bribing the bayoneteer. And, because this is not a treatise on ethics, we have not mentioned the libertarian ethical theory which holds that the use of coercion is itself the highest form of immorality.

Thus, we have shown that would-be dictators must necessarily fail to achieve their professed goal of advancing morality because the consequences will be precisely the opposite. It is possible, of course, that the dictators are not really sincere in stating their goal; perhaps their true purpose is to wield power over others and to prevent others from being happy. In that case, of course, praxeology can say no more about the matter, although ethics may find a good deal to say.7

• 5Mises, Human Action, pp. 728–29. The same total dictatorship over consumer choice is also implied by the knowledge-of-interest argument discussed above. As Thomas Barber astutely says:
  It is illegal for pleasure-boaters to fail to carry a life preserver for every person on board. A great number of young men are publicly employed to go about and look for violators of this law. Pleasant for the young men, of course. But is it really any more the government’s business that a man goes canoeing without a life preserver than that he goes out in the rain without his rubbers? . . . The law is irritating to the individual concerned, costly to the taxpayers, and turns a lot of potential producers into economic parasites. Perhaps the manufacturers of life preservers engineered its passage. (Barber, Where We Are At, p. 89)
• 6It is true that we do not advocate ends in this volume, and in that sense praxeology is “utilitarian.” But the difference is that utilitarianism would extend this Wertfrei injunction from its proper place in economics and praxeology to embrace all of rational discourse.
• 7Mises often states that interventionary measures in the market, e.g., price controls, will have consequences that even the government officials administering the plans would consider bad. But the problem is that we do not know what the government officials’ ends are—except that they demonstrably do like the power they have acquired and the wealth they have extracted from the public. Surely these considerations may often prove paramount in their minds, and we therefore cannot say that government officials would invariably concede, after learning all the consequences, that their actions were mistaken.

It is very common to assert that the advocates of the purely free market make one fundamental and shaky assumption: that all human beings are angels. In a society of angels, it is commonly agreed, such a program could “work,” but not in our fallible world. The chief difficulty with this criticism is that no libertarian—except possibly those under Tolstoyan influence—has ever made such an assumption. The advocates of the free market have not assumed a reformation of human nature, although they would certainly have no objection to such a reformation if it took place. We have seen that libertarians envision defense services against predators as provided by private bodies rather than by the State. But they do not assume that crime would magically disappear in the free society.

Statists concede to libertarians that no State would be required if all men were “good.” State control is allegedly required only to the extent that men are “evil.” But what if all men were “evil”? As F.A. Harper has pointed out:

Still using the same principle that political rulership should be employed to the extent of the evil in man, we would then have a society in which complete political rulership of all the affairs of everybody would be called for. . . . One man would rule all. But who would serve as the dictator? However he were to be selected and affixed to the political throne, he would surely be a totally evil person, since all men are evil. And this society would then be ruled by a totally evil dictator possessed of total political power. And how, in the name of logic, could anything short of total evil be its consequence? How could it be better than having no political rulership at all in that society?8

Is this argument unrealistic because, as everyone agrees, human beings are a compound, capable of both good and evil? But then, at what point in this mixture does State dictation become necessary? In fact, the libertarian would reason that the fact that human nature is a mixture of both good and evil provides its own particular argument in his favor. For if man is such a mixture, then the best societal framework is surely one in which evil is discouraged and the good encouraged. The libertarian maintains that the existence of the State apparatus provides a ready, swift channel for the exercise of evil, since the rulers of the State are thereby legitimated and can wield compulsion in ways that no one else is permitted to do. What is considered “crime” socially, is called “exercise of democratic power” when performed by an individual as a State official. The purely free market, on the other hand, eliminates all legitimated channels for the exercise of power over man.

• 8F.A. Harper, “Try This on Your Friends,” Faith and Freedom, January, 1955, p. 19.

Probably the most common ethical criticism of the market economy is that it fails to achieve the goal of equality. Equality has been championed on various “economic” grounds, such as minimum social sacrifice or the diminishing marginal utility of money (see the chapter on taxation above). But in recent years economists have recognized that they cannot justify egalitarian-ism by economics, that they ultimately need an ethical basis for equality.

Economics or praxeology cannot establish the validity of ethical ideals, but even ethical goals must be framed meaningfully. They must therefore pass muster before praxeology as being internally consistent and conceptually possible. The credentials of “equality” have so far not been adequately tested.

It is true that many objections have been raised that give egalitarians pause. Sometimes realization of the necessary consequences of their policies causes an abandonment, though more often a slowing down, of the egalitarian program. Thus: compulsory equality will demonstrably stifle incentive, eliminate the adjustment processes of the market economy, destroy all efficiency in satisfying consumer wants, greatly lower capital formation, and cause capital consumption—all effects signifying a drastic fall in general standards of living. Furthermore, only a free society is casteless, and therefore only freedom will permit mobility of income according to productivity. Statism, on the other hand, is likely to freeze the economy into a mold of (nonproductive) inequality.

Yet these arguments, though powerful, are by no means conclusive. Some people will pursue equality anyway; many will take these considerations into account by settling for some cuts in living standards in order to gain more equality.

In all discussions of equality, it is considered self-evident that equality is a very worthy goal. But this is by no means self-evident. For the very goal of equality itself is open to serious challenge. The doctrines of praxeology are deduced from three universally acceptable axioms: the major axiom of the existence of purposive human action; and the minor postulates, or axioms, of the diversity of human skills and natural resources, and the disutility of labor. Although it is possible to construct an economic theory of a society without these two minor axioms (but not without the major one), they are included in order to limit our theorizing to laws that can apply directly to reality.9 Anyone who wants to set forth a theory applicable to interchangeable human beings is welcome to do so.

Thus, the diversity of mankind is a basic postulate of our knowledge of human beings. But if mankind is diverse and individuated, then how can anyone propose equality as an ideal? Every year, scholars hold Conferences on Equality and call for greater equality, and no one challenges the basic tenet. But what justification can equality find in the nature of man? If each individual is unique, how else can he be made “equal” to others than by destroying most of what is human in him and reducing human society to the mindless uniformity of the ant heap? It is the task of the egalitarian, who confidently enters the scene to inform the economist of his ultimate ethical goal, to prove his case. He must show how equality can be compatible with the nature of mankind and must defend the feasibility of a possible egalitarian world.

But the egalitarian is in even direr straits, for it can be shown that equality of income is an impossible goal for mankind.

Income can never be equal. Income must be considered, of course, in real and not in money terms; otherwise there would be no true equality. Yet real income can never be equalized. For how can a New Yorker’s enjoyment of the Manhattan skyline be equalized with an Indian’s? How can the New Yorker swim in the Ganges as well as an Indian? Since every individual is necessarily situated in a different space, every individual’s real income must differ from good to good and from person to person. There is no way to combine goods of different types, to measure some income “level,” so it is meaningless to try to arrive at some sort of “equal” level. The fact must be faced that equality cannot be achieved because it is a conceptually impossible goal for man, by virtue of his necessary dispersion in location and diversity among individuals. But if equality is an absurd (and therefore irrational) goal, then any effort to approach equality is correspondingly absurd. If a goal is pointless, then any attempt to attain it is similarly pointless.

Many people believe that, though equality of income is an absurd ideal, it can be replaced by the ideal of equality of opportunity. Yet this, too, is as meaningless as the former concept. How can the New Yorker’s opportunity and the Indian’s opportunity to sail around Manhattan, or to swim in the Ganges, be “equalized”? Man’s inevitable diversity of location effectively eliminates any possibility of equalizing “opportunity.”

Blum and Kalven lapse into a common error10 when they state that justice connotes equality of opportunity and that this equality requires that “the contestants start from the same mark,” so that the “game” be “fair.” Human life is not some sort of race or game in which each person should start from an identical mark. It is an attempt by each man to be as happy as possible. And each person could not begin from the same point, for the world has not just come into being; it is diverse and infinitely varied in its parts. The mere fact that one individual is necessarily born in a different place from someone else immediately insures that his inherited opportunity cannot be the same as his neighbor’s. The drive for equality of opportunity would also require the abolition of the family since different parents have unequal abilities; it would require the communal rearing of children. The State would have to nationalize all babies and raise them in State nurseries under “equal” conditions. But even here conditions cannot be the same, because different State officials will themselves have different abilities and personalities. And equality can never be achieved because of necessary differences of location.

Thus, the egalitarian must not be permitted any longer to end discussion by simply proclaiming equality as an absolute ethical goal. He must first face all the social and economic consequences of egalitarianism and try to show that it does not clash with the basic nature of man. He must counter the argument that man is not made for a compulsory ant heap existence. And, finally, he must recognize that the goals of equality of income and equality of opportunity are conceptually unrealizable and are therefore absurd. Any drive to achieve them is ipso facto absurd as well.

Egalitarianism is, therefore, a literally senseless social philosophy. Its only meaningful formulation is the goal of “equality of liberty”—formulated by Herbert Spencer in his famous Law of Equal Freedom: “Every man has freedom to do all he wills, provided he infringes not the equal freedom of any other man.”11 This goal does not attempt to make every individual’s total condition equal—an absolutely impossible task; instead, it advocates liberty—a condition of absence of coercion over person and property for every man.12

Yet even this formulation of equality has many flaws and could profitably be discarded. In the first place, it opens the door for ambiguity and for egalitarianism. In the second place, the term “equality” connotes measurable identity with a fixed, extensive unit. “Equal length” means identity of measurement with an objectively determinable unit. In the study of human action, whether in praxeology or social philosophy, there is no such quantitative unit, and hence there can be no such “equality.” Far better to say that “each man should have X” than to say that “all men should be equal in X.” If someone wants to urge every man to buy a car, he formulates his goal in that way—“Every man should buy a car”—rather than in such terms as: “All men should have equality in car buying.” The use of the term “equality” is awkward as well as misleading.

And finally, as Clara Dixon Davidson pointed out so cogently many years ago, Spencer’s Law of Equal Freedom is redundant. For if every man has freedom to do all that he wills, it follows from this very premise that no man’s freedom has been infringed or invaded. The whole second clause of the law after “wills” is redundant and unnecessary.13 Since the formulation of Spencer’s Law, opponents of Spencer have used the qualifying clause to drive holes into the libertarian philosophy. Yet all this time they were hitting at an encumbrance, not at the essence of the law. The concept of “equality” has no rightful place in the “Law of Equal Freedom,” being replaceable by the logical quantifier “every.” The “Law of Equal Freedom” could well be renamed “The Law of Total Freedom.”

• 9For a further discussion of these axioms, see Rothbard, “In Defense of Extreme Apriorism,” Southern Economic Journal, January, 1957, pp. 314–20.
• 10Blum and Kalven, Uneasy Case for Progressive Taxation, pp. 501ff.
• 11Spencer, Social Statics, p. 121.
• 12This goal has sometimes been phrased as “equality before the law,” or “equality of rights.” Yet both formulations are ambiguous and misleading. The former could be taken to mean equality of slavery as well as liberty and has, in fact, been so narrowed down in recent years as to be of minor significance. The latter could be interpreted to mean any sort of “right,” including the “right to an equal income.”
• 13“. . . the opening affirmation includes what follows, since, if any one did infringe upon the freedom of another, all would not be equally free.” Clara Dixon Davidson in Liberty, September 3, 1892, as quoted in Benjamin R. Tucker, Instead of a Book(New York: Benjamin R. Tucker, 1893), p. 137. Davidson’s formulation has been completely neglected.

One of the most common ethical charges levelled at the free market is that it fails to provide “security.” It is said that the blessings of freedom must be weighed against the competing blessings of security—to be provided, of course, by the State.

The first comment to make is that this world is a world of uncertainty. We shall never be able to forecast the future course of the world with precision. Every action, therefore, involves risk. This risk cannot be eliminated. The man who keeps cash balances suffers the risk that its purchasing power may dwindle; the man who invests suffers the risk of loss; and so forth.

Yet the free market finds ways of voluntarily relieving risk as much as can possibly be done. In a free society there are three prime ways that men can alleviate uncertainty about the future:

(1) By savings. These savings, whether invested in production or kept in cash balances, insure money for future needs. Investing in production increases one’s future assets; cash balances insure that funds will be immediately available.

(2) By entrepreneurship. The entrepreneurs, i.e., the capitalist-entrepreneurs, assume the bulk of the risks of the market and concomitantly relieve laborers of a great deal of risk. Imagine the universal risk if laborers could not be paid until the final product reached the consumers! The pain of waiting for future income, the risk in attempting to forecast consumer demands in the future, would be almost intolerable, especially for those laborers toiling in the most remote processes of production. It is difficult to see how anyone would embark on longer processes of production if he were forced to wait the entire length of the production period to earn any income. But the capitalist-entrepreneur pays him, instead, immediately and himself adopts the burden of waiting and forecasting future wants. The entrepreneur then risks loss of his capital. Another method of entrepreneurial assumption of risk takes place in futures markets, where hedging allows buyers and sellers of commodities to shift the risk of future price changes onto a body of specialized traders.

(3) By insurance. Insurance is a basic method of pooling and abating risks on the market. While entrepreneurs assume the burdens of uncertainty, insurance takes care of actuarial risks, where stable collective frequencies can be arrived at and premiums can be charged accordingly.

The State cannot provide absolute security. The slaves may have believed that their security was guaranteed by their master. But the master assumed the risk; if his income fell, then he could not provide security for his charges.

A fourth way to provide security in a free society is by voluntary charity. This charity, of necessity, comes out of production. It has been maintained that the State can provide security for the people better than the market because it can guarantee a minimum income for everyone. Yet the government can do no such thing. The State produces nothing; it can only confiscate the production of others. The State, therefore, can guarantee nothing; if the requisite minimum is not produced, the State will have to default on its pledges. Of course, the State can print all the money it wants, but it cannot produce the needed goods. Furthermore, the State cannot, in this way, provide security for every man alike. It can make some secure only at the expense of others. If A can be made more secure only by robbing B, B is made more insecure in the process. Hence, the State, even if production is not drastically reduced, cannot provide security for all, but only for some at the expense of others.

Is there no way, then, that government—organized coercion—can provide security? Yes, but not in the absolute sense. Rather, it can provide a certain aspect of security, and only this aspect can be guaranteed to every man in the society. This is security against aggression. In fact, however, only a voluntary, free-market defense can provide this, since only such a non-Statist type of defense agency does not itself engage in aggression. With each man acquiring security of person and property against attack, productivity and leisure are both immeasurably increased. Any State attempt to provide such security is an anachronism, since the State itself constantly invades individual liberty and security.

That type of security, then, which is open to every man in society, is not only compatible with, but is a corollary to, perfect freedom. Freedom and security against aggression are two sides of the same coin.

It might still be objected that many people, even knowing that slavery or submission to dictation cannot bring absolute security, will still wish to rely on masters. But if they do so voluntarily, the libertarian asks, why must they force others, who do not choose to submit to masters, to join them?

One common related criticism of the free market and free society (particularly among intellectuals who are conspicuously not craftsmen or peasants) is that, in contrast to the Happy Craftsmen and Happy Peasants of the Middle Ages, it has “alienated” man from his work and from his fellows and has robbed him of his “sense of belonging.” The status society of the Middle Ages is looked back upon as a Golden Age, when everyone was sure of his station in life, when craftsmen made the whole shoe instead of just contributing to part of its production, and when these “whole” laborers were enmeshed in a sense of belonging with the rest of society.

In the first place, the society of the Middle Ages was not a secure one, not a fixed, unchanging hierarchy of status.14 There was little progress, but there was much change. Dwelling as they did in clusters of local self-sufficiency, marked by a low standard of living, the people were ever threatened by famine. And because of the relative absence of trade, a famine in one area could not be countered by purchasing food from another area. The absence of famine in capitalist society is not a providential coincidence. Secondly, because of the low living standards, very few members of the population were lucky enough to be born into the status of the Happy Craftsman, who could be really happy and secure in his work only if he were a craftsman to the King or the nobility (who, of course, earned their high status by the decidedly “unhappy” practice of permanent violence in domination over the mass of the exploited population). As for the common serf, one wonders whether, in his poverty-stricken, enslaved, and barren existence, he had even sufficient time and leisure to contemplate the supposed joys of his fixed post and his “sense of belonging.” And if there were a serf or two who did not wish to “belong” to his lord or master, that “belonging,” of course, was enforced by violence.

Aside from these considerations, there is another problem which the society of status cannot surmount, and which indeed contributed a great deal to breaking up the feudal and mercantilist structures of the precapitalistic era. This was population growth. If everyone is assigned his appointed and inherited role in life, how can an increased population be fitted into the scheme? Where are they to be assigned, and who is to do the assigning? And wherever they are allocated, how can these new people be prevented from disrupting the whole assigned network of custom and status? In short, it is precisely in the fixed, noncapitalistic society of status that the Malthusian problem is ever present, at its ugliest, and where Malthusian “checks” to population must come into play. Sometimes the check is the natural one of famine and plague; in other societies, systematic infanticide is practiced. Perhaps if there were a modern return to the society of status, compulsory birth control would be the rule (a not impossible prognosis for the future). But in precapitalist Europe, the population problem became a problem of an ever increasing number of people with no work to do and no place to go, who therefore had to turn to begging or highway robbery.

The proponents of the theory of modern “alienation” do not offer any reasoning to back up their assertions, which are therefore simply dogmatic myths. Certainly, it is not self-evident that the craftsman, or better still, the primitive man who made everything that he consumed, was in some sense happier or “more whole” as a result of this experience. Although this is not a treatise on psychology, it might be noted that perhaps what gives the worker his sense of importance is his participation in what Isabel Paterson has called the “circuit of production.” In free-market capitalism he can, of course, participate in that circuit in many more and varied ways than he could in the more primitive status society.

Furthermore, the status society is a tragic waste of potential skill for the individual worker. There is, after all, no reason why the son of a carpenter should be particularly interested or skilled in carpentry. In the status society he faces only a dreary life of carpentry, regardless of his desires. In the free-market, capitalist society, though he is of course not guaranteed that he will be able to make a livelihood in any line of work that he wants to pursue, his opportunities to do work that he really likes are immeasurably, almost infinitely, expanded. As the division of labor expands, there are more and more varieties of skilled occupations that he can engage in, instead of having to be content with only the most primitive skills. And in the free society he is free to try these tasks, free to move into whatever area he likes best. He has no freedom and no opportunity in the allegedly joyful society of status. Just as free capitalism enormously expanded the amount and variety of consumers’ goods and services available to mankind, so it vastly expanded the number and variety of jobs to be done and the skills that people can develop.

The hullabaloo about “alienation” is, in fact, more than a glorification of the medieval craftsman. He, after all, bought his food from the nearby land. It is actually an attack on the whole concept of the division of labor and an enshrining of primitive self-sufficiency. A return to such conditions could mean only the eradication of the bulk of today’s population and complete impoverishment for those remaining. Why “happiness” would nonetheless increase, we leave to the mythologists of status.

But there is one final consideration which indicates that the vast majority of the people do not believe that they need primitive conditions and the slave’s sense of belonging to make them happy. For there is nothing, in a free society, to prevent those who wish from going off in separate communities and living primitively and “belongingly.” No one is forced to join the specialized division of labor. Not only has almost no one abandoned modern society to return to a happy, integrated life of fixed poverty, but those few intellectuals who did form communal Utopias of one sort or another during the nineteenth century abandoned these attempts very quickly. And perhaps the most conspicuous nonwithdrawers from society are those very critics who use our modern “alienated” mass communications to denounce modern society. As we indicated at the end of the last section, a free society permits any who wish to enslave themselves to others to do so. But if they have a psychological need for a slave’s “sense of belonging,” why must other individuals without such a need be coerced into enslavement?

• 14The present section is meant more as a logical critique of the theory of status than as a detailed account of society in the Middle Ages. For a critique of a recent expression of the Happy Peasant myth, see Charles E. Silberman, The Myths of Automation (New York: Harper & Row, 1967), pp. 98–107.

A common complaint is that the free market would not insure the elimination of poverty, that it would “leave people free to starve,” and that it is far better to be “kindhearted” and give “charity” free rein by taxing the rest of the populace in order to subsidize the poor and the substandard.

In the first place, the “freedom-to-starve” argument confuses the “war against nature,” which we all conduct, with the problem of freedom from interference by other persons. We are always “free to starve” unless we pursue our conquest of nature, for that is our natural condition. But “freedom” refers to absence of molestation by other persons; it is purely an interpersonal problem.

Secondly, it should also be clear that it is precisely voluntary exchange and free capitalism that have led to an enormous improvement in living standards. Capitalist production is the only method by which poverty can be wiped out. As we stressed above, production must come first, and only freedom allows people to produce in the best and most efficient way possible. Force and violence may “distribute,” but it cannot produce. Intervention hampers production, and socialism cannot calculate. Since production of consumer satisfactions is maximized on the free market, the free market is the only way to abolish poverty. Dictates and legislation cannot do so; in fact, they can only make matters worse.

The appeal to “charity” is a truly ironic one. First, it is hardly “charity” to take wealth by force and hand it over to someone else. Indeed, this is the direct opposite of charity, which can only be an unbought, voluntary act of grace. Compulsory confiscation can only deaden charitable desires completely, as the wealthier grumble that there is no point in giving to charity when the State has already taken on the task. This is another illustration of the truth that men can become more moral only through rational persuasion, not through violence, which will, in fact, have the opposite effect.

Furthermore, since the State is always inefficient, the amount and direction of the giving will be much different from what it would be if people were left free to act on their own. If the State decides from whom to take and to whom to give, the power residing in the State’s hands is enormous. It is obvious that political unfortunates will be the ones whose property is confiscated, and political favorites the ones subsidized. And in the meantime the State erects a bureaucracy whose living is acquired by feeding off the confiscation of one group and the encouraged mendicancy of another.

Other consequences follow from a regime of compulsory “charity.” For one thing, “the poor”—or the “deserving” poor—have been exalted as a privileged caste, with an enforceable claim to the production of the more able. This is a far cry from a request for charity. Instead, the able are penalized and enslaved by the State, and the unable are placed on a moral pedestal. Certainly, this is a peculiar sort of moral program. The further consequence will be to discourage the able, to reduce production and saving in all of society, and beyond this, to subsidize the creation of a caste of poor. Not only will the poor be subsidized by right, but their ranks will be encouraged to multiply, both through reproduction and through their moral exaltation and subsidization. The able will be correspondingly hampered and repressed.15

Whereas the opportunity for voluntary charity acts as a spur to production by the able, coerced charity acts as a drain and a burden upon production. In fact, in the long run, the greatest “charity” is precisely not what we know by that name, but rather simple, “selfish” capital investment and the search for technological innovations. Poverty has been tamed by the enterprise and the capital investment of our ancestors, most of which was undoubtedly done for “selfish” motives. This is a fundamental illustration of the truth enunciated by Adam Smith that we generally help others most in those very activities in which we help ourselves.

Statists, in fact, are really opposed to charity. They often argue that charity is demeaning and degrading to the recipient, and that he should therefore be taught that the money is rightly his, to be given to him by the government as his due. But this oft-felt degradation stems, as Isabel Paterson pointed out, from the fact that the recipient of charity is not self-supporting on the market and that he is out of the production circuit and no longer providing a service in exchange for one received. However, granting him the moral and legal right to mulct his fellows increases his moral degradation instead of ending it, for the beneficiary is now further removed from the production line than ever. An act of charity, when given voluntarily, is generally considered temporary and offered with the object of helping a man to help himself. But when the dole is ladled out by the State, it becomes permanent and perpetually degrading, keeping the recipients in a state of subservience. We are not attempting to argue at this point that to be subservient in this way is degrading; we simply say that anyone who considers private charity degrading must logically conclude that State charity is far more so.16 Mises, furthermore, points out that free-market exchange—always condemned by statists for being impersonal and “unfeeling”—is precisely the relation that avoids all degradation and subservience.17

• 15See the readings referred to in footnote 3 of the preceding chapter.
• 16The devotion of government to charity may be gauged by its universal repression of mendicancy. A direct gift to a beggar helps the recipient directly and leaves no opportunity for large bureaucratic organizations to live full-time off the transaction. Harassment of direct aid, then, functions as a grant of monopolistic privilege to the “official” charity organizations. Isabel Paterson points out that the American government imposed a requirement of minimum cash assets for immigrants as an alleged way of helping the poorer immigrants! The actual effect, of course, was to keep the poorest immigrants, who could not meet the requirement, from American shores and economic opportunity.
• 17On various aspects of the problem of charity and poverty, see Paterson, “The Humanitarian with the Guillotine” in God of the Machine, pp. 233–50; Spencer,Social Statics, pp. 317–29; Mises, Human Action, pp. 831–36; F.A. Harper, “The Greatest Economic Charity” in Sennholz, ed., On Freedom and Free Enterprise, pp. 94 ff.; and Leonard E. Read, “Unearned Riches,” ibid., pp. 188–95.

One of the most common charges levelled against the free market (even by many of its friends) is that it reflects and encourages unbridled “selfish materialism.” Even if the free market—unhampered capitalism—best furthers man’s “material” ends, critics argue, it distracts man from higher ideals. It leads man away from spiritual or intellectual values and atrophies any spirit of altruism.

In the first place, there is no such thing as an “economic end.” Economy is simply a process of applying means to whatever ends a person may adopt. An individual can aim at any ends he pleases, “selfish” or “altruistic.” Other psychic factors being equal, it is to everyone’s self-interest to maximize his monetary income on the market. But this maximum income can then be used for “selfish” or for “altruistic” ends. Which ends people pursue is of no concern to the praxeologist. A successful businessman can use his money to buy a yacht or to build a home for destitute orphans. The choice rests with him. But the point is that whichever goal he pursues, he must first earn the money before he can attain the goal.

Secondly, whichever moral philosophy we adopt—whether altruism or egoism—we cannot criticize the pursuit of monetary income on the market. If we hold an egoistic social ethic, then obviously we can only applaud the maximization of monetary income, or of a mixture of monetary and other psychic income, on the market. There is no problem here. However, even if we adopt an altruistic ethic, we must applaud maximization of monetary income just as fervently. For market earnings are a social index of one’s services to others, at least in the sense that any services are exchangeable. The greater a man’s income, the greater has been his service to others. Indeed, it should be far easier for the altruist to applaud the maximization of a man’s monetary income than that of his psychic income when this is in conflict with the former goal. Thus, the consistent altruist must condemn the refusal of a man to work at a job paying high wages and his preference for a lower-paying job somewhere else. This man, whatever his reason, is defying the signalled wishes of the consumers, his fellows in society.

If, then, a coal miner shifts to a more pleasant, but lower-paying, job as a grocery clerk, the consistent altruist must castigate him for depriving his fellowman of needed benefits. For the consistent altruist must face the fact that monetary income on the market reflects services to others, whereas psychic income is a purely personal, or “selfish,” gain.18

This analysis applies directly to the pursuit of leisure. Leisure, as we have seen, is a basic consumers’ good for mankind. Yet the consistent altruist would have to deny each worker any leisure at all—or, at least, deny every hour of leisure beyond what is strictly necessary to maintain his output. For every hour spent in leisure reduces the time a man can spend serving his fellows.

The consistent advocates of “consumers’ sovereignty” would have to favor enslaving the idler or the man who prefers following his own pursuits to serving the consumer. Rather than scorn pursuit of monetary gain, the consistent altruist should praise the pursuit of money on the market and condemn any conflicting nonmonetary goals a producer may have—whether it be dislike for certain work, enthusiasm for work that pays less, or a desire for leisure.19 Altruists who criticize monetary aims on the market, therefore, are wrong on their own terms.

The charge of “materialism” is also fallacious. The market deals, not necessarily in “material” goods, but in exchangeable goods. It is true that all “material” goods are exchangeable (except for human beings themselves), but there are also many nonmaterial goods exchanged on the market. A man may spend his money on attending a concert or hiring a lawyer, for example, as well as on food or automobiles. There is absolutely no ground for saying that the market economy fosters either material or immaterial goods; it simply leaves every man free to choose his own pattern of spending.

Finally, an advancing market economy satisfies more and more of people’s desires for exchangeable goods. As a result, the marginal utility of exchangeable goods tends to decline over time, while the marginal utility of nonexchangeable goods increases. In short, the greater satisfaction of “exchangeable” values confers a much greater marginal significance on the “nonexchangeable” values. Rather than foster “material” values, then, advancing capitalism does just the opposite.

• 18W.H. Hutt actually goes this far in his article, “The Concept of Consumers’ Sovereignty,” Economic Journal, March, 1940, pp. 66–77.
• 19It is also peculiar that critics generally concentrate their fire on profits (“the profit motive”), and not on other market incomes such as wages. It is difficult to see any sense whatever in moral distinctions between these incomes.

Many critics complain that the free market, in casting aside inefficient entrepreneurs or in other decisions, proves itself an “impersonal monster.” The free-market economy, they charge, is “the rule of the jungle,” where “survival of the fittest” is the law.20 Libertarians who advocate a free market are therefore called “Social Darwinists” who wish to exterminate the weak for the benefit of the strong.

In the first place, these critics overlook the fact that the operation of the free market is vastly different from governmental action. When a government acts, individual critics are powerless to change the result. They can do so only if they can finally convince the rulers that their decision should be changed; this may take a long time or be totally impossible. On the free market, however, there is no final decision imposed by force; everyone is free to shape his own decisions and thereby significantly change the results of “the market.” In short, whoever feels that the market has been too cruel to certain entrepreneurs or to any other income receivers is perfectly free to set up an aid fund for suitable gifts and grants. Those who criticize existing private charity as being “insufficient” are perfectly free to fill the gap themselves. We must beware of hypostatizing the “market” as a real entity, a maker of inexorable decisions. The market is the resultant of the decisions of all individuals in the society; people can spend their money in any way they please and can make any decisions whatever concerning their persons and their property. They do not have to battle against or convince some entity known as the “market” before they can put their decisions into effect.

The free market, in fact, is precisely the diametric opposite of the “jungle” society. The jungle is characterized by the war of all against all. One man gains only at the expense of another, by seizure of the latter’s property. With all on a subsistence level, there is a true struggle for survival, with the stronger force crushing the weaker. In the free market, on the other hand, one man gains only through serving another, though he may also retire into self-sufficient production at a primitive level if he so desires. It is precisely through the peaceful co-operation of the market that all men gain through the development of the division of labor and capital investment. To apply the principle of the “survival of the fittest” to both the jungle and the market is to ignore the basic question: Fitness for what? The “fit” in the jungle are those most adept at the exercise of brute force. The “fit” on the market are those most adept in the service of society. The jungle is a brutish place where some seize from others and all live at the starvation level; the market is a peaceful and productive place where all serve themselves and others at the same time and live at infinitely higher levels of consumption. On the market, the charitable can provide aid, a luxury that cannot exist in the jungle.

The free market, therefore, transmutes the jungle’s destructive competition for meagre subsistence into a peaceful co-operative competition in the service of one’s self and others. In the jungle, some gain only at the expense of others. On the market, everyone gains. It is the market—the contractual society—that wrests order out of chaos, that subdues nature and eradicates the jungle, that permits the “weak” to live productively, or out of gifts from production, in a regal style compared to the life of the “strong” in the jungle. Furthermore, the market, by raising living standards, permits man the leisure to cultivate the very qualities of civilization that distinguish him from the brutes.

It is precisely statism that is bringing back the rule of the jungle—bringing back conflict, disharmony, caste struggle, conquest and the war of all against all, and general poverty. In place of the peaceful “struggle” of competition in mutual service, statism substitutes calculational chaos and the death-struggle of Social Darwinist competition for political privilege and for limited subsistence.

• 20Some years ago we were promised a “refutation” of the libertarian position—one which never appeared. It was to be entitled, “Back to the Jungle.” See Ralph L. Roy, Apostles of Discord (Boston: Beacon Press, 1953), p. 407.

A common criticism of free-market decisions is that “luck” plays too great a role in determining incomes. Even those who concede that income to a factor tends to equal its discounted marginal value product to consumers, and that entrepreneurs on the free market will reduce mistakes to an absolute minimum, add that luck still plays a role in income determination. After charging that the market confers undue laurels on the lucky, the critic goes on to call for expropriation of the “rich” (or lucky) and subsidization of the “poor” (or unlucky).

Yet how can luck be isolated and identified? It should be evident that it is impossible to do so. In every market action luck is interwoven inextricably and is impossible to isolate. Consequently, there is no justification for saying that the rich are luckier than the poor. It might very well be that many or most of the rich have been unlucky and are getting less than their true DMVP, while most of the poor have been lucky and are getting more. No one can say what the distribution of luck is; hence, there is no justification here for a “redistribution” policy.

In only one place on the market does luck purely and identifiably determine the result: gambling gains and losses.23 But is this what the statist critics really want—confiscation of the gains of gambling winners in order to pay gambling losers? This would mean, of course, the speedy death of gambling—except as an illegal activity—for there would obviously be no point in continuing the games. Presumably, even the losers would object to being compensated, for they freely and voluntarily accepted the rules of chance before beginning to gamble. The governmental policy of neutralizing luck destroys the satisfaction that all the participants derive from the game.24

• 23Here we refer to pure gambling, or games of chance, such as roulette, with no intermingled elements of skill such as in race-track betting.
• 24It is curious that so many economists, including Alfred Marshall, have “proved” the “irrationality” of gambling (e.g., from the diminishing marginal utility of money) by first assuming, clearly erroneously, that the participants do not like to gamble!

Because of its popularity, we may briefly consider the “traffic-manager analogy”—the doctrine that the government must obviously regulate the economy, “just as traffic must be regulated.” It is high time that this flagrant non sequitur be consigned to oblivion. Every owner necessarily regulates his own property. In the same way, every owner of a road will lay down the rules for the use of his road. Far from being an argument for statism, management is simply the attribute of all ownership. Those who own the roads will regulate their use. In the present day, the government owns most roads and so regulates them. In a purely free-market society, private owners would operate and control their own roads. Obviously, the “traffic-manager analogy” can furnish no argument against the purely free market.

Critics often level conflicting charges against the free market. The historicist-minded may concede that the free market is ideal for a certain stage of economic development, but insist that it is unsuited to other stages. Thus, advanced nations have been exhorted to embrace government planning because “the modern economy is too complex” to remain planless, “the frontier is gone,” and “the economy is now mature.” But, on the other hand, the backward countries have been told that they must adopt statist planning methods because of their relatively primitive state. So any given economy is either too advanced or too backward for laissez faire; and we may rest assured that the appointed moment for laissez faire somehow never arrives.

The currently fashionable “economics of growth” is an historicist regression. The laws of economics apply whatever the particular level of the economy. At any level, progressive change consists in a growing volume of capital per head of population and is furthered by the free market, low time preferences, far-seeing entrepreneurs, and sufficient labor and natural resources. Regressive change is brought about by the opposite conditions. The terms progressive and regressive change are far better than “growth,” a term expressing a misleading biological analogy that implies some actual law dictating that an economy must “grow” continually, and even at a fixed rate. Actually, of course, an economy can just as easily “grow” backward.

The term “underdeveloped” is also unfortunate, as it implies that there is some level or norm that the economy should have reached but failed to reach because some external force did not “develop” it. The old-fashioned term “backward,” though still normative, at least pins the blame for the relative poverty of an economy on the nation’s own policies.

The poor country can best progress by permitting private enterprise and investment to function and by allowing natives and foreigners to invest there unhampered and unmolested. As for the rich country and its “complexities,” the delicate processes of the free market are precisely equipped to handle complex adjustments and interrelations far more efficiently than can any form of statist planning.

Since the problem of the nature of man has been raised, we may now turn briefly to an argument that has pervaded Roman Catholic social philosophy, namely, that the State is part of the essential nature of man. This Thomistic view stems from Aristotle and Plato, who, in their quest for a rational ethic, leaped to the assumption that the State was the embodiment of the moral agency for mankind. That man should do such and such quickly became translated into the prescription: The State should do such and such. But nowhere is the nature of the State itself fundamentally examined.

Typical is a work very influential in Catholic circles, Heinrich Rommen’s The State in Catholic Thought.25 Following Aristotle, Rommen attempts to ground the State in the nature of man by pointing out that man is a social being. In proving that man’s nature is best fitted for a society, he believes that he has gone far to provide a rationale for the State. But he has not done so in the slightest degree, once we fully realize that the State and society are by no means coextensive. The contention of libertarians that the State is an antisocial instrument must first be refuted before such a non sequitur can be allowed. Rommen recognizes that the State and society are distinct, but he still justifies the State by arguments that apply only to society.

He also asserts the importance of law, although the particular legal norms considered necessary are unfortunately not specified. Yet law and the State are not coextensive either, although this is a fallacy that very few writers avoid. Much Anglo-Saxon law grew out of the voluntarily adopted norms of the people themselves (common law, law merchant, etc.), not as State legislation.26 Rommen also stresses the importance for society of the predictability of action, which can be assured only by the State. Yet the essence of human nature is that it cannot be considered as truly predictable; otherwise we should be dealing, not with free men, but with an ant heap. And if we could force men to march in unison according to a complete set of predictable norms, it is certainly not a foregone conclusion that we should all hail such an ideal. Some people would combat it bitterly. Finally, if the “enforceable norm” were limited to “abstinence from aggression against others,” (1) a State is not necessary for such enforcement, as we have noted above, and (2) the State’s own inherent aggression itself violates that norm.27

• 25Heinrich Rommen, The State in Catholic Thought, a Treatise in Political Philosophy (London, 1950).
• 26Thus, see Leoni, Freedom and the Law.
• 27Rommen, State in Catholic Thought, p. 225.

It28 is often asserted by critics of the free-market economy that they are interested in preserving “human rights” rather than property rights. This artificial dichotomy between human and property rights has often been refuted by libertarians, who have pointed out (a) that property rights of course accrue to humans and to humans alone, and (b) that the “human right” to life requires the right to keep what one has produced to sustain and advance life. In short, they have shown that property rights are indissolubly also human rights. They have, besides, pointed out that the “human right” of a free press would be only a mockery in a socialist country, where the State owns and decides upon the allocation of newsprint and other newspaper capital.29

There are other points that should be made, however. For not only are property rights also human rights, but in the most profound sense there are no rights but property rights. The only human rights, in short, are property rights. There are several senses in which this is true. In the first place, each individual, as a natural fact, is the owner of himself, the ruler of his own person. The “human” rights of the person that are defended in the purely free-market society are, in effect, each man’s property right in his own being, and from this property right stems his right to the material goods that he has produced.

In the second place, alleged “human rights” can be boiled down to property rights, although in many cases this fact is obscured. Take, for example, the “human right” of free speech. Freedom of speech is supposed to mean the right of everyone to say whatever he likes. But the neglected question is: Where? Where does a man have this right? He certainly does not have it on property on which he is trespassing. In short, he has this right only either on his own property or on the property of someone who has agreed, as a gift or in a rental contract, to allow him on the premises. In fact, then, there is no such thing as a separate “right to free speech”; there is only a man’s property right: the right to do as he wills with his own or to make voluntary agreements with other property owners.

The concentration on vague and wholly “human” rights has not only obscured this fact but has led to the belief that there are, of necessity, all sorts of conflicts between individual rights and alleged “public policy” or the “public good.” These conflicts have, in turn, led people to contend that no rights can be absolute, that they must all be relative and tentative. Take, for example, the human right of “freedom of assembly.” Suppose that a citizens’ group wishes to demonstrate for a certain measure. It uses a street for this purpose. The police, on the other hand, break up the meeting on the ground that it obstructs traffic. Now, the point is that there is no way of resolving this conflict, except arbitrarily, because the government owns the streets. Government ownership, as we have seen, inevitably breeds insoluble conflicts. For, on the one hand, the citizens’ group can argue that they are taxpayers and are therefore entitled to use the streets for assembly, while, on the other hand, the police are right that traffic is obstructed. There is no rational way to resolve the conflict because there is as yet no true ownership of the valuable street-resource. In a purely free society, where the streets are privately owned, the question would be simple: it would be for the streetowner to decide, and it would be the concern of the citizens’ group to try to rent the street space voluntarily from the owner. If all ownership were private, it would be quite clear that the citizens did not have any nebulous “right of assembly.” Their right would be the property right of using their money in an effort to buy or rent space on which to make their demonstration, and they could do so only if the owner of the street agreed to the deal.

Let us consider, finally, the classic case that is supposed to demonstrate that individual rights can never be absolute but must be limited by “public policy”: Justice Holmes’ famous dictum that no man can have the right to cry “fire” in a crowded theater. This is supposed to show that freedom of speech cannot be absolute. But if we cease dealing with this alleged human right and seek for the property rights involved, the solution becomes clear, and we see that there is no need at all to weaken the absolute nature of rights. For the person who falsely cries “fire” must be either the owner (or the owner’s agent) or a guest or paying patron. If he is the owner, then he has committed fraud upon his customers. He has taken their money in exchange for a promise to put on a motion picture, and now, instead, he disrupts the performance by falsely shouting “fire” and creating a disturbance among the patrons. He has thus willfully defaulted on his contractual obligation and has therefore violated the property rights of his patrons.

Suppose, on the other hand, that the shouter is not the owner, but a patron. In that case, he is obviously violating the property right of the theater owner (as well as the other patrons). As a guest, he is on the property on certain terms, and he has the obligation of not violating the owner’s property rights by disrupting the performance that the owner is putting on for the patrons. The person who maliciously cries “fire” in a crowded theater, therefore, is a criminal, not because his so-called “right of free speech” must be pragmatically restricted on behalf of the so-called “public good,” but because he has clearly and obviously violated the property rights of another human being. There is no need, therefore, of placing limits upon these rights.

Since this is a praxeological and not an ethical treatise, the aim of this discussion has not been to convince the reader that property rights should be upheld. Rather, we have attempted to show that the person who does wish to construct his political theory on the basis of “rights” must not only discard the spurious distinction between human rights and property rights, but also realize that the former must all be absorbed into the latter.

• 28See Murray N. Rothbard, “Human Rights Are Property Rights” in Essays on Liberty (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1959), VI, 315–19. See also Rothbard, “Bertrand de Jouvenel e i diritti di proprietá,”Biblioteca della Liberta (1966, No. 2), pp. 41–45.
• 29Paul L. Poirot, “Property Rights and Human Rights” in Essays on Liberty(Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1954), II, 79–89.

Some years ago, Professor Henry M. Oliver published an important study: a logical analysis of ethical goals in economic affairs.30 Professor Kenneth J. Arrow has hailed the work as a pioneer achievement on the road to the “axiomatization of a social ethics.” Unfortunately, this attempted “axiomatization” is a tissue of logical fallacies.31

It is remarkable what difficulty economists and political philosophers have had in trying to bury laissez faire. For well over a half century, laissez-faire thought, both in its Natural-Rights and its utilitarian versions, has been extremely rare in the Western world. And yet, despite the continued proclamation that laissez faire has been completely “discredited,” uneasiness has marked the one-sided debate. And so, from time to time, writers have felt obliged to lay the ghost of laissez faire. The absence of opposition has created a series of faintly worried monologues rather than a lively two-sided argument. Nevertheless the attacks continue, and now Professor Oliver has gone to the extent of writing a book almost wholly devoted to an attempted refutation of laissez-faire thought.

• 30Henry M. Oliver, Jr., A Critique of Socioeconomic Goals (Bloomington: Indiana University Press, 1954).
• 31Kenneth J. Arrow, “Review of Oliver’s A Critique of Socioeconomic Goals,”Political Science Quarterly, September, 1955, p. 442. Arrow is correct, however, when he says, “It is only when the socio-economic goals have been made clear that we can speak intelligently about the best policies for their achievement.” Such clarification has been attempted in the present chapter.