Only If Free Can We Compete; L.E. Read

FREE CAN COMPETE ONLY IF WE THE SEVERE DEPRECIATION of the dollar during the last two decades, the increase in the cost of living, the cur rent draining away of our gold supply, and the impend ing "dollar crisis" are among the consequences of deficit financing and the monetization of debt-inflation. And these monetary policies are the result of deliberate gov ernmen tal interven tionism. 1 One might put the same conclusion in other terms: Inflation is the fiscal concomitant of state intervention ism and state welfarism. When government goes into business, it incurs deficits. When it assumes responsi bility for the security, welfare, and prosperity of the people, the costs of government increase to a point where it becomes politically inexpedient-indeed, politically impossible-to defray them by direct tax levies. At this point (20-25 per cent of the people's earned income, as a rule) governments throughout history have resorted to one or another of the numerous forms of inflation and with popular support. 2 Apparently, many people 1 See "Monetary Crossroads" by Hans Sennholz, p. 305 of this volume.

2 Governmental take of all earned income in the U.S.A. today is slightly in excess of 35 per cent. 345 346 LEONARD E. READ believe that they can continue to have their so-called benefits from government without being taxed-unaware that inflation is the cruelest tax of all. Coercive interventionism in the market place assumes such forms as foreign aid, federal housing, farm price supports, government sponsored labor union monopolies, price controls, compulsory social security. These, and countless other interventions, restrict people in their pursuit of livelihood and add to the costs of production. They bring about inflation. These interventions, with their costs and the resulting inflation, weaken the com petitive position of American industry and thus tend to price American producers-workmen as well as owners out of both the home and world markets. Foreign-made goods are, in a growing number of instances, offered to consumers here and abroad at prices below what Ameri can producers can quote. Such producers are vitally, and properly, concerned about self-preservation.

Several means of survival suggest themselves. For in stance, the reduction of costs by automation has been pushed with remarkable ingenuity and vigor. While sound enough, this method leaves the basic problem un touched; and there are limits to its use, a fact well known to more and more producers. Another expedient is the establishment of plants in foreign countries. But, this is not feasible for many en terprises. Such a program presupposes that private prop erty will be respected by foreign governments-an as sumption scarcely substantiated by the record. Further more, this approach, like automation, fails to reach the ONL Y IF FREE CAN WE COMPETE 347 source of the problem: our internal interventionism or socialism. This, in some instances, is more a running away from the problem than a meeting of it. Indeed, if our own interventionism is not met and solved-and as suming the success of American firms overseas-the same increased restrictions will of course be imposed upon their exports to this country as are now being proposed against strictly foreign producers.

A third means that suggests itself is the resort to po litical devices--quotas, tariffs, embargoes, and all sorts of exchange controls. Indeed, every known nostrum will be dragged out to "cope" with the pinch which inter ventionism imposes on the economy; and, if history runs true to form, each panacea will attract a growing num ber of partisans. But these political devices are only ad ditional interventions-more injustices to meet existing injustices. They can only aggravate the trouble from which escape is sought. These devices, at best, are mere palliatives, as even their advocates concede. There are few persons who will not admit that free exchange is right in ideal theory. Is it not self-evident that the ideal theory is the right objective to strive for? It would seem to be. Yet, more and more industrialists are arguing that free exchange, as an objective, must be postponed until other nations mend their ways: drop their barriers and adopt an hon est monetary policy.3 This is tantamount to saying that 3 Not only industrialists, but labor unions, as well! For example, the powerful Amalgamated Clothing Workers are suggesting a boy cott against Japanese fabrics. See editorial, New Yor.k Journal Am,'erican" January 10, 1961.

348 LEONARD E. READ we should not stand for what's right until all error is erased. Such a view cannot be logically supported, nor should we let it blind us to the fourth and only true means to self-preservation: the removal of all restrictions to productive and creative effort, that is, the attainment of the free market, private property, limited government way of life. 4 There are at least two powerful reasons why freeing the market of· restraints is so hesitatingly, even reluc tantly, turned to as a means to self-preservation: 1. The growing, world-wide tendency to divest the in dividual of responsibility for his welfare, security, and prosperity, and to vest that responsibility in the arbitrary control of political power apparatuses. The chorus for this collectivistic way of life grows louder by the day, and may be heard from leaders in business as well as from political, labor, religious, and academic leaders.

2. The decline of what at best has been a faltering fai th in freedom. As the belief in coercive political devices increases, the faith in what free men can accomplish correspond ingly diminishes. This result is inevitable. The free mar ket solution, therefore, must take a positive form: the restoration of a faith in free men. No one really understands how freedom performs its miracles any more than you or I understand how elec tricity does so. Yet, when we flick a switch, we have a 4 While it must be admitted that in the practical world this ideal may not be attained on all fronts at once, intelligent thought must be aimed in this direction and to the recovery of positions pre viousl y conceded to socialism.

ONLY IF FREE CAN WE COMPETE 349 faithful expectation that the room will be flooded with light. You and I do not understand life, but when we plant a kernel of corn in fertile soil, we have faith that it will grow and reproduce itself. Faith as relating to earthly aspirations is founded on experience. The record clearly reveals that all progress material and spiritual-has been born of freedom. In the light of overwhelming demonstrations, why this declining faith in freedom? One reason is quite plain: The unsupportable conclusion that· nothing creative can happen without our knowing exactly how to make it happen. Yet, if the record be inspected, we observe that no person has ever been the sole architect· of anything. For, no one of us possesses more than a fragment of any kind of understanding. The most important economic fact of life is that our fragments of infinitely varied knowledge will, if not im peded, automatically, spontaneously, miraculously con figurate in the form of autos, airplanes, harvesters, sym phonies, telephones, pencils, a cup of coffee on our ta ble-countless things which no person on earth can, by himself, bring into existence. As molecules configurate in an infinite variety of combinations to form all the or..

ganic and inorganic manifestations of Nature, so do varied creative human· energies configurate in countless arrangements to form the things we live by. All of this, however, is based on one fundamental assumption: that creative energies be not impeded; that they be free to configurate. Adding impediments-coercive political devices like 350 LEONARD E. READ embargoes, quotas, tariffs, wage, price, and exchange controls, taking from some to give to others, and so on to offset or to compensate for existing impediments, is only to compound, confound, confuse, and complicate the problems of production and trade. The high road to self-realization as well as the path to survival lies in removing all restraints to creative and productive energy-everyone. This, however, will never be attempted or supported except by those who have a genuine faith in freedom. Unlike socialism, freedom does not presuppose some thing that does not exist: an omniscient human being.

Freedom simply allows countless fragments of the crea tive faculty to combine in satisfying human necessity and demand. In a social sense, freedom is a term for that state of affairs where man does nothing to inhibit the creative process, where he helps, never hinders, the miracles that are always trying to happen. Freedom is possible only with faith. Faith and freedom do indeed work miracles! Restoring faith in freedom is the object to which FEE is dedicated. The more intelligent the participation, the better. Let each believer advance this objective in what ever ways his best judgment dictates. At the minimum, let each of us help others to learn for themselves one fact, one simple truth: No living person knows how to make socialism work. If anyone doubts' this, let him name such a person.