Book Reviews

From Prague we took long rides on rattling bus es and on ironclad steam trains, marvelous behemoths .... We rumbled through long fields of corn ready to be harvested, in and out of dark pine forests where the cart tracks meandered across the rails ... most of all I remember the extraordinary joie de vivre of almost everyone we met. The joy of talking and of being allowed to remember-and to hope! ... I had never seen such a bubbling of hope and excitement. I remember one countrywoman looking with astonishment at photographs of the Masaryks I had brought from Prague. "Six months ago we were not allowed to know that these men exist ed." That the Communist Party of all institu tions was offering such freedoms! It was too good to believe! Over long jugs of black beer everybody in the beer halls showed contempt for the Russians. Spe cial toasts to Alexander Dubcek were drunk over and over again.

The Prague Spring became the Prague Autumn on a night in August when, on orders from the Kremlin, some 200,000troops of the Soviet Union, Poland, East Germany, Hungary, and Bulgaria crossed four .frontiers into the Czechoslovak Socialist Republic. The charge from the Kremlin was that the Communist Party in Prague had lost control of the nation because Dubcek had lost con trol of the party. Dubcek was portrayed as a "weak and mindless" man who had fallen into the clutch es of such "vicious agents of imperialism" as Dr. Ota Sik. Dubcek was not accused of leading a counterrevolution, but of "allowing a counter revolutionary situation to develop." Dubcek was dragged off in handcuffs to Moscow, where he uttered a cry of anguish "that they should have done this tome, after I have devoted my whole life to cooperation with the Soviet Union." It was, he said, "the great tragedy of my life." The unity of Czechs and Slovaks prevented the Russians from installing a puppet traitor, but Dubcek wasforced to make an agreement with the Soviets. Shawcross and his sister returned to Prague in the winter of 1968-69. The Russians were using "salami tactics," whittling away the measures of the Prague Spring one by one. Free dom of the press had crumbled. Shawcross, on a wet afternoon, walked up the slope of Wenceslaus Square to the statue of King Wenceslaus, which had become a shrine since a boy had been shot there by the Russians as he pushed a Czech flag down the barrel of a tank during the invasion. A Czech student, Jan Palach, had set himself on fire, as a fierce rebuke to compromise. In April of 1969, after ferocious demonstrations that marked the defeat of the Soviet ice hockey team by the Czechs, the Russians finally removed Dubcek and replaced him with Gustav Husak, his enemy. At this point Shawcross decided to write a book about Dubcek.

Under Husak and pressure from the Brezhnev regime, Czechoslovakia became once more one of the most viciously and stupidly run countries in Europe. More than 120,000 Czechoslovaks went into exile, and a half million who stayed became "non-persons." Writers became window cleaners, doctors became porters. Nothing changed until the advent of.Gorbachev. Shawcross's biography was published in 1970. His principle criticism of it today is that "I did not realize ... that the experiment of humane Commu nism, or Socialismwith a Human Face, was impos sible, or even a contradiction in terms." He now says he was naive. "The last twenty years," he says, "have shown us nothing so much as the catastroph ic nature of Communism everywhere ... wherever Communism has triumphed ... Vietnam, Cambodia, Laos its consequences have been utterly disastrous " For his new edition, Shawcross has provided an afterword. Dubcek had been banished to an insignificant forestry job. By now another man, Vaclav Havel, a playwright, had emerged as the moral spokesman of Czechoslovakia. The Euro pean Parliament, however, had not forgotten DUbcek, who was flown to Strasbourg to receive the Sakharov Prize.

Together, on November 24,1989, Havel and Dubcek appeared on a balcony overlooking Wenceslaus Square. It was, says Shawcross, "a remembrance of youth and optimism." Standing beside Dubcek, Havel was equally cheered by the crowd. Within three weeks of their appearance on the balcony "the Stalinist structures of Czechoslovakia had been swept away by the tidal wave of reform which was roaring across Eastern Europe in the last months of 1989." Dubcek had been appointed Chairman of the Federal Assem bly.It fell to him to propose a single candidate for the Presidency of Czechoslovakia-Vaclav Hav117 el. In Havel's words, "history began again for Czechoslovakia. " What happened in 1968,says Shawcross, "was a flawed experiment. 'Socialismwith a Human Face' could not have worked; people would have wanted more-a human government without socialism. But Sakharov was right: Dubcek was an inspira tion and the Prague Spring did indeed provide an exhilarating breath of freedom."

Ota Sik, Dubcek's economic counselor, was right, too. His New Economic Model didn't go far enough to champion a complete free market soci ety. But the hints were there. D THE POLITICSOF RICHAND POOR: WEALTHAND THE AMERICAN ELECTORATEIN THE REAGAN AFTERMATH by Kevin Phillips RandomHouse,400 Hahn Road, Westminster,MD 21157 1990 • 262 pages•$19.95cloth Reviewed by Ben Asa Rast D on't let the politicians and economists confuse you. There are only two moving parts to our economy. One creates wealth. The other just moves it around. The first part is made up of people buying and sellinggoods and services in mutually agreeable, mutually ben eficial transactions. Everyone wins, nobody gets hurt, and wealth is created. This is the part of the economy where, as Murray Rothbard says, "The greater a man's income, the greater his service to others." The second part of our economy doesn't create wealth. It moves wealth around by force. When a thief moves money, we call it a crime. When a politician does it, we callit government policy. In this part of the economy there are winners and losers, and each transaction is accomplished by coercion.Here, the greatera man's income,the greater his ability to force other people to givehim money. The most violent disagreements in crime and politics are about dividing up the loot.

This simple, two-part economic system means there are two ways to accumulate wealth: you can earn it or you can steal it. Unfortunately, too few people make the distinction. A primary case in 118 THE FREEMAN • MARCH 1991 point is Kevin Phillips, author of the best-selling The Politics ofRich ~nd Poor. Phillips cites lots of statistics trying to prove that there is a growing disparity between rich and poor. He argues that government policies redistributed income from the poor to the rich during the 1980s. The problem is he never distinguishes between the rich who earned their wealth and those who had it redistributed to them. And that's a big difference. Phillips assumes that all wealth comes at the expense of the poor via government policy. This assumption isn't just unfair, it's absurd. And it's too bad, because the point he's trying to make is emo tionally appealing and morally correct: govern ment should not take money from the poor and give it to the rich.

Most of us would agree that it's immoral for the government to plunder the poor for the sake of rich. But it's immoral to steal anything from any body, rich or poor. The bottom line is that govern ment policies shouldn't redistribute wealth up or down the economic ladder. Rich and poor people should be allowed to keep what they earn, and give away what they want. Now if government policieswere the only way to get rich, Phillipsmight have a point. But remember that new wealth is not the result of government intervention; it springs from creativity,service, and risk-taking. Lots of wealthy people earn their mon ey by servingothers. How cananyone justifytaking money from them, or anyone else for that matter? Phillips tries to strike an objective, analytical tone that hides his biases against free enterprise, rich folks, and Ronald Reagan. And he is really after Reagan more than anything else. The whole book seems designed to pin income inequality on Ronald Reagan. Perhaps the Reagan Administra tion did redistribute income-that's what politi cians do-but to imply that government policies moved all the wealth to the rich is nonsense. Many people made money in the 1980s because they worked hard, not because some bureaucrat had his hand in a poor person's pocket.

Phillips just doesn't understand free market economics. His ignorance is especially obvious when he constantly confuses the term "capitalist" with "Republican." Some Republicans are capi talists (so are some Democrats), but not all capi talists are Republicans. Phillips never takes the time to make an intelligent distinction between these terms. He just lumps Republicans and capitalists under one label, even though he admits that Richard Nixon followed a rather populist set of policies, and it was Jimmy Carter who started the process of deregulation. Another example of Phillips' misunderstanding of economics is when he calls a tax cut a redistribu tion of income from the poor to the rich. Clearly, when the government lets rich people keep more of what they earn, that doesn't mean it is taking money from poor people. This book is flawed because Phillips condemns the worthy with the unworthy. But to condemn the productive part of our economy for enabling peo ple to become wealthy is bad economics and mis guided public policy. D Mr. Rast is a financial advisor with Prudential-Bache Securities and a Fellow of the Committee for Monetary Research and Education.

AGRICULTURE AND THE STATE: MARKET PROCESSES AND BUREAUCRACY by E. C. Pasour, Jr. Holmes & Meier, 30 Irving Place, New York, NY 10003 1990. 258 pages. $39.50cloth, $19.95paper Reviewed by Brian Summers F ederal agricultural programs cost Ameri can taxpayers billions of dollars a year, and add hundreds of dollars to the average fam ily'sfood bill. Yet few people are more than vague ly aware of these programs, and almost no one out side academia has a real handle on how they work. Now,however, E. C. Pasour, Jr., a professor of eco nomics at North Carolina State University, has produced a superb analysis of U.S. agricultural policy that is scholarly yet readily accessible to the lay reader. Pas our begins with a fundamental question: What is the role of economic theory in agricultural policy analysis? The answer, he says, depends on how you view economics. If you try to measure real-world agricultural markets against the norm of perfect competition, they willbe found woefully lacking because "perfect competition" is an ideal ized, artificial construct. If, however, you view competition in terms of market processes-as competitors trying to outdo one another-then economics can tell you a lot more about the merits of free markets versus centrally planned systems.

Pasour then turns to public choice theory, the study of how economic principles explain political decisions. He shows that there is a bias in the polit ical process in favor of programs where benefits are immediate and concentrated on a special interest group, and costs are deferred and spread over the general public. A classic example is the sugar program, which yields enormous gains for a few thousand U.S. producers, while spreading the costs over 250 million U.S. consumers. It is much the same with other agricultural pro grams. Tobacco growers and peanut farmers, for example, have their marketing quotas. Farmers who grow wheat, cotton, peanuts, tobacco, rice, feed grains, milk, soybeans, wool, mohair, or hon ey have price supports. The list is seemingly end less.If you (or your father or grandfather) got in at the right time, you probably are doing very well. But many farmers aren't doing especially well.

For every farmer who has an acreage allotment, there are farmers who are legallylocked out by the system. Each increase in price supports encour ages more intensive farming, which drives ~p costs, misallocates resources, and depletes the SOIl. What value is it to a poor farmer if support prices are capitalized into the price of farmland, so he can't afford to buy or even rent land? Tobacco price supports,· for example, have raised some yearly rents by over $1,000an acre. Of course, the federal government has an alphabet soup of credit agencies ready to "help" farmers. But when a farmer can't get a loan in the private sector, and has to turn to governme.nt subsidized credit, doesn't that say somethIng about his ability to repay a loan? Is the govern ment doing a farmer a favor when it encourages him to expand beyond his means, as many farmers were encouraged in the 1970s? Pasour covers these and just about every other economic aspect of U.S. farm policy, including an excellent chapter on international trade and one discussing the merits of private versus gov ernment-subsidized crop insurance schemes.

However, although his analyses clearly lead him to the free market position, he limits his policy prescriptions to a few comments. For this type of book, where the message is in the analysis, this is ideal. D Mr. Summers is a Senior Editor of The Freeman. OTHER BOOKS 119 MARKETSOCIALISM:A SCRUTINY by Anthony de Jasay London: Institute of Economic Affairs; North American Distributor: Atlas Foundation, 4210Roberts Road, Fairfax, VA 22032 -1990 - 35 pages - $8.00paper Reviewed by Peter J. Boettke I n this brilliant essay, Anthony de Jasay criti cally examines the proposals for "market" socialismoffered by a leading group of British socialist academics. With the failure of "real exist ing" socialism evident throughout the world, socialist theorists have been working overtime to salvage their ideal. As the East European coun tries move to market-based social systems of pro duction, many men of action as well as of ideas will try to maintain the socialist system of distribution.

The welfare state is basically what is left of social ism after the lessons of its 70-odd years of experi ence are absorbed. De Jasay concentrates his critique on the funda mental ambiguity of many of the proposals offered by market socialists. For example, market social ists argue for "social ownership," where the capital stock is owned collectivelyby society,but adminis tered by a group of workers. But as de Jasay points out, social ownership if it means anything is state ownership of the means of production. So what we have at the heart of the proposal, then, is a state owned market: an oxymoron of near-perfect dimensions. This market is then to be controlled by society to limit the size of firms, protect against unemployment, and insure an equitable distribu tion of income. This produces the fundamental promises of market socialism: "social owners~i?," "equality of opportunity," and "equal pOSItIve freedom." Such promises, however, are inconsis tent with the existence of functioning markets. As de Jasay demonstrates, though, the advocates of market socialismthat he is extensively confronting have no clue to how wrongheaded and empty their phrases are.

"Plainly," he states, "advocates of a new kind of socialism have an implausible case to plead, and their chief fault is to imagine that it is a natu ral winner." De Jasay concludes: "Never did a political theory, in its eagerness to escape the li~ bilities of its predecessor, put forward so superfI cial an analysis and so many self-contradictions, as market socialism. Nor does any single market 120 THE FREEMAN • MARCH 1991 socialist promise, let alone two, never mind all three-an efficient market economy without cap italist ownership, equality through equal oppor tunity without imposing equal outcomes, and free choice without freedom of contract-look capa ble of being fulfilled, each being an open contra diction in terms, much like hot snow, wanton vir gin, fat skeleton, round square." This slim volume is highly recommended for New from FEE! anyone interested in finding out what socialist thinkers are advocating these days and how empty their proposals are when confronted by logic and economic argument. D Peter J. Boettke is a professor ofeconomics at New York University and author ofThe Political Economy of Sovi et Socialism: The Formative Years, 1918-1928 (Kluwer Academic Publishers, 1990).

ECONOMIC FREEDOM AND INTERVENTIONISM An Anthologyof Articlesand Essaysby Ludwigvon Mises Selected and Edited by Bettina Bien Greaves Forty-seven of the pre-eminent Austrian economist's shorter pieces, all written after Mises came to the U.S. in 1940, gathered from many sources into a well-organized and annotated collection. Topics include: • the importance of private property • savings and investment • Keynesianism • the proper role of government • interventionism • the dangers of inflation • Marxism • bureaucratic management All around the world, longtime advocates of economic planning are being forced by circumstances to admit that their policies haven't worked. This book sets' forth, with inescapable logic and clarity, the reasons why. It also shows how capitali~m, with its democracy of consumers, helps to reduce conflicts and point the way to peaceful human cooperation. Plus: Mises' original evaluations of F. A. Hayek's The Constitution of Liberty, Murray Rothbard's Man, Economy and State, Israel Kirzner's The Economic Point of View, and Hans F. Sen'nholz's How Can Europe Survive?

263 pages, indexed ORDER TODAY The Foundation for Economic Education 30 South Broadway Irvington-an-Hudson, NY 10533 Phone: (914) 591-7230 FAX: (914) 591-8910 Cloth: $29.95 Paper: $14.95 METHODS OF PAYMENT • Check or money order payable to The Foundation for Economic Education. • Credit card-VISA or MasterCard Please give your full credit card number, expiration date, and signature.