The Case for Economic Freedom; B. Rogge

I shall identify my brand of economics as that of eco nomic freedom, and I shall define economic freedom as that set of economic arrangements that would exist in a society in which the government's only function would be to prevent one man from using force or fraud against another-including within this, of course, the task of na tional defense. So that there can be no misunderstanding here, let me say that this is pure, uncompromising laissez faire economics. It is not the mixed economy; it is the unmixed economy. Dr. Rogge is Dean and Professor of Economics at Wabash College, Crawfordsville, Indiana. 9 10 BENJAMIN A. ROGGE I readily admit that I do not expect to see such an econ omy in nlY lifetime or in anyone's lifetime in the infinity of years ahead of us. I present it rather as the ideal we should strive for and should be disappointed in never fully attaining. Human society is not destroyed by men who have ideals but find that they cannot, in their im perfection, always attain them; rather it is destroyed by men who have no ideals, by men who have no bench marks against which to nleasure their own performances.

The tragedy of the classical socialist is that he has false ideals; the threat to society of the modern liberal is that so often he has no ideals, no guides to conduct, other than political expediency and a spurious realism. The man who insists that he will walk the middle of the road has his path determined for him by those who define the ditches, and never then takes a step of his own real choosing. To put it another way: I am not frustrated by the fact that politicians often pass laws that do violence to the free market. I am frustrated by the fact that so many peo ple do not know that violence has been done, that so few feel any sense of uneasiness at the departure from the ideal. I am convinced that we continue to move away froln the free market because few of the leaders of opinion even know or understand the ideal of the free market, be cause the ideal itself is no longer accepted as a basic guide to action. We drift toward socialism, not because we con sciouslywish to go there, but because we no longer know or care where our own home is.

THE CASE FOR ECONOMIC FREEDOM II How has this come about? Who has done us in? The fact is, of course, that we have done ourselves in. We have not been betrayed by subversives. We have been be trayed by our own indolence, by our preoccupation with profiting individually from the government inter ventions we deplore, by our failure to prepare and present the case for economic freedom as powerfully and persuasively as possible. The cure must start within each of us individually and not with programs to reform everyone else. Where do we find the most powerful and persuasive case for economic freedom? I don't know; probably it hasn't been prepared yet, and each concerned person should work at it himself. Certainly it is unlikely that the case I present is the definitive one. However, it is the one that is persuasive with me, that leads me to my own deep commitment to the free market. I present it as grist for your own mill and not as the divinely inspired last word on the subject.

The Moral Case for Econ01nic Freedom You will note as I develop my case that I attach· rela tively little importance to the demonstrated efficiency of the free market system in promoting economic growth, in raising levels of living. In fact, my central thesis is that the most important part of the case for economic freedom is not its vaunted efficiency as a system for organizing resources~ not its dramatic success in promoting economic growth~ but rather its consistency with certain funda mental moral principles of life itself.

12 BENJAMIN A. ROGGE I say, "the most important part of the case" for two reasons. First, the significance I attach to those moral principles would lead me to prefer the free enterprise sys tem even if it were demonstrably less efficient than al ternative systems, even if it were to produce a slower rate of economic growth than systems of central direction and control. Second, the great mass of the people of any coun try is never really going to understand the purely eco nomic workings of any economic system, be it free enter prise or socialism. Hence, most people are going to judge an economic system by its consistency with their moral principles rather than by its purely scientific operating characteristics. If economic freedom survives in the years ahead, it will be only because a majority of the people accept its basic morality. The success of the system in bringing ever higher levels of living will be no more per suasive in the future than it has been in the past.

Let me illustrate: The doctrine of man held in general in nineteenth century America argued that each man was ultimately responsible for what happened to him, for his own salvation, both in the here and now and in the here after. Thus, whether a man prospered or failed in eco nomic life was each man's individual responsibility: each man had a right to the rewards for success and, in the same sense, deserved the punishment that came with failure. It followed as well that it is explicitly immoral to use the power of government to take from one man to give to another, to legalize Robin Hood. This doctrine of man found its economic counterpart in the system of free enterprise and, hence, the system of free enterprise THE CASE FOR ECONOMIC FREEDOM 13 was accepted and respected by many who had no real understanding of its subtleties as a technique for organ izing resources. As this doctrine of man was replaced by one (largely reflecting Freudian psychology and sociology) which made of man a helpless victim of his subconscious and his environment-responsible for neither his successes nor his fail ures-the free enterprise system came to be re jected by many who still had no real understanding of its actual operating characteristics.

Inasmuch as my own value systems and my own as sumptions about human beings are so important to the case, I want to sketch them for you. To begin with, the central value in my choice system is individual freedom. By freedom I mean exactly and only freedom from coercion by others. I do not mean the four freedoms of President Roosevelt, which are not free doms at all, but only rhetorical devices to persuade peo ple to give up some of their true freedom. In the Rogge system, each man must be free to do what is his duty as he defines it, so long as he does not use force against another. Next, I believe each man to be ultimately responsible for what happens to him. True, he is influenced by his heredity, his environment, his subconscious, and by pure chance. But I insist that precisely what makes man man is his ability to rise above these influences, to change and determine his own destiny. If this be true, then, it follows that each of us is terrribly and inevitably and forever responsible for everything he does. The answer 14 BENJAMIN A. ROGGE to the question, "Who's to blame?" is always, UMea culpa~ I am."l I believe as well that man is imperfect, now and for ever. He is imperfect in his knowledge of the ultimate purpose of his life, imperfect in his choice of means to serve those purposes he does select, imperfect in the in tegrity with which he deals with himself and those around him, imperfect in his capacity to love his fellow man. If man is imperfect, then all of his constructs must be imperfect, and the choice is always among degrees and kinds of imperfection. The New Jerusalem is never go ing to be realized here on earth, and the man who insists that it is, is always lost unto freedom.

Moreover, man's imperfections are intensified as he acquires the power to coerce others; "power tends to cor;. rupt and absolute, power corrupts absolutely." This completes the listing of my assumptions, and it should be clear that the list does not constitute a total philosophy of life. Most importantly, it does not define what I believe the free man's duty to be, or more spe cifically, what I believe my own duty to be and the source of the charge to me. However important these questions, I do not consider them relevant to the choice of an economic system. Here, tp.en, are two sections of the case for economic freedom as I w9uld 'Construct it.· The first section pre sents economic freedom as an ultimate end in itself and the second· presents. it asa means to the preservation of the noneconomic elements in total freedom. 1. See .my "Who's To Blame?" in Essays on Liberty~ Vol. VIII, p. 34.

THE CASE FOR ECONOMIC FREEDOM Individu,al Freedom of Choice 15 The first section of the case is made in the stating of it, if one accepts the fundamental premise: l\1ajor premise: Each man should be free to take what ever action he wishes, so long as he does not use force or fraud against another; Minor prenl,ise: All economic behavior is "action" as identified above; Conclusion: Each man should be free to take what ever action he wishes in his economic behavior, so long as he does not use force or fraud against another. In other words, economic freedom is a part of total freedom; if freedom is an end in itself} as our society has traditionally asserted it to be} then economic freedom is an end in itself} to be valued for itself alone and not .just for its instrumental value in serving other goals. If this thesis be accepted, then there must always exist a tremendous presumption against each and every pro· posal for governmental limitation of economic freedom.

What is wrong with a state system of compulsory social security?. It denies to the individual his freedom} his right to choose what he will do with his own money re sources. What is wrong with a governmentally enforced minimum wage? It denies to the employer and the em ployee their individual freedom, their individual rights to enter into any voluntary relationship not involving force or fraud. What is wrong with government-to government foreign economic aid? It denies to the in dividual freedom to choose, as his conscience dictates, 16 BENJAMIN A. ROGGE whether to send aid or not. What is wrong with a tariff or an import quota? It denies to the individual consumer his right to buy what he wishes, wherever he wishes. It is breathtaking to think what this simple approach would do to the apparatus of state control at all levels of government. Strike from the books all legislation that denies economic freedom to any individual and three fourths of all the activities now undertaken by govern ment would be eliminated.

I am no dreamer of empty dreams and I do not ex pect that the day will ever come when this principle of economic freedom as a part of total freedom will be fully accepted and applied. Yet I am convinced that un less this principle is given some standing, unless at least those who examine proposals for each new regu lation of the individual by government look on this loss of freedom as a "cost" of the proposed legislation, the chances of free enterprise surviving are small indeed. The would-be controller can always find reasons why it might seem "expedient" to control the individual; and unless slowed down by some general feeling that it is immoral to do so, he will usually have his way. Noneconomic Freedoms So much for the first section of the case. Now for the second. The major premise here is the same, that is, the premise of the rightness of freedom. Here, though, the concern is with the noneconomic elements in total free dom-with freedom of speech, of religion, of the press, of THE CASE FOR ECONOMIC FREEDOM 17 personal behavior. My thesis is that these freedoms are not likely to be long preserved in a society that has denied economic freedom to its individual numbers.

Before developing this thesis, I wish to comment briefly on the importance of these noneconomic free doms. I do so because we who are known as conserva tives have often given too little attention to these free doms or have even played a significant role in reducing them. The modern liberal is usually inconsistent in that he defends man's noneconomic freedoms, but is often quite indifferent to his economic freedom. The modern conservative is often inconsistent in that he defends man's economic freedom but is indifferent to his non economic freedoms. Why are there so few conservatives in the struggles over censorship, over denials of equality before the law for people of all races, over blue laws, and so on? Why do we let the modern liberals dominate an organ ization such as the American Civil Liberties Union? The general purposes of this organization are completely consistent with, even necessary to, the truly free society.

Its modern liberal leadership has led it to make mis takes but, in spite of those mistakes, I continue as a member of the organization. After all, it was the only organization to protest when Moise Tshombe was denied a visa to enter this country. It was the first organization to study the handling of General Walker in the Mis sissippi case, to see if his rights before the law were be ing denied. Undoubtedly there are leftists in the or ganization, but probably few more than in other groups 18 BENJAMIN A. ROGGE with ·which I am involved, such as the American Eco nomic Association, the Episcopal Church and, yes, the Republican Party. Particularly in times of stress such as these, we must fight against the general pressure to curb the rights of individual human beings, even those whose ideas and actions we detest. Now is the time to remember the ex ample of men such as David Ricardo, the London banker and economist of the Classical free market school in the first part of the last century. Born a Jew, turned Quaker, he devoted some part of his energy and his fortune to eliminating the legal discriminations against Catholics in the England of his day.

It is precisely because I believe these noneconomic freedoms to be so important that I believe economic freedom to be so important. The argument here could be drawn from the wisdom of the Bible and the state ment that "where a man's treasure is, there will his heart be also." Give me control over a man's economic actions, and hence over his means of survival, and -except for a few occasional heroes, I'll promise to deliver to you men who think and write and behave as you want them to. The case is not difficult to make for the fully-con trolled economy, the true socialistic state. Milton Fried man, Professor of Economics, University of Chicago, in his new book, Capitalism and Freedom~ takes the case of a socialist society that has a sincere desire to preserve freedom of the press. The first problem would be that there would be no "private" capital, no private forTHE CASE FOR ECONOMIC FREEDOM 19 tunes that could be used to subsidize an antisocialist, procapitalist press. Hence, the socialist state would have to do it. However, the men and women undertaking the task would have to be released from the socialist labor pool and would have to be assured that they would never be discriminated against in employment oppor tunities in the socialist apparatus if they were to wish to change occupations later. Then these procapitalist mem bers of the socialist society would have to go to other functionaries of the state to secure the buildings, the presses, the paper, the skilled and unskilled workmen, and all the other components of a working newspaper.

Then they would face the problem of finding distribution outlets, either creating their own (a frightening task) or using the same ones used by the official socialist propa ganda organs. Finally, where would they find readers? How many men and women would risk showing up at their state-controlled jobs carrying copies of the Daily Capitalist? There are so many unlikely steps in this process that the assumption that true freedom of the press could be maintained in a socialist society is .so unrealistic as to be ludicrous. Partly Socialized Of course, we are not facing as yet a fully socialized America, but only one in which there is significant gov~ ernment intervention in a still predominantly private enterprise economy. Do these interventions pose any 20 BENJAMIN A. ROGGE threat to the noneconomic freedoms? I believe they do. First of all, the total of coercive devices now available to any administration of either party at the national level is so great that true freedom to work actively against the current administration (whatever it might be) is seriously reduced. For example, farmers have be come captives of the government in such a way that they are forced into political alignments that seriously re duce their ability to protest that of which they do not approve. The new trade bill, though right in the prin ciple of free trade, gives to the President enormous power to reward his friends and punish his critics.

Secondly, the form of these interventions is such as to threaten seriously one of the real cornerstones of all free doms-equality before the law. For example, farmers and trade union members are now encouraged and as sisted in doing precisely that for which businessmen are sent to jail (i.e., acting collusively to manipulate prices) . The blindfolded Goddess of Justice has been encouraged to peek and she now says, with the jurists of the ancient regime, "First tell me who you are and then I'll tell you what your rights are." A society in which such gross in equalities before the law are encouraged in economic life is not likely to be one which preserves the principle of equality before the law generally. We could go on to many specific illustrations. For ex ample, the government uses its legislated monopoly to carry the mails as a means for imposing a censorship on what people send to each other in a completely volun tary relationship. A man and a woman who exchange THE CASE FOR ECONOMIC FREEDOM 21 obscene letters may not be making productive use of their time, but their correspondence is certainly no busi ness of the government. Or to take an example from an other country, Winston Churchill, as a critic of the Chamberlin government, was not permitted one minute of radio time on the government-owned and monopo lized broadcasting system in the period from 1936 to the outbreak of the war he was predicting in 1939.

Each Step Leads to Another Every act of intervention in the economic life of its citizens gives to a government additional power to shape and control the attitudes, the writings, the behavior of those citizens. Every such act is another break in the dike protecting the integrity of the individual as a free man or woman. The free market protects the integrity of the individ ual by providing him with a hos t of decen tralized al ter natives rather than with one centralized opportunity. Even the known communist can readily find employ ment in capitalist America. The free market is politics blind, religion-blind, and, yes, race-blind. Do you ask about the politics or the religion of the farmer who gre,v the potatoes you buy at the store? Do you ask about the color of the hands that helped produce the steel you use in your office building? South Africa provides an interesting example of this.

The South Africans, of course, provide a shocking pic ture of racial bigotry, shocking even to a country that 22 BENJAMIN A. ROGGE has its own tragic race problems. South African law' clearly separates the whi tes from the nonwhites. Orientals have traditionally been classed as nonwhites, but· South African trade with Japan has become so important in the postwar period that the government of South Africa has declared the Japanese visitors to South Africa to be officially and legally "white." The free market is one of the really great forces making for tolerance and under standing among human beings. The controlled market gives man rein to express all those blind prejudices and intolerant beliefs to which he is forever subject. I1npersonality on the Market To look at this another way: The free market is often said to be impersonal, and indeed it is. Rather than a vice, this is one of its great virtues. Because the relation ships are substantially impersonal, they are not usually marked by bitter personal conflict. It is precisely because the labor union attempts to take the employment relation ship out of the market place that bitter personal conflict so often marks union-management relationships. The in tensely personal relationship is one that is civilized only by love, as between man and wife, and within the family.

But man's capacity for love is severely limited by his im perfect nature. Far better, then, to economize on love, to reserve our dependence on it to those relationships "V'here even our imperfect natures are capable of sus tained action based on love. Far better, then, to build our economic system on largely impersonal relationships THE CASE FOR ECONOMIC FREEDOM 23 and on man's sel£-interest-a motive power with which he is generously supplied. One need only study the history of such utopian ex periments as our Indiana's New Harmony to realize that a social structure which ignores man's essential nature results in the dissension, conflict, disintegration, and dis solution of Robert Owen's New Harmony or the abso lutism of Father Rapp's Harmony. The Hvulgar calculus of the market place," as its critics have described it, is still the most humane way man has yet found for solving those questions of economic alloca tion and division which are ubiquitous in human society.

By what must seem fortunate coincidence, it is also the system most likely to produce the affluent society, to move mankind above an existence in which life is mean, nasty, brutish, and short. But, of course, this is not just coincidence. Under economic freedom, only man's de structive instincts are curbed by law. All of his creative instincts are released and freed to work those wonders of which free men are capable .. In the controlled society oni y the crea tivity of the few at the top can be utilized and much of this creativity must be expended in main taining control and in fending off rivals. In the free so ciety, the creativity of every man can be expressed-ann surely by now we know that we cannot predict who will prove to be the most creative. You may be puzzled, then, that I do not rest my case for economic freedom on its productive achievements; on its buildings, its houses, its automobiles, its bathtubs, 24 BENJAMIN A. ROGGE its wonder drugs, its television sets, its sirloin steaks and green salads with Roquefort dressings. I neither feel within myself nor do I hear in the testimony of others any evidence that man's search for purpose, his longing for fulfillment, is in any significant way relieved by these accomplishments. I do not scorn these accomplishments nor do I worship them. Nor do I find in the lives of those who do worship them any evidence that they find ultimate peace and justification in their idols.

I rest my case rather on the consistency of the free market with man's essential nature, on the basic morality of its systern of rewards and punishments, on the pro tection it gives to the integrity of the individual. The free market cannot produce the perfect world, but it can create an environment in which each imperfect man may conduct his lifelong search for purpose in his own way, in which each day he may order his life accord ing to his own imperfect vision of his destiny, suffering both the agonies of his errors and the sweet pleasure of his successes. This freedom is what it means to be a man; this is the God-head, if you wish. I give you, then, the free market, the economic expres sion of man's freedom itself and the guarantor of all his other freedoms.