V The Gradual and Independent Realization of Freedom and Union by the European Nations

V The Gradual ana Independent Realization of Freedom and Union by the European Nations JLHE liberal system of social organization is the only system that is capable of restoration. It may be defeated, subdued, and overthrown, but it rises again and again, always with the vigor of youth. The heart of man is filled with admiration and love for the times of liberty and for those men who founded or restored it. While all other systems of social organization, once abandoned or overthrown, can never be resurrected because of the indelible changes that have come over persons and conditions, the liberal state in the heart of mankind never dies. To erase the idea of liberty as an ideal and directing principle is impossible. Even dictators, eager to warm the hearts of their suffering nations for war and other collectivist purposes, pay lip service to the idea of liberty. To restore the freedom of trade and movement of man and capital in Europe is an extremely difficult undertaking. But if the European nations really want to substitute peace for war and union for nationalism and conflict, there is no other way but to restore the freedom of the individual. It is true, restoration of the liberal system of society presently not only conflicts with the collectivist prejudices of the public, but also with the private interest of many individuals who in the past have gained, or are still gaining, protection and privileges from their government. The special favor groups, such as agriculture and labor, have become formidable pressure groups within our society. They are militantly organized and 312 GRADUAL REALIZATION OF FREEDOM AND UNION 313 upon many occasions intimidate the legislature. Those members of legislature who dare to oppose them are subjected to the most infamous abuse, personal insults, and sometimes bodily danger. To take up the cause of liberty is no task for the timid. It is for the courageous and fearless, the generous spirit anxious for the advancement of mankind, the one who does not count personal costs.

To restore free trade in Europe and further the European division of labor is a task for each European legislature. No international agreement and no cooperation on the part of national governments are required. But it is necessary that governments withdraw from the economic sphere and abolish their numerous economic functions. First of all, no new privileges of any kind should be granted, and existing privileges should not be extended. For every such government regulation introduces some degree of international divergency through changes in domestic and foreign structures of production, which are afterwards difficult to readjust to the state of the international division of labor. If we consider only the well-being of society, we must recommend that freedom of trade and the other freedoms of the individual be restored as quickly as possible. Restoration of unrestricted international competition would show its beneficial effects from the moment of inauguration. Those industries commonly exporting part of their production to other European countries would obviously be only favorably affected by this action. Many industries producing largely for local consumption and all distributive industries would be very little affected by foreign competition. The building industry and all service industries would have nothing to fear from freedom of trade.

Restoration of free importation of foreign goods, however, would hurt those industries that owe their existence to government regulations and privileges, or that are gaining from government intervention. Industries that have lived and prospered on government protection, i.e., restrictions on imports, production quotas, government licenses and subsidies, would no doubt suffer from free trade. To the extent that these industries would be unable to compete effectively with foreign industries working under more favorable conditions of production, they would have to contract or convert to more productive fields of activity in accordance with the state of international division of labor. During this period of conversion, unemployment of labor and capital will arise. On the other hand, the existing export industries will experience shortages of labor and capital.

314 AN ALLIANCE OF FREEMEN The difficulties of conversion as far as labor is concerned will be kept at a minimum, provided the workers discharged are at liberty to engage in any trade they are prepared and trained to exercise. Therefore, they should be free to assume any trade or work they please. The present laws on apprenticeship, professional organizations and qualifications, examinations and other official requirements, all imposed to restrict competition and protect those holding jobs from the competition of newcomers, must immediately be repealed. Such a society would take the necessary but painful effects of recuperation in stride. And yet we recommend that freedom of trade should be restored only by slow gradations. Though just those industries that enjoyed government protection and privileges to the detriment of society would suffer by a return to freedom of trade, the liberal philosophy requires us to give due consideration to every minority, indeed to each individual. The difficulties of conversion for labor and enterprise and the losses in specific and fixed capital which a readjustment would necessarily cause to their owners make it advisable, on grounds of equitable regard for the minority, that a period of warning should precede the readjustment, and that such readjustment should proceed in several stages. However, "equitable regard" does not mean that the return to free trade could not be achieved within a period of one decade.

Abolition of institutional barriers which prevent the free movement of workers among the free countries of Europe is another important task for the achievement of a free Europe. In the absence of migration barriers, workers would move from comparatively overpopulated areas to the comparatively underpopulated. A country is overpopulated if the capital invested per head of population is smaller and the consequent productivity of labor lower than in the country of comparison. That is to say, the wage rates are lower. On the other hand, a country is underpopulated if its wage rates are higher than those of another. The United States, for example, is comparatively underpopulated when compared with Germany where the wage rates are lower. But Germany is underpopulated when compared with Italy, Poland, or Russia. Consequently, under freedom of migration, the workers in the latter countries would be eager to migrate to Germany, while hardly a German would choose to migrate to these countries with lower wage rates.

But wage rates and standards of living are not the only factors that determine where people will choose to live and work. Language, religion, descent, and family ties each play an important GRADUAL REALIZATION OF FREEDOM AND UNION 315 role. Even in the complete absence of institutional migration barriers those factors tend to counteract the migration pressure caused by differences in wage rates and standards of living. This fact induces us to conclude that the European nations, on the way to freedom and union, could permit immediate freedom of migration without having to anticipate any great difficulties of readjustment. The flow of migrating workers from comparatively overpopulated countries, especially from Italy, to countries with higher wage rates, such as France and Germany, would probably proceed at first at a slow rate, accelerating as soon as linguistic, religious, and family ties with the new country are established. However, we feel moved to repeat that such an interEuropean migration depends not only on the complete absence of national migration barriers but also upon the removal of many institutional barriers, such as the numerous government restrictions on professional and business competition and, above all, housing and rent controls. Governments must refrain from all economic intervention and discrimination based on language, creed, or nationality.

The return to freedom of trade and migration of men and capital is the responsibility of each nation. The European governments need not cooperate in this return to a free European society, nor conclude lengthy pacts and agreements on unification. As a matter of fact, it even seems advisable that they refrain from such cooperation and merely liquidate numerous economic and discriminatory functions on their own. Government cooperation would probably take the form of simultaneous and coincident action. But this would only render the process of readjustment less smooth than the independent abolition of government barriers. Furthermore, international agreements on the repeal of trade restrictions proceed from the erroneous notion that the country abolishing its barriers sacrifices welfare and prosperity for the benefit of foreign countries. This popular notion disregards the fact that a country which abolishes its barriers stands to gain by far the greatest benefit from the absence of trade barriers. Freedom of imports benefits the importing country which may buy goods it cannot produce at all, or not as cheaply, or not as well. Exports, which are merely payments for goods imported, are the purchase price for imports.

Another reason for each nation to abolish trade and migration barriers independently is the lesser likelihood of measures of retaliation if certain governments should continue to restrict free trade. Among contemporary governments there seems to be a common practice of attempting to compensate a foolishness committed 316 AN ALLIANCE OF FREEMEN by one country with foolishnesses of other countries. If one country erects a wall of restrictions by which it mainly hurts itself, we in turn begin to build an even higher one to hurt ourselves. This is nonsensical! If one country is bent on committing suicide, why should we? All we can do is demonstrate the advantages of freedom. Freedom and union for the people of Europe solely depend upon their political and economic ideas. When this will be realized, we do not know. But we do know that the day will come, for the idea of liberty never dies in the heart of mankind.