XXXV. The Welfare Principle versus the Market Principle (continued)

0:003. Inequality. The inequality of incomes and wealth is an inherent feature of the market economy. Its elimination would entirely destroy the market economy. What those people who ask for equality have in mind is always an increase in their own power to consume. In endorsing the principle of equality as a political postulate, nobody He wants to share his own income with those who have less. When the American wage earner refers to equality, he means that the dividends of the stockholders should be given to him. He does not suggest a curtailment of his own income for the benefit of those 95 percent of the earth's population whose income is lower than his.

0:54The role that income inequality plays in the market society must not be confused with the role it plays in a feudal society or in other types of non-capitalistic societies. Yet, in the course of historical evolution, this pre-capitalistic inequality was of momentous importance. Let us compare the history of China with that of England. China has developed a very high civilization. 2000 years ago, it was far ahead of England. But at the end of the 19th century, England was a rich and civilized country, while China was poor. Its civilization did not differ much from the stage it had already reached ages before. It was an arrested civilization. China had tried to realize the principle of Income Equality to a greater extent than did England.

1:54Land holdings were divided and subdivided. There was no class of landless proletarians. But in 18th century England this class was very numerous. For a very long time the restrictive practices of non-agricultural business, sanctified by by traditional ideologies delayed the emergence of modern entrepreneurship. But when the laissez-faire philosophy had opened the way for capitalism by utterly destroying the fallacies of restrictionism, the evolution of industrialism could proceed at an accelerated pace because the labor force needed was already available. What generated the machine age was not, as Zombard imagined, a specific mentality of acquisitiveness which one day mysteriously got hold of the minds of some people and turned them into capitalistic men.

2:53There have always been people ready to profit from better adjusting production to the satisfaction of the needs of the public, but they were paralyzed by the ideology that branded acquisitiveness as immoral and erected institutional barriers to check it. The substitution of the laissez-faire philosophy for the doctrines that approved of the traditional system of restrictions removed these obstacles to material improvement and thus inaugurated the new age. The liberal philosophy attacked the traditional caste system because its preservation was Incompatible with the operation of the market economy. It advocated the abolition of privileges, because it wanted to give a free hand to those men who had the ingenuity to produce in the cheapest way the greatest quantity of products of the best quality.

3:51In this negative aspect of their program, the utilitarians and economists agreed with with the ideas of those who attacked the status privileges from the point of view of an alleged right of nature and the doctrine of the equality of all men. Both these groups were unanimous in the support of the principle of the equality of all men under the law, but this unanimity did not eradicate the fundamental opposition between the two lines of thought. In the opinion of the natural law school, all men are biologically equal, and therefore have the inalienable right to an equal share in all things. The first theorem is manifestly contrary to fact.

4:39The second theorem leads, when consistently interpreted, to such absurdities that its supporters abandon logical consistency altogether, and ultimately come to consider every institution, However discriminating and iniquitous as compatible with the inalienable equality of all men. The eminent Virginians, whose ideas animated the American Revolution, acquiesced in the preservation of Negro slavery. The most despotic system of government that history has ever known, Bolshevism, parades as the very incarnation of the principle of equality and liberty of all men. The liberal champions of equality under the law were fully aware of the fact that men are born unequal, and that it is precisely their inequality that generates social cooperation and civilization.

5:37Equality under the law was, in their opinion, not designed to correct the inexorable facts of the universe, and to make natural inequality disappear. It was, on the contrary, the device to secure for the whole of mankind the maximum of benefits it can derive from it. Hence, no man-made institution should prevent a man from attaining that station in which he can best serve his fellow citizens. The liberals approached the problem not from the point of view of alleged inalienable rights Equality under the law is, in their eyes, good, because it best serves the interests of all.

6:26It leaves it to the voters to decide who should hold public office, and to the consumers to decide who should direct production activities. It thus eliminates the causes of violent conflict, and secures a steady progress toward a more or Satisfactory State of Human Affairs. The triumph of this liberal philosophy produced all those phenomena which, in their totality, are called modern Western civilization. However, this new ideology could triumph only within an environment in which the ideal of income equality was very weak. If the Englishmen of the 18th century had been preoccupied with the chimera of income equality, laissez-faire philosophy would not have appealed to them, just as it does not appeal today to the Chinese or the Mohammedans.

7:22In this sense, the historian must acknowledge that the ideological heritage of feudalism and the manorial system contributed to the rise of our modern civilization, however different it is. Those 18th century philosophers who were foreign to the ideas of the new utilitarian theory could still speak of a superiority of conditions in China and in the Mohammedan countries. They knew it is true very little about the social structure of the oriental world. What they found praiseworthy in the dim reports they had obtained was the absence of a hereditary and of big land holdings. As they fancied it, these nations had succeeded better in establishing equality than their own nations.

8:15Then later in the 19th century, these claims were renewed by the nationalists of the nations concerned. The cavalcade was headed by pan-Slavism, whose champions exalted the eminence of communal Social Land Tenure as realized in the Russian Mir and Artel and in the Zadruga of the Yugoslavs. With the progress of the semantic confusion which has converted the meaning of political terms into their very opposite, the epithet democratic is now lavishly spent. The Moslem peoples, which never knew any form of government other than unlimited absolutism, are called democratic. Indian nationalists take pleasure in speaking of traditional Hindu democracy.

9:04Economists and historians are indifferent with regard to all such emotional effusions. In describing the civilizations of the Asiatics as inferior civilizations, they do not express any value judgments. They merely establish the fact that these peoples did not bring forth those ideological and institutional conditions which in the West produced that capitalist civilization, the superiority of which the Asiatics today implicitly accept, in clamoring at least for its technological and therapeutical implements and paraphernalia. It is precisely when one recognizes the fact that in the past the culture of many Asiatic peoples was far ahead of that of their Western contemporaries, that the question is raised as to what causes stopped progress in the East.

10:04In the case of the Hindu civilization, the answer is obvious. Here the iron grip of the inflexible caste system stunted individual initiative and nipped in the Bud every attempt to deviate from traditional standards. But China and the Mohammedan countries were, apart from the slavery of a comparatively small number of people, free from caste rigidity. They were ruled by autocrats, but the individual subjects were equal under the autocrat. Even slaves and eunuchs were not barred from access to the highest dignities. It is this equality before the ruler to which people refer today in speaking of the supposed democratic customs of these orientals.

10:55The notion of the economic equality of the subjects to which these peoples and their rulers were committed was not well defined, but vague. But it was very distinct in one respect, namely in utterly condemning the accumulation of of a large fortune by any private individual. The rulers considered wealthy subjects a threat to their political supremacy. All people, the rulers as well as the ruled, were convinced that no man can amass abundant means otherwise than by depriving others of what by rights should belong to them, and that the riches of the wealthy few are the cause of the poverty of the many.

11:41The position of wealthy businessmen was in all oriental countries extremely precarious. They were at the mercy of the officeholders. Even lavish bribes failed to protect them against confiscation. The whole people rejoiced whenever a prosperous businessmen fell victim to the envy and hatred of the administrators. This anti-crematistic spirit arrested the progress of civilization in the East, and kept the masses on the verge of starvation. As capital accumulation was checked, there could be no question of technological improvement. Capitalism came to the East as an imported alien ideology, imposed by foreign armies Studies and Navies in the shape either of colonial domination or of extraterritorial jurisdiction.

12:36These violent methods were certainly not the appropriate means to change the traditionalist mentality of the Orientals. But acknowledgement of this fact does not invalidate the statement that it was the abhorrence of capital accumulation that doomed many hundreds of millions of Asiatics to poverty and starvation. The notion of equality which our contemporary welfare propagandists have in mind is the replica of the Asiatic idea of equality. While vague in every other respect, it is very clear in its abomination of large fortunes. It objects to big business and great riches. It advocates various measures to stunt the growth of individual enterprises Enterprises and to bring about more equality by confiscatory taxation of incomes and estates, and it appeals to the envy of the injudicious masses.

13:37The immediate economic consequences of confiscatory policies have been dealt with already. It is obvious that in the long run such policies must result not only in slowing down or totally be checking the further accumulation of capital, but also in the consumption of capital accumulated in previous days. They would not only arrest further progress toward more material prosperity, but even reverse the trend and bring about a tendency toward progressing poverty. The ideals of Asia would triumph, and finally East and West would meet on an equal level School of Distress. The welfare school pretends not only to stand for the interests of the whole of society as against the selfish interests of profit-seeking business, it contends moreover that it takes into account the lasting secular interests of the nation as against the short-term concerns of speculators, promoters and capitalists who are exclusively committed to profiteering and do not bother about the future of the whole of society.

14:52This second claim is, of course, irreconcilable with the emphasis laid by the school upon short-run policies as against long-run concerns. However, consistency is not one of the virtues of the welfare doctrinaires. Let us, for the sake of argument, disregard this contradiction in their statements and examine them without reference to their inconsistency. Saving, capital accumulation and investment withhold the amount concerned from current consumption and dedicate it to the improvement of future conditions. The saver forgoes the increase in present satisfaction in order to improve his own well-being and that of his family in the more distant future.

15:41His intentions are certainly selfish in the popular connotation of the term. But the effects of his selfish conduct are beneficial to the lasting secular interests of the whole of society, as well as of all its members. His conduct produces all those phenomena to which even the most bigoted welfare propagandist attributes the epithets economic improvement and progress. The policies advocated by the welfare school remove the incentive to saving on the part of private citizens. On one hand, the measures directed toward a curtailment of big incomes and fortunes seriously reduce or destroy entirely the wealthier people's power to save.

16:31On the other hand, the sums which people with moderate incomes previously contributed to to Capital Accumulation are manipulated in such a way as to channel them into the lines of consumption. When in the past a man saved by entrusting money to a savings bank or by taking out an insurance policy, the bank or the insurance company invested the equivalent. Even if the saver at a later date consumed the sum saved, no disinvestment and capital Social Consumption Resulted. The total investments of the savings banks and the insurance companies steadily increased in spite of these withdrawals. Today there prevails a tendency to push the banks and the insurance companies more and more toward investment in government bonds.

17:25The funds of the social security institutions completely consist in titles to the public Debt. As far as public indebtedness was incurred by spending for current expenditure, the saving of the individual does not result in capital accumulation. While in the unhampered market economy, saving, capital accumulation and investment coincide. In the interventionist economy, the individual citizen's savings can be dissipated by the government. The individual citizen restricts his current consumption in order to provide for his own future. In doing this, he contributes his share to the further economic advancement of society and to an improvement of his fellow men's standard of living.

18:17But the government steps in and removes the socially beneficial effects of the individual's conduct. Everything explodes better than this example, the welfare cliché that contrasts the selfish and narrow-minded individual, exclusively committed to the enjoyment of the pleasures of the moment, and having no regard for the well-being of his fellow men and for the perennial concerns of society, and the far-sighted benevolent government, unflaggingly devoted to the promotion of the Lasting Welfare of the Whole of Society. The welfare propagandist, it is true, raises two objections. First, that the individual's motive is selfishness, while the government is imbued with good intentions.

19:07Let us admit, for the sake of argument, that individuals are devilish and rulers angelic. But what counts in life and reality is, whatever Kant may have said, not good intentions, but accomplishments. What makes the existence and the evolution of society possible is precisely the fact that peaceful cooperation under the social division of labor, in the long run, best serves the selfish concerns of all individuals. The eminence of the market society is that its whole functioning and operation is the consummation of this principle. The second objection points out that under the welfare system, capital accumulation by the government and public investment are to be substituted for private accumulation and investment.

20:02It refers to the fact that not all the funds which governments borrowed in the past were were spent for current expenditure. A considerable part was invested in the construction of roads, railroads, harbors, airports, power stations and other public works. Another no less conspicuous part was spent for waging wars of defense, which admittedly could not be financed by other methods. The objection, however, misses the point. What matters is that a part of the individual's saving is employed by government for current consumption, and that nothing hinders the government from so increasing this part that it in fact absorbs the whole.

20:49It is obvious that if governments make it impossible for their subjects to accumulate and to invest additional capital, responsibility for the formation of new capital, if there There is to be any, devolves upon government. The welfare propagandist, in whose opinion government control is a synonym for God's providential care that wisely and imperceptibly leads mankind to higher and more perfect stages of an inescapable evolutionary progress, fails to see the intricacy of the problem and its ramifications. Not only further saving and accumulation of additional capital, but no less, the maintenance of capital at its present level, require curtailing today's consumption in order to be more amply supplied later.

21:44It is abstinence, a refraining from satisfactions which could be reaped instantly. The market economy brings about an environment in which such abstinence is practiced to a to a certain extent, and in which its product, the accumulated capital, is invested in those lines in which it best satisfies the most urgent needs of the consumers. The questions arise whether government accumulation of capital can be substituted for private accumulation, and in what way a government would invest additional capital accumulated. These problems do not refer only to a socialist commonwealth. They are no less urgent in an interventionist scheme that has either totally or almost totally removed the conditions making for private capital formation.

22:40Even the United States is manifestly more and more approaching such a state of affairs. Let us consider the case of a government that has got control of the employment of a considerable Capital Part of the Citizen's Savings. The investments of the social security system, of the private insurance companies, of savings banks and of commercial banks, are to a great extent determined by the authorities and channeled into the public debt. The private citizens are still savers. But whether or not their savings bring about capital accumulation and thus increase the The quantity of capital goods available for an improvement of the apparatus of production depends on the employment of the funds borrowed by the government.

23:31If the government squanders these sums either by spending them for current expenditure or by malinvestment, the process of capital accumulation as inaugurated by the saving of individuals and continued by the investment operations of the banks and insurance enterprises is cut off. A contrast between the two ways may clarify the matter. In the process of the unhampered market economy, Bill saves $100 and deposits it with a savings bank. If he is wise in choosing a bank which is wise in its lending and investing business, An increment in capital results and brings about a rise in the productivity of labor.

24:18Out of the surplus thus produced, a part goes to Bill in the shape of interest. If Bill blunders in the choice of his bank and entrusts his $100 to a bank that fails, he goes empty-handed. In the process of government interference with saving and investment, Paul, in the year 1940 saves by paying $100 to the National Social Security Institution. He receives in exchange a claim which is virtually an unconditional government IOU. If the government spends the $100 for current expenditure, no additional capital comes into existence and no increase in the Productivity of Labor Results.

25:06The government's IOU is a check drawn upon the future taxpayers. In 1970, a certain Peter may have to fulfill the government's promise, although he himself does not derive any benefit from the fact that Paul, in 1940, saved $100. Thus it becomes obvious that there is no need to look at Soviet Russia in order to comprehend the role that public finance plays in our day. The trumpery argument that the public debt is no burden because we owe it to ourselves is delusive. The Pauls of 1940 do not owe it to themselves. It is the Peters of 1970 who owe it to the Pauls of 1940.

25:57The whole system is the acme of the short-run principle. The statesmen of 1940 solve their problems by shifting them to the statesmen of 1970. On that date, the statesmen of 1940 will be either dead or elder statesmen, glorying in their wonderful achievement, Social Security. The Santa Claus fables of the welfare school are characterized by their complete failure to grasp the problems of capital. It is precisely this defect that makes it imperative to deny them the appellation welfare economics, with which they describe their doctrines. He who does not take into consideration the scarcity of capital goods available is not an economist, but a fabulist.

26:49He does not deal with reality, but with a fabulous world of plenty. All the effusions of the contemporary welfare school are, like those of the socialist authors, based on the implicit assumption that there is an abundant supply of capital goods. Then, of course, it seems easy to find a remedy for all ills, to give to everybody according to his needs, and to make everyone perfectly happy. It is true that some of the champions of the welfare school feel troubled by a dim notion of the problems involved. They realize that capital must be maintained intact if the future productivity of labor is not to be impaired.

27:36However, these authors, too, fail to comprehend that even the mere maintenance of capital depends on the skillful handling of the problems of investment. that it is always the fruit of successful speculation and that endeavors to maintain capital intact presuppose economic calculation and thereby the operation of the market economy. The other welfare propagandists ignore the issue completely. It does not matter whether or not they endorse in this respect the Marxian scheme or resort to the invention of new chimerical notions such as the self-perpetuating character of useful things.

28:21In any event, their teachings are designed to provide a justification for the doctrine which blames over-saving and under-consumption for all that is unsatisfactory and recommends spending as a panacea. When pushed hard by economists, some welfare propagandists and socialists admit that impairment of the average standard of living can only be avoided by the maintenance of capital already accumulated, and that economic improvement depends on accumulation of additional capital. Maintenance of capital and accumulation of new capital, they say, will henceforth be a task of government. They will no longer be left to the selfishness of individuals exclusively concerned with their own enrichment and that of their families.

29:15The authorities will deal with them from the point of view of the common wheel. The crux of the issue lies precisely in the operation of selfishness. Under the system of inequality, this selfishness impels a man to save and always to invest his savings in such a way as to fill best the most urgent needs of the consumers. Under the system of equality, this motive fades. The curtailment of consumption in the immediate future is a perceptible privation, a blow to the individual's selfish aims. The increment in the supply available in more distant periods of the future, which is expected from this immediate privation is less recognizable for the average intellect.

30:05Moreover, its beneficial effects are, under a system of public accumulation, so thinly spread out that they hardly appear to a man as an appropriate compensation for what he forgoes today. The welfare school blithely assumes that the expectation that the fruits of today's saving will be reaped equally by the whole of the future generation will turn everybody's selfishness toward more saving. Thus they fall prey to a corollary of Plato's illusion that preventing people from knowing which children's parents they are will inspire them with parental feelings toward all younger people. It would have been wise if the welfare school had been mindful of Aristotle's observation that the result will rather be that all parents will be equally indifferent to all children.

31:01The problem of maintaining and increasing capital is insoluble for a socialist system which cannot resort to economic calculation. Such a socialist commonwealth lacks any method of ascertaining whether its capital equipment is decreasing or increasing. But under interventionism, and under a socialist system which is still in a position to resort to economic calculation on the basis of prices established abroad, things are not so bad. Here it is at least possible to comprehend what is going on. If such a country is under a democratic government, the problems of capital preservation and accumulation and the creation of additional capital become the main issue of political antagonisms.

31:52There will be demagogues to contend that more could be dedicated to current consumption than those who happen to be in power or the other parties are disposed to allow. They will always be ready to declare that, in the present emergency, there cannot be be any question of piling up capital for later days, and that, on the contrary, consumption of a part of the capital already available is fully justified. The various parties will outbid one another in promising the voters more government spending, and at the same time a reduction of all taxes which do not exclusively burden the rich. In the days of laissez-faire, people looked upon government as an institution whose operation required an expenditure of money which must be defrayed by taxes paid by the citizens.

32:49In the individual citizens' budgets, the state was an item of expenditure. Today, the majority of the citizens look upon government as an agency dispensing benefits. The wage earners and the farmers expect to receive from the Treasury more than they contribute to its revenues. The State is in their eyes a spender, not a taker. These popular tenets were rationalized and elevated to the rank of a quasi-economic doctrine by Lord Keynes and his disciples. Spending and unbalanced budgets are merely synonyms for capital consumption. If current expenditure, however beneficial it may be considered, is financed by taxing away those parts of higher incomes which would have been employed for investment, by inheritance taxes or by borrowing, the government becomes a factor making for capital consumption.

33:50The fact that in present-day America there is probably still a surplus of annual capital Capital Accumulation over Annual Capital Consumption does not invalidate the statement that the total complex of the financial policies of the Federal Government, the states and the municipalities tends toward capital consumption. Many who are aware of the undesirable consequences of capital consumption are prone to believe that popular government is incompatible with sound financial policies. They fail to realize that not democracy as such is to be indicted, but the doctrines which aim at substituting the Santa Claus conception of government for the Night Watchman conception derided by LaSalle.

34:40What determines the course of a nation's economic policies is always the economic ideas held by public opinion. No government, whether democratic or dictatorial, can free itself from the sway of the generally accepted ideology. Those advocating a restriction of the Parliament's prerogatives in budgeting and taxation issues, or even a complete substitution of authoritarian government for representative government, are blinded by the chimerical image of a perfect chief of state. This man, no less benevolent than wise, would be sincerely dedicated to the promotion of his subject's lasting welfare. The real furor, however, turns out to be a mortal man, who first of all aims at the perpetuation of his own supremacy and that of his kin, his friends and his party.

35:38As far as he may resort to unpopular measures, he does so for the sake of these objectives. He does not invest and accumulate capital, he constructs fortresses and equips armies. The much-talked-about plans of the Soviet and Nazi dictators involved restriction of current consumption for the sake of investment. The Nazis never tried to suppress the truth that all these investments were designed as a preparation for the wars of aggression that they planned. The Soviets were less outspoken at the beginning, but today they proudly declare that all their planning was directed by considerations of war preparedness.

36:24History does not provide any example of capital accumulation brought about by a government. As far as governments invested in the construction of roads, railroads and other useful public Works, the capital needed was provided by the savings of individual citizens and borrowed by the government. But the greater part of the public debts was spent for current expenditure. What individuals had saved was dissipated by the government. Even those who look upon the inequality of wealth and incomes as a deplorable thing cannot deny that it makes for progressing capital accumulation, and it is additional capital accumulation alone that brings about technological improvement, rising wage rates and a higher standard of living.

37:204. Insecurity The vague notion of security, which the welfare Secure Doctrineers have in mind, when complaining about insecurity, refers to something like a warrant, by means of which society guarantees to everybody, irrespective of his achievements, a standard of living which he considers satisfactory. Security in this sense, contend the eulogists of times gone by, was provided under the social regime of the Middle Ages. There is, however, no need to enter into an examination of these claims. Real conditions, even in the much glorified thirteenth century, were different from the ideal picture painted by scholastic philosophy.

38:10These schemes were meant as a description of conditions not as they were, but as they ought to be. But even these utopias of the philosophers and theologians allow for the existence of of a Numerous Class of Destitute Beggars, Entirely Dependent on Alms Given by the Wealthy. This is not precisely the idea of security which the modern usage of the term suggests. The concept of security is the wage earners and small farmers pendant to the concept of stability held by the capitalists. In the same way in which capitalists want to enjoy permanently an income which is not subject to the vicissitudes of changing human conditions, wage earners and small farmers want to make their revenues independent of the market.

39:03Both groups are eager to withdraw from the flux of historical events. No further occurrence should impair their own position. On the other hand, of course, they do not expressly object to an improvement of their material well-being. That structure of the market to which they have in the past adjusted their activities should never be altered in such a way as to force them to a new adjustment. The farmer in a European mountain valley waxes indignant upon encountering the competition of Canadian farmers producing at lower costs. The house painter boils over with rage when the introduction of a new appliance effects conditions in his sector of the labor market.

39:51It is obvious that the wishes of these people could be fulfilled only in a perfectly stagnant world. A characteristic feature of the unhampered market society is that it is no respecter of vested interests. Most achievements do not count if they are obstacles to further improvement. The advocates of security are therefore quite correct in blaming capitalism for insecurity. But they distort the facts in implying that the selfish interests of capitalists and entrepreneurs are responsible. What harms the vested interests is the urge of the consumers for the best possible satisfaction of their needs.

40:36Not the greed of the wealthy few, but the propensity of everyone to take advantage of any opportunity offered for an improvement of his own well-being makes for producer insecurity. What makes the house painter indignant is the fact that his fellow citizens prefer cheaper houses to more expensive ones. And the house painter himself, in preferring cheaper commodities to dearer ones, contributes presents his share to the emergence of insecurity in other sectors of the labor market. It is certainly true that the necessity to adjust oneself again and again to changing conditions is onerous. But change is the essence of life.

41:23In an unhampered market economy, the absence of security, that is, the absence of protection for Vested Interests is the principle that makes for a steady improvement in material well-being. There is no need to argue with the bucolic dreams of Virgil and of eighteenth century poets and painters. There is no need to examine the kind of security which the real shepherds enjoyed. No one really wishes to change places with them. The longing for security became especially intense in the Great Depression that started in 1929. It met with an enthusiastic response from the millions of unemployed. "'That is capitalism for you,' shouted the leaders of the pressure groups of the farmers and the wage earners.

42:15Yet the evils were not created by capitalism, but, on the contrary, by the endeavors to to reform and to improve the operation of the market economy by interventionism. The crash was the necessary outcome of the attempts to lower the rate of interest by credit expansion. Institutional unemployment was the inevitable result of the policy of minimum wage rates. 5. Social Justice In one respect, at least, present-day welfare propagandists are superior to most of the older schools of socialists and reformers. They no longer stress a concept of social justice with whose arbitrary precepts men should comply, however disastrous the consequences may be.

43:09They endorse the utilitarian point of view. They do not oppose the principle that the only standard for appreciating social systems is judging them with regard to their ability to realize the ends sought by acting men. However, as soon as they embark upon an examination of the operation of the market economy, they forget their sound intentions. They hold up a set of metaphysical principles and condemn the market economy beforehand because it does not conform to them. They smuggle in through a back door the idea of an absolute standard of morality which they had barred from the main entrance. In searching for remedies against poverty, inequality and insecurity, they come step by step to endorse all the fallacies of the older schools of socialism and interventionism.

44:05They become more and more entangled in contradictions and absurdities. Finally, they cannot help catching at the straw at which all earlier unorthodox reformers tried to grasp the superior wisdom of perfect rulers. Their last word is always state, government, society, or other cleverly designed synonyms for the superhuman dictator. The welfare school, foremost among them the German Katheter Sozialisten and their adepts, the American institutionalists, have published many thousands of volumes stuffed with punctiliously documented information about unsatisfactory conditions.

44:52In their opinion, the collected materials clearly illustrate the shortcomings of capitalism. In truth, they merely illustrate the fact that human wants are practically unlimited, and that there is an immense field open for further improvements. They certainly do not prove any of the statements of the welfare doctrine. There is no need to tell us that an amplifier supply of various commodities would be welcome to all people. The question is whether there is any means of achieving a greater supply other than by by Increasing the Productivity of Labor by the Investment of Additional Capital. All the babble of the welfare propagandists aims only at one end, namely obscuring this point, the point that alone matters.

45:46While the accumulation of additional capital is the indispensable means for any further or Economic Progress, these people speak of over-saving and over-investment, of the necessity of spending more and of restricting output. Thus, they are the harbingers of economic retrogression, preaching a philosophy of decay and social disintegration. A society arranged according to their precepts may appear to some people as fair from the for the point of view of an arbitrary standard of social justice, but it will certainly be a society of progressing poverty for all its members. For a century at least, public opinion in western countries has been diluted by the idea that there is such a thing as the social question, or the labor problem.

46:41The meaning implied was that the very existence of capitalism hurts the vital interests of of the masses, especially those of the wage earners and the small farmers. The preservation of this manifestly unfair system cannot be tolerated. Radical reforms are indispensable. The truth is that capitalism has not only multiplied population figures, but at the same time improved the people's standard of living in an unprecedented way. Neither economic thinking nor historical experience suggests that any other social system could be more beneficial to the masses than capitalism. The results speak for themselves.

47:29The market economy needs no apologists and propagandists. It can apply to itself the words of Sir Christopher Wren's epitaph in St. Paul's. If you seek his monument, look around.