FREE MARKET VS. SOCIALISM
William Simon wrote an excellent book called A Time For Truth about the battle between the left and the right in politics. The following is from the beginning of the book:
Freedom vs. Dictatorship
"Liberty has never come from the government .... The history of liberty is the history of the limitation of governmental power, not the increase of it." --WOODROW WILSON
In April 1975, after a grade meeting in Moscow, I boarded Air Force Two with the U.S. delegation. Still caught up in our official roles, we continued to discuss the ramifications of East-West trade. Then, abruptly, the roar of the motor broke into our conversation, and as the plane taxied down the runway, we all fell silent. After a moment or two Air Force Two lifted off. We heard the dull thump of the locking wheels. The ground fell away beneath us. We were no longer on Soviet soil! And everyone burst into applause.
I'll never forget the moment of elation that possessed us all. It needed no translation. I knew exactly what the emotion was: a sense of oppression being lifted from all of us who had never known oppression. It felt,' for a crazy moment, as if we were staging a great escape. I remember that sense of "I can breathe again. I can talk again. I'm not being spied on any more." It was a sudden vanishing of all the menacing things that characterize the Soviet Union, the shadowy intrusions that you can feel but cannot see. Throughout all the long, cooperative working hours, underlying the jovial ceremonies, lurking beneath the flash of crystal, the flow of vodka, the unspoken awareness of unseen oppression had been with each of us. We too had felt unfree. So all of us, 78 dignified representatives of the United States of America, shouted and applauded like youngsters in sheer relief because we had emerged from that mammoth jail called the Soviet Union, because-we were flying home, flying toward freedom. And it was then, for the first time, that I could put into words that sense of a deep, unnamable difference between the Soviet officials and myself. It was the difference between men who have never known freedom and men who were born free. Freedom is strangely ephemeral. It is something like breathing; one only becomes acutely aware of its importance when one is choking. Similarly, it is only when one confronts political tyranny that one really grasps the meaning and importance of freedom. What I actually realized in Air Force Two is that freedom is difficult to understand because it isn't a presence but an absence--an absence of governmental constraint.
Americans have had the unique privilege of living in a nation that was organized, constitutionally and economically, for one purpose above all: to protect that freedom. Our Founding Fathers, for whom the knowledge of the centuries of tyranny that had preceded them was vivid and acute, were guided in the creation of our political and economic system by that knowledge; virtually every decision they made was to bind the state in chains to protect the individual's freedom of thought, choice, and action.
I have also come to realize that of all the aspects of political freedom guaranteed to us by our Constitution, freedom of action -- most particularly, freedom of productive action or free enterprise -- is the least understood. For years, in Washington, I have been watching the tragic spectacle of citizens' groups, businessmen, politicians, bureaucrats, and media people systematically laying waste to our free enterprise system and our freedom even as they earnestly -- and often sincerely -- proclaimed their devotion to both. Again, this widespread incomprehension is largely due to the fact that freedom of action, including freedom of productive action, is simply a subdivision of freedom; it, too, is an absence rather than a presence -- an absence of governmental constraint. By whatever name one wishes to call this category of free human action -- free enterprise, the free market, capitalism -- it simply means that men are free to produce. They are free to discover, to invent; to experiment, to succeed, to fail, to create means of production, to exchange goods and services, to profit, to consume -- all on a voluntary basis without significant interference by the policing powers of the state. In the most fundamental sense, the right to freedom in this entire chain of productive action adds up to the right to life--for man, by his nature, is a being who must produce in order to live.
Our Founding Fathers, in whom I grow progressively more interested as I grow older, were well aware of this. One of the British philosophers who influenced their thought most profoundly was John Locke. And when I discovered his existence fairly recently (I was no scholar in college), I felt as if he were speaking directly for me. "A man... having, in the state of nature, no arbitrary power over the life, liberty or possession of another, but only so much as the law of nature gave him for the preservation of himself and the rest Of mankind, this is all he doth or can give up to the commonwealth, and by it to the legislative power, so that the legislative can have no more than this."
In other words, government's power, said Locke, was logically limited to the protection of each individual's right to his life, his liberty, and his property, and any government that interfered with these rights instead of protecting them was illegitimate. It is this language that ultimately appeared in our Constitution as the rights to "Life, Liberty, and the Pursuit of Happiness." Our Founding Fathers, intellectual heirs of Locke, consciously and deliberately created the first limited government in the history of man.
A philosopher I cherish equally is Adam Smith, the Scottish theoretician of free enterprise--that political system in which the state leaves producers and consumers free to produce and consume as they choose. Smith, too, believed in the natural right of the individual to liberty, and his essential message to all government was "laissez-faire," or "leave people alone to act." In The Wealth of Nations, published by happy coincidence in 1776, Adam Smith denounced the "mercantilists" of his period who (precisely like our contemporary "liberals") argued that a government should control all aspects of domestic and foreign trade if it wished to enrich the nation. Smith, on the contrary, argued that if the goal were wealth, the productive individual should be free of all such state controls, in accordance with "a system of natural liberty." In total liberty, he said, wealth would necessarily be produced on a scale yet unforeseen.
Our Founding Fathers must have read The Wealth of Nations with great satisfaction, for, as Smith himself observed, the American colonies had been practicing what he preached for more than a century. In their dedication to individual liberty, the earliest leaders of this nation were determined to leave citizens free to seek their fortunes with a minimum of state interference, and a free-market system rooted in "natural law" had been the brilliant result. From its very birth America was a natural laboratory for the liberty-loving philosophies of such men as Locke and Smith, and this country proved to be the noblest experiment ever devised by man. Not coincidentally, it also proved to be the form of society that produced a degree of wealth and a standard of living for the "common man" that had never before been seen. America was by the very definition of its founders a capitalist nation.
The extraordinary wealth of our nation is well known throughout the world. The statistics which record the tangible results of that system nevertheless miss the invisible dimension. The single most awe-inspiring thing about our economic system lies in what is absent, what is not perceivable to the naked eye. it is the fact that the flood of wealth emerges from the lack of government control, from the lack of state-imposed or "national" purposes and goals. The capitalist miracle occurred in the United States, the politically freest nation in the world, precisely because this explosion of wealth is uniquely a result of individual liberty. That is what most people do not understand--and that is what deserves to be shouted from the rooftops.
Ironically, this connection between political and economic freedom is perfectly understood by totalitarians. The communist theoretician knows precisely how to destroy individual freedom; he destroys economic freedom, and the job is done. More specifically, he expropriates private property, the means of production, and he forbids profits. He places the entire production-exchange-consumption chain under the direct -rule of the state, which means, of course, that he places the physical life of each individual at the mercy of the state. That is the essence of tyranny.
The totalitarian, of course, never announces that his intention is to enslave people. Quite the contrary, he invariably proposes to "liberate" them. He rationalizes his tyranny righteously in the name of the collective well-being of the "proletariat," "race," or "fatherland" or in the name of "public interest," "brotherhood," or "equality." But all these are invariably just rationalizations; the goal of tyranny is tyranny. And inexorably it destroys economic life. The ultimate result is inevitably grinding poverty, an inability to produce.
The rulers of the Soviet Union are fully aware that they preside over a sick and stagnant economy, and they are also aware that they cannot go on indefinitely starving their own people and depriving them of the most modest amenities of life. At the same time, they know exactly how America generates its technological innovation and wealth. They know that only by decentralizing and individualizing the decision-making process and allowing free, competitive markets to develop across the length and breadth of the Soviet Union can they generate technology and wealth. But, as one observer has said, "To cure the patient would kill the doctor." To introduce true incentives and economic freedom into the Soviet Union would destroy the communist state.
These are the polar systems of political-economic organization: at one extreme, a free, unplanned, individualist market in a free individualist society which creates a powerful and inventive economic system and produces wealth; at the other, totalitarian-collectivist planning which destroys both the political and the economic freedom of the individual and produces collective poverty and starvation. Only when one has a good grasp of these polar alternatives is it possible to understand what has been going on -- and going wrong -- in Western countries, and in our own country in particular, in the past few decades.
To understand it, one need merely ask one question: What would happen to a society if someone tried to mix these contradictory polar systems in the life of a nation? What would happen if one tried to mix the free and the totalitarian, the unplanned and the planned, the individualist and the collectivist elements in economic life? For an answer, we must examine the industrialized nations of the West. Their economic "mix" is known by many names --'liberalism, "interventionism, mixed economy," the "welfare state," "social democracy," "democratic socialism," even "socialism."
None of these terms has a precise definition, but societies with such economies share certain characteristics: Their intellectual and political leaders share the illusion that a comparative handful of individuals can substitute their judgment for the billions and trillions of decisions that go on in a market. Generally, they believe it possible to use central planning to "correct" free market processes without destroying the market itself. They advocate planning to increase economic efficiency, to enforce competition, to eliminate the business cycle, to manipulate the money supply and rates of interest, to determine prices and profits, to redistribute property and income, to speed up or slow down the growth of the economy, to prevent discrimination, to eliminate pollution and several hundred other things. Whatever such gentlemen deem to be in need of improvement is sufficient cause for them to turn to central planning as a solution. The result of such political leadership is a system that was accurately described by Newsweek magazine (October 18, 1976) in an article entitled "Is Socialism in Trouble?" "By and large," the writer said, "social democracy seeks a middle ground between communism and capitalism."
The advocates of economic intervention clearly believe that their aims are worthy. But if one deflects one's attention from the meritorious motives and goals of such planners and simply looks at the nature of the system they have created --"a middle ground between communism and capitalism"-- one sees that this is a regressive trend.