Jörg Guido Hülsmann (JGH): The economic literature on gifts is actually quite massive, but it’s true that these writings don’t make it into standard micro- and macroeconomics. My initial interest was sparked by Benedict XVI’s 2009 encyclical letter Caritas in veritate. The pope wondered how the scope of gratuitous goods could be increased in the human economy, and he called on all people of good will to deal with this issue in thought and action. I put a doctoral student to work on this subject in 2011 and she successfully defended her French-language dissertation four years later. Still I sensed that much more work was needed and that the economics of gratuitous goods promised to shed new light on the very foundations of economics.

In 2018, during a sabbatical semester, I therefore set out to study three specific areas in more detail: (1) How do gifts fit into the general theory of economic goods? Is the act of giving a distinct praxeological category on its own? (2) Which are the major types of positive externalities, or side-effect goods, that spring from profit seeking and other human actions that do not have the express purpose of providing gratuitous benefits to others? Which are the causes that promote and hamper the development of such side-effect goods? (3) In which ways and to what extent do government interventions influence these processes?

At first, I thought this could be done fairly quickly, but I overrated my speed and underestimated the difficulty of the subject. All told it took me four years to produce a complete draft of the book.

TM: The idea of Homo economicus has long plagued economics, and many people conclude the idea tells us that people engage in economic activity only for monetary profit. Does the Homo economicus model have value or is it an impediment to understanding the full economy?

JGH: With a few exceptions, economists have always understood that the Homo economicus fiction is precisely that, a fiction. Its proper use is to serve as a pedagogical tool. Sums of money can be directly compared. It is clear that nine units of money are more than eight units of money. It is also straightforward to argue that everybody prefers more money to less money. But outside of this narrow pedagogical use, the fiction becomes problematic. It is clearly not the case that all goods can be given a monetary expression. Nor is it the case that people only care about money. Human action designed to acquire and hold money must be balanced against all alternative actions. People do not desire to own as much money as possible but the proper amount of money, along with the proper amounts of all other goods that they also wish to own. Last but not least, it is not the case that all human actions have the purpose of providing the agent with monetary revenue or other advantages. Genuine donations of time and material goods are also possible.

TM: Why is the Austrian School uniquely suited to analyze gifts and charity?

JGH: The starting point of Austrian reasoning is real human action, not any fictitious stipulations. Carl Menger strongly emphasized that acting man pursues different objectives that cannot be summarized by a single one. In other words, human action does not aim at maximizing a single variable, such as monetary profit or utility. It aims at establishing a proper balance between different goods that cannot be reduced to a common denominator. It follows that, from a Mengerian perspective, it is not difficult to concede the possibility that gifts are meant to serve others, and that the satisfaction of the needs of others has to be brought into a proper balance with the satisfaction of our own needs.

By contrast, the Homo economicus of present-day mainstream economics maximizes a single variable; namely, utility. But this implies from the very outset that only one person counts; namely, the agent whose utility is being maximized. Whatever he may do for others he ultimately does for himself. Mainstream economists are therefore willy-nilly led to the conclusion that genuine gifts are impossible. They hold that donors always and everywhere give in order to benefit from “warm glow” feelings and for other selfish objectives. But such contentions have nothing to do with any science or empirical research. They are implied in the stipulated premise of Homo economicus. They are grounded in a fiction, not in a fact.

Let me also highlight that Austrians are uniquely well positioned to understand the nature and scope of positive externalities. The reason is that, contrary to the mainstream, they do not subscribe to Aristotle’s equivalence postulate.

Aristotle contended that a just exchange is an exchange of equal values. Unless each person provides the equivalent of what he receives, one partner to the exchange wins at the expense of the other, and the exchange is therefore unjust. This fundamental postulate has survived all evolutions and revolutions in economic thought. Present-day general equilibrium economics à la Debreu and Arrow postulates that each good provided to others is, or at least should be, adequately remunerated, unless it is provided as a deliberate gift. This is called the postulate of complete markets or, more pompously, the first fundamental theorem of welfare economics. But it is really just another example of a purely fictitious assumption gone wild.

On a free market, positive externalities abound. Each single externality might be marginal but, in the aggregate, they provide significant gratuitous abundance. An Austrian economist may therefore conclude that positive externalities are praiseworthy benefits that spring from the workings of an unhampered economy. But then come the mainstream economists with their postulate of complete markets. When they see these benefits, they infer they must be terrible market failures that cry out for state intervention. They start to tax some people and subsidize others. Thus, they paralyze the taxpayers, encourage the subsidy recipients to frivolous behavior, and eliminate or at least diminish the side-effect benefits for all others.

TM: A potential problem with all research is that the researchers may only study the things that can be quantitatively measured. Is that a problem here, since it is difficult to quantify the value of gift giving and charity?

JGH: You highlight an important issue. Indeed, the value of any good is a matter of personal judgment within a personal context. A poor woman may consecrate a day to care for her mother. That comes with a huge opportunity cost for her. The personal value of this service is therefore immense, and will be greatly appreciated by her mother and any objective bystander. But from a statistical point of view it is nil, it does not exist at all.

TM: You note that there are many things in the world that are gratuitous, such as culture. What are some other examples, and how can we measure the benefits of such things?

JGH: Language, money, and law are prime examples of cultural commons. They are network goods that emerge from the interaction of countless individuals, each of whom pursues his own goals and does not, as a rule, intend to bring about or preserve the network good. Carl Menger famously described the process of their spontaneous emergence, emphasizing that network goods are not instituted by the deliberate choice of any individual or group. They owe their origin to a social process, not to any political authority. It is impossible to measure their monetary value, and no attempt has ever been made to do so, to my knowledge.

There are other side-effect benefits the monetary value of which could conceivably be estimated in various ways, yet with great margins of error. A shopkeeper may benefit from the security personnel of a business right next door. He could know the costs of hiring his own security staff, but how could he assess the contribution that the extra security provided by his neighbor makes to his bottom line? He would have to make various assumptions about what would have happened if the neighbor’s security had been absent. In other words, he would have to engage in intellectual gymnastics of the sort that is undergirding present-day macroeconomic modeling. The quality of his results would probably be of the same sort: wild guesses. Most likely, he would quickly come to conclude that such guesswork is a waste of time and money.

Difficulties of this sort have an important practical ramification. Precisely because the money value of side-effect benefits is so difficult if not impossible to assess, it is out of the question to eliminate these benefits by a sleight of hand. Positive externalities are therefore especially robust gratuitous goods.

TM: Do pure gifts really exist? That is, do people ever give gifts without wanting something in return?

JGH: Pure gifts can exist, and I know they do exist. However, it is impossible to publicly demonstrate their actual existence because this would require the ability to look into the minds and hearts of others.

TM: There is a lot of history about economic theory in this book. When did economists first go wrong on the charity problem?

JGH: I cannot pinpoint a concrete date or period. The medieval theologians had considered it to be a matter of course that pure gifts do exist and play a hugely important role. I suppose a change came with the modern philosophy of utilitarianism, especially with Jeremy Bentham’s utilitarianism, which rushed into the reductionism that is so characteristic of modern economics. In Bentham’s conception, all human choices are reduced to a calculus of pleasure and pain. And, of course, these pleasures and pains are the ones of the acting person, so that it is from the outset clear that only this one person counts.

On the other hand, as far as side-effect goods are concerned, things turned sour when the academic economists of the nineteenth century decided to neglect the work of Frédéric Bastiat. The latter had developed a very powerful analysis of the role of gratuitous goods in human welfare. Most notably, he had argued that increased savings allowed people to create ever more tools and harvest the gratuitous forces of nature. He had also shown that technological progress eventually conveys gratuitous benefits to the ultimate consumers, whereas the innovators benefit only temporarily (although it is true that Bastiat’s work was marred to some extent by the shortcomings of his value theory and by his inattention to the role of side-effects of human action, which he had neglected, as did all of his contemporaries). Tragically, he came to be almost completely forgotten when the fictitious theory of complete markets rose to its triumph in the twentieth century.

TM: How is bad economics in this field a problem for ordinary people? That is, has a failure to understand the economics of gratuitous goods led to justifications for interventionist economic policy?

JGH: There are here two issues of paramount practical importance. Both spring from bad economics and have led to disastrous policies.

The first one is the theory of externalities. In Human Action, Mises pointed out that negative and positive externalities do not have symmetrical effects but fundamentally different ones and that they required fundamentally different responses. When negative externalities like factory smoke and noise affect the property rights of neighbors, these conflicts can be settled in courts of justice. By contrast, positive externalities do not require any action at all. There is simply nothing wrong with them. It is superfluous and, in fact, disastrous to interpret positive externalities as market failures and have the government step in to redress them, for example, by funding the courts, the army, or roads with taxpayer money. The gratuitous abundance that characterizes the workings of a free economy is then curtailed with rising taxation and rising consumer-good prices.

This brings me to the second issue. In the mainstream conception, the development of the market economy inevitably goes hand in hand with a decline of generosity and altruism. Indifference and coldheartedness rear their ugly heads. Rugged individualism reigns supreme when the state is small or inactive. By contrast, a large and active state is bound to provide the population with the numerous and substantial gratuitous benefits of the welfare state. And, of course, such a large and active state is also likely to promote economic growth through expansionary fiscal and monetary policy. In my book, I show that this conception is the exact opposite of the truth. It is a fairy tale of statist propaganda. The truth is that generosity and abundance flourish in a free economy. When such an economy grows, there is actually a powerful tendency for generosity to increase more than aggregate output. But government interventions, most notably expansionary monetary policies, annihilate and invert these tendencies. They create very strong incentives for people to become stingy, selfish, and indifferent. And for analogous reasons, the services provided by the welfare state in the long run never solve any of the problems they were supposed to mend. They always end up reinforcing and perpetuating homelessness, illiteracy, sickness, unemployment, violence, dependence, indifference, and despair. In other words, state-provided gratuitousness is not only sterile but positively harmful, the exact opposite of the gratuitous goods provided by free and responsible citizens.

Original Article: Legacies of Injustice and Racial Inequality

This collection provides important example of populist laissez-faire opinion from the Jacksonian Era in the United States. In terms of economic policy, the Jacksonians favored low taxes, decentralization, and hard-money while opposing central banks and regulation of private business.

William Leggett was born on April 30, 1801 in New York City and died at age thirty-eight, on May 29, 1839 in New Rochelle, New York. He was a Jacksonian era journalist and the intellectual leader of the laissez-faire wing of Jacksonian democracy. He wrote editorials in support of individual liberties and private property rights while working with William Cullen Bryant at the Evening Post.

Dr. Eli Dourado, Senior Research Fellow with the Center for Growth and Opportunity at Utah State University, joins Bob to discuss the recent "successful failure" of the exploded SpaceX launch and the differences between government and privately funded space travel.

Dr. Dourado on NASA contracting private companies to build their shuttles: Mises.org/HAP393a

Dr. Dourado on the Artemis moon program: Mises.org/HAP393b

From the background material of the paper we can learn why the author is not concerned with the rationale of credit nationalization, but merely with the details of its realization. Dr. Deumer is presenting a proposal, elaborated in its insignificant details, on the nationalization of all German institutions of banking and credit, and the establishment of a national credit monopoly. But his plan can be of no interest to us as no one is contemplating its implementation in the foreseeable future. And if there ever should be such a movement, conditions may be quite different so that the Deumer proposal will not be applicable. Therefore, it would not make any sense to discuss its details, such as article I, section 10, of the "Draft of a Bill Nationalizing Banking and Credit," which reads,

"He who engages in any banking and credit transaction after the nationalization will be subject to a fine not exceeding ten million gold marks, or imprisonment up to five years, or both."Ibid., p. 335.

Deumer's work is of interest to us because of its motives for the nationalization of credit, and its statements on a reform that preserves the superiority of "profit" management over "bureaucratic" management. These statements reveal an opinion that is shared by a large majority of our contemporaries — yes, that is even accepted without contradiction. If we should share this Deumer-Travers-Borgstroem-mutualist position we must welcome a nationalization of credit and every other measure leading to socialism. In fact, we must agree to its realizability and even its urgent necessity.

The public welcomes all proposals designed to limit the sphere of private property and entrepreneurship because it readily accepts the critique of the private-property order by the Socialists of the Chair in Germany, the Solidarists in France, the Fabians in Great Britain, and the Institutionalists in the United States. If the nationalization proposals have not yet been fully realized we must not search for any opposition in social literature and the political parties. We must look to the fact that the public realizes that whenever enterprises are nationalized and municipalized or government otherwise interferes with economic life, financial failure and serious disruption of production and transportation follow instead of the desired consequences. Ideology has not yet taken stock of this failure of reality. It continues to hold fast to the desirability of public enterprises and the inferiority of private enterprises. And it continues to find only malice, selfishness, and ignorance in opposition to its proposals, of which every objective observer should approve.

Under such conditions an analysis of Deumer's reasoning seems to be in order.

According to Deumer, banks presently serve private interests. They serve public interests only inasmuch as these do not conflict with the former. Banks do not finance those enterprises that are most essential from the national point of view, but only those that promise to yield the highest return. For instance, they finance "a whiskey distillery or any other enterprise that is superfluous for the economy."

"From the national point of view, their activity is not only useless, but even harmful."

"Banks permit enterprises to grow whose products are not in demand; they stimulate unnecessary consumption, which in turn reduces the people's purchasing power for goods that are more important culturally and rationally. Furthermore, their loans waste socially necessary capital, which causes essential production to decline, or at least their costs of credit, and thus their production costs, to rise."Ibid., p. 86.

Obviously, Deumer does not realize that in a market order, capital and labor are distributed over the economy in such a way that, except for the risk premium, capital yields the same return, and similar labor earns the same wage everywhere. The production of "unnecessary" goods pays no more and no less than that of "essential goods." In the final analysis, it is the consumers in the market who determine the employment of capital and labor in the various industries. When the demand for an item rises its prices will rise and thus the profits, which causes new enterprises to be built and existing enterprises to be expanded. Consumers decide whether this or that industry will receive more capital. If they demand more beer, more beer will be brewed. If they want more classical plays, the theaters will add classics to their repertoire and offer fewer antics, slapstick, and operettas. The taste of the public, not the producer, decides that The Merry Widow and The Garden of Eden are performed more often than Goethe's Tasso.

To be sure, Deumer's taste differs from that of the public. He is convinced that people should spend their money differently. Many would agree with him. But from this difference in taste Deumer draws the conclusion that a socialistic command system should be established through nationalization of credit, so that public consumption can be redirected. On this we must disagree with Deumer.

Guided by central authority according to central plan, a socialistic economy can be democratic or dictatorial. A democracy in which the central authority depends on public support through ballots and elections cannot proceed differently from the capitalistic economy. It will produce and distribute what the public likes, that is, alcohol, tobacco, trash in literature, on the stage, and in the cinema, and fashionable frills. The capitalistic economy, however, caters as well to the taste of a few consumers. Goods are produced that are demanded by some consumers, and not by all. The democratic command economy with its dependence on popular majority need not consider the special wishes of the minority. It will cater exclusively to the masses.

But even if it is managed by a dictator who, without consideration for the wishes of the public, enforces what he deems best — who clothes, feeds, and houses the people as he sees fit — there is no assurance that he will do what appears proper to "us." The critics of the capitalistic order always seem to believe that the socialistic system of their dreams will do precisely what they think correct. While they may not always count on becoming dictators themselves, they are hoping that the dictator will not act without first seeking their advice. Thus they arrive at the popular contrast of productivity and profitability. They call "productive" those economic actions they deem correct. And because things may be different at times, they reject the capitalistic order, which is guided by profitability and the wishes of consumers, the true masters of markets and production. They forget that a dictator, too, may act differently from their wishes, and that there is no assurance that he will really try for the "best," and, even if he should seek it, that he should find the way to the "best."

It is an even more serious question whether a dictatorship of the "best" or a committee of the "best" can prevail over the will of the majority. Will the people, in the long run, tolerate an economic dictatorship that refuses to give them what they want to consume and gives them only what the leaders deem useful? Will not the masses succeed in the end in forcing the leaders to pay heed to public wishes and taste and do what the reformers sought to prevent?

We may agree with Deumer's subjective judgment that the consumption by our fellow men is often undesirable. If we believe this, we may attempt to convince them of their errors. We may inform them of the harm of excessive use of alcohol and tobacco, of the lack of value of certain movies, and of many other things. He who wants to promote good writings may imitate the example of the Bible Society that makes financial sacrifices in order to sell Bibles at reduced prices and to make them available in hotels and other public places. If this is yet insufficient, there cannot be any doubt that the will of our fellow men must be subdued. Economic production according to profitability means production according to the wishes of consumers, whose demand determines goods prices and thus capital yield and entrepreneurial profit. Whenever economic production according to "national productivity" deviates from the former, it means production that disregards the consumers' wishes, but pleases the dictator or committee of dictators.

Surely, in a capitalistic order a fraction of national income is spent by the rich on luxuries. But regardless of the fact that this fraction is very small and does not substantially affect production, the luxury of the well-to-do has dynamic effects that seem to make it one of the most important forces of economic progress. Every innovation makes its appearance as a "luxury" of the few well-to-do. After industry has become aware of it, the luxury then becomes a "necessity" for all. Take, for example, our clothing, the lighting and bathroom facilities, the automobile, and travel facilities. Economic history demonstrates how the luxury of yesterday has become today's necessity. A great deal of what people in the less capitalistic countries consider luxury is a common good in the more capitalistically developed countries. In Vienna, ownership of a car is a luxury (not just in the eyes of the tax collector); in the United States, one out of four or five individuals owns one.

The critic of the capitalist order who seeks to improve the conditions of the masses should not point at this luxury consumption as long as he has not disproved the assertion of theorists and the experience of reality that only capitalistic production assures highest possible production. If a command system produces less than a private-property order it will obviously not be possible to supply the masses with more than they have today.

The poor performance of public enterprises is usually blamed on bureaucratic management. In order to render state, municipal, and other public operations as successful as private enterprise, they should be organized and directed along commercial lines. This is why for decades everything has been tried to make such operations more productive through "commercialization." The problem became all the more important as state and municipal operations expanded. But not by a single step has anyone come closer to the solution.

Deumer, too, deems it necessary "to manage the national banking monopoly along commercial lines," and makes several recommendations on how to achieve this.Ibid., p. 210. They do not differ from many other proposals in recent years or from those which under the circumstances could and have been achieved. We hear of schools and examinations, of promotion of the "able," of sufficient pay for employees, and of profit sharing for leading officials. But Deumer does not see the essence of the problem any more clearly than do any others who seek to make the inevitably unproductive system of public operations more productive.

Deumer, in step with prevailing opinion, seems to believe erroneously that the "commercial" is a form of organization that can easily be grafted onto government enterprises in order to debureaucratize them. That which usually is called "commercial" is the essence of private enterprise aiming at nothing but the greatest possible profitability. And that which usually is called "bureaucratic" is the essence of government operations aiming at "national" objectives. A government enterprise can never be "commercialized" no matter how many external features of private enterprise are superimposed on it.

The entrepreneur operates on his own responsibility. If he does not produce at lowest costs of capital and labor what consumers believe they need most urgently, he suffers losses. But losses finally lead to a transfer of his wealth — and thus his power of control over means of production — to more capable hands. In a capitalistic economy, the means of production are always on the way to the most capable manager, that is, to one who is able to use these means most economically to the satisfaction of consumer needs. A public enterprise, however, is managed by men who do not face the consequences of their success or failure.

The same is said to be true of the leading executives of large private enterprises which therefore are run as "bureaucratically" as state and municipal operations. But such arguments ignore the basic difference between public and private enterprises.

In a private, profit-seeking enterprise, every department and division is controlled by bookkeeping and accounting aiming at the same profit objective. Departments and divisions that are unprofitable are reorganized or closed. Workers and executives who fail in their assigned tasks are removed. Accounting in dollars and cents controls every part of the business. Monetary calculation alone shows the way to highest profitability. The owners — that is, the stockholders of a corporation — issue only one order to the manager who transmits it to the employees: earn profits.

The situation is quite different in the bureaus and courts that administer the affairs of the state. Their tasks cannot be measured and calculated in a way market prices are calculated, and the order given to subordinates cannot be so easily defined as that of an entrepreneur to his employees. If the administration is to be uniform and all executive power is not to be delegated to the lowest officials, their actions must be regulated in every detail for every conceivable case. Thus it becomes the duty of every official to follow these instructions. Success and failure are of lesser importance than formal observance of the regulation. This is especially visible in the hiring, treatment, and promotion of personnel, and is called "bureaucratism." It is no evil that springs from some failure or shortcoming of the organization or the incompetence of officials; it is the nature of every enterprise that is not organized for profit.

When state and municipality go beyond the sphere of court and police, bureaucratism becomes a basic problem of social organization. Even a profit-seeking public enterprise could not be unbureaucratic. Attempts have been made to eliminate bureaucratism through profit sharing by managers. But since they could not be expected to bear the eventual losses, they are tempted to become reckless, which then is to be avoided by limiting the manager's authority through directives from higher officials, boards, committees, and "expert" opinions. Thus again, more regulation and bureaucratization are created.

But usually public enterprises are expected to strive for more than profitability. This is why they are owned and operated by government. Deumer, too, demands of the nationalized banking system that it be guided by national rather than private considerations — that it should invest its funds not where the return is highest, but where they serve the national interest.Ibid., p. 184.

We need not analyze other consequences of such credit policies, such as the preservation of uneconomical enterprises. But let us look at their effects on the management of public enterprises. When the national credit service or one of its branches submits an unfavorable income statement, it may plead, "To be sure, from the viewpoint of private interest and profitability we were not very successful. But it must be borne in mind that the loss shown by commercial accounting is offset by public services that are not visible in the accounts. For instance, dollars and cents cannot express our achievements in the preservation of small and medium enterprises, in the improvements of the material conditions of the 'backbone' classes of population."

Under such conditions the profitability of an enterprise loses significance. If public management is to be audited at all, it must be judged with the yardstick of bureaucratism. Management must be regimented, and positions must be filled with individuals who are willing to obey the regulations.

No matter how we may search, it is impossible to find a form of organization that could prevent the strictures of bureaucratism in public enterprises. It won't do to observe that many large corporations have become "bureaucratic" in recent decades. It is a mistake to believe that this is the result of size. Even the biggest enterprise remains immune to the dangers of bureaucratism as long as it aims exclusively at profitability. True, if other considerations are forced on it, it loses the essential characteristic of a capitalistic enterprise. It was the prevailing etatistic and interventionist policies that forced large enterprises to become more and more bureaucratic. They were forced, for instance, to appoint executives with good connections to the authorities, rather than able businessmen, or to embark upon unprofitable operations in order to please influential politicians, political parties, or government itself. They were forced to continue operations they wished to abandon, and merge with companies and plants they did not want.

The mixing of politics and business not only is detrimental to politics, as is frequently observed, but even much more so to business. Many large enterprises must give thousands of considerations to political matters, which plants the seeds of bureaucratism. But all this does not justify the proposals to bureaucratize completely and formally all production through the nationalization of credit. Where would the German economy be today if credit had been nationalized as early as 1890, or even 1860? Who can be aware of the developments that will be prevented if it is nationalized today?

What has been said here applies to every attempt at transferring private enterprises, especially the banking system, into the hands of the state, which in its effects would amount to all-around nationalization. But in addition, it would create credit problems that must not be overlooked.

Deumer seeks to show that the credit monopoly could not be abused for fiscal reasons. But the dangers of credit nationalization do not lie here; they lie with the purchasing power of money.

As is well known, demand deposits subject to checks have the same effect on the purchasing power of a monetary unit as bank notes. Deumer even proposes an issue of "guaranteed certificates" or "clearing house certificates" that are never to be redeemed.Ibid., p. 152 et seq. In short, the national bank will be in the position to inflate.

Public opinion always wants "easy money," that is, low interest rates. But it is the very function of the note-issuing bank to resist such demands, protecting its own solvency and maintaining the parity of its notes toward foreign notes and gold. If the bank should be excused from the redemption of its certificates, it would be free to expand its credits in accordance with the politicians' wishes. It would be too weak to resist the clamor of credit applicants. But the banking system is to be nationalized, in Deumer's words, "to pay heed to the complaints of small industrial enterprises and many commercial firms that they are able to secure the necessary credits only with great difficulties and much sacrifice."Ibid., p. 184.

A few years ago it would have been necessary to elaborate the consequences of credit expansion. There is no need for such an effort today. The relationship between credit expansion and rising goods prices and foreign-exchange rates is well known today. This has been brought out not only by the research of some economists, but also by the American and British experiences and theories with which Germans have become familiar. It would be superfluous to elaborate further on this.

Deumer's book clearly reveals that étatisme, socialism, and interventionism have run their course. Deumer is unable to support his proposals with anything but the old étatist and Marxian arguments which have been refuted a hundred times. He simply ignores the critique of these arguments. Nor does he consider the problems that arose from recent socialistic experience. He still takes his stand on the ground of an ideology that welcomes every nationalization as progress, even though it has been shaken to its foundations in recent years.

Politics, therefore, will ignore Deumer's book, which may be regrettable from the author's viewpoint because he invested labor, ingenuity, and expertise in his proposals. But in the interest of a healthy recovery of the German economy, it is gratifying.

[In Notes and Recollections, Mises revealed that he meant to include this essay — written in 1926 —in the original German edition of Critique of Interventionism (1929). It was left out of that volume through editorial error, but was included in later editions.]

This project brings together the core of Hoppe’s lifetime of theoretical work in one vital and cohesive source. Here we find provocative themes developed by Hoppe in the 1980s and 90s, particularly in his essays found in A Theory of Socialism and Capitalism and The Economics and Ethics of Private Property. We also find his devastating critique of democracy, made famous in his seminal book Democracy—The God That Failed.

This audiobook is narrated by Paul Strikwerda.

One thing is abundantly clear. Both the spirit and the genius of Ludwig von Mises are alive and well here at the Mises Institute. The breadth and depth of the scholarship encountered at these annual conferences is quite remarkable. Indeed, the transdisciplinary nature of much of this work may be unique in the academic world. Mises would, I believe, be enormously proud of the research being carried on in his name — even, and perhaps especially, by those whose conclusions diverge in some particulars from his own.

Guido Hülsmann's masterful biography, Mises: The Last Knight of Liberalism, has carefully documented the fact that this was truly a man of the mind, a man utterly devoted to the pursuit of truth. Ayn Rand once made an observation that I think is germane to Mises, though it appeared in the context of discussing educational theories. She exhorted her readers to "[o]bserve also the intensity, the austere, the unsmiling seriousness with which an infant watches the world around him. (If you ever find, in an adult, that degree of seriousness about reality, you will have found a great man)" (The New Left, p. 156). In the course of his pursuit of truth, this great man unfailingly exhibited what I like to think of as a "dignified ruthlessness." To comprehend complex phenomena was what was important. To grasp reality was the objective that fueled Mises's life, not popularity, not winning debates, not currying political approval. Moreover, this quest was to be undertaken within an interpersonal context of civility and even elegance.

All that is so alien to our present world. Today the kind of impregnable integrity that Mises possessed is decried as "dogmatism," because truth is thought to be limitlessly malleable. His sort of aristocratic grace is slandered as "elitist" and "reactionary," because so many collectivists are mesmerized by all things proletarian. His deep concern with the epistemological foundations of economics is demeaned as pedantic babbling, because ours is a Humean world in which the profundity of the law of causality is routinely brushed aside in favor of the glamour of statistical correlation. And his heroic defense of laissez-faire capitalism is dismissed as being "out of touch with reality," on the grounds that such an economic system is callous, crass, wasteful, inequitable, and exploitative, not to mention insensitive to "real human needs."

Capitalism and Envy

It is this last issue — capitalism and Mises's powerful defense of it, as well as both the grave implications of the common assaults on capitalism and the characteristics of those assailants — that I wish to examine today. Allow me first to state clearly what I mean by "capitalism." Now it is true that I would shrink the state by more than would Mises, but we have the same broad objective. I mean a totally unregulated, laissez-faire economic system, one in which property rights are sacred, where profit-seeking is seen as a noble enterprise, where money is a symbol of honorable achievement — rather than being castigated as a sordid tool used only by those sadly devoid of humane qualities. It is liberalism — in the classical sense — applied to the everyday business of life. Recall that Mises insisted that "[f]reedom is indivisible. He who has not the faculty to choose among various brands of canned food or soap, is also deprived of the power to choose between various political parties and programs…. He is no longer a man; he becomes a pawn in the hands of the supreme social engineer" ("Liberty and Property," Two Essays, p. 27).

Elsewhere, Mises declared that, if compressed into one word, liberalism meant property — privately held and earnestly protected by law (Liberalism, p. 19).

In terms of concretes, by capitalism I mean an economy with no progressive taxes, no central bank, no pure paper currency, no drug prohibition, no gun prohibition, no "affirmative action" employment mandates for any ethnic group, no government-run health care, no federal departments of education, energy, labor, homeland security, health and human services, no DEA, BATFE, SEC, EPA, FTC, FDA, no minimum legal wage rates, no price controls, no tariffs, no welfare — domestic or foreign, rural or urban, for the rich or the poor. You know, a free economy!

Parenthetically, I am amazed by how often I hear people speak of "the free market," but somehow manage to incorporate within that notion the presence of the Federal Reserve, Social Security, the IRS, ad nauseum. What part of the word "free" do they not comprehend? In any case, I for one obviously do not refer to that tortured, disfigured, tormented, twisted gargoyle which usually masquerades as capitalism today. Who would be willing to risk his "life, liberty, and sacred honor" in order to protect and maintain that monstrosity? Not I, I assure you.

If this be capitalism, then what drives so many to oppose it so strongly?

Indeed, how can anyone find capitalism objectionable at all once one recognizes that it has — even in its attenuated form — increased the standard of living so dramatically that an average person now daily enjoys "luxuries" which hereditary monarchs could not boast of a mere 200 years ago? Mises offers two basic answers to that question: envy and ignorance.

First, regarding envy, he declares:

What makes many feel unhappy under capitalism is the fact that capitalism grants to each the opportunity to attain the most desirable positions which, of course, can only be attained by a few. Whatever a man may have gained for himself, it is mostly a mere fraction of what his ambition has impelled him to win. There are always before his eyes people who have succeeded where he failed…. The price and market system of capitalism is such a society in which merit and achievements determine a man's success or failure. (Anti-Capitalistic Mentality, pp. 12, 14)

Mises observes that, for many, feudalism offered psychological comforts not available within capitalist society. "In a society based on caste and status, the individual can ascribe adverse fate to conditions beyond his control…. there is no reason for him to be ashamed of his humbleness…. It is quite another thing under capitalism. Here everybody's station in life depends on his own doing" (Anti-Capitalistic Mentality, p. 11).

Envy and resentment, although condemned by virtually every known system of ethics, secular or religious, seems to lie hidden deep within some primitive part of a great many human psyches. That such emotions are in fact primitive is explored in detail by Helmut Schoeck in his book Envy: A Theory of Social Behaviour (1966). There he explains, in memorable terms, the mechanism at work:

What is decisive…. is the envious man's conviction that the envied man's prosperity, his success and his income are somehow to blame for the subject's deprivation, for the lack that he feels…. A self-pitying inclination to contemplate another's superiority or advantages, combined with a vague belief in his being the cause of one's own deprivation, is also to be found among educated members of our modern societies who really ought to know better. The primitive people's belief in black magic differs little from modern ideas. Whereas the socialist believes himself robbed by the employer, just as the politician in a developing country believes himself robbed by the industrial countries, so primitive man believes himself robbed by his neighbour, the latter having succeeded by black magic in spiriting away to his own fields part of the former's harvest. (pp. 23, 51)

Consider what follows if one couples the repugnant urge toward envy with a broad misperception of reality. That is, what if one fails to see that all economic and technological progress has been brought about by industrious individuals striving to apply reason to the problems of life? It is likely then that such progress will be thought of as some "automatic" gift from Nature or God and, therefore, that all humans deserve to share equally in those natural blessings. But what if one's neighbor, or one's employer, or some famed industrialist, possesses a noticeably larger basket of those material goods? The conclusion is clear: he must have unfairly appropriated that excess; he must be an exploiter. Further, the social system that permitted, nay even encouraged, such a result must be corrupt.

As Mises frames the thoughts of the purveyors of this sort of attitude,

[Capitalism] crowns the dishonest unscrupulous scoundrel, the swindler, the exploiter, the "rugged individualist"…. As conditions are under capitalism, a man is forced to choose between virtue and poverty on the one hand, and vice and riches on the other. (Anti-Capitalistic Mentality, p. 14)

In other words, capitalism does not just evoke sober and reluctant comments about its unfortunate inadequacy; it provokes vitriolic, and self-righteous, denunciations. It is not something like, "Well, too bad capitalism did not work, it sounded like a good idea." It is instead, "No decent human being can be in favor of laissez-faire capitalism; it is rife with racism, sexism, and the rape of Mother Earth; fueled by avarice, driven by malice, it is the very institutionalization of exploitation!"

In rebuttal, one can of course describe socialism as the institutionalization of envy. For instance, Karl Marx quite explicitly presents the process of economic progress, and its concomitant rise in real wage rates, in relative rather than absolute terms:

If capital is growing rapidly, wages may rise: the profit of capital rises incomparably more rapidly. The material position of the worker has improved, but at the cost of his social position. The social gulf that divides him from the capitalist has widened. ("Wage Labour and Capital," Selected Works, Vol. I, p. 94)

It is by such sleight-of-hand tricks that Marx could be confronted, as he was, with the fact that British agricultural workers experienced a 40% rise in real wages between 1849 and 1859, and yet dismiss this as insignificant (Sowell, Marxism, p. 138).

Actually, it is not just Marxian communism that enshrines envy in its doctrines and practices. The modern welfare state is also guilty. Schoeck, writing in the 1960s, gives several examples of nations in which its citizens, driven by envy and resentment, have demanded to know the incomes of others:

The procedure of making tax returns public is found, incidentally, in Swiss communities, where it is possible to find out, without valid reason, the amount of income and assets declared by one's neighbour or competitor…. There is…[in Sweden] a private firm which yearly produces a much-consulted list giving the incomes of all families where these are more than about $3600 a year…. [And even in the United States] between 1923 and 1953, in the state of Wisconsin there was a law permitting anyone to inspect any of his fellow citizens' tax returns, with all details and particulars. (Envy, pp. 35, 386)

Of course, progressive taxation is itself a profound manifestation of envy. Actually, all taxes — whether sales, excise, income, or other — are unavoidably devices of redistribution, as I and others have argued in print. However, progressive income taxes are the most blatant. On the one hand, if taxes were a proxy for some justifiable fee levied as payment for governmental services actually, demonstrably demanded by the nation's citizens, then such taxes should be on a per capita basis, not set as an accelerating percentage of one's income. Or, if the value of the service were related to the monetary magnitude involved — such as protecting property against theft — at most the tax should be a fixed percentage of the value thereby made secure. To adopt progressive income taxes is to declare openly that the goal is punitive.

As Schoeck sees it, envy lies at the heart of the matter: "the subjective sense of well-being of every income group is prejudiced by the income groups above it. In order to be rid of this 'feeling of deprivation,' recourse is had to the progressive income tax" (Envy, p. 365).

Beyond identifying envy as a key motive for their hatred of capitalism, Mises also offers an entertaining sociological commentary on the various subcategories of anti-capitalists. There are, of course, the intellectuals: "Lawyers and teachers, artists and actors, writers and journalists, architects and scientific research workers, engineers and chemists" (p. 17). Their antipathy toward capitalism is largely a macro-level projection of micro-level pettiness. For the typical intellectual, the "passionate dislike of capitalism is a mere blind for his hatred of some successful 'colleagues'" (p. 18).

White-collar workers tend to suffer from an additional affliction. "Sitting behind a desk and committing words and figures to paper, [such a worker] is prone to overrate the significance of his work…. Full of conceit, he imagines himself to belong to the enterprise's managing elite and compares his own tasks with those of his boss" (p. 21).

In other words, why should one think highly of capitalism when it is a system in which the CEOs of corporations are granted multimillion dollar salaries for accomplishing tasks that could be equally well performed by the typical office worker? Arrogance of this kind on the part of white-collar workers is encouraged and reinforced by the confused declarations of many leftists. If running a profitable business required nothing more than meticulous record keeping, then any competent filing clerk could indeed be a successful entrepreneur. However, as Mises reminds us, the task of the entrepreneur is far more challenging than that. His is a task for the active and agile mind. Abstractions, concretes, and endless alternatives abound. Complicated chains of causality must be discerned and then sorted out: The entrepreneur must deal with

the inevitable scarcity of the factors of production, the uncertainty of future conditions for which production has to provide, and the necessity of picking out from the bewildering multitude of technological methods suitable for the attainment of ends already chosen those which obstruct as little as possible the attainment of other ends — i.e., those with which the cost of production is lowest. No allusion to these matters can be found in the writings of Marx and Engels. All that Lenin learned about business from the tales of his comrades who occasionally sat in business offices was that it required a lot of scribbling, recording, and ciphering." (p. 24)

Then too there is an intrafamilial phenomenon that "plays an important role in modern anticapitalistic propaganda and machinations" (p. 27). Mises here distinguishes between the "bosses" and the "cousins" in the families possessed of great wealth. The former consist of those few whose entrepreneurial talents make them capable of running the family business. This is probably no more than one or two of the founder's sons or grandsons in each generation. Wholly dependent upon the "bosses" are the "cousins," which include the "brothers, cousins, nephews of the bosses, more often their sisters, widowed sisters-in-law, female cousins, nieces, and so on" (p. 27). The members of this latter group "have been brought up in fashionable boarding schools and colleges, whose atmosphere was filled by a haughty contempt for banausic money-making. Some of them pass their time in nightclubs and other places of amusement, bet and gamble, feast and revel, and indulge in expensive debauchery. Others amateurishly busy themselves with painting, writing, or other arts. Thus, most of them are idle and useless people" (p. 28).

Actually, they are worse than useless. Since they are woefully ignorant of both the principles of economics and the daily practicalities of business, they leap to the conclusions that (1) the capital created by their ancestor must be an unending, self-sustaining fount of income for all his descendants, (2) the greater share of that income enjoyed by their kin, the "bosses," who actually run the business must be an unearned excess, and (3) thus, they are justified in railing at and rebelling against both the "bosses" and the system they represent — capitalism. "The 'cousins' are enthusiastic in supporting strikes, even strikes in the factories from which their own revenues originate…. [They] endow progressive universities and colleges and institutes for 'social research' and sponsor all sorts of communist party activities. As 'parlor socialists' and 'penthouse Bolsheviks,' they play an important role in the 'proletarian army' fighting against the 'dismal system of capitalism'" (p. 30).

Mises seems to have had a particularly low opinion of actors, because he mentions them as a species of would-be intellectuals and then returns to them in full force when he blasts Broadway and Hollywood for being "hotbeds of communism" and home to many who are "among the most bigoted supporters of Sovietism" (p. 31). His explanation for this fact hinges on his perception of entertainers as bedeviled by a bottomless well of insecurity:

The essence of the entertainment industry is variety. The patrons applaud most what is new and therefore unexpected and surprising. They are capricious and unaccountable…. A tycoon of the stage or the screen must always fear the waywardness of the public…. He is always agitated by anxiety (p. 32).

This seems a commonplace observation. Alright, entertainers of all sorts are probably very insecure people. So, what then pushes them so strongly toward the Left? Mises's two-fold response is that they lurch toward communism because (a) being poorly educated like so many others, they believe the propaganda which declares communism to be a panacea for all unhappiness and (b) they perceive themselves as "hard-working people, comrades of all other working men" (p. 32).

Frankly, this is not a terribly satisfactory explanation. Immediately one wonders why the same statements could not be used with equal force to explain the leftist bias found in many particular strata of society. Why is this peculiar to entertainers?

The phenomenon of "Hollywood communists" is indeed striking. And it of course continues to this very day. It is not merely an artifact of the Red Decade of the 1930s. Note, in just the last few weeks, the adoring murmurings that have poured forth on the occasion of the retirement of that cheap little dictator Fidel Castro. Famed director and producer Steven Spielberg called his audience with Castro "the most important eight hours in my life." Actor Jack Nicholson characterized the man as a "genius." Popular culture is deeply infected by such warped perspectives as these. Thus, it would be worthwhile to have a sound grasp of the reasons that lie behind them. To that end, allow me to offer a modification and amplification of Mises's hypothesis.

But first, a disclaimer is in order. I possess no direct experience in the world of actors, directors, and playwrights. However, my son is a professional actor who has a keen interest in the works of Shakespeare. I should add, by the way, that he is also a radical libertarian who was exposed early on to the writings Rothbard, Rand, Spooner, and Heinlein — which, in the theatrical world, makes him a very rare bird indeed. More important for the present purposes, it means that he does not view his craft through the distorting lens of the "Broadway commie."

Conversations with my son have illuminated several of the darker corners of this issue. First, actors had for centuries been condemned as belonging to one of the lowest social classes. Theatrical folk were kept separate from polite society. For instance, it is alleged that until well into the twentieth century, in many American cities, deceased actors could not legally be buried in church cemeteries. H.L. Mencken expressed something of this contempt when, writing in 1926, he declared:

Men are not alike, and very little can be learned about the mental processes of a congressman, an ice-wagon driver, or a cinema actor by studying the mental processes of a genuinely superior man. (Notes on Democracy, pp. 15-16)

Because of this pervasively negative image, it has long been traditional among actors to see themselves as outcasts. And that leads most all of them to identify strongly with the poorest of the working class. Given also their mistaken belief that socialism actually serves the interests of the proletariat, they automatically embrace the Left. Further, actors think of themselves as "avant-garde intellectuals," despite the fact that they rarely can boast of much in the way of scholarly training. Since the Left, especially in the United States, has long been successful in portraying itself as the progressive, enlightened opposition to the bigoted, priggish, witless members of the Right, actors gravitate toward the former.

Actors and playwrights are, above all, storytellers, interpreters of the human condition whose words and gestures evoke powerful emotions from their audiences. Stories that engage and move an audience are usually tales of conflict, struggle, and triumph. These can be internal stories of personal awakening, or they can be tales of resistance against external forces — injustice, ignorance, corruption. Of these latter, it is far easier to excite an audience with the stark drama of a poor workingman struggling to survive than it is to glory in the success of a brilliant industrialist. Those currents of altruistic and egalitarian sentiments which are so common in our society work to sharpen the appeal of the former and to tarnish the luster of the latter. From Charles Dickens to John Steinbeck, this has been the path chosen by many writers, and most actors have reveled in bringing such stories to life on stage and in the movies.

Furthermore, the worldview of most actors is apparently heavily influenced by the micro-level environment in which they function. As my son has pointed out, a group of actors combining their efforts in some cooperative project develop powerful communal bonds with one another. Their work is highly interdependent; the success of each depends on the success of all. Moreover, in creating the final product they may spend most of their waking hours together for long periods of time. All this is particularly true of live theatre, but also often characteristic of film actors. The result should not be too surprising: possessed of an intense familiarity with communal enterprises, actors value what they believe to be that socioeconomic system which enshrines the communal impulse within it, namely socialism.

Finally, I wish to bring attention to an additional factor — one not suggested by my son — which may be of considerable significance. It is the Marxian notion of "alienation." I believe that many persons, not just actors, succumb to the attractions of this idea, even those who otherwise might reject the pronouncements of Marx. Recall that Marx and Engels insist that capitalism "alienates" both proletarians and capitalists. That is, both lose touch with crucial aspects of their essential humanity. Workers are reduced to being trivial, easily replaceable pieces of the industrial process, little better than the components of machinery. Their only solace lies in drugs and debauchery. Capitalists are crudely driven to accumulate ever greater wealth at the expense of a more balanced life, one graced by the gentle delights of literature, family, and friends. In either case, the products of man allegedly take hold and, in a sense, come to dominate and corrupt man (Marxism, pp. 25-28).

This proposition is pregnant with implications for various disciplines, especially psychology and sociology. Every person who finds his current occupation (or life) boring or unfulfilling is, unless bolstered by sound philosophical and economic principles, likely to drift toward alienation as an explanatory device, one which soothes as much as it miseducates. And the next step may well be a wholesale adoption of the socialist dicta in whose service alienation was concocted in the first place. Considering how avidly actors seek to explore the inner workings of the human soul, it is perhaps understandable why movies and plays might turn so often to this prepackaged tool. Marxian alienation is seductive. Much as Freudian psychoanalysis did a bit later in history, it offers an instant explanation for a wide variety of human phenomena. And, so long as one does not look too closely at the premises upon which it is constructed, the explanation appears rich with insight.

I wish to emphasize that none of the foregoing is intended to exonerate those actors and other entertainers who endlessly repeat the bromides of that nonsense which is socialism. My purpose is merely to offer a more complete picture of the motives behind this oft-cited connection.

Capitalism and Ignorance

Allow me now to turn to the second prong of Mises's explanation for the prevalence of anti-capitalistic sentiments: ignorance. As he puts it:

[People] are socialists [not only] because they are blinded by envy…. [but also] they stubbornly refuse to study economics and spurn the economists' devastating critique of the socialist plans because, in their eyes, economics, being an abstract theory, is simply nonsense. They pretend to trust only in experience. (Anti-Capitalistic Mentality, p. 46)

But why should there be this "stubborn refusal" to study economics? Surely not all the enemies of capitalism are uneducated boobs scarcely able to read and write. Note that Mises links the failure to study economics with (a) objections to all "abstract theory" and (b) a dependence on personal experience. In other words, universal principles of human action, true for all times, all places, and all persons are to be rejected. In their place have been installed what of necessity must be an endless stream of statistical applications. The stream is endless because one can never exhaust all the possible particular scenarios. A new database always lies just around the corner. Moreover, new and "better" methods of regression analysis, or simulation techniques, can always be applied so as to refine and improve upon past studies.

This is not the broad, reality-based empiricism of Carl Menger, but the data mining of the modern econometrician. It adds nothing significant to our understanding of economics, but it does greatly increase the number of potential journal articles. It creates the illusion of an advancing science, when all it really accomplishes is to flood the field of economics with a large number of applied mathematicians — and not particularly good ones at that — who possess a rather superficial understanding of economic principles, and no grasp of the history of economic science at all. Worse yet, they do of course "replicate" themselves, so to speak. That is, they expect and require their students to approach economics much as they do. We now have had several generations of economics majors who seem to know less about real economics with each passing graduating class.

This orthodox version of economics described above also plays into the hands of the postmodern enemies of reason. If economics is no longer to be seen as a body of universal principles which are grasped via the application of deductive logic to certain axiomatic propositions, then a variety of concrete conclusions becomes viable. The door opens wide, for instance, to what Keith Windschuttle has described as the "argument that the Western sciences have no universal validity, but are merely expressions of those in authority within Western culture" (The Killing of History, p. 270). Now, Windschuttle's primary concern is admittedly with trends among historians and anthropologists, but the fundamental issue cuts across all academic disciplines. "Cultural relativism began as an intellectual critique of Western thought but has now become an influential justification for one of the contemporary era's most potent political forces. This is the revival of tribalism in thinking and politics" (p. 277).

Here is the core issue that is at stake. Primitive, tribal thinking is opposed to abstract reasoning. It focuses on the particular, the personal, the concrete. It reorients "knowledge" so as to abandon the powerful processes of integration and differentiation in favor of the narrow perspective of the caste, clan, or tribe. It leads ineluctably to epistemological relativism as well as cultural relativism. Moreover, we should note well, as Mises stated forcefully in Human Action, that the modern rejection of reason actually began as an attack on economics:

The revolt against reason was directed against another target. It did not aim at the natural sciences, but at economics. The attack against the natural sciences was only the logically necessary outcome of the attack against economics. It was impermissible to dethrone reason in one field only and not to question it in other branches of knowledge also. (p. 73)

He is, of course, here referring to the beast he calls polylogism and to its progenitor, Karl Marx:

Marxian polylogism asserts that the logical structure of the mind is different with the members of various social classes. Racial polylogism differs from Marxian polylogism only in so far as it ascribes to each race a peculiar logical structure of mind and maintains that all members of a definite race, no matter what their class affiliation may be, are endowed with this peculiar logical structure. (p. 75)

To question the power of reason is to question the value of the human mind. Once such doubts are raised, abstraction departs through the window. Analysis is made impotent. Education becomes a cluttered attic in which unrelated odd items are piled randomly. Further, as Mises well realized, human reason is coextensive with human action. One virtually cannot conceive of one without the other. Reason, divorced from action, is sterile. Action, undisciplined by reason, is aimless. To shackle the mind is to constrain action, to make action teleologically incompetent. In order to survive and to flourish, man must turn to that one wonderful tool he possesses — his rational faculty.

Political chains may limit a man's actions to a great extent, but no external constraint is as effective in hobbling a man as the philosophical proposition that his mind is not to be trusted. The deep currents of skepticism that have risen to prominence over the past two centuries have in this way gravely damaged the bedrock that underlies economics, science, technology, and education.

As examples of these insidious influences, in Human Action Mises cites David Hume, the utilitarians, and the American pragmatists. Being concerned about these same issues, Ayn Rand once wrote of education that it was by nature theoretical, that is, conceptual. The student "has to be taught to think, to understand, to integrate, to prove," but that this is precisely "what the colleges have renounced, failed in, and defaulted on long ago. What they are teaching today has no relevance to anything — neither to theory nor practice nor reality nor human life" (The New Left, p. 197). I cannot imagine that Mises would disagree. I certainly do not.

Those of us who are academics have almost all been sad witnesses to one prominent manifestation of the default noted by Rand, the proliferation of special additions to the college curriculum: mandatory multicultural courses, plus whole new programs in Women's Studies, Black Studies, Gay and Lesbian Studies, Mexican-American Studies, and so forth. Six decades ago Mises cautioned against the pernicious effects of polylogism, and now we see that very thing embedded in college mission statements and degree plans.

To his everlasting credit, Mises fully comprehended what some free-market advocates still have not: namely, that the debate over capitalism is not merely about which socioeconomic system will more efficiently produce goods and services, nor about which will accord more closely with consumers' individual preferences. He understood that the debate involved that and much more besides. He understood that to attack capitalism was to attack civilization itself, to attack the role of reason in man's life — and thus to undermine the value of life itself. As he put it with characteristic candor, present day collectivists "advocate measures which are bound to result finally in general impoverishment, in the disintegration of social cooperation under the principle of the division of labor and in a return to barbarism" (Anti-Capitalistic Mentality, p. 5).

As if that were not quite sufficient to drive the point home, Mises adds the following crescendo, with which pronouncement he closes Human Action:

It rests with men whether they will make the proper use of the rich treasure with which [economic] knowledge provides them or whether they will leave it unused. But if they fail to take advantage of it and disregard its teachings and warnings, they will not annul economics; they will stamp out society and the human race. (p. 885)

A Call to Arms

Where, then, do we stand? As we know, socialism is calculational chaos. Rational appraisement and allocation are eternally elusive. It is a gigantic negative-sum game in which each player quickly grabs a piece of the pie, and all the while the pie shrinks before the players' eyes. The welfare/warfare state, the interventionist state, is no improvement. Each intervention begets yet another. Bureaucracy is the only "industry" guaranteed to experience growth. Each new regulation taxes the private sector, relentlessly shifting resources out of the hands of the productive, and into the hands of the unproductive. Capitalism is the only positive-sum game in town.

In short, the case against capitalism is indefensible. It is smoke and mirrors. It is rooted in envy and malice. It is fueled by a stunning ignorance of sound economics, which is part and parcel of a broader rejection of reason itself. These anti-capitalists, these New Barbarians will — if they get their way — finally destroy not only capitalism, but also education, science, technology, literature, art, individual rights, prosperity, in fact, civilization itself.

No, it will not come like an avalanche of snow, cascading down some mountainside. It will be, it has been, more like a stream of water slowly but inexorably eroding the surface of a rock until, eventually, the rock simply is no more. One might say that mankind is slouching, shuffling toward collectivism. What are we to do?

We can and must continue the magnificent legacy of Ludwig von Mises. We must extend Austrian economics in every way and direction. We must encourage the application of Austro-libertarian insights to every field and every topic imaginable. We must engage other scholars, policymakers, and the molders of opinion both in print and in person. We must educate the public whenever the opportunity presents itself. We know the task is not easy. Let's face the truth. The collectivists have their tentacles firmly inserted into every shadowy orifice of the body politic. We can — we must — root them out by mercilessly exposing them to the light of reason, liberty, and the economics of Menger, Böhm-Bawerk, Mises, and Rothbard. In this grand endeavor, we may perhaps take heart from an observation offered long ago by a great American patriot, Samuel Adams:

It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires of freedom in people's minds.

Until the day of liberation finally arrives, let us dedicate ourselves to being that irate and tireless minority.

As a consequence, Say's achievements are often abridged to some incoherent assertion that "supply creates its own demand."For a correct exposition of Say's Law, see Say's biography at mises.org.

But Jean-Baptiste Say has much more to offer than his Law of Markets. Actually, he had already conceived a society without government long before Gustave De Molinari, who is often considered as being "the first writer to draw the conclusion that government could, in effect, be replaced by competing companies or agencies offering to provide security and protection."Amongst others: "Remembering Gustav de Molinari." It is my endeavor to show that Say was conscious of the shortcomings of governmental services in terms of the security and organization of society as such.This article is greatly inspired by the writings of Philippe Steiner who is co-editor of the compilation of Say's Oeuvres Complètes (Paris: Economica, 2003) and the author of some precious contributions on Say in the recently published Histoire du Libéralisme (Paris: Presses Universitaires de France, 2006) which I strongly recommend to every francophile reader.

In the third session of his Cours à l'Athénée,These lectures were given in 1819 which is also the year in which Gustave De Molinari was born. The Athénée was a private school founded in 1781. With the arrival of Jean-Baptiste Say, political economy began to be taught (Marivault, Auguste Walras and others succeded Say). The lectures were as an introduction to economics for the "profanes," (lay people). Say explains that the supply of society is assured by the individuals who actually compose it. Furthermore, he notes that the disposal of capital is due to the private savings and precaution of individuals who, rather than destroying their savings, build their savings with the intention of creating new products. Likewise, he considers how these products come into the hands of those who need them, concluding that this is the result of interpersonal exchanges. As a result of this conclusion, he raises the following final question:

Have we found the government in this analysis up to now?2003. Oeuvres Complètes, IV. Leçons d'Economie Politique, p. 101.

Again, he provides an answer:

No. And the reason of this is the fact that government is not at all an essential part of the social organization.2003. Oeuvres Complètes, IV. Leçons d'Economie Politique, p. 101.

Thus, society could work without government management if people carried out their business and let other people carry out their business at the same time. Say underlines his position by giving some historical examples. Writing in 1819, he observes that at times during the previous thirty years, France had found itself in a situation in which all the authorities were suddenly halted. In these critical moments, no government was at all existent. And what does Say observe? During these periods, the essential functions of the social body could not have been carried out in a better way: everything worked, better than would have normally been the case. Say states that the worst occurred in times when people were too much governed.

Endeavoring to strengthen his position, he brings up another example, this time from overseas. In Kentucky, there are "cantons" in which one family would settle and take root, after which another family would move into the area, and so forth until the formation of villages occurred. There were houses, clothes, and food, and the people were better nourished than many households in the rue Jean-pain-molletThe editors of Say's Oeuvres Complètes did not find the origins of this expression. and yet there was no government.

His observations lead him to declare that one can not only conceive a society without government but one can actually see it; the only problem is the journey overseas. Likewise, Say correctly argues that social life is not in the government but in the governed. As a consequence, the old representations of the state as a family and the chief executive of the administration as the father are not accurate at all.

According to Say, all productive enterprises are created by individuals in society, not by the state. It is the responsibility of productive enterprise to support the continuity of families, the components of society. Likewise, if there are government officials in the society, they exist at the people's expense. Only those who refuse to acknowledge this reality can still represent the state under the emblem of the family and public authority as an image of paternal power. Furthermore, Say attacks the role of the government in commerce. He denounces those who pretend that government would have a favorable influence by asking what could be more favorable than a man's privacy as well as his liberty.

Say emphasizes that the primary condition of society is private property, given that it encourages production which is necessary in order to exist. Therefore, if one transgresses the natural law of private property (including the harm of human beings, self-ownership being the most incontestable form of property), the entire social body will take action against the aggressor. But since the involvement of the whole people would be disproportionate to the aim sought, it is necessary to charge persons with the responsibility of guaranteeing the respect for the fundamental law of private property.

It is worth mentioning that Say explicitly qualifies the government as not being useless (while also not essential) with regard to the protection of private property. It is in another essay that Say conceives the idea of private security, on Practical Politics.2003. Oeuvres Complètes, V.Oeuvres morales et politiques, p. 324–327, p. 484. These manuscripts were written in the beginning of the 19th century. Jean-Baptiste was already a highly reputable economist at the time (his treatise having been published in 1803) and was very prudent in that he avoided publishing these manuscripts. As such, it was not until after his death that they were finally published.

The respect of private property and persons is necessary for the correct functioning of society. For this, it is only necessary to abandon the police to the society.This is a word-by-word translation of the sentence in Old French. It underlines his position very clearly. As Say writes:

Whether a man beats a woman in the streets or a thief breaks into a store; the whole society will apprehend the delinquent … in the case of a dispute between two merchants: both of them nominate the judges. The judges pronounce and the point of contention is put aside.2003. Oeuvres Complètes, V. Oeuvres morales et politiques, p. 324. No literal translation.

But there are other dangers that could occur. For instance, an isolated traveler could be attacked, thus, nobody comes to his rescue. "Is this the justification for a police corps composed of thirty thousand persons?" Say wonders. He proposes to entrust the security services that cannot be executed on one's own to a company and to withdraw their responsibilities in the case in which they are not able to protect an individual against some attacks or, at least, to find the culprit. He underlines this point by proposing the introduction of the principle of competition in the field of public administration, i.e., ascribe these functions to those companies who could exercise them with the highest efficiency and the smallest costs.

One quickly recognizes the similarity with Molinari's "government could, in effect, be replaced by competing companies or agencies offering to provide security and protection." A little bit further in his essay, Say repeats again that nobody is better governed than in the absence of government.

Society is composed of different professions having different functions. One of these functions is the protection or security of an individual and his rights. Thus, security is a profession like that of restoring the health of an individual in case of disease. This argument enforces Say's position of providing security with the aid of private enterprises.

However, one could still say that the problem of an invasion by a stranger persists. Say argues that there are no historical examples of successful invasion against a people, given only two conditions:

Likewise, he strengthens his position by giving an example of the Romans:

The Romans were invaded by the Gauls and Hannibal. This would not have been the case if the provinces had been populated by citizens and not by slaves.2003. Oeuvres Complètes, V. Oeuvres morales et politiques, p. 325.

This final statement by Say extinguishes remaining doubts that he considered the possibility of a purely private society. His insights on this particular field of study are precious and leave some room for further elaboration, but his writings make clear that he not only considered society separate from the state, but actually entertained the possibility of a stateless society.

This article was originally published March 28, 2007.

Absolute pacifists who also assert their belief in property rights—such as Mr. Robert LeFevre—are caught in an inescapable inner contradiction: for if a man owns property and yet is denied the right to defend it against attack, then it is clear that a very important aspect of that ownership is being denied to him. To say that someone has the absolute right to a certain property but lacks the right to defend it against attack or invasion is also to say that he does not have total right to that property.

Furthermore, if every man has the right to defend his person and property against attack, then he must also have the right to hire or accept the aid of other people to do such defending: he may employ or accept defenders just as he may employ or accept the volunteer services of gardeners on his lawn.

How extensive is a man's right of self-defense of person and property? The basic answer must be: up to the point at which he begins to infringe on the property rights of someone else. For, in that case, his "defense" would in itself constitute a criminal invasion of the just property of some other man, which the latter could properly defend himself against.

It follows that defensive violence may only be used against an actual or directly threatened invasion of a person's property—and may not be used against any nonviolent "harm" that may befall a person's income or property value. Thus, suppose that A, B, C, D … etc. decide, for whatever reason, to boycott the sales of goods from Smith's factory or store. They picket, distribute leaflets, and make speeches—all in a non-invasive manner—calling on everyone to boycott Smith. Smith may lose considerable income, and they may well be doing this for trivial or even immoral reasons; but the fact remains that organizing such a boycott is perfectly within their rights, and if Smith tried to use violence to break up such boycott activities he would be a criminal invader of their property.

Defensive violence, therefore, must be confined to resisting invasive acts against person or property. But such invasion may include two corollaries to actual physical aggression: intimidation, or a direct threat of physical violence; and fraud, which involves the appropriation of someone else's property without his consent, and is therefore "implicit theft."

Thus, suppose someone approaches you on the street, whips out a gun, and demands your wallet. He might not have molested you physically during this encounter, but he has extracted money from you on the basis of a direct, overt threat that he would shoot you if you disobeyed his commands. He has used the threat of invasion to obtain your obedience to his commands, and this is equivalent to the invasion itself.

It is important to insist, however, that the threat of aggression be palpable, immediate, and direct; in short, that it be embodied in the initiation of an overt act. Any remote or indirect criterion—any "risk" or "threat"—is simply an excuse for invasive action by the supposed "defender" against the alleged "threat." One of the major arguments, for example, for the prohibition of alcohol in the 1920s was that the imbibing of alcohol increased the likelihood of (unspecified) people committing various crimes; therefore, prohibition was held to be a "defensive" act in defense of person and property. In fact, of course, it was brutally invasive of the rights of person and property, of the right to buy, sell, and use alcoholic beverages.

In the same way, it could be held that

Once we bring in "threats" to person and property that are vague and future—i.e., are not overt and immediate then all manner of tyranny becomes excusable. The only way to guard against such despotism is to keep the criterion of perceived invasion clear and immediate and overt. For, in the inevitable case of fuzzy or unclear actions, we must bend over backwards to require the threat of invasion to be direct and immediate, and therefore to allow people to do whatever they may be doing. In short, the burden of proof that the aggression has really begun must be on the person who employs the defensive violence.

Fraud as implicit theft stems from the right of free contract, derived in turn from the rights of private property. Thus, suppose that Smith and Jones agree on a contractual exchange of property titles: Smith will pay $1,000 in return for Jones's car. If Smith appropriates the car and then refuses to turn over $1,000 to Jones, then Smith has in effect stolen the $1,000; Smith is an aggressor against $1,000 now properly belonging to Jones. Thus, failure to keep a contract of this type is tantamount to theft, and therefore to a physical appropriation of another's property fully as "violent" as trespass or simple burglary without armed assault.

Fraudulent adulteration is equally implicit theft. If Smith pays $1,000 and receives from Jones not a specified make of car but an older and poorer car, this too is implicit theft: once again, someone's property has been appropriated in a contract, without the other person's property being turned over to him as agreed.For a development of libertarian principles of the law of adulteration, see Wordsworth Donisthorpe, Law In A Free State (London: Macmillan, 1895), pp. 132–58.

But we must not be led into the trap of holding that all contracts, whatever their nature, must be enforceable (i.e., that violence may properly be used in their enforcement). The only reason the above contracts are enforceable is that breaking such contracts involves an implicit theft of property. Those contracts which do not involve implicit theft should not be enforceable in a libertarian society.For a further development of this thesis, see the section "Property Rights and the Theory of Contracts," pp. 133–48 below.

Suppose, for example, that A and B make an agreement, a "contract," to get married in six months; or that A promises that, in six months' time, A will give B a certain sum of money. If A breaks these agreements, he may perhaps be morally reprehensible, but he has not implicitly stolen the other person's property, and therefore such a contract cannot be enforced. To use violence in order to force A to carry out such contracts would be just as much a criminal invasion of A's rights as it would be if Smith decided to use violence against the men who boycotted his store. Simple promises, therefore, are not properly enforceable contracts, because breaking them does not involve invasion of property or implicit theft.

Debt contracts are properly enforceable, not because a promise is involved, but because the creditor's property is appropriated without his consent—i.e., stolen—if the debt is not paid. Thus, if Brown lends Green $1,000 this year in return for the delivery of $1,100 next year, and Green fails to pay the $1,100, the proper conclusion is that Green has appropriated $1,100 of Smith's property, which Green refuses to turn over—in effect, has stolen. This legal way of treating a debt—of holding that the creditor has a property in the debt—should be applied to all debt contracts.

Thus, it is not the business of law—properly the rules and instrumentalities by which person and property are violently defended—to make people moral by use of legal violence. It is not the proper business of law to make people be truthful or to keep their promises. It is the business of legal violence to defend persons and their property from violent attack, from molestation or appropriation of their property without their consent. To say more—to say, for example, that mere promises are properly enforceable—is to make an unwarranted fetish of "contracts" while forgetting why some of them are enforceable: in defense of the just rights of property.

Violent defense then must be confined to violent invasion—either actually, implicitly, or by direct and overt threat. But given this principle, how far does the right of violent defense go? For one thing, it would clearly be grotesque and criminally invasive to shoot a man across the street because his angry look seemed to you to portend an invasion. The danger must be immediate and overt, we might say, "clear and present"—a criterion that properly applies not to restrictions on freedom of speech (never permissible, if we regard such freedom as a subset of the rights of person and property) but to the right to take coercive action against a supposedly imminent invader.This requirement recalls the scholastic doctrine of the double effect. See G.E.M. Anscombe, "The Two Kinds of Error in Action," Journal of Philosophy 60 (1963): 393–401; Philippa R. Foot, Virtues and Vices (Berkeley: University of California Press, 1978), pp. 19–25.

Secondly, we may ask: must we go along with those libertarians who claim that a storekeeper has the right to kill a lad as punishment for snatching a piece of his bubblegum? What we might call the "maximalist" position goes as follows: by stealing the bubblegum, the urchin puts himself outside the law. He demonstrates by his action that he does not hold or respect the correct theory of property rights. Therefore, he loses all of his rights, and the storekeeper is within his rights to kill the lad in retaliation.On the maximalist view, furthermore, socialists, interventionists and utilitarians would, by virtue of their views, be liable to execution. I am indebted to Dr. David Gordon for this point

I propose that this position suffers from a grotesque lack of proportion. By concentrating on the storekeeper's right to his bubblegum, it totally ignores another highly precious property-right: every man's—including the urchin's—right of self-ownership. On what basis must we hold that a minuscule invasion of another's property lays one forfeit to the total loss of one's own?

I propose another fundamental rule regarding crime: the criminal, or invader, loses his own right to the extent that he has deprived another man of his. If a man deprives another man of some of his self-ownership or its extension in physical property, to that extent does he lose his own rights.The great libertarian Auberon Herbert, in Auberon Herbert and J.H. Levy, Taxation and Anarchism (London: Personal Rights Association, 1912), p. 38, put it this way:Am I right in saying that a man has forfeited his own rights (to the extent of the aggression he has committed) in attacking the rights of others? … It may be very difficult to translate into concrete terms the amount of aggression, and of resulting restraint; but all just law seems to be the effort to do this. We punish a man in a certain way if he has inflicted an injury which lays me up for a day; in another way if he takes my life…. There is generally underlying it [the law] the view (which is, I think, true) that the punishment or redress—both in civil and criminal matters—should be measured by the amount of aggression; in other words that the aggressor—after a rough fashion—loses as much liberty as that of which he has deprived others. From this principle immediately derives the proportionality theory of punishment—best summed up in the old adage: "let the punishment fit the crime."For a development of this theory of punishment, see the section "Punishment and Proportionality," pp. 85–96 below.

We conclude that the shopkeeper's shooting of the erring lad went beyond this proportionate loss of rights, to wounding or killing the criminal; this going beyond is in itself an invasion of the property right in his own person of the bubblegum thief. In fact, the storekeeper has become a far greater criminal than the thief, for he has killed or wounded his victim—a far graver invasion of another's rights than the original shoplifting.

Should it be illegal, we may next inquire, to "incite to riot"? Suppose that Green exhorts a crowd: "Go! Burn! Loot! Kill!" and the mob proceeds to do just that, with Green having nothing further to do with these criminal activities. Since every man is free to adopt or not adopt any course of action he wishes, we cannot say that in some way Green determined the members of the mob to their criminal activities; we cannot make him, because of his exhortation, at all responsible for their crimes. "Inciting to riot," therefore, is a pure exercise of a man's right to speak without being thereby implicated in crime.

On the other hand, it is obvious that if Green happened to be involved in a plan or conspiracy with others to commit various crimes, and that then Green told them to proceed, he would then be just as implicated in the crimes as are the others—more so, if he were the mastermind who headed the criminal gang. This is a seemingly subtle distinction which in practice is clearcut—there is a world of difference between the head of a criminal gang and a soap-box orator during a riot; the former is not, properly to be charged simply with "incitement."

It should further be clear from our discussion of defense that every man has the absolute right to bear arms—whether for self-defense or any other licit purpose. The crime comes not from bearing arms, but from using them for purposes of threatened or actual invasion. It is curious, by the way that the laws have especially banned concealed weapons, when it is precisely the open and unconcealed weapons which might be used for intimidation.

In every crime, in every invasion of rights, from the most negligible breach of contract up to murder, there are always two parties (or sets of parties) involved: the victim (the plaintiff) and the alleged criminal (the defendant). The purpose of every judicial proceeding is to find, as best we can, who the criminal is or is not in any given case.

Generally, these judicial rules make for the most widely acceptable means of finding out who the criminals may be. But the libertarian has one overriding caveat on these procedures: no force may be used against non-criminals. For any physical force used against a non-criminal is an invasion of that innocent person's rights, and is therefore itself criminal and impermissible.

Take, for example, the police practice of beating and torturing suspects—or, at least, of tapping their wires. People who object to these practices are invariably accused by conservatives of "coddling criminals." But the whole point is that we don't know if these are criminals or not, and until convicted, they must be presumed not to be criminals and to enjoy all the rights of the innocent: in the words of the famous phrase, "they are innocent until proven guilty." (The only exception would be a victim exerting self-defense on the spot against an aggressor, for he knows that the criminal is invading his home.)

"Coddling criminals" then becomes, in actuality, making sure that police do not criminally invade the rights of self-ownership of presumptive innocents whom they suspect of crime. In that case, the "coddler," and the restrainer of the police, proves to be far more of a genuine defender of property rights than is the conservative.

We may qualify this discussion in one important sense: police may use such coercive methods provided that the suspect turns out to be guilty, and provided that the police are treated as themselves criminal if the suspect is not proven guilty. For, in that case, the rule of no force against non-criminals would still apply.

Suppose, for example, that police beat and torture a suspected murderer to find information (not to wring a confession, since obviously a coerced confession could never be considered valid). If the suspect turns out to be guilty, then the police should be exonerated, for then they have only ladled out to the murderer a parcel of what he deserves in return; his rights had already been forfeited by more than that extent. But if the suspect is not convicted, then that means that the police have beaten and tortured an innocent man, and that they in turn must be put into the dock for criminal assault.

In short, in all cases, police must be treated in precisely the same way as anyone else; in a libertarian world, every man has equal liberty, equal rights under the libertarian law. There can be no special immunities, special licenses to commit crime. That means that police, in a libertarian society, must take their chances like anyone else; if they commit an act of invasion against someone, that someone had better turn out to deserve it, otherwise they are the criminals.

As a corollary, police can never be allowed to commit an invasion that is worse than, or that is more than proportionate to, the crime under investigation. Thus, the police can never be allowed to beat and torture someone charged with petty theft, since the beating is far more proportionate a violation of a man's rights than the theft, even if the man is indeed the thief.

It should be clear that no man, in an attempt to exercise his right of self-defense, may coerce anyone else into defending him. For that would mean that the defender himself would be a criminal invader of the rights of others. Thus, if A is aggressing against B, B may not use force to compel C to join in defending him, for then B would be just as much a criminal aggressor against C.

This immediately rules out conscription for defense, for conscription enslaves a man and forces him to fight on someone else's behalf. It also rules out such a deeply embedded part of our legal system as compulsory witnesses. No man should have the right to force anyone else to speak on any subject. The familiar prohibition against coerced self-incrimination is all very well, but it should be extended to preserving the right not to incriminate anyone else, or indeed to say nothing at all. The freedom to speak is meaningless without the corollary freedom to keep silent.

If no force may be used against a noncriminal, then the current system of compulsory jury duty must also be abolished. Just as conscription is a form of slavery, so too is compulsory jury duty. Precisely because being a juror is so important a service, the service must not be filled by resentful serfs. And how can any society call itself "libertarian" that rests on a foundation of jury slavery? In the current system, the courts enslave jurors because they pay a daily wage so far below the market price that the inevitable shortage of jury labor has to be supplied by coercion.

The problem is very much the same as the military draft, where the army pays far below the market wage for privates, cannot obtain the number of men they want at that wage, and then turns to conscription to supply the gap. Let the courts pay the market wage for jurors, and sufficient supply will be forthcoming.

If there can be no compulsion against jurors or witnesses, then a libertarian legal order will have to eliminate the entire concept of the subpoena power. Witnesses, of course, may be requested to appear. But this voluntarism must also apply to the defendants, since they have not yet been convicted of crime.

In a libertarian society, the plaintiff would notify the defendant that the latter is being charged with a crime, and that a trial of the defendant will be underway. The defendant would be simply invited to appear. There would be no compulsion on him to appear. If he chose not to defend himself, then the trial would proceed in absentia, which of course would mean that the defendant's chances would be by that much diminished. Compulsion could only be used against the defendant after his final conviction. In the same way, a defendant could not be kept in jail before his conviction, unless, as in the case of police coercion, the jailer is prepared to face a kidnapping conviction if the defendant turns out to be innocent.This prohibition against coercing an unconvicted person would eliminate the blatant evils of the bail system, where the judge arbitrarily sets the amount of bail, and where, regardless of the amount, poorer defendants are clearly discriminated against.

This article is excerpted from chapter 12 of The Ethics of Liberty. Listen to this article in MP3, read by Jeff Riggenbach.

Suppose, for example, that Henry Jones I stole a piece of land from its legitimate owner, James Smith. What is the current status of the title of current possessor Henry Jones X? Or of the man who might be the current possessor by purchasing the land from Henry Jones X? If Smith and his descendants are lost to antiquity, then title to the land properly and legitimately belongs to the current Jones (or the man who has purchased it from him), in direct application of our theory of property titles.

A second problem, and one that sharply differentiates land from other property, is that the very existence of capital goods, consumers goods, or the monetary commodity, is at least a prima facie demonstration that these goods had been used and transformed, that human labor had been mixed with natural resources to produce them. For capital goods, consumer goods, and money do not exist by themselves in nature; they must be created by human labor's alteration of the given conditions of nature. But any area of land, which is given by nature, might never have been used and transformed; and therefore, any existing property title to never-used land would have to be considered invalid. For we have seen that title to an unowned resource (such as land) comes properly only from the expenditure of labor to transform that resource into use. Therefore, if any land has never been so transformed, no one can legitimately claim its ownership.

Suppose, for example, that Mr. Green legally owns a certain acreage of land, of which the northwest portion has never been transformed from its natural state by Green or by anyone else. Libertarian theory will morally validate his claim for the rest of the land—provided, as the theory requires, that there is no identifiable victim (or that Green had not himself stolen the land.) But libertarian theory must invalidate his claim to ownership of the northwest portion.

Now, so long as no "settler" appears who will initially transform the northwest portion, there is no real difficulty; Brown's claim may be invalid but it is also mere meaningless verbiage. He is not yet a criminal aggressor against anyone else. But should another man appear who does transform the land, and should Green oust him by force from the property (or employ others to do so), then Green becomes at that point a criminal aggressor against land justly owned by another. The same would be true if Green should use violence to prevent another settler from entering upon this never-used land and transforming it into use.

Thus, to return to our Crusoe "model," Crusoe, landing upon a large island, may grandiosely trumpet to the winds his "ownership" of the entire island. But, in natural fact, he owns only the part that he settles and transforms into use. Or, as noted above, Crusoe might be a solitary Columbus landing upon a newly-discovered continent. But so long as no other person appears on the scene, Crusoe's claim is so much empty verbiage and fantasy, with no foundation in natural fact. But should a newcomer—a Friday—appear on the scene, and begin to transform unused land, then any enforcement of Crusoe's invalid claim would constitute criminal aggression against the newcomer and invasion of the latter's property rights.

Note that we are not saying that, in order for property in land to be valid, it must be continually in use.This was the use-theory of landed property propounded by Joshua K. Ingalls in the nineteenth century. On Ingalls, see James J. Martin, Men Against the State (DeKalb, Ill.: Adrian Allen Associates, 1953), pp. 142–52  The only requirement is that the land be once put into use, and thus become the property of the one who has mixed his labor with, who imprinted the stamp of his personal energy upon, the land.As Leon Wolowski and Emile Levasseur have eloquently written in "Property," Lalor's Cyclopedia of Political Science, etc. (Chicago: M.B. Cary, 1884), vol. 3, p. 392:Nature has been appropriated by … [man] for his use; she has become his own; she is his property. This property is legitimate; it constitutes a right as sacred for man as is the free exercise of his faculties. It is his because it has come entirely from himself, and is in no way anything but an emanation from his being. Before him, there was scarcely anything but matter, since him, and by him, there is interchangeable wealth. The producer has left a fragment of his own person in the thing which has thus become valuable, and may hence be regarded as a prolongation of the faculties of man acting upon external nature. As a free being he belongs to himself; now, the cause, that is to say, the productive force, is himself; the effect, that is to say, the wealth produced is still himself. Who shall dare contest his title of ownership so clearly marked by the seal of his personality? After that use, there is no more reason to disallow the land's remaining idle than there is to disown someone for storing his watch in a desk drawer.There are, as I have demonstrated elsewhere, excellent economic reasons why land, in particular, may remain unused; for above-subsistence living standards depend on the supply of labor being scarcer than the supply of land, and, when that happy situation obtains, considerable land will be "sub-marginal" and therefore idle. See Murray N. Rothbard, Man, Economy, and State (Princeton, N.J.: D. Van Nostrand, 1962), pp. 504, 609. For a fascinating example of recurring property titles in land according to a migratory calendar worked out by numerous tribes in southern Persia, see Fredrik Barth, "The Land Use Pattern of Migratory Tribes of South Persia," Norsk Geografisk Tidsskrift, Bind 17 (1959–1960): 1–11.

One form of invalid land title, then, is any claim to land that has never been put into use. The enforcement of such a claim against a first-user then becomes an act of aggression against a legitimate property right. In practice, it must be noted, it is not at all difficult to distinguish land in its natural virgin state from land that has at some time been transformed by man for his use. The hand of man will in some way be evident.

One problem, however, that sometimes arises in the validity of land titles is the question of "adverse possession." Let us suppose that a man, Green, comes upon a section of land not obviously owned by someone—there is no fence perhaps, and no one on the premises. Green assumes that the land is unowned; he proceeds to work the land, uses it for a length of time, and then the original owner of the land appears on the scene and orders Green's eviction. Who is right?

The common law of adverse possession arbitrarily sets a time span of twenty years, after which the intruder, despite his aggression against the property of another, retains absolute ownership of the land. But our libertarian theory holds that land needs only to be transformed once by man to pass into private ownership. Therefore, if Green comes upon land that in any way bears the mark of a former human use, it is his responsibility to assume that the land is owned by someone. Any intrusion upon his land, without further inquiry, must be done at the risk of the newcomer being an aggressor.

It is of course possible that the previously owned land has been abandoned; but the newcomer must not assume blithely that land which has obviously been transformed by man is no longer owned by anyone. He must take steps to find out if his new title to the land is clear, as we have seen is in fact done in the title-search business.Of course, everyone should have the right to abandon any property he wishes; in a libertarian society, no one can be forced to own property which he wishes to abandon.  On the other hand, if Green comes upon land that has obviously never been transformed by anyone, he can move onto it at once and with impunity, for in the libertarian society no one can have a valid title to land that has never been transformed.

In the present world, when most land areas have been pressed into service, the invalidating of land titles from never being used would not be very extensive. More important nowadays would be invalidating a land title because of a continuing seizure of landed property by aggressors. We have already discussed the case of Jones's ancestors having seized a parcel of land from the Smith family, while Jones uses and owns the land in the present day. But suppose that centuries ago, Smith was tilling the soil and therefore legitimately owning the land; and then that Jones came along and settled down near Smith, claiming by use of coercion the title to Smith's land, and extracting payment or "rent" from Smith for the privilege of continuing to till the soil. Suppose that now, centuries later, Smith's descendants (or, for that matter, other unrelated families) are now tilling the soil, while Jones's descendants, or those who purchased their claims, still continue to exact tribute from the modern tillers. Where is the true property right in such a case?

It should be clear that here, just as in the case of slavery, we have a case of continuing aggression against the true owners—the true possessors—of the land, the tillers, or peasants, by the illegitimate owner, the man whose original and continuing claim to the land and its fruits has come from coercion and violence. Just as the original Jones was a continuing aggressor against the original Smith, so the modern peasants are being aggressed against by the modern holder of the Jones-derived land title. In this case of what we might call "feudalism" or "land monopoly," the feudal or monopolist landlords have no legitimate claim to the property. The current "tenants," or peasants, should be the absolute owners of their property, and, as in the case of slavery, the land titles should be transferred to the peasants, without compensation to the monopoly landlords.The term "feudalism," as used here, is not intended to apply to any specific landed or other relation during the Middle Ages; it is used here to cover a single kind of action: the seizure of land by conquest and the continuing assertion and enforcement of ownership over that land and the extraction of rent from the peasants continuing to till the soil. For a defense of such a broader use of the term "feudalism," see Robert A. Nisbet, The Social Impact of the Revolution (Washington, D.C.: American Enterprise Institute for Public Policy Research, 1974), pp. 4–7.

Note that "feudalism," as we have defined it, is not restricted to the case where the peasant is also coerced by violence to remain on the lord's land to keep cultivating it (roughly, the institution of serfdom).Serfdom, like slavery, constituted a continuing aggression by the lord against the person of the serf, as well as against his rightful property. For a discussion of various definitions of feudalism, see Marc Bloch, Feudal Society (Chicago: University of Chicago Press, 1961), chap. 1. Nor is it restricted to cases where additional measures of violence are used to bolster and maintain feudal landholdings (such as the State's prevention by violence of any landlord's sale or bequest of his land into smaller subdivisions).Such measures include entail (forcibly preventing the landowner from selling his land) and primogeniture (coercively preventing him from bequeathing his land except intact to his eldest son).

All that "feudalism," in our sense, requires is the seizure by violence of landed property from its true owners, the transformers of land, and the continuation of that kind of relationship over the years. Feudal land rent, then, is the precise equivalent of paying a continuing annual tribute by producers to their predatory conquerors. Feudal land rent is therefore a form of permanent tribute.

Note also that the peasants in question need not be the descendants of the original victims. For since the aggression is continuing so long as this relation of feudal aggression remains in force, the current peasants are the contemporary victims and the currently legitimate property owners. In short, in the case of feudal land, or land monopoly both of our conditions obtain for invalidating current property titles: for not only the original but also the current land title is criminal; and the current victims can very easily be identified.

Our above hypothetical case of the King of Ruritania and his relatives is one example of a means by which feudalism can get started in a land area. After the king's action, he and his relatives become feudal landlords of their quotal portions of Ruritania, each one extracting coercive tribute in the form of feudal "rent" from the inhabitants.

We do not of course mean to imply that all land rent is illegitimate and a form of continuing tribute. On the contrary there is no reason, in a libertarian society, why a person transforming land may not then rent it out or sell it to someone else; indeed, that is precisely what will occur. How, then, can we distinguish between feudal rent and legitimate rent, between feudal tenancies and legitimate tenancies?

Again, we apply our rules for deciding upon the validity of property titles: we look to see if the origin of the land title is criminal, and, in the current case, whether the aggression upon the producers of the land, the peasants, is still continuing. If we know that these conditions hold, then there is no problem, for the identification of both aggressor and victim is remarkably clear cut. But if we don't know whether these conditions obtain, then (applying our rule), lacking a clear identifiability of the criminal, we conclude that the land title and the charge of rent are just and legitimate and not feudal. In practice, since in a feudal situation criminality is both old and continuing, and the peasant-victims are readily identifiable, feudalism is one of the easiest forms of invalid title to detect.

Thus, there are two types of ethically invalid land titles:In addition, of course, to government titles, for which see below. "feudalism," in which there is continuing aggression by titleholders of land against peasants engaged in transforming the soil; and land-engrossing, where arbitrary claims to virgin land are used to keep first-transformers out of that land. We may call both of these aggressions "land monopoly"—not in the sense that some one person or group owns all the land in society, but in the sense that arbitrary privileges to land ownership are asserted in both cases, clashing with the libertarian rule of non-ownership of land except by actual transformers, their heirs, and their assigns.As I have indicated in Man, Economy, and State (Princeton, N.J.: D. Van Nostrand, 1962), chap. 10, "monopoly" is properly defined as a receipt of exclusive privilege to a property beyond the libertarian rule of property rights.

Land monopoly is far more widespread in the modern world than most people—especially most Americans—believe. In the undeveloped world, especially in Asia, the Middle East, and Latin America, feudal landholding is a crucial social and economic problem—with or without quasi-serf impositions on the persons of the peasantry. Indeed, of the countries of the world, the United States is one of the very few virtually free from feudalism, due to a happy accident of its historical development.This happy exception does not hold for those Mexican lands seized from their owners and redistributed by the conquering Yankees—as can be seen by the recent movement of Mexican-Americans, led by Reies Lopez Tijerina, to return to the heirs of the victims the land stolen from them by the US conquerors. On the theft of land from the Mexican-Americans, see Clark S. Knowlton, "Land-Grant Problems Among the State's Spanish-Americans," New Mexico Business (June 1967): 1–13. Also see Clyde Eastman, Garrey Carruthers, and James A. Liefer, "Contrasting Attitudes Toward Land in New Mexico," New Mexico Business (March 1971): 3–20. On the Tijerina movement, see Richard Gardner, Grito!: Reies Tuerina and the New Mexico Land Grant War of 1967 (New York: Harper and Row, 1971).

Largely escaping feudalism itself, it is difficult for Americans to take the entire problem seriously. This is particularly true of American laissez-faire economists, who tend to confine their recommendations for the backward countries to preachments about the virtues of the free market. But these preachments naturally fall on deaf ears, because "free market" for American conservatives obviously does not encompass an end to feudalism and land monopoly and the transfer of title to these lands, without compensation, to the peasantry.

And yet, since agriculture is always the overwhelmingly most important industry in the undeveloped countries, a truly free market, a truly libertarian society devoted to justice and property rights, can only be established there by ending unjust feudal claims to property. But utilitarian economists, grounded on no ethical theory of property rights, can only fall back on defending whatever status quo may happen to exist—in this case, unfortunately, the status quo of feudal suppression of justice and of any genuinely free market in land or agriculture. This ignoring of the land problem means that Americans and citizens of undeveloped countries talk in two different languages and that neither can begin to understand the other's position.

American conservatives, in particular, exhort the backward countries on the virtues and the importance of private foreign investment from the advanced countries, and of allowing a favorable climate for this investment, free from governmental harassment.

This is all very true, but is again often unreal to the undeveloped peoples, because the conservatives persistently fail to distinguish between legitimate, free-market foreign investment, as against investment based upon monopoly concessions and vast land grants by the undeveloped states. To the extent that foreign investments are based on land monopoly and aggression against the peasantry, to that extent do foreign capitalists take on the aspects of feudal landlords, and must be dealt with in the same way.

A moving expression of these truths was delivered in the form of a message to the American people by the prominent left-wing Mexican intellectual, Carlos Fuentes:

You have had four centuries of uninterrupted development within the capitalistic structure. We have had four centuries of underdevelopment within a feudal structure…. You had your own origin in the capitalistic revolution…. You started from zero, a virgin society, totally equal to modern times, without any feudal ballast. On the contrary, we were founded as an appendix of the falling feudal order of the Middle Ages; we inherited its obsolete structures, absorbed its vices, and converted them into institutions on the outer rim of the revolution in the modern world…. We come from … slavery to … latifundio [enormous expanses of land under a single landlord], denial of political, economic, or cultural rights for the masses, a customs house closed to modern ideas…. You must understand that the Latin American drama stems from the persistence of those feudal structures over four centuries of misery and stagnation, while you were in the midst of the industrial revolution and were exercising a liberal democracy.Carlos Fuentes, "The Argument of Latin America: Words for the North Americans," in Whither Latin America? (New York: Monthly Review Press, 1963), pp. 10–12.

We need not search far for examples of land aggression and monopoly in the modern world; they are indeed legion. We might cite one example not so very far removed from our hypothetical king of Ruritania:

"The Shah owns more than half of all arable land in Iran, land originally taken over by his father. He owns close to 10,000 villages. So far, this great reformer has sold two of his villages"Michael Parrish, "Iran: The Portrait of a U.S. Ally," The Minority of One (December 1962): 12

A typical example of foreign investment combined with land aggression is a North American mining company in Peru, the Cerro de Pasco Corporation. Cerro de Pasco, having legitimately purchased its land from a religious convent a half century ago, began in 1959 to encroach upon and seize the lands of neighboring Indian peasants. Indians of Rancas refusing to leave their land were massacred by peasants in the pay of the company; Indians of Yerus Yacan tried to contest the company's action in the courts, while company men burned pastures and destroyed peasant huts. When the Indians retook their land through mass non-violent action, the Peruvian government, at the behest of the Cerro de Pasco and the regional latifundia owners, sent troops to eject, assault, and even murder the unarmed Indians.Sebastian Salazar Bondy, "Andes and Sierra Maestra," in Whither Latin America? p. 116, says:From time to time, the Lima newspapers publish stories about such and such a community's having "invaded" properties of latifundists or miners. The informed reader knows what is happening. Disgusted with being dispossessed, lacking official justice, the Indians have decided to take through their own effort what has always belonged to them.

What, then, is to be our view toward investment in oil lands, one of the major forms of foreign investment in underdeveloped countries in today's world? The major error of most analyses is to issue either a blanket approval or a blanket condemnation, for the answer depends on the justice of the property title established in each specific case. Where, for example, an oil company, foreign or domestic, lays claim to the oil field which it discovers and drills, then this is its just "homesteaded" private property, and it is unjust for the undeveloped government to tax or regulate the company. Where the government insists on claiming ownership of the land itself, and only leases the oil to the company, then (as we will see further below in discussing the role of government), the government's claim is illegitimate and invalid, and the company, in the role of homesteader, is properly the owner and not merely the renter of the oil land.

On the other hand, there are cases where the oil company uses the government of the undeveloped country to grant it, in advance of drilling, a monopoly concession to all the oil in a vast land area, thereby agreeing to the use of force to squeeze out all competing oil producers who might search for and drill oil in that area. In that case, as in the case above of Crusoe's arbitrarily using force to squeeze out Friday, the first oil company is illegitimately using the government to become a land-and-oil monopolist.

Ethically, any new company that enters the scene to discover and drill oil is the proper owner of its "homesteaded" oil area. A fortiori, of course, our oil concessionaire who also uses the State to eject peasants from their land by force—as was done, for example, by the Creole Oil Co. in Venezuela—is a collaborator with the government in the latter's aggression against the property rights of the peasantry.

We are now able to see the grave fallacy in the current programs for "land reform" in the undeveloped countries. (These programs generally involve minor transfers of the least fertile land from landlords to peasants, along with full compensation to the landlords, often financed by the peasants themselves via state aid.) If the landlord's title is just, then any land reform applied to such land is an unjust and criminal confiscation of his property; but, on the other hand, if his title is unjust, then the reform is picayune and fails to reach the heart of the question. For then the only proper solution is an immediate vacating of the title and its transfer to the peasants, with certainly no compensation to the aggressors who had wrongly seized control of the land. Thus, the land problem in the undeveloped countries can only be solved by applying the rules of justice that we have set forth; and such application requires detailed and wholesale empirical inquiry into present titles to land.

In recent years, the doctrine has gained ground among American conservatives that feudalism, instead of being oppressive and exploitative, was in fact a bulwark of liberty. It is true that feudalism, as these conservatives point out, was not as evil a system as "Oriental despotism," but that is roughly equivalent to saying that imprisonment is not as severe a penalty as execution.

The difference between feudalism and Oriental despotism was really of degree rather than kind; arbitrary power over land and over persons on that land was, in the one case, broken up into geographical segments; in the latter case, land tended to concentrate into the hands of one imperial overlord over the land-area of the entire country, aided by his bureaucratic retinue. The systems of power and repression are similar in type; the Oriental despot is a single feudal overlord with the consequent power accruing into his hands.

Each system is a variant of the other; neither is in any sense libertarian. And there is no reason to suppose that society must choose between one and the other—that these are the only alternatives.

Historical thinking on this entire matter was shunted onto a very wrong road by the statist German historians of the late 19th century: by men such as Schmoller, Bücher, Ehrenberg, and Sombart.Ironically, Sombart's later years were marked by an attack on the notion of capitalist development. See e.g., Werner Sombart, A New Social Philosophy (Princeton, N.J.: Princeton University Press, 1937); also see Werner Sombart, Vom Menschen (Berlin, 1938). These historians postulated a sharp dichotomy and inherent conflict between feudalism on the one hand and absolute monarchy, or the strong State, on the other.

They postulated that capitalist development required absolute monarchy and the strong State to smash local feudal and guild-type restrictions. In upholding this dichotomy of capitalism plus the strong central State vs. feudalism, they were joined, from their own special viewpoint, by the Marxists, who made no particular distinction between "bourgeoisie" who made use of the State, and bourgeoisie who acted on the free market.

Now some modern conservatives have taken this old dichotomy and turned it on its head. Feudalism and the strong central state are still considered the critical polar opposites, except that feudalism is, on this view, considered the good alternative.

The error here is in the dichotomy itself. Actually, the strong state and feudalism were not antithetical; the former was a logical outgrowth of the latter, with the absolute monarch ruling as the super-feudal overlord. The strong state, when it developed in Western Europe, did not set about to smash feudal restrictions on trade; on the contrary, it superimposed its own central restrictions and heavy taxes on top of the feudal structure.

The French Revolution, directed against the living embodiment of the strong state in Europe, was aimed at destroying both feudalism with its local restrictions, and the restrictions and high taxes imposed by the central government.On private property and feudalism in the French Revolution, see Gottfried Dietze, In Defense of Property (Chicago: Regnery, 1963), pp. 140–41. The true dichotomy was liberty on the one side versus the feudal lords and the absolute monarch on the other. Furthermore, the free market and capitalism flourished earliest and most strongly in those very countries where both feudalism and central government power were at their relative weakest: the Italian city-states, and seventeenth-century Holland and England.On the neglected case of the Dutch, see Jelle C. Riemersma, "Economic Enterprise and Political Powers After the Reformation," Economic Development and Cultural Change (July 1955): 297–308.

North America's relative escape from the blight of feudal land and land monopoly was not for lack of trying. Many of the English colonies made strong attempts to establish feudal rule, especially where the colonies were chartered companies or proprietorships, as in New York, Maryland, and the Carolinas. The attempt failed because the New World was a vast and virgin land area, and therefore the numerous receivers of monopoly and feudal land grants—many of them enormous in size—could only gain profits from them by inducing settlers to come to the New World and settle on their property.

Here were not, as in the Old World, previously existing settlers on relatively crowded land who could easily be exploited. Instead, the landlords, forced to encourage settlement, and anxious for a quick return, invariably subdivided and sold their lands to the settlers. It was unfortunate, of course, that by means of arbitrary claims and governmental grants, land titles were engrossed ahead of settlement. The settlers were consequently forced to pay a price for what should have been free land. But once the land was purchased by the settler, the injustice disappeared, and the land title accrued to its proper holder: the settler. In this way, the vast supply of virgin land, along with the desire of the land grantees for quick profits, led everywhere to the happy dissolution of feudalism and land monopoly, and the establishment in North America of a truly libertarian land system.

Some of the colonial proprietors tried to keep collecting quitrents from the settlers—the last vestige of feudal exactions—but the settlers widely refused to pay or to treat the land as anything but their own. In every case, the colonial proprietors gave up trying to collect their quitrents, even before their charters were confiscated by the British Crown.On the American experience, see Murray N. Rothbard, Conceived in Liberty (New York: Arlington House, 1975), vol. 1.

In only one minor case did feudal land tenure persist (apart from the vital case of slavery and the large Southern plantations) in the English colonies: in the Hudson Valley counties in New York, where the large grantees persisted in not selling the lands to settlers, but in renting them out. As a result, continuing resistance and even open warfare were waged by the farmers (who were even known as "peasants") against their feudal landlords. This resistance culminated in the "Anti-Rent" wars of the 1840s, when the quitrent exactions were finally ended by the state legislature, and the last vestige of feudalism outside the South finally disappeared.

The important exception to this agrarian idyll, of course, was the flourishing of the slave system in the Southern states. It was only the coercion of slave labor that enabled the large plantation system in staple crops to flourish in the South. Without the ability to own and coerce the labor of others, the large plantations—and perhaps much of the tobacco and later the cotton culture—would not have pervaded the South.

We have indicated above that there was only one possible moral solution for the slave question: immediate and unconditional abolition, with no compensation to the slavemasters. Indeed, any compensation should have been the other way—to repay the oppressed slaves for their lifetime of slavery. A vital part of such necessary compensation would have been to grant the plantation lands not to the slavemaster, who scarcely had valid title to any property, but to the slaves themselves, whose labor, on our "homesteading" principle, was mixed with the soil to develop the plantations.

In short, at the very least, elementary libertarian justice required not only the immediate freeing of the slaves, but also the immediate turning over to the slaves, again without compensation to the masters, of the plantation lands on which they had worked and sweated.

As it was, the victorious North made the same mistake—though "mistake" is far too charitable a word for an act that preserved the essence of an unjust and oppressive social system—as had Czar Alexander when he freed the Russian serfs in 1861: the bodies of the oppressed were freed, but the property which they had worked and eminently deserved to own, remained in the hands of their former oppressors. With the economic power thus remaining in their hands, the former lords soon found themselves virtual masters once more of what were now free tenants or farm laborers. The serfs and the slaves had tasted freedom, but had been cruelly deprived of its fruits.In recent years, a new wave of pro-abolitionist historians—such as Staughton Lynd, James McPherson, and Willie Lee Rose—have recognized the critical importance of the abolitionist demand for "forty acres and a mule," for turning over the old plantations to the slaves. See James M. McPherson, The Struggle for Equality: Abolitionists and the Negro in the Civil War and Reconstruction (Princeton, N.J.: Princeton University Press, 1964); and Willie Lee Rose, Rehearsal for Reconstruction: The Port Royal Experiment (Indianapolis, Ind.: Bobbs-Merrill, 1964). Also see Claude F. Oubre, Forty Acres and a Mule: The Freedmen's Bureau and Black Land Ownership (Baton Rouge: Louisiana State University Press, 1978).

This article is excerpted from chapters 10 and 11 of The Ethics of Liberty. Audiobook versions of these chapters are available for download.

After a brief period of study for the ministry, and an even briefer stint as a college tutor, Wayland accepted the pastorate of a Baptist church in Boston, and remained there for four years. He distinguished himself throughout his life as both an effective preacher and a prolific author. Near the end of his life he served as the pastor of a Baptist church in Providence, Rhode Island, and devoted himself to humanitarian causes.

Between his two pastorates, Wayland served as president of Brown University in Providence, Rhode Island. During his presidency Wayland authored what became one of the most widely used and influential American textbooks of the nineteenth century, The Elements of Moral Science. First published in 1835, it was reprinted with a lengthy introduction in 1963 by Harvard University Press.

Because he was a Baptist minister, it is no surprise that Wayland held to the absolute authority of the Bible. But he was equally an advocate of liberty, property, and peace. And because of his strong religious convictions, he made no attempt to separate God from these things. In fact, he grounded them in the will of God.

Politically, Wayland was a Jeffersonian, but said: "I do not wish to be connected with politics. Indeed, I dare not commit myself with politicians. No one knows what they will be next year by what they are this year." When speaking about liberty, he sounds like a contemporary libertarian:

Thus a man has an entire right to use his own body as he will, provided he do not so use it as to interfere with the rights of his neighbor. He may go where he will and stay where he please; he may work or be idle; he may pursue one occupation or another or no occupation at all; and it is the concern of no one else, if he leave inviolate the rights of everyone else; that is, if he leave everyone else in the undisturbed enjoyment of those means of happiness bestowed upon him by the Creator.

Wayland likewise considered the right of property to be "the right to use something as I choose, provided I do not so use it as to interfere with the rights of my neighbor." Because he believed that "men will not labor continuously nor productively" unless they receive some benefit from their labor, Wayland deplored property "held in common" because under such an arrangement there was "no connexion between labor and the rewards of labor." He insisted that the "division of property, or the appropriation, to each, of his particular portion of that which God has given to all, lays at the foundation of all accumulation of wealth, and of all progress in civilization."

Wayland took what would now be considered "politically incorrect" positions on voting, poverty, and "the rich." Voting privileges should be restricted to "those who are able to read and write." He was opposed to "poor laws," and regularly defended "the rich" from the false notions frequently advanced against them. Indeed, one reason why Wayland considered poor laws so "destructive" is because they falsely assume "that the rich are under obligation to support the poor."

Because Wayland considered all wars to be "contrary to the will of God," he believed that "the individual has no right to commit to society, nor society to government, the power to declare war." He further maintained that no one was obligated to support his government in an aggressive war. He depicted the Mexican War as "wicked, infamous, unconstitutional in design, and stupid and shockingly depraved in its management"—sentiments one might hear today about the war in Iraq. Wayland was not a subscriber to the "broken window" fallacy, and faithfully described the negative economic consequences of war:

Of all the modes of national expenditure, the most enormous is that of war. In the first place, the expense of the munitions of war is overwhelming. In the next place, the most athletic and vigorous laborers must be selected for slaughter. Of these the time and labor are wholly unproductive. The operations of industry, in both belligerent nations, are thus greatly paralyzed. The destruction of property, in the district through which an army passes, is generally very great. All this must be taken from the earnings of a people; and is so much capital absolutely destroyed, from which multitudes might have reared, and have lived in prosperity.

Although it was never as popular as his The Elements of Moral Science, Wayland's textbook on economics, The Elements of Political Economy, is a classic that deserves a hearing even though it was written almost two centuries ago. First published in 1837, it was soon afterward published in abridged and revised editions. It is my contention that a reexamination of The Elements of Political Economy is beneficial because Wayland's economic principles are not only sound, insightful, and in some cases profound, his emphasis on human action both echoes and predates Ludwig von Mises (1881–1973) and the Austrian School of economics. One can hold to the absolute authority of scripture and be a strong advocate of liberty and the free market. Conservative Christianity and laissez-faire economics are not incompatible.

Wayland's book contains the substance of his lectures on political economy that he delivered to the senior class at Brown University. Wayland says he "labored to express the general principles in the plainest manner possible, and to illustrate them by cases with which every person is familiar." One reason Wayland presents these maxims in such a plain manner is that there are no graphs or mathematical formulas in his book to obscure them.

The Elements of Political Economy is a treatise under the four divisions of Production, Exchange, Distribution, and Consumption. Production addresses "the laws which govern the application of labor to capital in the creation of value." Exchange addresses "the principles which govern men, when they wish, by means of their own labor, to avail themselves of the labor of others." Distribution deals with "the laws by which those who have united in the creation of a product, receive, respectively, their portion of the result." And Consumption discusses "the laws which should govern us in the destruction of value."

Each division, or "book," as Wayland terms them, is further divided into chapters, parts, and sections. The book as a whole is meticulously organized. Wayland's lengthy Introduction is itself a discourse on the basic principles of value, supply and demand, and the gains from trade.

The emphasis in The Elements of Political Economy is always on industry, frugality, thrift, innovation, entrepreneurship, property, competition, the division of labor, labor-saving devices, and capital. And rather than exalting the laborer and scorning the capitalist, the merchant, the retailer, the exchanger (middleman), and the money-lender—as is usually the case—Wayland earnestly defends them.

With but few exceptions, economists—from the chairman of the president's Council of Economic Advisers to the teacher fresh out of graduate school—are interventionists to the core. They believe that the government should have a major role in the economy or at least intervene in the event of market "failure." I am pleased to report that this is not the case with Francis Wayland. Whether he is discussing usury laws, money and banking, internal improvements, or trade restrictions, the detrimental effect of government intervention is a theme that appears throughout The Elements of Political Economy.

To begin with, Wayland disparages legislation and legislators. He specifically mentions five forms of detrimental "legislative interference": the granting of monopolies, obliging someone to engage in labor or investment against their wishes, restrictions on industry, obliging someone to change his mode of employment, and sumptuary laws. Legislators fail as central planners because:

Not only are legislators, who generally assume the labor of directing the manner in which labor or capital shall be employed, in no manner peculiarly qualified for this task; they are, in many respects, peculiarly disqualified for it. The individual is liable to no peculiar biases, in making up his mind in respect to the profitableness of an investment. If he err, it is because the indications deceive him. The legislator, besides being liable to err by mistaking the indications, is liable to be misled by party zeal, by political intrigue, and by sectional prejudice. What individual would succeed in his business, if he allowed himself to be influenced in the manner of conducting it, by such considerations?

Wayland's discussion of money and banking takes up 100 pages, or one-fourth of his entire book. His treatment of the history, nature, and purpose of money is straightforward. His conclusion is that "gold and silver possess all the essential qualities which are required in a circulating medium." He was against government regulation of money, and believed that government has no right "to prevent the exportation or importation of specie," "to alter the value of money," or "to fix the relative value between the precious metals."

Wayland also spoke at length about paper money. He saw the only advantages to using paper money as economy and convenience. Otherwise, it is liable to forgery, fraud, and fluctuation. Wayland did not demonize banking. Banks increase the productiveness of capital and facilitate exchange. They should be treated as any other business; the legislature has no authority to protect them "against the consequences of their own misconduct." Banks should be obligated to redeem their bills in specie, but otherwise not be subject to legislative interference.

Although it is commonly accepted now, the role of the state in undertaking the task of internal improvements was very much an issue in the period before the Civil War. Wayland, writing in 1837, was opposed to the state undertaking the work of internal improvements. The benefits of exchange and the absurdity of trade restrictions are another focal point of Wayland's book. His free-trade credentials are impeccable. Not only did he reject the notion that there is a "loser" in an exchange, he maintained that "universal exchange is as necessary to the welfare, and even to the existence of the human race, as universal production." There should be no restrictions that hinder an individual from purchasing or selling "where he pleases" or controls on "the nature or the quantity of the articles which he exports or imports."

We cannot call Francis Wayland an Austrian economist in the true sense of the word. Not only did he write The Elements of Political Economy before Carl Menger (1840–1921) was born, there are no specific discussions in his book of the business cycle, marginal utility, or subjective value. It is also probably true that Wayland would have preferred to be remembered as a preacher, an educator, or a philanthropist. But for someone who would not have considered himself an economist, Wayland's work on economics is both insightful and immensely practical. His emphasis on property, capital, entrepreneurship, and above all, his commitment to human action and not government action, makes his long-forgotten work on economics worthy of a revival.

This article is the foreword to a reprint of Francis Wayland's 1837 book, The Elements of Political Economy. The complete book can be viewed here. A hardcopy is also available from the Francis Wayland Institute.

Upon the collapse of centralizing totalitarian Communism in Eastern Europe and even the Soviet Union, long suppressed ethnic and nationality questions and conflicts have come rapidly to the fore. The crack-up of central control has revealed the hidden but still vibrant "deep structures" of ethnicity and nationality.

To those of us who glory in ethnic diversity and yearn for national justice, all this is a wondrous development of what has previously lived only in fantasy or longing: it is a chance in Europe at long last, to begin to reverse the monstrous twin injustices of Sarajevo and Versailles. It is like being back in 1914 or 1919 again, with a chance for the map of Europe and near Asia to be righted and redrawn.

For the first time since the end of World War II, or arguably since Versailles, the world is in a "revolutionary situation." There are many problems and costs to such a revolutionary situation, costs that are well-known and need not be repeated here; but there are also many benefits: currently, not only the collapse of Socialism-Communism, but the sense that all things are possible, and that justice may come at last to a long-suffering area of the world.

Most Americans, however, are puzzled and disturbed rather than delighted at the re-emergence of the nationalities question. We can separate the worried or hostile reactions into four groups:

First, the average American is uncomprehending of the very problem. Why can't all these groups live-and-let-live, and join peacefully together as has the United States in its "melting pot" of varied immigrant groups? In the first place, this Pollyanna view of America overlooks the black question, which has scarcely settled into any melting pot, and is more mired in deep conflict now than at any time since the late nineteenth century.

But even setting that aside no peaceful "melting pot" existed in the nineteenth century. From the 1830s until after World War I, northern, "Yankee," mainstream Protestants (with the exception of old-style Calvinists and high-church Lutherans) were captured by an aggressive and militant post-millennial pietism whose objective was to use government to stamp out "sin" (especially liquor and the Catholic Church), and who made the lives of Catholic and German Lutheran immigrants miserable and put them under constant attack for nearly a century. Finally, the pietists succeeded in imposing immigration restrictions and national origin quotas after World War I.

But even setting all that aside, the United States of America was a unique development in the modern world: a roughly "empty" land (with the notable exception of American Indians), peopled by a large number of mainly European religious, ethnic, and national immigrant groups, within the framework of a mainly free, constitutional Republic under the rubric of English as the common, public language.

Other nations in Europe and Asia developed very differently, often with native nationalities conquered and dominated by "imperial" nations. Instead of one public language, the oppressor nationalities invariably tried to obliterate the languages and even the names of conquered nationalities. One of the most moving cries during last year's implosion of Communism came from the suppressed Turkish minority in Bulgaria and the conquered "Moldavians" (i.e., Romanians) in Soviet Moldavia, grabbed from Romania after World War II: "give us our names back!"

The Moldavians want to shed the hated Russian names imposed by the Soviet state, as well as the even more hated Cyrillic forced upon them in place of their Latin alphabet. And this national obliteration is not just a product of Communism. It is an age-old practice: "imperial" France still forbids the Celts of Brittany to name their children according to Celtic nomenclature; and the Turks, still not admitting their genocidal massacre of the Armenian minority during World War I, also refuse to acknowledge the very existence of their Kurdish minority, referring to them contemptuously as "mountain Turks."

The Marxist-Leninists are a dying breed, but it is fascinating to consider their now vanishing role on this issue. Their reputation as "anti-imperialists" has nothing to do with classical Marxism. In fact, Marx and Engels, consistent with their pro-modernizing approach, aggressively favored Western imperialism (especially that of the Prussians as against the hated Slavs). This stance accorded with their view that the faster capitalism and "modernization" advance, the sooner the "inevitable final stage" of history, the proletarian communist revolution, will take place.

Lenin, however, pragmatically junked Marxism to side with the Third World and other peasantry, which he saw perceptively as far riper for revolution than the advanced capitalist nations. In practice, however, Leninism, while giving lip-service to the right of national self-determination (enshrined on paper in the Soviet Constitution but always ignored in practice), was a centralizing universalist creed transcending nationalities. More important, the actual Leninist cadre in every country were deracinated intellectuals (often colonials educated by Marxist-Leninist professors in the imperial centers of London, Paris, and Lisbon), who were generally ignorant of, and contemptuous or hostile toward, ethnicity, religion, and culture. The official compulsory atheism of Marxist-Leninists was only the most overt example of this hostility.

This riding roughshod over national cultures in the name of universalist Leninist ideology is most starkly evident in the regimes of Africa. The Marxist centralizing governments of Africa are descendants of the regimes of Western imperialism established in the late nineteenth century.

Britain, France, and Portugal marched into Africa and carved it up into provinces totally heedless and uncaring of the realities of the varied and highly diverse tribes which constituted the African polity. Many tribes, most of which hated each other's guts, and had nothing—neither culture, language, customs, nor tradition—in common, were coercively incorporated into "colonies" with arbitrary borders imposed by the imperial Western powers. In addition to this forced marriage, many of the artificial borders split tribal regions into two or more parts, so that tribesmen seasonally migrating into age-old occupied regions, found themselves stopped at the border and accused of being "illegal immigrants" or "aggressors."

The tragedy of modern Africa is that the imperial powers did not simply withdraw and allow the natural tribal formation to resume their original occupation of the continent. Instead, the coercive centralizing regimes of these so-called "nations" were turned over to the deracinated Marxist intellectuals educated in the imperial capitals, who soon became a parasitic bureaucratic class taxing and oppressing the peaceful peasantry who constitute the bulk of the actual producers in Africa.

The most significant negative reaction to the recent eruption of the nationalities question is that of our "global democracy" establishment. Theirs is the most significant because they constitute the dominant opinion-molding force in American life. Essentially theirs is a far more sophisticated version of the reaction of the average American. The concerns and demands of nationalities are dismissed as narrow, selfish, parochial, and even dangerously hostile per se and aggressive toward other nationalities. Above all, they interfere with the most sanctified value in the global-democratic canon: "the democratic process," which inherently means "majority rule," albeit sometimes limited by the restraints of "human" or "minority" rights. Therefore, the ultimate curse leveled against nationalities and their demands is that they are perforce "undemocratic" and hence not suitable for the modern world.

Thus, there is a deeper reason than realpolitik for the seemingly strange coolness of the Bush administration toward the heroic national independence movement of the Lithuanians and the other Baltic nations. It's not just that the United States is supposed to sacrifice them on the altar of "saving Gorby." For there was unalloyed joy at the liberating of Officially Accredited Nations, such as Poland, Hungary, and Czechoslovakia, from Soviet and Communist yokes. But the Baltic nations, after all, are different: they are "part" of the Soviet Union, and therefore their unilateral secession, against the will of the majority of the USSR, becomes an affront to "democracy," to "majority rule," and, last but far from least, to the unitary, centralizing nation-state that allegedly embodies the democratic ideal.

The fact that the United States had never recognized the forcible incorporation of the Baltic nations into the USSR in 1940, is now demonstrated to be a Cold War sham to win the votes of East European ethnics living in the United States. For when push comes to shove, how can little parts of a great nation be permitted to secede in opposition to the "democratic will" of the larger nation? Not only the Bush and establishment coolness toward the Baltics, but also their palpable relief when Gorby sent troops in to Azerbaijan, allegedly to stop Azeris and Armenians from killing each other, shows that far more is at stake here than helping Gorby against the Stalinists.

For the US global democrats had gotten worried that Gorby might fail to carry out the alleged fundamental responsibility of a great modernizing nation: to use force and violence to settle disputes among its various regions and nationalities. That is, in fact, to maintain the unitary force of the central "imperial" power against the nationalities within its periphery.

The clinching argument of the global democrats in all this may be summed up as "after all, didn't Lincoln?" The most sanctified figure in American historiography is, by no accident, the Great Saint of centralizing "democracy" and the strong unitary nation-state: Abraham Lincoln. It is fascinating and no accident, and reveals the vital importance of history and of historical myth even in as amnesiac a nation as the United States, that a major reason that the neocons and their stooges have tried to read such paleocons as Mel Bradford and Tom Fleming out of the conservative movement is that they are highly critical of "honest Abe."

And so didn't Lincoln use force and violence, and on a massive scale, on behalf of the mystique of the sacred "Union," to prevent the South from seceding? Indeed he did, and on the foundation of mass murder and oppression, Lincoln crushed the South and outlawed the very notion of secession (based on the highly plausible ground that since the separate states voluntarily entered the Union they should be allowed to leave).

But not only that: for Lincoln created the monstrous unitary nation-state from which individual and local liberties have never recovered: e.g., the triumph of an all-powerful federal judiciary, Supreme Court, and national army; the overriding of the ancient Anglo-Saxon and libertarian right of habeas corpus by jailing dissidents against the war without trial; the establishment of martial rule; the suppression of freedom of the press; and the largely permanent establishment of conscription, the income tax, the pietist "sin" taxes against liquor and tobacco, the corrupt and cartelizing "partnership of government and industry" constituting massive subsidies to transcontinental railroads, and the protective tariff; the establishment of fiat money inflation through the greenbacks and getting off the gold standard; and the nationalization of the banking system through the national Banking Acts of 1863 and 1864.

It is particularly fascinating that many conservative defenders of Lithuania and the other Baltic nations, try themselves to preserve the Lincoln myth and the general US hostility to secession. They argue that since the Baltic states were forcibly incorporated by Stalin in 1940, they at least should be allowed to secede without the punishment of Lincoln-style repression!

Let us set aside the fact that most of the other incorporations of nations into the Soviet Union were just as compulsory albeit more venerable: e.g., the Ukraine, Armenia, or Georgia in the early days of the Bolshevik Revolution. Let us instead cut to the heart of the democratic political theory that is involved in the pervasive hostility to secession. For democratic theory, including the theory of most "minarchist" laissez-faire libertarians, holds that government, whether broadly social-democratic or confined to police, defense, and the judiciary, should be chosen by majority rule in free elections. Minority secession movements are accused of violating democratic majority rule. But the crucial and always unanswered question is: democratic rule over what geographical area?

Let us put the problem another way: minarchist or democratic theory says that the state should have a monopoly of force in its territorial area. Let us agree for the sake of argument. But then the big unasked, and unanswered, question arises: what should be the territorial area? To paraphrase a favorite gambit of Ayn Rand's, the near-universal response is: Blankout!

Nationalities secessionists are implicitly challenging this pervasive blankout as a serious response to their concerns. So far, whether under Lincoln or, to a much lesser extent under Gorby, their crucial question has been met only by violence and force majeure: by the unquestioned mystique of might-makes-right and the coercive unitary nation-state. But the inner logic of that mystique, and the basic logic of minarchist political theory, is at once simple and terrifying: unitary world "democratic" government.

The minarchist argument against anarcho-capitalist libertarians is that there must be a single, overriding government agency with a monopoly force to settle disputes by coercion. OK, but in that case and by the very same logic shouldn't nation-states be replaced by a one-world monopoly government? Shouldn't unitary world government replace what has been properly termed our existing "international anarchy"?

Minarchist libertarians and conservatives balk at the inner logic of world government for obvious reasons: for they fear correctly that world taxation and world socialization would totally and irreversibly suppress the liberty and property of Americans. But they remain trapped in the logic of their own position. Left-liberals, on the other hand, are happy to embrace this logic precisely because of this expected outcome. Even the democratic establishment, however, hesitates at embracing the ultimate logical end of a single world democratic state, at least until they can be assured of controlling that monstrous entity.

Short of the world state of their dreams, how does our global democratic establishment deal with the crucial problem of where state boundaries should be? By sanctifying whatever state boundaries happen to exist at the time. Sanctifying status-quo boundaries has been the axiom of the foreign policy of every US administration since Woodrow Wilson, and of the League of Nations and its successor the United Nations, all based on the incoherent and disastrous concept of "collective security against aggression." It was that concept that underlay US intervention in World Wars I and II, and in the Korean War: first we determine (often incorrectly) which is the "aggressor state," and then all nation-states are supposed to band together to combat, repel, and punish that aggression.

The theoretical analogue of such a concert against "aggression" is held to be combating criminal action against individuals. A robs or murders B; the local police, appointed defenders of the right of person and property, leap to the defense of B and act to apprehend and punish A. In the same way, "peace-loving" nations are supposed to band together against "aggressor" nations or states. Hence, Harry Truman's otherwise mystifying insistence that the US war against North Korea was not a war at all but a "police action."

The deep flaw in all this is that when A robs or murders B, there is a general agreement that A is in the wrong, and that he has indeed aggressed against the person and just property rights of B. But when State A aggresses against the border of State B, often claiming that the border is unjust and the result of a previous aggression against country A decades before, how can we say a priori that State A is the aggressor and that we must dismiss its defense out of hand? Who says, and on what principle, that State B has the same moral right to all of its existing territory as individual B has to his life and property? And how can the two aggressions be equated when our global democrats refuse to come up with any principles or criteria whatsoever: except the unsatisfactory and absurd call for a world state or blind reliance upon the boundary status quo at any given moment?

What, then, is the answer? What national boundaries can be considered as just? In the first place, it must be recognized that there are no just national boundaries per se; that real justice can only be founded on the property rights of individuals. If fifty people decided voluntarily to set up an organization for common services or self-defense of their persons and properties in a certain geographical area, then the boundaries of that association, based on the just property rights of the members, will also be just.

National boundaries are only just insofar as they are based on voluntary consent and the property rights of their members or citizens. Just national boundaries are, then, at best derivative and not primary. How much more is this true of existing state boundaries which are, in greater or lesser degree, based on coercive expropriation of private property, or on a mixture of that with voluntary consent! In practice, the way to have such national boundaries as just as possible is to preserve and cherish the right of secession, the right of different regions, groups, or ethnic nationalities to get the blazes out of the larger entity, to set up their own independent nation. Only by boldly asserting the right of secession can the concept of national self-determination be anything more than a sham and a hoax.

But wasn't the Wilsonian attempt to impose national self-determination and draw the map of Europe a disaster? And how! But the disaster was inevitable even assuming (incorrectly) good will on the part of Wilson and the Allies and ignoring the fact that national self-determination was a mask for their imperial ambitions. For by its nature, national self-determination cannot be imposed from without, by a foreign government entity, be it the United States or some world league.

The whole point of national self-determination is to get top-down coercive power out of the picture and, for the use of force to devolve from the larger entity to more genuine natural and voluntary national entities. In short, to devolve power from the top downward. Imposing national self-determination from the outside makes matters worse and more coercive than ever. Moreover, getting the United States or other governments involved in every ethnic conflict throughout the globe maximizes, rather than minimizes, coercion, conflict, war, and mass murder. It drags the United States, as the great isolationist scholar Charles A. Beard once put it, into "perpetual war for perpetual peace."

Referring back to political theory, since the nation-state has a monopoly of force in its territorial area, the one thing it must not do is ever try to exercise its force beyond its area, where it has no monopoly, because then a relatively peaceful "international anarchy" (where each state confines its power to its own geographical boundary) is replaced by an international Hobbesian chaos of war of all (governments) against all. In short, given the existence of nation-states, they should

The right of secession, if fearlessly upheld, implies also the right of one or more villages to secede even from its own ethnic nation, or, even, as Ludwig von Mises affirmed in his Nation, State, and Economy, the right of secession by each individual.

If one deep flaw in the Wilsonian enterprise was its imposition of national self-determination from the outside, another was his total botch of redrawing the European map. It is difficult to believe that they could have done a worse job if the Versailles rulers had blindfolded themselves and put pins arbitrarily in a map of Europe to create new nations.

Instead of self-determination for each nation, three officially designated Good Guy peoples (Poles, Czechs, and Serbs) were made masters over other nationalities who had hated their guts for centuries, often with good reason. That is, these three favored nationalities were not simply given ethnic national independence; instead, their boundaries were arbitrarily swollen so as to dominate other peoples officially designated as Bad Guys (or at best Who-Cares Guys): the Poles ruling over Germans, Lithuanians (in the Lithuanian city of Vilnius/Vilna), Byelorussians, and Ukrainians; the Czechs ruling over Slovaks and Ukrainians (called "Carpatho-Ruthenians"); and the Serbs tyrannizing over Croats, Slovenes, Albanians, Hungarians, and Macedonians, in a geographical abortion called "Yugoslavia" (now at least in the process of falling apart).

In addition, the Romanians were aggrandized at the expense of the Hungarians and Bulgarians. These three (or four if we include Romania) lopsided countries were also given the absurd and impossible task by the United States and the Western allies of keeping down permanently the two neighboring great "revisionist" powers and losers at Versailles: Germany and Russia. This imposed task led straight to World War II.

In short, national self-determination must remain a moral principle and a beacon-light for all nations, and not be something to be imposed by outside governmental coercion.

One practical way of implementing self-determination and the right of secession is the concept of a partition referendum in which each village or parish votes to decide whether to remain inside the existing national entity or to secede or join another such nation. The much disputed area of Nagorno-Karabakh, for example, would undoubtedly vote overwhelmingly to leave the hated Azerbaijan Republic and join Armenia. But what of the fact that Nagorno-Karabakh is not contiguous with greater Armenia, that there is a sliver of ethnically Azeri land inbetween? But surely good will on both sides (which of course is obviously non-existent at this point) could permit a free zone or free entry across that zone. Not only an airpath, but also a road corridor proved to be viable for decades after the explosive Berlin crisis.

Partition referenda were used fitfully after World War I; the most renowned case was the separation of Northern Ireland from the rest of the country. Unfortunately, the British deliberately promised referendum for a second partition was never carried out by the British government. As a result, a large amount of Catholic territory in the north was forcibly incorporated into the Protestant state, and the existence of that Catholic minority, which undoubtedly would vote to join the South, has been responsible for the tragic and unending violence and bloodshed ever since. In short, a genuine partition based on referenda, would probably lop off from Northern Ireland the territories of counties Tyrone and Fermanagh (including the city of Derry) and South Down. Essentially, Northern Ireland would be much reduced in land area, and left with a belt around Belfast and county Antrim. The only substantial Catholic minority would then be in the Catholic section of Belfast.

One criticism of partition by referendum is that parishes and villages are often mixed, so that there could not be a precise separation of the nationalities. In the vexed region of Transylvania, for example, Hungarian and Romanian villages are intermixed in the same region. No doubt; no one ever said that such referenda would provide a panacea. But the point is that at least the degree of voluntary choice would be enlarged and the amount of social and ethnic conflict minimized, and not much more can be achieved. (Transylvania, by the way, is largely Hungarian, especially the northern part, and the wrong done to Hungary after World War I should be rectified.)

There is one criticism of the referendum approach that is far more cogent and troublesome. The Azeri claim to Nagorno-Karabakh rests on the thesis that, while the Armenians are now admittedly in the overwhelming majority, the region was, centuries ago, a center of Azeri culture. This claim from history may properly be dismissed as the dead hand of the past ruling the living, perhaps with the proviso that ancient Azeri shrines be protected under Azeri care.

But more troubling is, say, the current situation in Estonia and Latvia, where the Soviets deliberately tried to swamp and destroy native culture and ethnic nationalism by shipping in a large number of Russians after World War II to work in the factories. In Latvia, the Russian minority is only slightly under fifty percent. Here, I believe the recency of this migration and its political nature tip the scales in favor of maintaining native nationalism. In fact, libertarians believe that everyone has the natural right to self-ownership and ownership of property, but that there is no such thing as a natural "right" to vote. Here, it would make sense not to allow Russians to vote in Latvia and Estonia, to treat them as guests or immigrants of indefinite duration, but not with the voting privileges of citizenship.

Libertarians are, by and large, as fiercely opposed to ethnic nationalism as the global democrats, but for very different reasons. Libertarians are generally what might be called simplistic and "vulgar" individualists. A typical critique would run as follows:

"There is no nation; there are only individuals. The nation is a collectivist and therefore pernicious concept. The concept of 'national self-determination' is fallacious, since only the individual has a 'self.' Since the nation and the State are both collective concepts, both are pernicious and should be combated."

The linguistic complaint may be dismissed quickly. Yes, of course, there is no national "self," we are using "self-determination" as a metaphor, and no one really thinks of a nation as an actual living entity with its own "self."

More seriously, we must not fall into a nihilist trap. While only individuals exist individuals do not exist as isolated and hermetically sealed atoms. Statists traditionally charge libertarians and individualists with being "atomistic individualists," and the charge, one hopes, has always been incorrect and misconceived. Individuals may be the only reality, but they influence each other, past and present, and all individuals grow up in a common culture and language. (This does not imply that they may not, as adults, rebel and challenge and exchange that culture for another.)

While the state is a pernicious and coercive collectivist concept, the "nation" may be and generally is voluntary. The nation properly refers, not to the state, but to the entire web of culture, values, traditions, religion, and language in which the individuals of a society are raised. It is almost embarrassingly banal to emphasize that point, but apparently many libertarians aggressively overlook the obvious. Let us never forget the great libertarian Randolph Bourne's analysis of the crucial distinction between "the nation" (the land, the culture, the terrain, the people) and "the State" (the coercive apparatus of bureaucrats and politicians), and of his important conclusion that one may be a true patriot of one's nation or country while—and even for that very reason—opposing the state that rules over it.

In addition, the libertarian, especially of the anarcho-capitalist wing, asserts that it makes no difference where the boundaries are, since in a perfect world all institutions and land areas would be private and there would be no national boundaries. Fine, but in the meantime, in the real world, in which language should the government courts hold their proceedings? What should be the language of signs on the government streets? Or the language of the government schools? In the real world, then, national self-determination is a vitally important matter in which libertarians should properly take sides.

Finally, nationalism has its disadvantages for liberty, but also has its strengths, and libertarians should try to help tip it in the latter direction. If we were residents of Yugoslavia, for example, we should be agitating in favor of the right to secede from that swollen and misbegotten state of Croatia and Slovenia (that is, favoring their current nationalist movements), while opposing the desire of the Serb demagogue Slobodan Milosevic to cling to Serb domination over the Albanians in Kosovo or over the Hungarians in the Vojvodina (that is, opposing Great Serbian nationalism).

There is, in short national liberation (good) versus national "imperialism" over other peoples (bad). Once we get over simplistic individualism, this distinction should not be difficult to grasp.

Let us examine a typical bribe contract. Suppose that Black wants to sell materials to the XYZ Company. In order to gain the sale, he pays a bribe to Green, the purchasing agent of the company. It is difficult to see what Black has done which libertarian law should consider as illegal. In fact, all he has done is to lower the price charged to the XYZ Company by paying a rebate to Green. From Black's point of view, he would have been just as happy to charge a lower price directly, though presumably he did not do so because the XYZ executives would still not have purchased the materials from him. But the inner workings of the XYZ Company should scarcely be Black's responsibility. As far as he is concerned, he simply lowered his price to the company, and thereby gained the contract.

The illicit action here is, instead, solely the behavior of Green, the taker of the bribe. For Green's employment contract with his employers implicitly requires him to purchase materials to the best of his ability in the interests of his company. Instead, he violated his contract with the XYZ Company by not performing as their proper agent: for because of the bribe he either bought from a firm which he would not have dealt with otherwise, or he paid a higher price than he need have by the amount of his rebate. In either case, Green violated his contract and invaded the property rights of his employers.

In the case of bribes, therefore, there is nothing illegitimate about the briber, but there is much that is illegitimate about the bribee, the taker of the bribe. Legally, there should be a property right to pay a bribe, but not to take one. It is only the taker of a bribe who should be prosecuted. In contrast, left-liberals tend to hold the bribe-giver as somehow more reprehensible, as in some way "corrupting" the taker. In that way they deny the free will and the responsibility of each individual for his own actions.

Let us now use our theory to analyze the problem of payola, which repeatedly arises on radio programs that play popular records. In a typical payola scandal, a record company bribes a disc jockey to play Record A. Presumably, the disc jockey would either not have played the record at all or would have played Record A fewer times; therefore, Record A is being played at the expense of Records B, C, and D which would have been played more frequently if the disc jockey had evaluated the records purely on the basis of his own and/or the public's taste.

Surely, in a moral sense, the public is being betrayed in its trust in the disc jockey's sincerity. That trust turns out to have been a foolish one. But the public has no property rights in the radio program, and so they have no legal complaint in the matter. They received the program without cost. The other record companies, the producers of Records B, C, and D, were also injured since their products were not played as frequently, but they too, have no property rights in the program, and they have no right to tell the disc jockey what to play.

Was anyone's property rights aggressed against by the disc jockey's taking of a bribe? Yes, for as in the case of the bribed purchasing agent, the disc jockey violated his contractual obligation to his employer — whether it be the station owner or the sponsor of the program — to play those records which in his view will most suit the public. Hence, the disc jockey violated the property of the station owner or sponsor. Once again, it is the disc jockey who accepts payola who has done something criminal and deserves to be prosecuted, but not the record company who paid the bribe.

Furthermore, if the record company had bribed the employer directly — whether the station owner or the sponsor — then there would have been no violation of anyone's property right and therefore properly no question of illegality. Of course, the public could easily feel cheated if the truth came out, and would then be likely to change their listening custom to another station or sponsor.

What about the case of plugola, where one sponsor pays for the program, and another company pays the producer of the program to plug its own product? Again, the property right being violated is that of the sponsor, who pays for the time and is entitled therefore to have sole advertising rights on the program. The violator of his property is not the maverick company that pays the bribe, but the producer who violates his contract with the sponsor by accepting it.

This article is taken from chapter 17 of The Ethics of Liberty. Listen to this article in MP3, read by Jeff Riggenbach. The entire book is being prepared for podcast and download.

If Crusoe economics can and does supply the indispensable groundwork for the entire structure of economics and praxeology—the broad, formal analysis of human action—a similar procedure should be able to do the same thing for social philosophy, for the analysis of the fundamental truths of the nature of man vis-à-vis the nature of the world into which he is born, as well as the world of other men. Specifically, it can aid greatly in solving such problems of political philosophy as the nature and role of liberty, property, and violence.Such seventeenth- and eighteenth-century constructs as "the state of nature" or "the social contract" were not wholly successful attempts to construct such a logical analysis. Such attempts were far more important than any actual historical assertions that may have been made in the course of developing these concepts.

Let us consider Crusoe, who has landed on his island, and, to simplify matters, has contracted amnesia. What inescapable facts does Crusoe confront? He finds, for one thing, himself, with the primordial fact of his own consciousness and his own body. He finds, second, the natural world around him, the nature-given habitat and resources which economists sum up in the term "land."This economic "land," including all nature-given resources, does not necessarily mean "land" in the popular sense, as it may include parts of the sea, e.g., fishing waters, and excludes man-made improvements on the earth. He finds also that, in seeming contrast with animals, he does not possess any innate instinctual knowledge impelling him into the proper paths for the satisfaction of his needs and desires. In fact, he begins his life in this world by knowing literally nothing; all knowledge must be learned by him. He comes to learn that he has numerous ends, purposes which he desires to achieve, many of which he must achieve to sustain his life: food, shelter, clothing, etc. After the basic needs are satisfied, he finds more "advanced" wants for which to aim. To satisfy any or all of these wants which he evaluates in accordance with their respective importance to him, Crusoe must also learn how to achieve them; he must, in short, acquire "technological knowledge," or "recipes."

Crusoe, then, has manifold wants which he tries to satisfy, ends that he strives to attain. Some of these ends may be attained with minimal effort on his part; if the island is so structured, he may be able to pick edible berries off nearby bushes. In such cases, his "consumption" of a good or service may be obtained quickly and almost instantaneously. But for almost all of his wants, Crusoe finds that the natural world about him does not satisfy them immediately and instantaneously; he is not, in short, in a Garden of Eden. To achieve his ends, he must, as quickly and productively as he can, take the nature-given resources and transform them into useful objects, shapes, and places most useful to him—so that he can satisfy his wants.

In short, he must (a) choose his goals; (b) learn how to achieve them by using nature-given resources; and then (c) exert his labor energy to transform these resources into more useful shapes and places: i.e., into "capital goods," and finally into "consumer goods" that he can directly consume. Thus, Crusoe may build himself, out of the given natural raw materials, an axe (capital good) with which to chop down trees, in order to construct a cabin (consumer good). Or he may build a net (capital good) with which to catch fish (consumer good). In each case, he employs his learned technological knowledge to exert his labor effort in transforming land into capital goods and eventually into consumer goods. This process of transformation of land resources constitutes his "production." In short, Crusoe must produce before he can consume, and so that he may consume. And by this process of production, of transformation, man shapes and alters his nature-given environment to his own ends, instead of, animal-like, being simply determined by that environment.

And so man, not having innate, instinctive, automatically acquired knowledge of his proper ends, or of the means by which they can be achieved, must learn them, and to learn them he must exercise his powers of observation, abstraction, thought: in short, his reason. Reason is man's instrument of knowledge and of his very survival; the use and of his mind, the acquisition of knowledge about what is best for him and how he can achieve it, is the uniquely human method of existence and of achievement. And this is uniquely man's nature; man, as Aristotle pointed out, is the rational animal, or to be more precise, the rational being. Through his reason, the individual man observes both the facts and ways of the external world, and the facts of his own consciousness, including his emotions: in short, he employs both extraspection and introspection.

Crusoe, we have said, learns about his ends and about how to attain them. But what specifically does his learning faculty, his reason, do in the process of obtaining such knowledge? It learns about the way things work in the world, i.e., the natures of the various specific entities and classes of entities that the man finds in existence; in short, he learns the natural laws of the way things behave in the world. He learns that an arrow shot from a bow can bring down a deer, and that a net can catch an abundance of fish. Further, he learns about his own nature, about the sort of events and actions that will make him happy or unhappy; in short, he learns about the ends he needs to achieve and those he should seek to avoid.

This process, this method necessary to man's survival and prosperity upon the earth, has often been derided as unduly or exclusively "materialistic." But it should be clear that what has happened in this activity proper to man's nature is a fusion of "spirit" and matter; man's mind, using the ideas it has learned, directs his energy in transforming and reshaping matter into ways to sustain and advance his wants and his life. Behind every "produced" good, behind every man-made transformation of natural resources, is an idea directing the effort, a manifestation of man's spirit.

The individual man, in introspecting the fact of his own consciousness, also discovers the primordial natural fact of his freedom: his freedom to choose, his freedom to use or not use his reason about any given subject. In short, the natural fact of his "free will." He also discovers the natural fact of his mind's command over his body and its actions: that is, of his natural ownership over his self.

Crusoe, then, owns his body; his mind is free to adopt whatever ends it wishes, and to exercise his reason in order to discover what ends he should choose, and to learn the recipes for employing the means at hand to attain them. Indeed, the very fact that the knowledge needed for man's survival and progress is not innately given to him or determined by external events, the very fact that he must use his mind to learn this knowledge, demonstrates that he is by nature free to employ or not to employ that reason—i.e., that he has free will.See Murray N. Rothbard, Individualism and the Philosophy of the Social Sciences (San Francisco: Cato Institute, 1979), pp. 5–10. For one thing, a person cannot coherently believe that he is making judgments and at the same time that he is being determined by a foreign cause to do so. For if that were true, what would be the status of the judgment that he is determined? This argument was used by Immanuel Kant, Groundwork of the Metaphysics of Morals, trans. H.J. Paton (New York: Harper and Row, 1964), pp. 115f. Surely, there is nothing outré or mystical about the fact that men differ from stones, plants, or even animals, and that the above are crucial differences between them. The critical and unique facts about man and the ways in which he must live to survive—his consciousness, his free will and free choice, his faculty of reason, his necessity for learning the natural laws of the external world and of himself, his self-ownership, his need to "produce" by transforming nature-given matter into consumable forms—all these are wrapped up in what man's nature is, and how man may survive and flourish. Suppose now that Crusoe is confronted with a choice of either picking berries or picking some mushrooms for food, and he decides upon the pleasantly tasting mushrooms, when suddenly a previously shipwrecked inhabitant, coming upon Crusoe, shouts: "Don't do that! Those mushrooms are poisonous." There is no mystery in Crusoe's subsequent shift to berries. What has happened here? Both men have operated on an assumption so strong that it remained tacit, an assumption that poison is bad, bad for the health and even for the survival of the human organism—in short, bad for the continuation and the quality of a man's life. In this implicit agreement on the value of life and health for the person, and on the evils of pain and death, the two men have clearly arrived at the basis of an ethic, grounded on reality and on the natural laws of the human organism.

If Crusoe had eaten the mushrooms without learning of their poisonous effects, then his decision would have been incorrect—a possibly tragic error based on the fact that man is scarcely automatically determined to make correct decisions at all times. Hence, his lack of omniscience and his liability to error. If Crusoe, on the other hand, had known of the poison and eaten the mushrooms anyway—perhaps for "kicks" or from a very high time preference—then his decision would have been objectively immoral, an act deliberately set against his life and health. It may well be asked why life should be an objective ultimate value, why man should opt for life (in duration and quality).On the value of life not depending on whether it is perceived as one of happiness, see Philippa R. Foot, Virtues and Vices (Berkeley: University of California Press, 1978), p. 41. In reply, we may note that a proposition rises to the status of an axiom when he who denies it may be shown to be using it in the very course of the supposed refutation.Elsewhere, I have written: "if a man cannot affirm a proposition without employing its negation, he is not only caught in an inextricable self-contradiction; he is conceding to the negation the status of an axiom." Rothbard, Individualism, p. 8. Also see R.P. Phillips, Modern Thomistic Philosophy (Westminster, Md.: Newman Bookshop, 1934–35), vol. 2, pp. 36–37. Now, any person participating in any sort of discussion, including one on values, is, by virtue of so participating, alive and affirming life. For if he were really opposed to life, he would have no business in such a discussion, indeed he would have no business continuing to be alive. Hence, the supposed opponent of life is really affirming it in the very process of his discussion, and hence the preservation and furtherance of one's life takes on the stature of an incontestable axiom.

We have seen that Crusoe, as in the case of any man, has freedom of will, freedom to choose the course of his life and his actions. Some critics have charged that this freedom is illusory because man is bound by natural laws. This, however, is a misrepresentation—one of the many examples of the persistent modem confusion between freedom and power. Man is free to adopt values and to choose his actions; but this does not at all mean that he may violate natural laws with impunity—that he may, for example, leap oceans at a single bound. In short, when we say that "man is not 'free' to leap the ocean," we are really discussing not his lack of freedom but his lack of power to cross the ocean, given the laws of his nature and of the nature of the world. Crusoe's freedom to adopt ideas, to choose his ends, is inviolable and inalienable; on the other hand, man, not being omnipotent as well as not being omniscient, always finds his power limited for doing all the things that he would like to do. In short, his power is necessarily limited by natural laws, but not his freedom of will. To put the case another way it is patently absurd to define the "freedom" of an entity as its power to perform an act impossible for its nature!See Rothbard, Individualism, p. 8, and F.A. Hayek, The Road to Serfdom (Chicago: University of Chicago Press, 1944), p. 26.

If a man's free will to adopt ideas and values is inalienable, his freedom of action—his freedom to put these ideas into effect in the world, is not in such a fortunate condition. Again, we are not talking about the limitations on man's power inherent in the laws of his own nature and of the natures of other entities. What we are talking about now is interference with his sphere of action by other people—but here we are getting a bit ahead of Robinson Crusoe and our discussion. Suffice it to say now that, in the sense of social freedom—of freedom as absence of molestation by other persons—Crusoe is absolutely free, but that a world of more than one person requires our further investigation.

Since, in this book, we are interested in social and political philosophy rather than in philosophy proper, we shall be interested in the term "freedom" in this social or interpersonal sense, rather than in the sense of freedom of will.Perhaps the one great advantage of the term "liberty" over its synonym "freedom" is that liberty is generally used only in the social, and not in the purely philosophic free-will sense, and is also less confused with the concept of power. For an excellent discussion of free will, see J.R. Lucas, The Freedom of the Will (Oxford: Clarendon Press, 1970).

Let us now return to our analysis of Crusoe's purposeful transformation of nature-given data though the understanding of natural laws. Crusoe finds virgin, unused land on the island; land, in short, unused and uncontrolled by anyone, and hence unowned. By finding land resources, by learning how to use them, and, in particular, by actually transforming them into a more useful shape, Crusoe has, in the memorable phrase of John Locke, "mixed his labor with the soil." In doing so, in stamping the imprint of his personality and his energy on the land, he has naturally converted the land and its fruits into his property. Hence, the isolated man owns what he uses and transforms; therefore, in his case there is no problem of what should be A's property as against B's. Any man's property is ipso facto what he produces, i.e., what he transforms into use by his own effort. His property in land and capital goods continues down the various stages of production, until Crusoe comes to own the consumer goods which he has produced, until they finally disappear through his consumption of them.

As long as an individual remains isolated, then, there is no problem whatever about how far his property—his ownership—extends; as a rational being with free will, it extends over his own body, and it extends further over the material goods which he transforms with his labor. Suppose that Crusoe had landed not on a small island, but on a new and virgin continent, and that, standing on the shore, he had claimed "ownership" of the entire new continent by virtue of his prior discovery. This assertion would be sheer empty vainglory, so long as no one else came upon the continent. For the natural fact is that his true property—his actual control over material goods—would extend only so far as his actual labor brought them into production. His true ownership could not extend beyond the power of his own reach.Later on, when other people arrived on the continent, they too, in natural fact, would own the lands which they transformed by their labor, the first man could only obtain ownership of them by the use of invasive force against their natural property, or by receiving them from the newcomers in voluntary gift or exchange. Similarly, it would be empty and meaningless for Crusoe to trumpet that he does not "really" own some or all of what he has produced (perhaps this Crusoe happens to be a romantic opponent of the property concept), for in fact the use and therefore the ownership has already been his. Crusoe, in natural fact, owns his own self and the extension of his self into the material world, neither more nor less.

It is now time to bring other men into our Robinsonian idyll—to extend our analysis to interpersonal relations. The problem for our analysis is not simply more people: after all, we could simply postulate a world of a million Crusoes on a million isolated islands, and our analysis would not need to be expanded by one iota. The problem is to analyze the interaction of these people. Friday, for example, might land in another part of the island, and make contact with Crusoe, or he might land on a separate island, and then later construct a boat that could reach the other island.

Economics has revealed a great truth about the natural law of human interaction: that not only is production essential to man's prosperity and survival, but so also is exchange. In short, Crusoe, on his island or part thereof, might produce fish, while Friday, on his part, might grow wheat, instead of both trying to produce both commodities. By exchanging part of Crusoe's fish for some of Friday's wheat, the two men can greatly improve the amount of both fish and bread that both can enjoy.On the economic analysis of all this, see Murray N. Rothbard, Man, Economy, and State (Princeton, N.J.: D. Van Nostrand, 1962), chap. 2. This great gain for both men is made possible by two primordial facts of nature—natural laws—on which all of economic theory is based: (a) the great variety of skills and interests among individual persons; and (b) the variety of natural resources in geographic land areas. If all people were equally skilled and equally interested in all matters, and if all areas of land were homogeneous with all others, there would be no room for exchanges. But, in the world as it is, the opportunity for specialization in the best uses for land and people enables exchanges to multiply vastly and immensely to raise the productivity and the standard of living (the satisfaction of wants) of all those participating in exchange.

If anyone wishes to grasp how much we owe to the processes of exchange, let him consider what would happen in the modern world if every man were suddenly prohibited from exchanging anything with anyone else. Each person would be forced to produce all of his own goods and services himself. The utter chaos, the total starvation of the great bulk of the human race, and the reversion to primitive subsistence by the remaining handful of people, can readily be imagined.

Another remarkable fact of human action is that A and B can specialize and exchange for their mutual benefit even if one of them is superior to the other in both lines of production. Thus, suppose that Crusoe is superior to Friday in fish and wheat production. It still benefits Crusoe to concentrate on what he is relatively best at. If, for example, he is a far better fisherman than Friday but only a moderately better farmer, he can gain more of both products by concentrating on fishing, and then exchanging his produce for Friday's wheat. Or, to use an example from an advanced exchange economy, it will pay a physician to hire a secretary for typing, filing, etc. even if he is better at the latter jobs, in order to free his time for far more productive work. This insight into the advantages of exchange, discovered by David Ricardo in his Law of Comparative Advantage, means that, in the free market of voluntary exchanges, the "strong" do not devour or crush the "weak," contrary to common assumptions about the nature of the free-market economy. On the contrary, it is precisely on the free market where the "weak" reap the advantages of productivity because it benefits the "strong" to exchange with them.

The process of exchange enables man to ascend from primitive isolation to civilization: it enormously widens his opportunities and the market for his wares; it enables him to invest in machines and other "high-order capital goods"; it forms a pattern of exchanges—the free market—which enables him to calculate economically the benefits and the costs of highly complex methods and aggregates of production.

But economists too often forget, in contemplating the critical importance and the glories of the free market, what precisely is being exchanged. For apples are not simply being exchanged for butter, or gold for horses. What is really being exchanged is not the commodities themselves, but the rights to ownership of them. When Smith exchanges a bag of apples for Jones's pound of butter, he is actually transferring his ownership rights in the apples in exchange for the ownership rights to the butter, and vice versa. Now that Smith rather than Jones is the absolute controller of the butter, it is Smith who may eat it or not at his will; Jones now has nothing to say in its disposition, and is instead absolute owner of the apples.

Returning now to Crusoe and Friday, suppose that more people, C, D, E … join Crusoe and Friday on the island. Each specializes in different products; gradually one particular product emerges—because of such qualities as high value, steady demand, ready divisibility—as a medium of exchange. For it is discovered that the use of a medium enormously expands the scope of exchanges and the wants that can be satisfied on the market. Thus, a writer or an economics teacher would be hard put to exchange his teaching or writing services for loaves of bread, parts of a radio, a piece of a suit, etc. A generally acceptable medium is indispensable for any extensive network of exchange and hence for any civilized economy.

Such a generally acceptable medium of exchange is defined as a money. It has generally been found, on the free market, that the best commodities for use as a money have been the precious metals, gold and silver. The exchange sequence now appears as follows: A, owning his body and his labor, finds land, transforms it, produces fish which he then owns; B uses his labor similarly to produce wheat, which he then owns; C finds land containing gold, transforms it, produces the gold which he then owns. C then exchanges the gold for other services, say A's fish. A uses the gold to exchange for B's wheat, etc. In short, the gold "enters circulation," i.e., its ownership is transferred from person to person, as it is used as a general medium of exchange. In each case, the exchangers transfer ownership rights, and, in each case, ownership rights are acquired in two ways and two ways only: (a) by finding and transforming resources ("producing"), and (b) by exchanging one's produce for someone else's product—including the medium of exchange, or "money" commodity. And it is clear that method b reduces logically to a, for the only way a person can obtain something in exchange is by giving up his own product. In short, there is only one route to ownership of goods: production-and-exchange. If Smith gives up a product in exchange for Jones's which Jones also acquired in a previous exchange, then someone, whether the person from whom Jones bought the product or someone else down the line, must have been the original finder- and-transformer of the resource.

A man then, can acquire "wealth"—a stock of useful capital or consumer goods—either by "producing" it himself, or by selling to its producer some other product in exchange. The exchange process reduces logically back to original production. Such production is a process by which a man "mixes his labor with the soil"—finding and transforming land resources or, in such cases as a teacher or writer, by producing and selling one's own labor services directly. Put another way: since all production of capital goods reduces ultimately back to the original factors of land and labor, all production reduces back either to labor services or to finding new and virgin land and putting it into production by means of labor energy.That capital goods reduce back to land and labor as original factors is a fundamental insight of the Austrian School of economics. In particular, see Eugen von Böhm-Bawerk, The Positive Theory of Capital, vol. 2 of Capital and Interest (South Holland, Ill.: Libertarian Press, 1959).

A man may also obtain wealth voluntarily in another way: through gifts. Thus Crusoe, upon stumbling on Friday at another end of the island, may give him some sustenance. In such a case, the giver receives, not another alienable good or service from the other party, but the psychic satisfaction of having done something for the receiver. In the case of a gift, also, the process of acquisition reduces back to production and exchange—and again ultimately to production itself, since a gift must be preceded by production, if not directly as in this case, then somewhere back down the line.

We have so far analyzed the exchange process for a multitude of exchanges of consumer goods. We must now complete our picture of the real world by analyzing exchanges along the structure of production. For exchanges in an advanced economy are not only "horizontal" (of consumer goods), but also "vertical": they proceed downward from the original transformation of land, down through the various types of capital goods, and finally to the ultimate state of consumption.

Let us consider a simple vertical pattern as it occurs in the exchange economy. Smith transforms land resources and constructs an axe; instead of using the axe to make another product, Smith, as a specialist in a vast exchange economy, sells his axe for gold (money). Smith, producer of the axe, transfers his right of ownership to Jones, in exchange for a certain amount of Jones's gold—the precise amount of gold being agreed upon voluntarily by the two parties. Jones now takes the axe and fells lumber, then sells the lumber to Johnson for gold; Johnson in turn sells the lumber to Robbins, a contractor, for gold, and Robbins in his turn constructs a house in exchange for the gold of his client, Benton. (It should be evident that this vertical network of exchange could not take place without the use of a monetary medium for the exchanges.)

To complete our picture of a market economy, let us suppose that Jones has cut down his lumber, but has to ship it downriver to transfer it to Johnson; Jones, then, sells the lumber to another intermediary, Polk, who hires the labor services of X, Y, and Z to transport the logs to Johnson. What has happened here, and why doesn't the use of X, Y, and Z's labor in transforming and transporting the logs to a more useful place give them rights to ownership of the logs?

What has happened is this: Polk transfers some gold to X and to Y, and to Z, in return for their selling to him their labor services of transporting the logs. Polk did not sell the logs to these men for money; instead, he "sold" them money in exchange for employing their labor services on his logs. In short, Polk may have bought the logs from Jones for 40 gold ounces, and then paid X, Y, and Z 20 gold ounces each to transport the logs, and then sold the logs to Johnson for 110 ounces of gold. Hence, Polk netted a gain of 10 gold ounces on the entire transaction. X, Y, and Z, if they had so desired, could have purchased the logs from Jones themselves for the 40 ounces, and then shipped the logs themselves, sold them to Johnson for 110 and pocketed the 10 extra ounces. Why didn't they? Because (a) they didn't have the capital; in short, they hadn't saved up the requisite money by reducing their previous consumption sufficiently below their income to accumulate the 40 ounces; and/or (b) they wanted money payment while they worked, and were not willing to wait for the number of months it took for the logs to be shipped and sold; and/or (c) they were unwilling to be saddled with the risk that the logs might indeed not be saleable for 110 ounces. Thus, the indispensable and enormously important function of Polk, the capitalist in our example of the market economy is to save the laborers from the necessity of restricting their consumption and thus saving up the capital themselves, and from waiting for their pay until the product would (hopefully) be sold at a profit further down the chain of production. Hence, the capitalist, far from somehow depriving the laborer of his rightful ownership of the product, makes possible a payment to the laborer considerably in advance of the sale of the product. Furthermore, the capitalist, in his capacity as forecaster or entrepreneur, saves the laborer from the risk that the product might not be sold at a profit, or that he might even suffer losses.

The capitalist, then, is a man who has labored, saved out of his labor (i.e., has restricted his consumption) and, in a series of voluntary contracts has (a) purchased ownership rights in capital goods, and (b) paid the laborers for their labor services in transforming those capital goods into goods nearer the final stage of being consumed. Note again that no one is preventing the laborers themselves from saving, purchasing capital goods from their owners and then working on their own capital goods, finally selling the product and reaping the profits. In fact, the capitalists are conferring a great benefit on these laborers, making possible the entire complex vertical network of exchanges in the modern economy. For they save the money needed to buy the capital goods and to pay the laborers in advance of sale for "producing" them further.In technical economic terms, the laborers, by choosing to take their money in advance of sale, earn the "discounted marginal value product" of their labor-the discount being the value which the laborers achieve by getting their money now instead of later. The capitalists, by advancing money now and relieving the laborers of the burden of waiting until later, earn the discount for "time-preference"; the farsighted ones also earn the reward for being better at forecasting the future under conditions of uncertainty, in the form of "pure profits." The less farsighted entrepreneurs suffer losses for poor handling of decisions under uncertainty. See Rothbard, Man, Economy, and State, passim.

At each step of the way then, a man produces—by exerting his labor upon tangible goods. If this good was previously unused and unowned, then his labor automatically brings the good under his control, his "ownership." If the good was already owned by someone else, then the owner may either sell this (capital) good to our laborer for money, after which his labor is exerted on the good; or the previous owner may purchase the labor service for money in order to produce the good further and then sell it to the next buyer. This process, too, reduces back to the original production of unused resources and to labor, since the capitalist—the previous owner in our example—ultimately derived his own ownership from: original production; voluntary exchange; and the saving of money. Thus, all ownership on the free market reduces ultimately back to: (a) ownership by each man of his own person and his own labor; (b) ownership by each man of land which he finds unused and transforms by his own labor; and (c) the exchange of the products of this mixture of a and b with the similarly produced output of other persons on the market.

The same law holds true for all ownership, on the market, of the money commodity. As we have seen, money is either (1) produced by one's own labor transforming original resources (e.g., mining gold); or (2) obtained by selling one's own product—or selling goods previously purchased with the proceeds of one's own product—in exchange for gold owned by someone else. Again, just as c in the previous paragraph reduces logically back to a and b production coming before exchange—so here 2 ultimately reduces logically back to 1.

In the free society we have been describing, then, all ownership reduces ultimately back to each man's naturally given ownership over himself, and of the land resources that man transforms and brings into production. The free market is a society of voluntary and consequently mutually beneficial exchanges of ownership titles between specialized producers. It has often been charged that this market economy rests on the wicked doctrine that labor "is treated as a commodity." But the natural fact is that labor service is indeed a commodity, for, as in the case of tangible property, one's own labor service can be alienated and exchanged for other goods and services. A person's labor service is alienable, but his will is not. It is most fortunate, moreover, for mankind that this is so; for this alienability means (1) that a teacher or physician or whatever can sell his labor services for money; and (2) that workers can sell their labor services in transforming goods to capitalists for money. If this could not be done, the structure of capital required for civilization could not be developed, and no one's vital labor services could be purchased by his fellow men.

The distinction between a man's alienable labor service and his inalienable will may be further explained: a man can alienate his labor service, but he cannot sell the capitalized future value of that service. In short, he cannot, in nature, sell himself into slavery and have this sale enforced—for this would mean that his future will over his own person was being surrendered in advance. In short, a man can naturally expend his labor currently for someone else's benefit, but he cannot transfer himself, even if he wished, into another man's permanent capital good. For he cannot rid himself of his own will, which may change in future years and repudiate the current arrangement. The concept of "voluntary slavery" is indeed a contradictory one, for so long as a laborer remains totally subservient to his master's will voluntarily, he is not yet a slave since his submission is voluntary; whereas, if he later changed his mind and the master enforced his slavery by violence, the slavery would not then be voluntary. But more of coercion later on.

The society that we have been describing in this section—the society of free and voluntary exchanges—may be called the "free society" or the society of "pure liberty." The bulk of this work will be devoted to spelling out the implications of such a system. The term "free market," while properly signifying the critically important network of free and voluntary exchanges, is insufficient when going at all beyond the narrowly economic or praxeologic. For it is vital to realize that the free market is exchanges of titles to property, and that therefore the free market is necessarily embedded in a larger free society—with a certain pattern of property rights and ownership titles. We have been describing the free society as one where property titles are founded on the basic natural facts of man: each individual's ownership by his ego over his own person and his own labor, and his ownership over the land resources which he finds and transforms. The natural alienability of tangible property as well as man's labor service makes possible the network of free exchanges of ownership titles.

The regime of pure liberty—the libertarian society—may be described as a society where no ownership titles are "distributed," where, in short, no man's property in his person or in tangibles is molested, violated, or interfered with by anyone else. But this means that absolute freedom, in the social sense, can be enjoyed, not only by an isolated Crusoe but by every man in any society, no matter how complex or advanced. For every man enjoys absolute freedom—pure liberty—if, like Crusoe, his "naturally" owned property (in his person and in tangibles) is free from invasion or molestation by other men. And, of course, being in a society of voluntary exchanges, each man can enjoy absolute liberty not in Crusoe-like isolation, but in a milieu of civilization, harmony, sociability, and enormously greater productivity through exchanges of property with his fellow men. Absolute freedom, then, need not be lost as the price we must pay for the advent of civilization; men are born free, and need never be in chains. Man may achieve liberty and abundance, freedom and civilization.

This truth will be obscured if we persist in confusing "freedom" or "liberty" with power. We have seen the absurdity of saying that man does not have free will because he has not the power to violate the laws of his nature—because he cannot leap oceans at a single bound. It is similarly absurd to say that a man is not "truly" free in the free society because, in that society, no man is "free" to aggress against another man or to invade his property. Here, again, the critic is not really dealing with freedom but with power; in a free society, no man would be permitted (or none would permit himself) to invade the property of another. This would mean that his power of action would be limited; as man's power is always limited by his nature; it would not mean any curtailment of his freedom. For if we define freedom, again, as the absence of invasion by another man of any man's person or property, the fatal confusion of freedom and power is at last laid to rest.We shall see later that this definition of freedom or liberty must be clarified to read "absence of molestation of a man's just property," with justice implying, once again, ownership title to one's own self, to one's own transformed property, and to the fruits of voluntary exchanges built upon them. We then see clearly that a supposed "freedom to steal or assault"—in short, to aggress—would not be a state of freedom at all, because it would permit someone, the victim of an assault, to be deprived of his right to person and property—in short, to have his liberty violated.For a critique of the "freedom to steal or assault" argument against the libertarian position, see Murray N. Rothbard, Power and Market, 2nd ed. (Kansas City: Sheed Andrews and McMeel, 1977), p. 242. Each man's power, then, is always necessarily limited by the facts of the human condition, by the nature of man and his world; but it is one of the glories of man's condition that each person can be absolutely free, even in a world of complex interaction and exchange. It is still true, moreover, that any man's power to act and do and consume is enormously greater in such a world of complex interaction than it could be in a primitive or Crusoe society.

A vital point: if we are trying to set up an ethic for man (in our case, the subset of ethics dealing with violence), then to be a valid ethic the theory must hold true for all men, whatever their location in time or place.On the requirement that ethical laws be universally binding, see R.M. Hare, The Language of Morals (Oxford: Clarendon Press, 1952), p. 162; Marcus Singer, Generalization in Ethics (New York: Knopf, 1961), pp. 13–33. This is one of the notable attributes of natural law—its applicability to all men, regardless of time or place. Thus, ethical natural law takes its place alongside physical or "scientific" natural laws. But the society of liberty is the only society that can apply the same basic rule to every man, regardless of time or place. Here is one of the ways in which reason can select one theory of natural law over a rival theory—just as reason can choose between many economic or other competing theories. Thus, if someone claims that the Hohenzollern or Bourbon families have the "natural right" to rule everyone else, this kind of doctrine is easily refutable by simply pointing to the fact that there is here no uniform ethic for every person: one's rank in the ethical order being dependent on the accident of being, or not being, a Hohenzollern. Similarly, if someone says that every man has a "natural right" to three square meals a day, it is glaringly obvious that this is a fallacious natural law or natural rights theory; for there are innumerable times and places where it is physically impossible to provide three square meals for all, or even for the majority, of the population. Hence this cannot be set forth as some kind of "natural right."

On the other hand, consider the universal status of the ethic of liberty, and of the natural right of person and property that obtains under such an ethic. For every person, at any time or place, can be covered by the basic rules: ownership of one's own self; ownership of the previously unused resources which one has occupied and transformed; and ownership of all titles derived from that basic ownership—either through voluntary exchanges or voluntary gifts. These rules—which we might call the "rules of natural ownership"—can clearly be applied, and such ownership defended, regardless of the time or place, and regardless of the economic attainments of the society. It is impossible for any other social system to qualify as universal natural law; for if there is any coercive rule by one person or group over another (and all rule partakes of such hegemony), then it is impossible to apply the same rule for all; only a rulerless, purely libertarian world can fulfill the qualifications of natural rights and natural law, or, more important, can fulfill the conditions of a universal ethic for all mankind.

We have so far been discussing the free society, the society of peaceful cooperation and voluntary interpersonal relations. There is, however, another and contrasting type of interpersonal relation: the use of aggressive violence by one man against another. What such aggressive violence means is that one man invades the property of another without the victim's consent. The invasion may be against a man's property in his person (as in the case of bodily assault), or against his property in tangible goods (as in robbery or trespass). In either case, the aggressor imposes his will over the natural property of another—he deprives the other man of his freedom of action and of the full exercise of his natural self-ownership.

Let us set aside for a moment the corollary but more complex case of tangible property, and concentrate on the question of a man's ownership rights to his own body. Here there are two alternatives: either we may lay down a rule that each man should be permitted (i.e., have the right to) the full ownership of his own body, or we may rule that he may not have such complete ownership. If he does, then we have the libertarian natural law for a free society as treated above. But if he does not, if each man is not entitled to full and 100 percent self-ownership, then what does this imply? It implies either one of two conditions: (1) the "communist" one of Universal and Equal Other-ownership, or (2) Partial Ownership of One Group by Another—a system of rule by one class over another. These are the only logical alternatives to a state of 100 percent self-ownership for all.Professor George Mavrodes, of the department of philosophy of the University of Michigan, objects that there is another logical alternative: namely, "that no one owns anybody, either himself or anyone else, nor any share of anybody." However, since ownership signifies range of control, this would mean that no one would be able to do anything, and the human race would quickly vanish.

Let us consider alternative 2; here, one person or group of persons, G, are entitled to own not only themselves but also the remainder of society, R. But, apart from many other problems and difficulties with this kind of system, we cannot here have a universal or natural-law ethic for the human race. We can only have a partial and arbitrary ethic, similar to the view that Hohenzollerns are by nature entitled to rule over non-Hohenzollerns. Indeed, the ethic which states that Class G is entitled to rule over Class R implies that the latter, R, are subhuman beings who do not have a right to participate as full humans in the rights of self-ownership enjoyed by G—but this of course violates the initial assumption that we are carving out an ethic for human beings as such.

What then of alternative 1? This is the view that, considering individuals A, B, C … , no man is entitled to 100 percent ownership of his own person. Instead, an equal part of the ownership of A's body should be vested in B, C … , and the same should hold true for each of the others. This view, at least, does have the merit of being a universal rule, applying to every person in the society, but it suffers from numerous other difficulties.

In the first place, in practice, if there are more than a very few people in the society, this alternative must break down and reduce to alternative 2, partial rule by some over others. For it is physically impossible for everyone to keep continual tabs on everyone else, and thereby to exercise his equal share of partial ownership over every other man. In practice, then, this concept of universal and equal other-ownership is utopian and impossible, and supervision and therefore ownership of others necessarily becomes a specialized activity of a ruling class. Hence, no society which does not have full self-ownership for everyone can enjoy a universal ethic. For this reason alone, 100 percent self-ownership for every man is the only viable political ethic for mankind.

But suppose for the sake of argument that this utopia could be sustained. What then? In the first place, it is surely absurd to hold that no man is entitled to own himself, and yet to hold that each of these very men is entitled to own a part of all other men! But more than that, would our utopia be desirable? Can we picture a world in which no man is free to take any action whatsoever without prior approval by everyone else in society? Clearly no man would be able to do anything, and the human race would quickly perish. But if a world of zero or near-zero self-ownership spells death for the human race, then any steps in that direction also contravene the law of what is best for man and his life on earth. And, as we saw above, any ethic where one group is given full ownership of another violates the most elemental rule for any ethic: that it apply to every man. No partial ethics are any better, though they may seem superficially more plausible, than the theory of all-power-to-the-Hohenzollerns.

In contrast, the society of absolute self-ownership for all rests on the primordial fact of natural self-ownership by every man, and on the fact that each man may only live and prosper as he exercises his natural freedom of choice, adopts values, learns how to achieve them, etc. By virtue of being a man, he must use his mind to adopt ends and means; if someone aggresses against him to change his freely selected course, this violates his nature; it violates the way he must function. In short, an aggressor interposes violence to thwart the natural course of a man's freely adopted ideas and values, and to thwart his actions based upon such values.

We cannot fully explain the natural laws of property and of violence without expanding our discussion to cover tangible property. For men are not floating wraiths; they are beings who can only survive by grappling with and transforming material objects. Let us return to our island of Crusoe and Friday. Crusoe, isolated at first, has used his free will and self-ownership to learn about his wants and values, and how to satisfy them by transforming nature-given resources through "mixing" them with his labor. He has thereby produced and created property. Now suppose that Friday lands in another part of this island. He confronts two possible courses of action: he may, like Crusoe, become a producer, transform unused soil by his labor, and most likely exchange his product for that of the other man. In short, he may engage in production and exchange, in also creating property. Or, he may decide upon another course: he may spare himself the effort of production and exchange, and go over and seize by violence the fruits of Crusoe's labor. He may aggress against the producer.

If Friday chooses the course of labor and production, then he in natural fact, as in the case of Crusoe, will own the land area which he clears and uses, as well as the fruits of its product. But, as we have noted above, suppose that Crusoe decides to claim more than his natural degree of ownership, and asserts that, by virtue of merely landing first on the island, he "really" owns the entire island, even though he had made no previous use of it. If he does so, then he is, in our view, illegitimately pressing his property claim beyond its homesteading-natural law boundaries, and if he uses that claim to try to eject Friday by force, then he is illegitimately aggressing against the person and property of the second homesteader.

Some theorists have maintained—in what we might call the "Columbus complex"—that the first discoverer of a new, unowned island or continent can rightfully own the entire area by simply asserting his claim. (In that case, Columbus, if in fact he had actually landed on the American continent—and if there had been no Indians living there—could have rightfully asserted his private "ownership" of the entire continent.) In natural fact, however, since Columbus would only have been able actually to use, to "mix his labor with," a small part of the continent, the rest then properly continues to be unowned until the next homesteaders arrive and carve out their rightful property in parts of the continent.A modified variant of this "Columbus complex" holds that the first discoverer of a new island or continent could properly lay claim to the entire continent by himself walking around it (or hiring others to do so), and thereby laying out a boundary for the area. In our view, however, their claim would still be no more than to the boundary itself, and not to any of the land within it, for only the boundary will have been transformed and used by man.

Let us turn from Crusoe and Friday and consider the question of a sculptor who has just created a work of sculpture by transforming clay and other materials (and let us for the moment waive the question of property rights in the clay and the tools). The question now becomes: who should properly own this work of art as it emerges from the fashioning of the sculptor? Once again, as in the case of the ownership of people's bodies, there are only three logical positions: (1) that the sculptor, the "creator" of the work of art, should have the property right in his creation; (2) that another man or group of men have the right in that creation, i.e., to expropriate it by force without the sculptor's consent; or (3) the "communist" solution—that every individual in the world has an equal, quotal right to share in the ownership of the sculpture.

Put this starkly, there are very few people who would deny the monstrous injustice in either a group or the world community seizing ownership of the sculpture. For the sculptor has in fact "created" this work of art—not of course in the sense that he has created matter, but that he has produced it by transforming nature-given matter (the clay) into another form in accordance with his own ideas and his own labor and energy. Surely, if every man has the right to own his own body and if he must use and transform material natural objects in order to survive, then he has the right to own the product that he has made, by his energy and effort, into a veritable extension of his own personality. Such is the case of the sculptor, who has placed the stamp of his own person on the raw material, by "mixing his labor" with the clay. But if the sculptor has done so, then so has every producer who has "homesteaded" or mixed his labor with the objects of nature.

Any group of people who expropriated the work of the sculptor would be clearly aggressive and parasitical—benefiting at the expense of the expropriated. As most people would agree, they would be clearly violating the right of the sculptor to his product—to the extension of his personality. And this would be true whether a group or the "world commune" did the expropriation—except that, as in the case of communal ownership of persons, in practice this expropriation would have to be performed by a group of men in the name of the "world community." But, as we have indicated, if the sculptor has the right to his own product, or transformed materials of nature, then so have the other producers. So have the men who extracted the clay from the ground and sold it to the sculptor, or the men who produced the tools with which he worked on the clay. For these men, too, were producers; they too, mixed their ideas and their technological know-how with the nature-given soil to emerge with a valued product. They, too, have mixed their labor and energies with the soil. And so, they, too, are entitled to the ownership of the goods they produced.Cf. John Locke, Two Treatises on Government, pp. 307–8.

If every man has the right to own his own person and therefore his own labor, and if by extension he owns whatever property he has "created" or gathered out of the previously unused, unowned state of nature, then who has the right to own or control the earth itself? In short, if the gatherer has the right to own the acorns or berries he picks, or the farmer his crop of wheat, who has the right to own the land on which these activities have taken place? Again, the justification for the ownership of ground land is the same for that of any other property. For no man actually ever "creates" matter: what he does is to take nature-given matter and transform it by means of his ideas and labor energy. But this is precisely what the pioneer—the homesteader—does when he clears and uses previously unused virgin land and brings it into his private ownership. The homesteader—just as the sculptor, or miner—has transformed the nature-given soil by his labor and his personality. The homesteader is just as much a "producer" as the others, and therefore just as legitimately the owner of his property. As in the case of the sculptor, it is difficult to see the morality of some other group expropriating the product and labor of the homesteader. (And, as in the other cases, the "world communist" solution boils down in practice to a ruling group.) Furthermore, the land communalists, who claim that the entire world population really owns the land in common, run up against the natural fact that before the homesteader, no one really used and controlled—and hence owned—the land. The pioneer, or homesteader, is the man who first brings the valueless unused natural objects into production and use.

And so, there are only two paths for man to acquire property and wealth: production or coercive expropriation. Or, as the great German sociologist Franz Oppenheimer perceptively put it, there are only two means to the acquisition of wealth. One is the method of production, generally followed by voluntary exchange of such products: this is what Oppenheimer called the economic means. The other method is the unilateral seizure of the products of another: the expropriation of another man's property by violence. This predatory method of getting wealth Oppenheimer aptly termed the political means.Franz Oppenheimer, in his book The State (New York: Free Life Editions, 1975), p. 12, said:There are two fundamentally opposed means whereby man, requiring sustenance, is impelled to obtain the necessary means for satisfying his desires. These are work and robbery, one's own labor and the forcible appropriation of the labor of others…. I propose … to call one's own labor and the equivalent exchange of one's own labor for the labor of others, the "economic means" for the satisfaction of needs, while the unrequited appropriation of the labor of others will be called the "political means."

Now the man who seizes another's property is living in basic contradiction to his own nature as a man. For we have seen that man can only live and prosper by his own production and exchange of products. The aggressor, on the other hand, is not a producer at all but a predator; he lives parasitically off the labor and product of others. Hence, instead of living in accordance with the nature of man, the aggressor is a parasite who feeds unilaterally by exploiting the labor and energy of other men. Here is clearly a complete violation of any kind of universal ethic, for man clearly cannot live as a parasite; parasites must have non-parasites, producers, to feed upon. The parasite not only fails to add to the social total of goods and services, he depends completely on the production of the host body. And yet, any increase in coercive parasitism decreases ipso facto the quantity and the output of the producers, until finally, if the producers die out, the parasites will quickly follow suit.

Thus, parasitism cannot be a universal ethic, and, in fact, the growth of parasitism attacks and diminishes the production by which both host and parasite survive. Coercive exploitation or parasitism injure the processes of production for everyone in the society. Any way that it may be considered, parasitic predation and robbery violate not only the nature of the victim whose self and product are violated, but also the nature of the aggressor himself, who abandons the natural way of production—of using his mind to transform nature and exchange with other producers—for the way of parasitic expropriation of the work and product of others. In the deepest sense, the aggressor injures himself as well as his unfortunate victim. This is fully as true for the complex modern society as it is for Crusoe and Friday on their island.

We may define anyone who aggresses against the person or other produced property of another as a criminal. A criminal is anyone who initiates violence against another man and his property: anyone who uses the coercive "political means" for the acquisition of goods and services.We are here using "crime" and "criminal" in the ordinary language, rather than technical, legal sense. In legal parlance, offenses or aggressions against individuals are not crimes but torts, with committers of torts being referred to as tortfeasors. The legal concept of "crime" is confined to offenses against the State or Community. It will be seen below that we deny the latter concept altogether, with all legally punishable offenses confined to invasions of the person or property of other individuals. In short, in the libertarian conception, its "crimes" correspond to legally designated "torts," although there is no particular reason for redress or punishment to be confined to monetary payment, as was the case in ancient tort law. See Sir Henry Maine, Ancient Law (New York: E.P. Dutton, 1917), pp. 217ff.

Now, however, critical problems arise; we are now indeed at the very heart of the entire problem of liberty, property, and violence in society. A crucial question—and one which has unfortunately been almost totally neglected by libertarian theorists—may be illustrated by the following examples:

Suppose we are walking down the street and we see a man, A, seizing B by the wrist and grabbing B's wristwatch. There is no question that A is here violating both the person and the property of B. Can we then simply infer from this scene that A is a criminal aggressor, and B his innocent victim?

Certainly not—for we don't know simply from our observation whether A is indeed a thief, or whether A is merely repossessing his own watch from B who had previously stolen it from him. In short, while the watch had undoubtedly been B's property until the moment of A's attack, we don't know whether or not A had been the legitimate owner at some earlier time, and had been robbed by B. Therefore, we do not yet know which one of the two men is the legitimate or just property owner. We can only find the answer through investigating the concrete data of the particular case, i.e., through "historical" inquiry.

Thus, we cannot simply say that the great axiomatic moral rule of the libertarian society is the protection of property rights, period. For the criminal has no natural right whatever to the retention of property that he has stolen; the aggressor has no right to claim any property that he has acquired by aggression. Therefore, we must modify or rather clarify the basic rule of the libertarian society to say that no one has the right to aggress against the legitimate or just property of another.

In short, we cannot simply talk of defense of "property rights" or of "private property" per se. For if we do so, we are in grave danger of defending the "property right" of a criminal aggressor—in fact, we logically must do so. We may therefore only speak of just property or legitimate property or perhaps "natural property." And this means that, in concrete cases, we must decide whether any single given act of violence is aggressive or defensive: e.g., whether it is a case of a criminal robbing a victim, or of a victim trying to repossess his property.

Another vital implication of this way of looking at the world is to invalidate totally the utilitarian way of looking at property rights and therefore of looking at the free market. For the utilitarian, who has no conception, let alone theory, of justice, must fall back on the pragmatic, ad hoc view that all titles to private property currently existing at any time or place must be treated as valid and accepted as worthy of defense against violation.For a criticism of utilitarianism on this point, see John Rawls, A Theory of Justice (Cambridge, Mass.: Harvard University Press, 1971), pp. 26–27, secs. 83–84. Utilitarianism is attacked more generally in Peter Geach, The Virtues (Cambridge: Cambridge University Press, 1977), pp. 91ff., 103ff. Geach points out the counter-intuitive nature of the formula, "the greatest happiness of the greatest number." For a utilitarian defense of existing property titles, see Ludwig von Mises, Socialism (New Haven, Conn.: Yale University Press, 1951), pp. 45–47. This, in fact, is the way utilitarian free-market economists invariably treat the question of property rights. Note, however, that the utilitarian has managed to smuggle into his discussion an unexamined ethic: that all goods "now" (the time and place at which the discussion occurs) considered private property must be accepted and defended as such. In practice, this means that all private property titles designated by any existing government (which has everywhere seized the monopoly of defining titles to property) must be accepted as such. This is an ethic that is blind to all considerations of justice, and, pushed to its logical conclusion, must also defend every criminal in the property that he has managed to expropriate. We conclude that the utilitarian's simply praising a free market based upon all existing property titles is invalid and ethically nihilistic.For more on the role of government and existing property titles see below; for a more detailed critique of utilitarian free-market economics, see pp. 201–14 below.

I am convinced, however, that the real motor for social and political change in our time has been a moral indignation arising from the fallacious theory of surplus value: that the capitalists have stolen the rightful property of the workers, and therefore that existing titles to accumulated capital are unjust. Given this hypothesis, the remainder of the impetus for both Marxism and anarchosyndicalism follow quite logically. From an apprehension of what appears to be monstrous injustice flows the call for "expropriation of the expropriators," and, in both cases, for some form of "reversion" of the ownership and the control of the property to the workers.In this sense, the only proper carrying out of the Marxian ideal has partially occurred in Yugoslavia, where the Communist regime has turned the socialized sphere of production over to the control, and hence de facto ownership, of the workers in each particular plant. Their arguments cannot be successfully countered by the maxims of utilitarian economics or philosophy, but only by dealing forthrightly with the moral problem, with the problem of the justice or injustice of various claims to property.

Neither can Marxist views be rebutted by utilitarian paeans to the virtues of "social peace." Social peace is all very well, but true peace is essentially the quiet, unmolested enjoyment of one's legitimate property, and if a social system is founded upon monstrously unjust property titles, not molesting them is not peace but rather the enshrinement and entrenchment of permanent aggression. Neither can the Marxists be rebutted by pointing the finger at their use of violent methods of overthrow. It is, to be sure, a consistent creed—though one that I do not share—that no violence should ever be used by anyone against anyone else: even by a victim against a criminal. But this Tolstoyan-Gandhian moral position is really irrelevant here. For the point at question is whether or not the victim has a moral right to employ violence in defending his person or property against criminal attack or in repossessing property from the criminal. The Tolstoyan may concede that the victim has such a right but may try to persuade him not to exercise that right in the name of a higher morality. But this takes us afield from our discussion into broader reaches of ethical philosophy. I would only add here that any such total objector to violence must then be consistent and advocate that no criminal ever be punished by the use of violent means. And this implies, let us note, not only abstaining from capital punishment but from all punishment whatsoever, and, indeed, from all methods of violent defense that might conceivably injure an aggressor. In short, to employ that horrid cliché to which we shall have occasion to return, the Tolstoyan may not use force to prevent someone from raping his sister.

The point here is that only Tolstoyans are entitled to object to the violent overthrow of an entrenched criminal group; for everyone who is not a Tolstoyan favors the use of force and violence to defend against and punish criminal aggression. He must therefore favor the morality, if not the wisdom, of using force to overthrow entrenched criminality. If so, then we are pushed immediately back to the really important question: who is the criminal, and therefore who is the aggressor? Or, in other words, against whom is it legitimate to use violence? And if we concede that capitalist property is morally illegitimate, then we cannot deny the right of the workers to employ whatever violence may be necessary to seize the property, just as A, in our above example, would have been within his rights in forcibly repossessing his watch if B had stolen it previously.

The only genuine refutation of the Marxian case for revolution, then, is that capitalists' property is just rather than unjust, and that therefore its seizure by workers or by anyone else would in itself be unjust and criminal. But this means that we must enter into the question of the justice of property claims, and it means further that we cannot get away with the easy luxury of trying to refute revolutionary claims by arbitrarily placing the mantle of "justice" upon any and all existing property titles. Such an act will scarcely convince people who believe that they or others are being grievously oppressed and permanently aggressed against. But this also means that we must be prepared to discover cases in the world where violent expropriation of existing property titles will be morally justified, because these titles are themselves unjust and criminal. Let us again use an example to make our thesis clear. To use Ludwig von Mises's excellent device for abstracting from emotionalism, let us take a hypothetical country, "Ruritania."

Let us say that Ruritania is ruled by a king who has grievously invaded the rights of persons and the legitimate property of individuals, and has regulated and finally seized their property. A libertarian movement develops in Ruritania, and comes to persuade the bulk of the populace that this criminal system should be replaced by a truly libertarian society, where the rights of each man to his person and his found and created property are fully respected. The king, seeing the revolt to be imminently successful, now employs a cunning stratagem. He proclaims his government to be dissolved, but just before doing so he arbitrarily parcels out the entire land area of his kingdom to the "ownership" of himself and his relatives. He then goes to the libertarian rebels and says: "all right, I have granted your wish, and have dissolved my rule; there is now no more violent intervention in private property. However, myself and my eleven relatives now each own one-twelfth of Ruritania, and if you disturb us in this ownership in any way, you shall be infringing upon the sanctity of the very fundamental principle that you profess: the inviolability of private property. Therefore, while we shall no longer be imposing 'taxes,' you must grant each of us the right to impose any 'rents' that we may wish upon our 'tenants,' or to regulate the lives of all the people who presume to live on 'our' property as we see fit. In this way, taxes shall be fully replaced by 'private rents'!"

Now what should be the reply of the libertarian rebels to this pert challenge? If they are consistent utilitarians, they must bow to this subterfuge, and resign themselves to living under a regime no less despotic than the one they had been battling for so long. Perhaps, indeed, more despotic, for now the king and his relatives can claim for themselves the libertarians' very principle of the absolute right of private property, an absoluteness which they might not have dared to claim before.

It should be clear that for the libertarians to refute this stratagem they must take their stand on a theory of just versus unjust property; they cannot remain utilitarians. They would then say to the king: "We are sorry, but we only recognize private property claims that are just—that emanate from an individual's fundamental natural right to own himself and the property which he has either transformed by his energy or which has been voluntarily given or bequeathed to him by such transformers. We do not, in short, recognize anyone's right to any given piece of property purely on his or anyone else's arbitrary say-so that it is his own. There can be no natural moral right derivable from a man's arbitrary claim that any property is his. Therefore, we claim the right to expropriate the 'private' property of you and your relations, and to return that property to the individual owners against whom you aggressed by imposing your illegitimate claim."

One corollary that flows from this discussion is of vital importance for a theory of liberty. This is that, in the deepest sense, all property is "private."I owe this insight to Mr. Alan Milchman. For all property belongs to, is controlled by, some individual persons or groups of persons. If B stole a watch from A, then the watch was B's private "property"—was under his control and de facto ownership—so long as he was allowed to possess and use it. Therefore, whether the watch was in the hands of A or B, it was in private hands—in some cases, legitimate-private, in others criminal-private, but private just the same.

As we shall see further below, the same holds for individuals forming themselves into any sort of group. Thus, when they formed the government, the king and his relatives controlled—and therefore at least partially "owned"—the property of the persons against whom they were aggressing. When they parceled out the land into the "private" property of each, they again shared in owning the country, though in formally different ways. The form of private property differed in the two cases, but not the essence. Thus, the crucial question in society is not, as so many believe, whether property should be private or governmental, but rather whether the necessarily "private" owners are legitimate owners or criminals. For, ultimately, there is no entity called "government"; there are only people forming themselves into groups called "governments" and acting in a "governmental" manner.See pp. 159–98 below for a further discussion of the role of government. All property is therefore always "private"; the only and critical question is whether it should reside in the hands of criminals or of the proper and legitimate owners. There is really only one reason for libertarians to oppose the formation of governmental property or to call for its divestment: the realization that the rulers of government are unjust and criminal owners of such property.

In short, the laissez-faire utilitarian cannot simply oppose "government" ownership and defend private; for the trouble with governmental property is not so much that it is governmental (for what of "private" criminals like our watch-stealer?) but that it is illegitimate, unjust, and criminal—as in the case of our Ruritanian king. And since "private" criminals are also reprehensible, we see that the social question of property cannot ultimately be treated in utilitarian terms as either private or governmental. It must be treated in terms of justice or injustice: of legitimate property-owners vs. illegitimate, criminal invaders of such property, whether these invaders are called "private" or "public." The libertarian may now be getting rather worried. He may say: "granted that you are right in principle, that property titles must be validated by justice, and that neither the criminal may be allowed to keep the stolen watch, nor the king and his relatives 'their' country, how can your principle be applied in practice? Wouldn't this involve a chaotic inquiry into everyone's property title, and furthermore, what criterion can you establish for the justice of these titles?"

The answer is that the criterion holds as we have explained above: the right of every individual to own his person and the property that he has found and transformed, and therefore "created," and the property which he has acquired either as gifts from or in voluntary exchange with other such transformers or "producers." It is true that existing property titles must be scrutinized, but the resolution of the problem is much simpler than the question assumes. For remember always the basic principle: that all resources, all goods, in a state of no-ownership belong properly to the first person who finds and transforms them into a useful good (the "homestead" principle). We have seen this above in the case of unused land and natural resources: the first to find and mix his labor with them, to possess and use them, "produces" them and becomes their legitimate property owner. Now suppose that Mr. Jones has a watch; if we cannot clearly show that Jones or his ancestors to the property title in the watch were criminals, then we must say that since Mr. Jones has been possessing and using it, that he is truly the legitimate and just property owner.

Or, to put the case another way: if we do not know if Jones's title to any given property is criminally derived, then we may assume that this property was, at least momentarily in a state of no-ownership (since we are not sure about the original title), and therefore that the proper title of ownership reverted instantaneously to Jones as its "first" (i.e., current) possessor and user. In short, where we are not sure about a title but it cannot be clearly identified as criminally derived, then the title properly and legitimately reverts to its current possessor.

But now suppose that a title to property is clearly identifiable as criminal, does this necessarily mean that the current possessor must give it up? No, not necessarily. For that depends on two considerations: (a) whether the victim (the property owner originally aggressed against) or his heirs are clearly identifiable and can now be found; or (b) whether or not the current possessor is himself the criminal who stole the property. Suppose, for example, that Jones possesses a watch, and that we can clearly show that Jones's title is originally criminal, either because (1) his ancestor stole it, or (2) because he or his ancestor purchased it from a thief (whether wittingly or unwittingly is immaterial here). Now, if we can identify and find the victim or his heir, then it is clear that Jones's title to the watch is totally invalid, and that it must promptly revert to its true and legitimate owner. Thus, if Jones inherited or purchased the watch from a man who stole it from Smith, and if Smith or the heir to his estate can be found, then the title to the watch properly reverts immediately back to Smith or his descendants, without compensation to the existing possessor of the criminally derived "title."Or it may revert to any other of Smith's assignees. Thus, Smith might have sold his claim or right to the watch to someone else, and then if this purchaser or his heirs can be found, the legitimate property title reverts to him. Thus, if a current title to property is criminal in origin, and the victim or his heir can be found, then the title should immediately revert to the latter.

Suppose, however, that condition a is not fulfilled: in short, that we know that Jones's title is criminal, but that we cannot now find the victim or his current heir. Who now is the legitimate and moral property owner? The answer to this question now depends on whether or not Jones himself is the criminal, whether Jones is the man who stole the watch. If Jones was the thief, then it is quite clear that he cannot be allowed to keep it, for the criminal cannot be allowed to keep the reward of his crime; and he loses the watch, and probably suffers other punishments besides.We are assuming here that criminals suffer punishment beyond simple surrender of the property stolen: but how much the punishment should be or what theory it should be based upon—whether retributive, deterrent, or reform, for example—will be treated below. In that case, who gets the watch? Applying our libertarian theory of property, the watch is now—after Jones has been apprehended—in a state of no-ownership, and it must therefore become the legitimate property of the first person to "homestead" it—to take it and use it, and therefore, to have converted it from an unused, no-ownership state to a useful, owned state. The first person who does so then becomes its legitimate, moral, and just owner.

But suppose that Jones is not the criminal, not the man who stole the watch, but that he had inherited or had innocently purchased it from the thief. And suppose, of course, that neither the victim nor his heirs can be found. In that case, the disappearance of the victim means that the stolen property comes properly into a state of no-ownership. But we have seen that any good in a state of no-ownership, with no legitimate owner of its title, reverts as legitimate property to the first person to come along and use it, to appropriate this now unowned resource for human use. But this "first" person is clearly Jones, who has been using it all along. Therefore, we conclude that even though the property was originally stolen, that if the victim or his heirs cannot be found, and if the current possessor was not the actual criminal who stole the property, then title to that property belongs properly, justly, and ethically to its current possessor.

To sum up, for any property currently claimed and used: (a) if we know clearly that there was no criminal origin to its current title, then obviously the current title is legitimate, just and valid; (b) if we don't know whether the current title had any criminal origins, but can't find out either way, then the hypothetically "unowned" property reverts instantaneously and justly to its current possessor; (c) if we do know that the title is originally criminal, but can't find the victim or his heirs, then (c1) if the current title-holder was not the criminal aggressor against the property, then it reverts to him justly as the first owner of a hypothetically unowned property. But (c2) if the current titleholder is himself the criminal or one of the criminals who stole the property, then clearly he is properly to be deprived of it, and it then reverts to the first man who takes it out of its unowned state and appropriates it for his use. And finally, (d) if the current title is the result of crime, and the victim or his heirs can be found, then the title properly reverts immediately to the latter, without compensation to the criminal or to the other holders of the unjust title.

It might be objected that the holder or holders of the unjust title (in the cases where they are not themselves the criminal aggressors) should be entitled to the property which they added on to the property which was not justly theirs, or, at the very least, to be compensated for such additions. In reply, the criterion should be whether or not the addition is separable from the original property in question. Suppose, for example, that Brown steals a car from Black, and that Brown sells the car to Robinson. In our view, then, the car must be returned immediately to the true owner, Black, without compensation to Robinson. Being a victim of a theft should not impose obligations on Black to recompense someone else. Of course, Robinson has a legitimate complaint against the car-thief Brown, and should be able to sue Brown for repayment or damages on the basis of the fraudulent contract that Brown had foisted upon him (pretending that the car was really Brown's property to sell). But suppose that Robinson, in the course of his possession of the car, had added a new car radio; since the radio is separable from the car, he should be able to extract the radio as legitimately his own before returning the car to Black. On the other hand, if the addition is not separable, but an integral part of the property (e.g., a repaired engine), then Robinson should not be able to demand any payment or property from Black (although perhaps he may be able to do so by suing Brown). Similarly if Brown had stolen a parcel of land from Black, and sold it to Robinson, the criterion should again be the separability of any additions Robinson had made to the property. If, for example, Robinson had built some buildings on the property, then he should be able to move the buildings or demolish them before turning the land over to the original landowner, Black.

Our example of the stolen car enables us to see immediately the injustice of the current legal concept of the "negotiable instrument." In current law, the stolen car would indeed revert to the original owner with no obligation on the owner's part to compensate the current holder of the unjust title. But the State has designated certain goods as "negotiable instruments" (e.g., dollar bills) which the non-criminal recipient or buyer is now deemed to own, and who cannot be forced to return them to the victim. Special legislation has also made pawnbrokers into a similarly privileged class; so that if Brown steals a typewriter from Black, and then pawns it with Robinson, the pawnbroker may not be forced to return the typewriter to its just property owner, Black.

To some readers, our doctrine may seem harsh on good-faith recipients of goods which later turn out to be stolen and unjustly possessed. But we should remember that, in the case of land purchase, title searches are a common practice, as well as title insurance against such problems. In the libertarian society, presumably the business of title search and title insurance will become more extensive to apply to the wider areas of the protection of the rights of just and private property.

We see, then, that, properly developed libertarian theory neither joins the utilitarians in placing an arbitrary and indiscriminate ethical blessing upon every current property title, nor does it open the morality of existing titles to total uncertainty and chaos. On the contrary, from the fundamental axiom of the natural right of every man to property in his self and in the unowned resources which he finds and transforms into use, libertarian theory deduces the absolute morality and justice of all current titles to property except where the origin of the current titles is criminal, and (1) the victim or his heirs can be identified and found, or (2) the victim cannot be found but the current title-holder is the criminal in question. In the former case, the property reverts in common justice to the victim or his heirs; in the latter, it becomes the property of the first appropriator to alter its unowned state.

We thus have a theory of the rights of property: that every man has an absolute right to the control and ownership of his own body, and to unused land resources that he finds and transforms. He also has the right to give away such tangible property (though he cannot alienate control over his own person and will) and to exchange it for the similarly derived properties of others. Hence, all legitimate property-right derives from every man's property in his own person, as well as the "homesteading" principle of unowned property rightly belonging to the first possessor.

We also have a theory of criminality: a criminal is someone who aggresses against such property. Any criminal titles to property should be invalidated and turned over to the victim or his heirs; if no such victims can be found, and if the current possessor is not himself the criminal, then the property justly reverts to the current possessor on our basic "homesteading" principle.

Let us now see how this theory of property may be applied to different categories of property. The simplest case, of course, is property in persons. The fundamental axiom of libertarian theory is that each person must be a self-owner, and that no one has the right to interfere with such self-ownership. From this there follows immediately the total impermissibility of property in another person.The difficult case of children will be treated on pp. 97–112. One prominent example of this sort of property is the institution of slavery. Before 1865, for example, slavery was a "private property" title to many persons in the United States. The fact of such private title did not make it legitimate; on the contrary, it constituted a continuing aggression, a continuing criminality, of the masters (and of those who helped enforce their titles) against their slaves. For here the victims were immediately and clearly identifiable, and the master was every day committing aggression against his slaves. We should also point out that, as in our hypothetical case of the king of Ruritania, utilitarianism provides no firm basis for vacating the "property right" of a master in his slaves.

When slavery was a common practice, much discussion raged as to whether or how much the master should be monetarily compensated for the loss of his slaves if slavery were to be abolished. This discussion was palpably absurd. For what do we do when we have apprehended a thief and recovered a stolen watch: do we compensate the thief for the loss of the watch, or do we punish him? Surely, the enslavement of a man's very person and being is a far more heinous crime than the theft of his watch, and should be dealt with accordingly. As the English classical liberal Benjamin Pearson commented acidly: "the proposal had been made to compensate the slaveownersQuoted in William D. Grampp, The Manchester School of Economics (Stanford, Calif.: Stanford University Press, 1969), p. 59. Also on compensation and slavery, see pp. 204, 237ff below. and he had thought it was the slaves who should have been compensated." And clearly, such compensation could only justly have come from the slaveholders themselves, and not from the ordinary taxpayers.

It should be emphasized that on the question of slavery, whether or not it should have been abolished immediately is irrelevant to problems of social disruption, of the sudden impoverishing of slave masters, or of the flowering of Southern culture, let alone the question—interesting, of course, on other grounds—whether slavery was good for the soil, and for the economic growth of the South, or would have disappeared in one or two generations. For the libertarian, for the person who believes in justice, the sole consideration was the monstrous injustice and continuing aggression of slavery, and therefore the necessity of abolishing the institution as soon as it could be accomplished.For more on the general necessity for the libertarian to be an "abolitionist," see pp. 259ff. below.

This article is excerpted from the chapters 6–9 of The Ethics of Liberty.

Original Article: "Some Conservatives Still Pine for the Good Ol' Days of Cannabis Prohibition"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Original Article: "An End to the Bizarre CDC Rent Moratorium"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

In June 2004, Professor Hoppe visited the Mises Institute in Auburn to deliver an ambitious series of lectures titled Economy, Society, and History.

Over ten lectures, one each morning and afternoon for a week, Dr. Hoppe presented nothing short of a sweeping historical narrative and vision for a society rooted in markets and property. Delivered only from notes, to an audience of academics and intellectuals, the lectures showed astonishing depth and breadth. Even the most jaded scholars in the room were blown away by the erudition and scholarship of Hoppe’s presentation.

This project brings together the core of Hoppe’s lifetime of theoretical work in one vital and cohesive source. Here we find provocative themes developed by Hoppe in the 1980s and 90s, particularly in his essays found in A Theory of Socialism and Capitalism and The Economics and Ethics of Private Property. We also find his devastating critique of democracy, made famous in his seminal book Democracy—The God That Failed.

We’ve taken the recordings, edited them, and put them into a printed book. As always, Hoppe is equipped—and unafraid— to tackle history, anthropology, philosophy, sociology, ethics, politics, and economics, melding them into one coherent thesis:

Chapter 1: The Nature of Man and the Human Condition: Language, Property, and Production  Property developed naturally, not artificially, as a consequence of human action. What is the philosophical justification for private property, and what does property mean for economics and justice?

Chapter 2: The Spread of Humans Around the World: The Extension and Intensification of the Division of LaborHow did man evolve to develop trade and specialization? What did that mean for the development of society?

Chapter 3: Money and Monetary Integration: The Growth of Cities and the Globalization of TradeMoney solves problems of barter and trade; good money makes global economics possible. But money is always and forever subject to corrupting monopolization by states and central banks. How do we separate money from the state, and separate trade from politics?

Chapter 4: Time Preference, Capital, Technology, and Economic GrowthTime, and our preference for present goods over future goods, informs everything we do. Low time preference, demonstrated by capital accumulation, is the key to advancing civilization. How do we encourage capital accumulation when the forces of statism work against us?

Chapter 5: The Wealth of Nations: Ideology, Religion, Biology, and EnvironmentHow did the West get rich? What intellectual movements threaten progress, or advance it?

Chapter 6: The Production of Law and Order: Natural Order, Feudalism, and FederalismMust law be positive rather than evolved? Who creates it, and who enforces it?

Chapter 7: Parasitism and the Origin of the StateHow did we get here? How does the ruling class derive its putative legitimacy, and what can the distant origins of governance teach us about the vast managerial social welfare states we endure today?

Chapter 8: From Monarchy to DemocracyIs democracy really the great advancement in human liberty we have been taught to believe? What is the role of natural and artificial elites?

Chapter 9: State, War, and ImperialismStates are necessarily expansionist and bellicose. How do we tame their warring and intervening nature?

Chapter 10: Strategy: Secession, Privatization, and the Prospects of LibertyCan private covenant communities replace the state? Why is a private property order morally urgent? Is secession viable? How do we move forward strategically?

As you can see, this book is a tremendous addition to Hoppe’s body of work, and a hugely important contribution to the “big picture” outlook for the West. Hoppe’s work is more important today than ever, given the penchant of modern bureaucratic states to war, intervene, tax, regulate, debase, and generally plunder the engines of peace and civilization.

Economy, Society, and History is a blueprint for understanding the world, rethinking it, and creating a better one.

The work of Rawls and Nozick; two volumes edited by Gordon Tullock, Explorations in the Theory of Anarchy; and a book by David Friedman, The Machinery of Freedom, provide examples. The goals of the literature have varied from providing a conceptual framework for comparing Leviathan and its opposite extreme to presenting a formula for the operation of society in a state of anarchy. But nearly all of this work has one common aspect; it explores the "theory of anarchy."

The purpose of this paper is to take us from the theoretical world of anarchy to a case study of its application. To accomplish our task we will first discuss what is meant by "anarchocapitalism" and present several hypotheses relating to the nature of social organization in this world.

These hypotheses will then be tested in the context of the American West during its earliest settlement. We propose to examine property-rights formulation and protection under voluntary organizations such as private protection agencies, vigilantes, wagon trains, and early mining camps. Although the early West was not completely anarchistic, we believe that government as a legitimate agency of coercion was absent for a long enough period to provide insights into the operation and viability of property rights in the absence of a formal state. The nature of contracts for the provision of "public goods" and the evolution of western "laws" for the period from 1830 to 1900 will provide the data for this case study.

The West during this time is often perceived as a place of great chaos, with little respect for property or life. Our research indicates that this was not the case; property rights were protected, and civil order prevailed. Private agencies provided the necessary basis for an orderly society in which property was protected and conflicts were resolved.

These agencies often did not qualify as governments because they did not have a legal monopoly on "keeping order." They soon discovered that "warfare" was a costly way of resolving disputes and lower-cost methods of settlement (arbitration, courts, etc.) resulted. In summary, this paper argues that a characterization of the American West as chaotic would appear to be incorrect.

Though the first dictionary definition of anarchy is "the state of having no government," many people believe that the third definition, "confusion or chaos generally," is more appropriate since it is a necessary result of the first.

If we were to engage seriously in the task of dismantling the government as it exists in the US, the political economist would find no scarcity of programs to eliminate. However, as the dismantling continued, the decisions would become more and more difficult, with the last "public goods" to be dealt with probably being programs designed to define and enforce property rights. Consider the following two categories of responses to this problem:

The first school we shall represent as the "constitutionalist" or "social contractarian" school. For this group the important question is "how do rights re-emerge and come to command respect? How do 'laws' emerge that carry with them general respect for their 'legitimacy'?"James M. Buchanan, "Before Public Choice," in G.Tullock, ed., Explorations in the Theory of Anarchy (Blacksburg, Va.: Center for the Study of Public Choice, 1972), p. 37. This position does not allow us to "'jump over' the whole set of issues involved in defining the rights of persons in the first place."James M. Buchanan, "Review of David Friedman, The Machinery of Freedom: Guide to Radical Capitalism," The Journal of Economic Literature, Vol. X11, No.3 (1974), p. 915.

Here, collective action is taken as a necessary step in the establishment of a social contract or constitutional contract which specifies these rights. To the extent that rights could be perfectly defined, the only role for the state would be in the protection of those rights, since the law designed for that protection is the only public good.

If rights cannot be perfectly well-defined, a productive role for the state will arise. The greater the degree to which private rights cannot be perfectly defined, the more the collective action will be plunged into the "eternal dilemma of democratic government," which is "how can government, itself the reflection of interests, establish the legitimate boundaries of self-interest, and how can it, conversely carve out those areas of intervention that will be socially protective and collectively useful?"E.A.J. Johnson, The Foundations of American Economic Freedom (Minneapolis: University of Minnesota Press, 1973), p. 305.

The contractarian solution to this dilemma is the establishment of a rule of higher law or a constitution, which specifies the protective and productive roles of the government. Since the productive role, because of the free-rider problem, necessarily requires coercion, the government will be given a monopoly on the use of force. Were this not the case, some individuals would choose not to pay for services from which they derive benefits.

The second school can be labeled "anarchocapitalist" or "private-property anarchist." In its extreme form this school would advocate eliminating all forms of collective action since all functions of government can be replaced by individuals possessing private rights exchangeable in the market place. Under this system all transactions would be voluntary except insofar as the protection of individual rights and enforcement of contracts required coercion. The essential question facing this school is how can law and order, which do require some coercion, be supplied without ultimately resulting in one provider of those services holding a monopoly on coercion, i.e., government.

If a dominant protective firm or association emerges after exchanges take place, we will have the minimal state as defined by Nozick and will have lapsed back into the world of the "constitutionalist." The private-property anarchist's view that markets can provide protection services is summarized as follows:

The profit motive will then see to it that the most efficient providers of high-quality arbitration rise to the top and that inefficient and graft-oriented police lose their jobs. In short, the market is capable of providing justice at the cheapest price. According to Rothbard, to claim that these services are "public goods" and cannot be sold to individuals in varying amounts is to make a claim which actually has little basis in fact.Laurence S. Moss, "Private Property Anarchism: An American Variant," in G.Tullock, ed., Further Explorations in the Theory of Anarchy (Blacksburg, Va.: Center for the Study of Public Choice, 1974), p. 26.

Hence, the anarchocapitalists place faith in the profit-seeking entrepreneurs to find the optimal size and type of protective services and faith in competition to prevent the establishment of a monopoly in the provision of these services.

There are essentially two differences between the two schools discussed above. First, there is the empirical question of whether competition can actually provide the protection services. On the anarchocapitalist side, there is the belief that it can. On the constitutionalists or "minimal-state" side, there is the following argument.

Conflicts may occur, and one agency will win. Persons who have previously been clients of losing agencies will desert and commence purchasing their protection from winning agencies. In this manner a single protective agency or association will eventually come to dominate the market for policing services over a territory. Independent persons who refuse to purchase protection from anyone may remain outside the scope of the dominant agency, but such independents cannot be allowed to punish clients of the agency on their own. They must be coerced into not punishing. In order to legitimize their coercion, these persons must be compensated, but only to the extent that their deprivation warrants.James M. Buchanan, Freedom in Constitutional Contract (College Sta., Tex.: Texas A&M University Press, 1977), p. 52.

The second issue is more conceptual than empirical, and hence cannot be entirely resolved through observation. This issue centers on the question of how rights are determined in the first place; how do we get a starting point with all its status quo characteristics from which the game can be played.

Buchanan, a leading constitutionalist, criticizes Friedman and Rothbard, two leading private-property anarchists, because "they simply 'jump over' the whole set of issues involved in defining the rights of persons in the first place."Buchanan, "Review of Machinery of Freedom," p. 915. To the constitutionalist, the Lockean concept of mixing labor with resources to arrive at "natural rights" is not sufficient. The contractarian approach suggests that the starting point is determined by the initial bargaining process which results in the constitutional contract.

Debate over this issue will undoubtedly continue, but even Buchanan agrees that

if the distribution or imputation of the rights of persons (rights to do things, both with respect to other persons and to physical things) is settled, then away we go. And aside from differences on certain specifics (which may be important but relatively amenable to analysis, e.g., the efficacy of market-like arrangements for internal and external peace-keeping), I should accept many of the detailed reforms that these passionate advocates propose.Ibid., emphasis added.

Our purpose in this paper is to discuss, in a historical context, some of the important issues that Buchanan says are amenable to analysis. We do not plan to debate the issue of the starting point, but will be looking at the "efficacy of market-like arrangements for internal … peacekeeping."Ibid.

It does seem, for the time period and the geographical area which we are examining, that there was a distribution of rights which was accepted either because of general agreement to some basic precepts of natural law or because the inhabitants of the American West came out of a society in which certain rights were defined and enforced.

Such a starting point is referred to as a Schelling point, a point of commonality that exists in the minds of the participants in some social situationFor a longer discussion of Schelling points, see Thomas C. Schelling, The Strategy of Conflict (Cambridge: Harvard University Press, 1960), pp. 54–58; Buchanan, "Review of Machinery of Freedom," p. 914; and David Friedman, "Schelling Points, Self-Enforcing Contracts, and the Paradox of Order," (unpublished MS, Center for the Study of Public Choice, Virginia Polytechnic Institute). Even in the absence of any enforcement mechanism, most members of Western society agreed that certain rights to use and control property existed. Thus when a miner argued that a placer claim was his because he "was there first," that claim carried more weight than if he claimed it simply because he was most powerful.

Tastes, culture, ethics, and numerous other influences give Schelling-point characteristics to some claims but not to others. The long period of conflicts between the Indians and the settlers can be attributed to a lack of any such Schelling points. We concentrate, however, on arrangements for peace-keeping and enforcement that existed among the nonindigenous, white population.

In the following pages we describe the private enforcement of rights in the West between 1830 and 1900. This description does allow one to test, in a limited fashion, some of the hypotheses put forth about how anarchocapitalism might function.

We qualify the test with "limited" because a necessary feature of such a system is the absence of a monopoly on coercion.David Friedman, The Machinery of Freedom: Guide to Radical Capitalism (New York: Harper & Row, 1973), p. 152. Various coercive agencies would exist but none would have a legitimized monopoly on the use of such coercion. The difficulty of dealing with this proposition in the American West is obvious. Although for much of the period, formal government agencies for the protection of rights were not present, such agencies were always lurking in the background. Therefore, none of the private enforcement means operated entirely independent of government influence.

Also, one has to be careful in always describing private agencies as "nongovernment" because, to the extent that they develop and become the agency of legitimized coercion they also qualify as "government." Although numerous descriptions of such private agencies exist, it is oftentimes difficult to determine when they are enhancing competition and when they are reducing it.

Despite the above caveats, the West is a useful testing ground for several of the specific hypotheses about how anarchocapitalism might work. We use David Friedman's The Machinery of Freedom as our basis for the formulation of hypotheses about the working of anarchocapitalism, because it is decidedly nonutopian and it does set out, in a fairly specific form, the actual mechanisms under which a system of nongovernment protective agencies would operate. The major propositions are:

Private agencies will provide the necessary functions for preservation of an orderly society.

The concept of "justice" is not an immutable one that only needs to be discovered. Preferences do vary across individuals as to the rules they prefer to live under and the price they are willing to pay for such rules. Therefore, significant differences in rules might exist in various societies under anarchocapitalism.

Competition among protective agencies and adjudication bodies will serve as healthy checks on undesirable behavior. Consumers will have better information than under government and will use it in judging these agencies.

Before turning to specific examples of anarchocapitalistic institutions in the American West, it is useful to examine the legendary characterization of the "wild, wild West." The potential for chaos is a major objection to trust in the market for enforcement of rights, and many histories of the West seem to substantiate this argument. These histories describe the era and area as characterized by gunfights, horse-thievery, and general disrespect for basic human rights.

The taste for the dramatic in literature and other entertainment forms has led to concentration on the seeming disparity between the Westerners' desire for order and the prevailing disorder. If the Hollywood image of the West were not enough to taint our view, scholars of violence have contributed with quotes such as the following: "We can report with some assurance that compared to frontier days there has been a significant decrease in crimes of violence in the United States."Gilbert Geis, "Violence in American Society," Current History, Vol. LII (1976), p. 357.

Recently, however, more careful examinations of the conditions that existed cause one to doubt the accuracy of this perception. In his book, Frontier Violence: Another Look, W. Eugene Hollon stated that he believed "that the Western frontier was a far more civilized, more peaceful, and safer place than American society is today."Eugene W. Hollon, Frontier Violence: Another Look (New York: Oxford University Press, 1974), p. x. The legend of the "wild, wild West" lives on despite Robert Dykstra's finding that in five of the major cattle towns (Abilene, Ellsworth, Wichita, Dodge City, and Caldwell) for the years from 1870 to 1885, only 45 homicides were reported — an average of 1.5 per cattle-trading season.Robert A. Dykstra, The Cattle Towns (New York: Alfred A. Knopf, 1968), p. 144.

In Abilene, supposedly one of the wildest of the cow towns, "nobody was killed in 1869 or 1870. In fact, nobody was killed until the advent of officers of the law, employed to prevent killings."Paul I. Wellman, The Trampling Herd (New York: Carrick and Evans, 1939), p. 159. Only two towns, Ellsworth in 1873 and Dodge City in 1876, ever had 5 killings in any one year.Hollon, Frontier Violence, p. 200. Frank Prassel states in his book subtitled A Legacy of Law and Order, that "if any conclusion can be drawn from recent crime statistics, it must be that this last frontier left no significant heritage of offenses against the person, relative to other sections of the country."Frank Prassel, The Western Peace Officer (Norman, Okla.: University of Oklahoma Press, 1937), pp. 16–17.

Moreover, even if crime rates were higher, it should be remembered that the preference for order can differ across time and people. To show that the West was more "lawless" than our present-day society tells one very little unless some measure of the "demand for law and order" is available. "While the frontier society may appear to have functioned with many violations of formal law, it sometimes more truly reflected community customs in conflict with superficial and at times alien standards."Prassel, Western Peace Officer, p. 7.

The vigilance committees, which sprang up in many of the mining towns of the West provide excellent examples of this conflict. In most instances these committees arose after civil government was organized. They proved that competition was useful in cases where government was ineffective, as in the case of San Francisco in the 1850s,See George R. Stewart, Committee on Vigilance (Boston: Houghton Mifflin Co., 1964); and Alan Valentine, Vigilante Justice (New York: Reynal and Co., 1956). or where government became the province of criminals who used the legal monopoly on coercion to further their own ends, as in Virginia City, Montana Territory in the 1860s.Thomas J. Dimsdale, The Vigilantes of Montana (Norman, Okla.: University of Oklahoma Press, 1953).

Even in these cases, however, violence was not the standard modus operandi. When the San Francisco vigilante committee was reconstituted in 1856, "the group remained in action for three months, swelling its membership to more than eight thousand. During this period, San Francisco had only two murders, compared with more than a hundred in the six months before the committee was formed."Wayne Gard, Frontier Justice (Norman, Okla.: University of Oklahoma Press, 1949), p. 165.

To understand how law and order were provided in the American West, we now turn to four examples of institutions which approximated anarchocapitalism. These case studies of (a) land-claims clubs, (b) cattlemen's associations, (c) mining camps, and (d) wagon trains provide support for the hypotheses presented above and suggest that private rights were enforced and that chaos did not reign.

For the pioneer settlers, who often moved into the public domain before it was surveyed or opened for sale by the federal government, definition and enforcement of property rights in the land they claimed was always a problem.

These marginal or frontier settlers (squatters as they were called) were beyond the pale of constitutional government. No statute of Congress protected them in their rights to the claims they had chosen and the improvements they had made. In law they were trespassers; in fact they were honest farmers.Benjamin F. Shambaugh, "Frontier Land Clubs, or Claim Associations," Annual Report of the American Historical Association (1900), p. 71.

The result was the formation of "extralegal" organizations for protection and justice. These land clubs or claims associations, as the extralegal associations came to be known, were found throughout the Middle West, with the Iowa variety receiving the most attention. Benjamin F. Shambaugh suggests that we view these clubs "as an illustrative type of frontier extra-legal, extra-constitutional political organization in which are reflected certain principles of American life and character."Shambaugh, "Frontier Land Clubs," p. 69. To Frederick Jackson Turner these squatters' associations provided an excellent example of the "power of the newly arrived pioneers to join together for a common end without the intervention of governmental institutions."Frederick Jackson Turner, The Frontier in American History (New York: Henry Holt and Co., 1920), p. 343.

Each claims association adopted its own constitution and bylaws, elected officers for the operation of the organization, established rules for adjudicating disputes, and established the procedure for the registration and protection of claims. The constitution of the Claim Association of Johnson County, Iowa offers one of the few records of club operation. In addition to president, vice president, and clerk and record, that constitution provided for the election of seven judges, any five of whom could compose a court to settle disputes, and for the election of two marshals charged with enforcing rules of the association. The constitution specified the procedure whereby property rights in land would be defined as well as the procedure for arbitrating claims disputes. User charges were utilized for defraying arbitration expenses.

In such case of the place and time of holding such court and summons all witnesses that either of the parties may require the court made previous to their proceeding to investigate any case require the plaintiff and defendant to deposit a sufficient sum of money in their hands to defray the expenses of said suit or the costs of said suit, and should either party refuse to deposit such sum of money the court may render judgment against such person refusing to do.Shambaugh, "Frontier Land Clubs," p. 77.

As a sanction against those who would not follow the rules of the association, violence was an option, but the following resolution suggests that less violent means were also used.

Resolved, that more effectually to sustain settlers in their just claims according to the custom of the neighborhood and to prevent difficulty and discord in society that we mutually pledge our honours to observe the following resolutions rigidly. That we will not associate nor countenance those who do not respect the claims of settlers and further that we will neither neighbor with them.… Trade barter deal with them in any way whatever.Ibid., pp. 77–78.

That the constitutions, bylaws, and resolutions of all claims clubs were not alike suggests that preferences among the squatters did vary and that there were alternative forms of protection and justice available. The most common justification for the clubs was stated as follows:

Whereas it has become a custom in the western states, as soon as the Indian title to the public lands has been extinguished by the General Government for the citizens of the United States to settle upon and improve said lands, and heretofore the improvement and claim of the settler to the extent of 320 acres, has been respected by both the citizens and laws of Iowa.Quoted in Allan Bogue, "The Iowa Claim Clubs: Symbol and Substance," in V. Carstensen, ed., The Public Lands (Madison, Wisc.: University of Wisconsin Press, 1963), p. 50.

Other justifications "emphasized the need of protection against 'reckless claim jumpers and invidious wolves in human form,' or the need 'for better security against foreign as well as domestic aggression.'Ibid. Some associations were formed specifically for the purpose of opposing "speculators" who were attempting to obtain title to the land. The constitutions of these clubs as evidenced by the Johnson County document specifically regulated the amount of improvements which had to be made on the claim. Other associations, however, encouraged speculation by making no such requirements. These voluntary, extralegal associations provided protection and justice without apparent violence and developed rules consistent with the preferences, goals, and endowments of the participants.

Early settlement of the cattle frontier created few property conflicts, but as land became more scarce, private, voluntary enforcement mechanisms evolved. Initially "there was room enough for all, and when a cattleman rode up some likely valley or across some well-grazed divide and found cattle thereon, he looked elsewhere for range."Ernest Staples Osgood, The Day of the Cattleman (Minneapolis: University of Minnesota Press, 1929), p. 182. But even "as early as 1868, two years after the first drive, small groups of owners were organizing themselves into protective associations and hiring stock detectives."Ibid., p. 118. The place of these associations in the formation of "frontier law" is described by Louis Pelzer.

From successive frontiers of our American history have developed needed customs, laws, and organizations. The era of fur-trading produced its hunters, its barter, and the great fur companies; on the mining frontier came the staked claims and the vigilance committees; the camp meeting and the circuit rider were heard on the religious outposts; on the margins of settlement the claim clubs protected the rights of the squatter farmers; on the ranchmen's frontier the millions of cattle, the vast ranges, the ranches, and the cattle companies produced pools and local, district, territorial and national cattle associations.Louis Pelzer, The Cattlemen's Frontier (Glendale, Calif.: A.H. Clark, 1936), p. 87.

As Ernest Staples Osgood tells us, it was "the failure of the police power in the frontier communities to protect property and preserve order that "resulted over and over again in groups who represented the will of the law-abiding part of the community dealing out summary justice to offenders."Osgood, Day of Cattleman, p. 157.

Like the claims associations, the cattlemen's associations drew up formal rules governing the group, but their means of enforcing private rights was often more violent than the trade sanctions specified by the claims associations. These private protection agencies were quite clearly a market response to existing demands for enforcement of rights.

Expert gunmen — professional killers — had an economic place in the frontier West. They turned up wherever there was trouble.… Like all mercenaries, they espoused the side which made them the first or best offer.… Wellman, Trampling Herd, p. 346.

Just why, when, and how he hooked up with the cattlemen around Fort Maginnis, instead of with the rustlers, is a trifle obscure, but Bill became Montana's first stock detective. Raconteurs of the period seem agreed that Bill's choice was not dictated by ethics, but by the prospect of compensation. At any rate, he became a hired defender of property rights, and he executed his assignments — as well as his quarry — with thoroughness and dispatch.Robert H. Fletcher, Free Grass to Fences: the Montana Cattle Range Story (New York: University Publishers, 1960), p. 65.

The market-based enforcement agencies of the cattlemen's frontier were different from modern private enforcement firms in that the earlier versions evidently enforced their own laws much of the time rather than serving as simply an extension of the government's police force. An often expressed concern about this type of enforcement is that (1) the enforcement will be ineffective or (2) the enforcement agencies will themselves become large-scale organizations that use their power to infringe upon individual rights. We have argued above that there is little reason to believe that the first concern is justified.Prassel, Western Peace Officer, pp. 134–141.

It also appears that the second concern is not supported by the experience of the American West. Major economies of scale did not seem to exist in either enforcement or crime. Although there are numerous records of gunslingers making themselves available for hire, we find no record of these gunslingers discovering that it was even more profitable to band together and form a super-defense agency that sold protection and rode roughshod over private property rights.

Some of the individuals did drift in and out of a life of crime and sometimes did form loose criminal associations. However, these associations did not seem to be encouraged by the market form of peacekeeping, and in fact, seemed to be dealt with more quickly and more severely under private-property protective associations than under government organization.

There were a few large private enforcement organizations, in particular the Pinkerton Agency and Wells Fargo, but these agencies seemed to serve mainly as adjuncts to government and were largely used in enforcing state and national laws. Other large-scale associations, e.g., the Rocky Mountain Detective Association and the Anti-Horse Thief Association, were loose information-providing and coordination services, and rarely provided on-the-spot enforcement of private rules.Prassel, Western Peace Officer, pp. 134–141.

As the population of the United States grew, westward expansion was inevitable. But there can be little doubt that the discovery of gold in California in 1848 rapidly increased the rate of expansion. Thousands of Easterners rushed to the most westward frontier in search of the precious metal, leaving behind their civilized world. Later, the same experience occurred in Colorado, Montana, and Idaho and, in each case, the first to arrive were forced into a situation where they had to write the rules of the game.

There was no constitutional authority in the country, and neither judge nor officer within five hundred miles. The invaders were remitted to the primal law of nature, with, perhaps, the inherent rights of American citizenship. Every gulch was filling with red-hot treasure hunters; every bar was pock-marked with "prospect holes"; timber, water-rights, and town-lots were soon to be valuable, and government was an imperative necessity. Here was a fine field for theorists to test their views as to the origin of civil law.J.H. Beadle, Western Wilds and the Men Who Redeem Them (Cincinnati: Jones Brothers, 1882), p. 476.

The early civil law which evolved from this process approximated anarchocapitalism as closely as any other experience in the United States.

In the absence of a formal structure for the definition and enforcement of individual rights, many of the groups of associates who came seeking their fortunes organized and made their rules for operation before they left their homes. Much the same as company charters today, these voluntary contracts entered into by the miners specified financing for the operation as well as the nature of the relationship between individuals. These rules applied only to the miners in the company and did not recognize any outside arbitrator of disputes; they did not "recognize any higher court than the law of the majority of the company."Charles Howard Shinn, Mining Camps: A Study in American Frontier Government (New York: Alfred A. Knopf, 1948), p. 107.

As Friedman's theory predicts, the rules under which the companies were organized varied according to tastes and needs of the company. "When we compare the rules of different companies organized to go to the mines, we find considerable variation."Ibid. In addition to the rules listed above, company constitutions often specified arrangements for payments to be used for caring for the sick and unfortunate, rules for personal conduct including the use of alcoholic spirits, and fines which could be imposed for misconduct, to mention a few.John Phillip Reid, "Prosecuting the Elephant: Trials and Judicial Behavior on the Overland Trail," BYU Law Review, Vol. 77, No. 2 (1977), pp. 335–336. In the truest nature of the social contract, the governing rules of the company were negotiated, and as in all market transactions unanimity prevailed. Those who wished to purchase other "bundles of goods" or other sets of rules had that alternative.

Once the mining companies arrived at the potential gold sites, the rules were useful only insofar as questions of rights involved members of the company; when other individuals were confronted in the mining camps, additional negotiation was necessary. Of course, the first issues to arise concerned the ownership of mining claims. When the groups were small and homogeneous, dividing up the gulch was an easy task. But when the numbers moving to the gold country reached the thousands, the problems increased. The general solution was to hold a mass meeting and appoint committees assigned to drafting the laws. Gregory Gulch in Colorado provides an example.

A mass meeting of miners was held June 8, 1859, and a committee appointed to draft a code of laws. This committee laid out boundaries for the district, and their civil code, after some discussion and amendment, was unanimously adopted in mass meeting, July 16, 1859. The example was rapidly followed in other districts, and the whole Territory was soon divided between a score of local sovereignties.Beadle, Western Wilds, p. 477, emphasis added.

The camps could not live in complete isolation from the established forms of government, but there is evidence that they were able to maintain their autonomy. In California, military posts were established to take care of Indian troubles, but these governmental enforcement organizations did not exercise any authority over the mining camps. General Riley in an 1849 visit to a California camp told the miners that "all questions touching the temporary right of individuals to work in particular localities of which they were in possession, should be left to the decision of the local authorities."Quoted in Shinn, Mining Camps, p. 111.

No alcalde, no council, no justice of the peace, was ever forced upon a district by an outside power. The district was the unit of political organization, in many regions, long after the creation of the state; and delegates from adjoining districts often met in consultation regarding boundaries, or matters of local government, and reported to their respective constituencies in open-air meeting, on hillside or river-bank.Shinn, Mining Camps, p. 168.

Moreover, the services of trained lawyers were not welcomed in many of the camps and even forbidden in districts such as the Union Mining District.

Resolved, that no lawyer be permitted to practice law in this district, under penalty of not more than fifty nor less than twenty lashes, and be forever banished from this district.Quoted in Beadle, Western Wilds, p. 478.

In this way, the local camps were able to agree upon rules for individual rights and upon methods for enforcement thereof without coercion from US authorities. When outside laws were imposed upon the camps, there is some evidence that they increased rather than decreased crime. One early Californian writes, "We needed no law until the lawyers came," and another adds, "There were few crimes until the courts with their delays and technicalities took the place of miners."Quoted in Shinn, Mining Camps, p. 113.

While the mining camps did not have private courts where individuals could take their disputes and pay for arbitration, they did develop a system of justice through the miners' courts. These courts seldom had permanent officers, although there were instances of justices of the peace. The folk-moot system was common in California. By this method a group of citizens was summoned to try a case. From their midst they would elect a presiding officer or judge and select six or twelve persons to serve as the jury.

Most often their rulings were not disputed, but there was recourse when disputes arose. For example, in one case involving two partners, after a ruling by the miners' court, the losing partner called a mass meeting of the camp to plead his case and the decision was reversed.Marvin Lewis, ed., The Mining Frontier (Norman, Okla.: University of Oklahoma Press, 1967), pp. 10–18. And if a larger group of miners was dissatisfied with the general rulings regarding camp boundaries or individual claim disputes, notices were posted in several places calling meeting of those wishing a division of the territory.

If a majority favored such action, the district was set apart and named. The old district was not consulted on the subject, but received a verbal notice of the new organization. Local conditions, making different regulations regarding claims desirable, were the chief causes of such separations.Shinn, Mining Camps, p. 118.

The work of mining, and its environment and conditions, were so different in different places, that the laws and customs of the miners had to vary even in adjoining districts.Ibid., p. 159.

When disputes did arise and court sessions were called, any man in the camp might be called upon to be the executive officer. Furthermore, anyone who was a law-abiding citizen might be considered for prosecutor or defender for the accused.

In Colorado there is some evidence of competition among the courts for business, and hence, an added guarantee that justice prevailed.

The civil courts promptly assumed criminal jurisdiction, and the year 1860 opened with four governments in full blast. The miners' courts, people's courts, and "provisional government" (a new name for "Jefferson") divided jurisdiction in the mountains; while Kansas and the provisional government ran concurrent in Denver and the valley. Such as felt friendly to either jurisdiction patronized it with their business. Appeals were taken from one to the other, papers certified up or down and over, and recognized, criminals delivered and judgments accepted from one court by another, with a happy informality which it is pleasant to read of. And here we are confronted by an awkward fact: there was undoubtedly much less crime in the two years this arrangement lasted than in the two which followed the territorial organization and regular government.Beadle, Western Wilds, p. 477.

This evidence is consistent with Friedman's hypothesis that when competition exists, courts will be responsible for mistakes and the desire for repeat business will serve as an effective check on "unjust" decisions.

Perhaps the best example of private-property anarchism in the American West was the organization of the wagon trains as they moved across the plains in search of California gold. The region west of Missouri and Iowa was unorganized, unpatrolled, and beyond the jurisdiction of US law. But to use the old trapper saying that there was "no law west of Leavenworth" to describe the trains would be inappropriate.

Realizing that they were passing beyond the pale of the law, and aware that the tedious journey and the constant tensions of the trail brought out the worst in human character, the pioneers … created their own law making and law-enforcing machinery before they started.Ray Allen Billington, The Far Western Frontier, 1830–1860 (New York: Harper & Bros., 1956), p. 99.

Like their fellow travelers on the ocean, the pioneers in their prairie schooners negotiated a "plains law" much like their counterparts' "sea law."David Morris Potter, ed., Trail to California (New Haven: Yale University Press, 1945), pp. 16–17. The result of this negotiation in many cases was the adoption of a formal constitution patterned after that of the US. The preamble of the constitution of the Green and Jersey County Company provides an example.

We, the members of the Green and Jersey County Company of Emigrants to California, for the purpose of effectually protecting our persons and property, and as the best means of ensuring an expeditious and easy journey do ordain and establish the following constitution.Reprinted in Elizabeth Page, Wagon West (New York: Farrar & Rinehart, 1930), Appendix C.

From this and the other constitutions which have survived it is clear that these moving communities did have a basic set of rules defining how "the game would be played" during their journey. Like the rules of the mining camps, the wagon train constitutions varied according to the tastes and needs of each organization, but several general tendencies do emerge. Most often the groups waited until after they have been on the trail for a few days and out of the jurisdiction of the United States. One of the first tasks was to select officers who would be responsible for enforcing the rules. For the Green and Jersey County Company, which was not atypical, the officers included a Captain, Assistant Captain, Treasurer, Secretary, and an Officer of the Guard.

The constitutions also included eligibility for voting and decision rules for amendment, banishment of individuals from the group, and dissolution of the company. Duties for each officer were often well specified, as in the case of the Charleston, Virginia, Mining Company.Constitution reprinted in Potter, Trail to California, Appendix A. In addition to these general rules, specific laws were enacted. Again, the introduction of the Green and Jersey County Company is illustrative.

We, citizens and inhabitants of the United States, and members of the Green and Jersey County Company of Emigrants to California; about starting on a journey through a territory where the laws of our common country do not extend their protection, deem it necessary, for the preservation of our rights, to establish certain wholesome rules and regulations. We, therefore, having first organized a constitution of government, for ourselves, do now proceed to enact and ordain the following laws; and in so doing we disclaim all desire or intention of violating or treating with disrespect, the laws of our country.Page, Wagon West, p. 118.

The specific rules included organization of jury trials; regulation of Sabbath-breaking, gambling and intoxication; and penalties for failing to perform chores, especially guard duty. In certain cases there were even provisions for the repair of roads, building bridges, and protection of other "public goods."Ibid., p. 119.

It has been argued that

these ordinances or constitutions … may be of interest as guides to pioneers' philosophies about law and social organization, [but] they do not help answer the more essential question of how, in fact, not in theory, did the overland pioneer face problems of social disorder, crime, and private conflict.David J. Langum, "Pioneer Justice on the Overland Trail," Western Historical Quarterly, Vol. 5, No. 3 (1974), p. 424, fn. 12.

Nonetheless, it is clear that the travelers did negotiate from Schelling points to social contracts without relying upon the coercive powers of government. And these voluntary contracts did provide the basis for social organization.

The Schelling points from which the individuals negotiated included a very well-accepted set of private rights especially with regard to property. One might expect that upon leaving the legal jurisdiction of the United States, with its many laws governing private property, that the emigrants would have less respect for other's rights. Moreover, since the constitutions and bylaws seldom specifically mentioned individual property rights, we might infer that these were of little concern to the overlanders. In his article, "Paying for the Elephant: Property Rights and Civil Order on the Overland Trail," John Phillip Reid convincingly argues that respect for property rights was paramount. Even when food became so scarce that starvation was a distinct possibility, there are few examples where the pioneers resorted to violence.

Indeed, it is no exaggeration to say that the emigrants who traveled America's overland trail gave little thought to solving their problems by violence or theft. We know that some ate the flesh of dead oxen or beef with maggots while surrounded by healthy animals they could have shot. Those who suffered losses early in the trip and were able to go back, did so. The disappointment and embarrassment for some must have been extremely bitter, but hundreds returned. They did not use weapons to force their way through. While a few of those who were destitute may have employed tricks to obtain food, most begged, and those who were "too proud to beg" got along the best they could or employed someone to beg for them. If they could not beg, they borrowed, and when they could not borrow they depended on their credit.

The emigrants were property minded. The fact that the constitution contained few references to individual property rights may well reflect the significance of private-property Schelling points.

When crimes against property or person did occur, the judicial system which was specified in the contracts was brought into play.

The rules of a traveling company organized at Kanesville, Iowa, provided: "Resolved, that in case of any dispute arising between any members of the Company, they shall be referred to three arbiters, one chosen by each party, and one by the two chosen, whose decision shall be final."Reid, "Prosecuting the Elephant," p. 330.

The methods of settling disputes varied among the companies, but in nearly all cases some means of arbitration were specified to insure "that the rights of each emigrant are protected and enforced."Quoted in Reid, "Prosecuting the Elephant," p. 330.

In addition to the definition and enforcement of individual rights, the overlanders also were faced with the question of how to solve disputes involving contractual relations for business purposes. For all of the same reasons that firms exist for the production of goods and services, individuals crossing the plains had incentives to organize into "firms" with one another. Scale economies in the production of goods such as meals and services such as herding and in the provision of protection from Indians provided for gains from voluntary and collective action. Again markets seemed to function well in providing several types of contractual arrangements for this production and protection.

A common form of organization on the overland trail was the "mess." Similar to sharecropping arrangements in agriculture, the mess allowed individuals to contribute inputs such as food, oxen, wagons, labor, etc. for the joint production of travel or meals. In this way, the mess, which allowed the property to remain privately owned, differed from the partnership where property was concurrently owned.

Since mess property was available for use by all members of the mess, the potential for conflict was great. When the conflicts occurred, renegotiation of the contract was sometimes necessary. When new agreements could not be reached, the mess would have to be dissolved and property returned to individual owners. Since ownership remained private, division was not difficult.

Moreover, since there were gains from trade to be obtained from combining inputs, it was usually possible to renegotiate when violations in the contract occurred. There were, however, cases where renegotiation seemed impossible, as in the following example of a mess which found one of its members unwilling to do his share of the chores.

We concluded the best thing we could do was to buy him out and let him go which accordingly we did by paying him one hundred doll[ar]s. He shoulder[ed] his gun, carpet bag, and blanket and took the track to the prairie without saying good by to one of us.Quoted in John Phillip Reid, "Dividing the Elephant: the Separation of Mess and Joint Stock Property on the Overland Trail," Hastings Law Journal, Vol. 28, No. 1 (1976), p. 77.

While other cases of dissolution of messes occurred, there is no evidence that coercive power was used to take property from rightful owners. If an individual left one mess he could usually join another.

The other common type of organization on the overland routes was the joint-stock company. In this organization members contributed capital and other property which was held concurrently. The Charlestown, Virginia, Mining Company provides an example of such a company and its constitution attests to the establishment of rules governing use of concurrent property.See Potter, Trail to California, Appendix A. Again it should be emphasized that these rules were voluntary, though coercion was used within the organization to enforce them.

Like the mess, when disagreements occurred within the joint-stock company, renegotiation was necessary. However, since the property was held concurrently this process was more complicated. In the first place, an individual could not simply leave the company. Most often, withdrawal could only occur with the consent of a percentage of other members. But even then withdrawal was complicated by the need to divide the property. In at least one case this problem was solved by dividing all of the property and reorganizing into messes.

When the original joint stock company of sixty men dissolved, there was no mention of individual ownership. The property was parcelled by assigning it to traveling units already in existence. However, in executing the second division, the smaller group found it possible — perhaps even necessary — to utilize the concept of personal property. In order to accomplish their purpose, the men first transmuted the common stock from "company" or partnership property into private property. Then, by negotiating contracts, goods they briefly had held as individuals, were converted back into partnership or mess property.Reid, "Dividing the Elephant," p. 79.

All of this occurred in the absence of coercion.

Perhaps an even more revealing example of anarchocapitalism at work is found in the dissolution of the Boone County Company. When the eight members of the company fell into rival factions of three and five, dissolution became imminent. Negotiations continued for some time until all the company property (note that none of the private property was divided) was divided between the two groups.

When negotiations appeared at an impasse because of the indivisibility of units and differences in quality, prices were assigned to units and the groups resolved the issue by trade. However, a $75 claim of the majority group proved even harder to resolve. The claim resulted from the fact that a passenger who owned two mules and a horse, and who had been traveling with the company, chose to take his property and go with the minority. The disadvantaged majority demanded compensation. Unable to settle the dispute, arbitration came from a "private court" consisting of "3 disinterested men," one chosen by each side and a third chosen by the two. Their decision follows.

We can see no just cause why the mess of 3 men should pay anything to the mess of 5 men. It being … a mutual and sumultaneous agreement to dissolve the original contract. The fact that Abbott joins in with the 3 men does not alter in our opinion the matter of the case — for the dessolution being mutually agreed upon, all the parties stand in the same relation to each other which they did, before any contract was entered into. And Abbott might or not just as he chose unite with either party. If he chose to unite with neither party, then clearly neither could claim of the other. If he united with a foreign party then who could think of claiming anything of such a party.Quoted in Reid, "Dividing the Elephant," p. 85.

The important point of this example is that when the Boone County Company could not renegotiate its initial contract the members did not resort to force, but chose private arbitration instead. The many companies which crossed the plains

were experiments in democracy and while some proved inadequate to meet all emergencies, the very ease with which the members could dissolve their bonds and form new associations without lawlessness and disorder proves the true democratic spirit among the American frontiersmen rather than the opposite.Owen Cochran Coy, The Great Trek (San Francisco: Powell Pub. Co., 1931), p. 117.

Competition rather than coercion insured justice.

While the above evidence suggests that the wagon trains were guided by anarchocapitalism, it should be noted that their unique characteristics may have contributed to the efficacy of the system. First, the demand for public goods was probably not as great as found in more permanent communities. If nothing else, the transient nature of these moving communities meant that schools, roads, and other goods which are publicly provided in our society were not needed, hence there was no demand for a government to form for this purpose.

Secondly, the short-term nature of the organization meant that there was not a very long time for groups to organize to use coercion. These were "governments" of necessity rather than ambition. Nonetheless, the wagon trains on the overland trails did provide protection and justice without a monopoly on coercion, did allow competition to produce rules, and did not result in the lawless disorder generally associated with anarchy.

From the above descriptions of the experience of the American West, several conclusions consistent with Friedman's hypotheses appear.

The West, although often dependent upon market peacekeeping agencies, was, for the most part, orderly.

Different standards of justice did prevail and various preferences for rules were expressed through the market place.

Competition in defending and adjudicating rights does have beneficial effects. Market agencies provided useful ways of measuring the efficiency of government alternatives. The fact that government's monopoly on coercion was not taken as seriously as at present meant that when that monopoly was poorly used, market alternatives arose.

Even when these market alternatives did become "governments" in the sense of having a virtual monopoly on coercion, the fact that such firms were usually quite small provided significant checks on their behavior. Clients could leave or originate protective agencies on their own. Without formal legal sanctions, the private agencies did face a "market test" and the rate of survival of such agencies was much less than under government.

The above evidence points to the overall conclusion that competition was very effective in solving the "public-goods" problem of law and order in the American West. However, this does not mean that there were no disputes that would cause one to doubt the efficacy of such arrangements. Two examples of civil disorder are often mentioned in Western history, and they must be dealt with.

The first is the very bitter feud between the Regulators and the Moderators in the Republic of Texas in the 1840s.See Gard, Frontier Justice; Hollon, Frontier Violence; and Hugh David Graham and Ted Robert Gurr, eds., The History of Violence in America: Historical and Comparative Perspectives (New York: Prager, 1969). What started as a disagreement between two individuals in Shelby County escalated until it involved a significant number of people in a large area of east Texas.

In 1839 a loosely organized band, later to be known as the Moderators, was issuing bogus land papers, stealing horses, murdering, and generally breaking the "law" of Shelby County, Texas. To counter this lawlessness, a vigilance committee was formed under the name of Regulators. Unfortunately, "bad elements soon infiltrated the Regulators, and their excesses in crime later rivaled those of the Moderators. The situation evolved into a complexity of personal and family feuds, and complete anarchy existed until 1844."Hollon, Frontier Violence, p. 53. One citizen described the situation in a letter to a friend:

Civil war, with all its horror, has been raging in this community. The citizens of the county are about equally divided into two parties, the Regulators and Moderators. It is no uncommon sight to see brothers opposed to each other. Every man's interest in this county is seriously affected.Quoted in Gard, Frontier Justice, pp. 35–36.

During the period, 18 men were murdered and many more wounded. Only when President Sam Houston called out the militia in 1844 did the feuding stop. Thus, for whatever reasons, in this case it appears that dependence upon nongovernmental forms of organization was not successful.

Another major civil disruption that should be considered is the Johnson County War in Northern Wyoming in 1892. A group of stock growers and their hired guns entered Johnson County with the express purpose of wiping out the rustlers they believed to be prevalent there. The citizens of the county, feeling they were being invaded by a foreign army, responded en masse, and for a short period of time a "war" did result.

However, in this case the disorder seems to have been more a battle between two "legitimized" agencies of coercion, the state and the local government, than between strictly private enforcement agencies. The invaders, while ostensibly acting as a private party, had the tacit approval of the state government and used that approval to thwart several attempts by the local authorities to secure state or federal intervention.

Those who responded to the invasion were under the leadership of the Johnson County sheriff and felt very much that they were acting appropriately under the existing laws of that time.See Helen Huntington Smith, The War on the Powder River: The History of an Insurrection (Lincoln, Neb.: University of Nebraska Press, 1966). Thus this incident sheds little light on the efficacy of market arrangements for maintaining order.

In conclusion, it appears in the absence of formal government, that the Western frontier was not as wild as legend would have us believe. The market did provide protection and arbitration agencies that functioned very effectively, either as a complete replacement for formal government or as a supplement to that government. However, the same desire for power that creates problems in government also seemed to create difficulties at times in the West. All was not peaceful. Especially when Schelling points were lacking, disorder and chaos resulted, lending support to Buchanan's contention that agreement on initial rights is important to anarchocapitalism. When this agreement existed, however, we have presented evidence that anarchocapitalism was viable on the frontier.

This paper was originally published as "An American Experiment in Anarcho-Capitalism: The Not So Wild, Wild West" in the Journal of Libertarian Studies, Vol. 3, Num. 1. It was written while Terry Anderson was a National Fellow at the Hoover Institution, 1977–1978. While retaining responsibility for any errors, the authors wish to thank Jon Christianson, Murray Rothbard, and Gordon Tullock for their valuable comments.

The authors expanded this article into the book The Not So Wild, Wild West: Property Rights on the Frontier.

Original Article: "They Don't Hate Gold Because It's Gold. They Hate It Because It's Not Government Money."

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Men have chosen the precious metals gold and silver for the money service on account of their mineralogical, physical, and chemical features. The use of money in a market economy is a praxeologically necessary fact. That gold—and not something else—is used as money is merely a historical fact and as such cannot be conceived by catallactics. In monetary history too, as in all other branches of history, one must resort to historical understanding. If one takes pleasure in calling the gold standard a "barbarous relic,"Lord Keynes in the speech delivered before the House of Lords, May 23. 1944.

one cannot object to the application of the same term to every historically determined institution. Then the fact that the British speak English — and not Danish, German, or French — is a barbarous relic too, and every Briton who opposes the substitution of Esperanto for English is no less dogmatic and orthodox than those who do not wax rapturous about the plans for a managed currency.

The demonetization of silver and the establishment of gold monometallism was the outcome of deliberate government interference with monetary matters. It is pointless to raise the question concerning what would have happened in the absence of these policies. But it must not be forgotten that it was not the intention of the governments to establish the gold standard. What the governments aimed at was the double standard. They wanted to substitute a rigid, government-decreed exchange ratio between gold and silver for the fluctuating market ratios between the independently coexistent gold and silver coins. The monetary doctrines underlying these endeavors misconstrued the market phenomena in that complete way in which only bureaucrats can misconstrue them. The attempts to create a double standard of both metals, gold and silver, failed lamentably. It was this failure that generated the gold standard. The emergence of the gold standard was the manifestation of a crushing defeat of the governments and their cherished doctrines.

In the 17th century, the rates at which the English government tariffed the coins overvalued the guinea with regard to silver and thus made the silver coins disappear. Only those silver coins that were much worn by usage or in any other way defaced or reduced in weight remained in current use; it did not pay to export and to sell them on the bullion market. Thus England got the gold standard against the intention of its government. Only much later the laws made the de facto gold standard a de jure standard. The government abandoned further fruitless attempts to pump silver standard coins into the market and minted silver only as subsidiary coins with a limited legal tender power. These subsidiary coins were not money, but money-substitutes. Their exchange value depended not on their silver content, but on the fact that they could be exchanged at every instant, without delay and without cost, at their full face value against gold. They were de facto silver printed notes, claims against a definite amount of gold.

Later in the course of the 19th century, the double standard resulted in a similar way in France and in the other countries of the Latin Monetary Union in the emergence of de facto gold monometallism. When the drop in the price of silver in the later 1870s would automatically have effected the replacement of the de facto gold standard by the de facto silver standard, these governments suspended the coinage of silver in order to preserve the gold standard. In the United States, the price structure on the bullion market had already, before the outbreak of the Civil War, transformed the legal bimetallism into de facto gold monometallism.

After the greenback period, there ensued a struggle between the friends of the gold standard on the one hand and those of silver on the other hand. The result was a victory for the gold standard. Once the economically most advanced nations had adopted the gold standard, all other nations followed suit. After the great inflationary adventures of the First World War, most countries hastened to return to the gold standard or the gold-exchange standard.

The gold standard was the world standard of the age of capitalism, increasing welfare, liberty, and democracy, both political and economic. In the eyes of the free traders its main eminence was precisely the fact that it was an international standard as required by international trade and the transactions of the international money and capital market.T.E. Gregory, The Gold Standard and Its Future (3d ed. London, 1934), pp. 22 ff. It was the medium of exchange by means of which Western industrialism and Western capital had borne Western civilization into the remotest parts of the earth's surface, everywhere destroying the fetters of age-old prejudices and superstitions, sowing the seeds of new life and new well-being, freeing minds and souls, and creating riches unheard of before. It accompanied the triumphal unprecedented progress of Western liberalism ready to unite all nations into a community of free nations peacefully cooperating with one another.

It is easy to understand why people viewed the gold standard as the symbol of this greatest and most beneficial of all historical changes. All those intent upon sabotaging the evolution toward welfare, peace, freedom, and democracy loathed the gold standard, and not only on account of its economic significance. In their eyes the gold standard was the labarum, the symbol, of all those doctrines and policies they wanted to destroy. In the struggle against the gold standard, much more was at stake than commodity prices and foreign-exchange rates.

The nationalists are fighting the gold standard because they want to sever their countries from the world market and to establish national autarky as far as possible. Interventionist governments and pressure groups are fighting the gold standard because they consider it the most serious obstacle to their endeavors to manipulate prices and wage rates. But the most fanatical attacks against gold are made by those intent upon credit expansion. With them, credit expansion is the panacea for all economic ills. It could lower or even entirely abolish interest rates, raise wages and prices for the benefit of all except the parasitic capitalists and the exploiting employers, free the state from the necessity of balancing its budget — in short, make all decent people prosperous and happy. Only the gold standard, that devilish contrivance of the wicked and stupid "orthodox" economists, prevents mankind from attaining everlasting prosperity.

The gold standard is certainly not a perfect or ideal standard. There is no such thing as perfection in human things. But nobody is in a position to tell us how something more satisfactory could be put in place of the gold standard. The purchasing power of gold is not stable. But the very notions of stability and unchangeability of purchasing power are absurd. In a living and changing world there cannot be any such thing as stability of purchasing power. In the imaginary construction of an evenly rotating economy there is no room left for a medium of exchange. It is an essential feature of money that its purchasing power is changing. In fact, the adversaries of the gold standard do not want to make money's purchasing power stable. They want rather to give to the governments the power to manipulate purchasing power without being hindered by an "external" factor, namely, the money relation of the gold standard.

The main objection raised against the gold standard is that it makes operative in the determination of prices a factor that no government can control — the vicissitudes of gold production. Thus an "external" or "automatic" force restrains a national government's power to make its subjects as prosperous as it would like to make them. The international capitalists dictate and the nation's sovereignty becomes a sham.

However, the futility of interventionist policies has nothing at all to do with monetary matters. It will be shown later why all isolated measures of government interference with market phenomena must fail to attain the ends sought. If the interventionist government wants to remedy the shortcomings of its first interferences by going further and further, it finally converts its country's economic system into socialism of the German pattern. Then it abolishes the domestic market altogether, and with it money and all monetary problems, even though it may retain some of the terms and labels of the market economy.Cf. Human Action, chapters XXVII–XXXI. In both cases it is not the gold standard that frustrates the good intentions of the benevolent authority.

The significance of the fact that the gold standard makes the increase in the supply of gold depend upon the profitability of producing gold is, of course, that it limits the government's power to resort to inflation. The gold standard makes the determination of money's purchasing power independent of the changing ambitions and doctrines of political parties and pressure groups. This is not a defect of the gold standard; it is its main excellence. Every method of manipulating purchasing power is by necessity arbitrary. All methods recommended for the discovery of an allegedly objective and "scientific" yardstick for monetary manipulation are based on the illusion that changes in purchasing power can be "measured." The gold standard removes the determination of cash-induced changes in purchasing power from the political arena. Its general acceptance requires the acknowledgment of the truth that one cannot make all people richer by printing money. The abhorrence of the gold standard is inspired by the superstition that omnipotent governments can create wealth out of little scraps of paper.

It has been asserted that the gold standard too is a manipulated standard. The governments may influence the height of gold's purchasing power either by credit expansion — even if it is kept within the limits drawn by considerations of preserving the redeemability of the money-substitutes — or indirectly by furthering measures that induce people to restrict the size of their cash holdings. This is true. It cannot be denied that the rise in commodity prices that occurred between 1896 and 1914 was to a great extent provoked by such government policies. But the main thing is that the gold standard keeps all such endeavors toward lowering money's purchasing power within narrow limits. The inflationists are fighting the gold standard precisely because they consider these limits a serious obstacle to the realization of their plans.

What the expansionists call the defects of the gold standard are indeed its very eminence and usefulness. It checks large-scale inflationary ventures on the part of governments. The gold standard did not fail. The governments were eager to destroy it, because they were committed to the fallacies that credit expansion is an appropriate means of lowering the rate of interest and of "improving" the balance of trade.

No government is, however, powerful enough to abolish the gold standard. Gold is the money of international trade and of the supernational economic community of mankind. It cannot be affected by measures of governments whose sovereignty is limited to definite countries. As long as a country is not economically self-sufficient in the strict sense of the term, as long as there are still some loopholes left in the walls by which nationalistic governments try to isolate their countries from the rest of the world, gold is still used as money. It does not matter that governments confiscate the gold coins and bullion they can seize and punish those holding gold as felons. The language of bilateral clearing agreements by means of which governments are intent upon eliminating gold from international trade, avoids any reference to gold. But the turnovers performed on the ground of those agreements are calculated on gold prices. He who buys or sells on a foreign market calculates the advantages and disadvantages of such transactions in gold. In spite of the fact that a country has severed its local currency from any link with gold, its domestic structure of prices remains closely connected with gold and the gold prices of the world market. If a government wants to sever its domestic price structure from that of the world market, it must resort to other measures, such as prohibitive import and export duties and embargoes. Nationalization of foreign trade, whether effected openly or directly by foreign exchange control, does not eliminate gold. The governments qua traders are trading by the use of gold as a medium of exchange.

The struggle against gold, which is one of the main concerns of all contemporary governments, must not be looked upon as an isolated phenomenon. It is but one item in the gigantic process of destruction that is the mark of our time. People fight the gold standard because they want to substitute national autarky for free trade, war for peace, totalitarian government omnipotence for liberty.

It may happen one day that technology will discover a method of enlarging the supply of gold at such a low cost that gold will become useless for the monetary service. Then people will have to replace the gold standard by another standard. It is futile to bother today about the way in which this problem will be solved. We do not know anything about the conditions under which the decision will have to be made.

As a corollary to the proposition that all institutions must be subordinated to the law of equal freedom, we cannot choose but admit the right of the citizen to adopt a condition of voluntary outlawry. If every man has freedom to do all that he wills, provided he infringes not the equal freedom of any other man, then he is free to drop connection with the state—to relinquish its protection, and to refuse paying towards its support.

It is self-evident that in so behaving he in no way trenches upon the liberty of others; for his position is a passive one; and whilst passive he cannot become an aggressor. It is equally self-evident that he cannot be compelled to continue one of a political corporation, without a breach of the moral law, seeing that citizenship involves payment of taxes; and the taking away of a man's property against his will is an infringement of his rights.

Government being simply an agent employed in common by a number of individuals to secure to them certain advantages, the very nature of the connection implies that it is for each to say whether he will employ such an agent or not. If any one of them determines to ignore this mutual-safety confederation, nothing can be said except that he loses all claim to its good offices, and exposes himself to the danger of maltreatment—a thing he is quite at liberty to do if he likes. He cannot be coerced into political combination without a breach of the law of equal freedom; he can withdraw from it without committing any such breach; and he has therefore a right so to withdraw.

"No human laws are of any validity if contrary to the law of nature; and such of them as are valid derive all their force and all their authority mediately or immediately from this original."

Thus writes Blackstone, to whom let all honor be given for having so far outseen the ideas of his time, and, indeed, we may say of our time.Sir William Blackstone (1723–1780) was the most renowned of English jurists. He produced the historical and analytic treatise on the common law called Commentaries on the Laws of England, first published in four volumes over 1765–1769.

A good antidote, this, for those political superstitions which so widely prevail. A good check upon that sentiment of power worship which still misleads us by magnifying the prerogatives of constitutional governments as it once did those of monarchs. Let men learn that a legislature is not "our God upon earth," though, by the authority they ascribe to it, and the things they expect from it, they would seem to think it is. Let them learn rather that it is an institution serving a purely temporary purpose, whose power, when not stolen, is at the best borrowed.

Nay, indeed, have we not seen that government is essentially immoral? Is it not the offspring of evil, bearing about it all the marks of its parentage? Does it not exist because crime exists? Is it not strong, or, as we say, despotic, when crime is great? Is there not more liberty, that is, less government, as crime diminishes? And must not government cease when crime ceases, for very lack of objects on which to perform its function?

Not only does magisterial power exist because of evil, but it exists by evil. Violence is employed to maintain it; and all violence involves criminality. Soldiers, policemen, and jailers, swords, batons, and fetters, are instruments for inflicting pain; and all infliction of pain is in the abstract wrong.

The state employs evil weapons to subjugate evil, and is alike contaminated by the objects with which it deals, and the means by which it works. Morality cannot recognize it; for morality, being simply a statement of the perfect law, can give no countenance to anything growing out of, and living by, breaches of that law. Wherefore, legislative authority can never be ethical—must always be conventional merely.

Hence, there is a certain inconsistency in the attempt to determine the right position, structure, and conduct of a government by appeal to the first principles of rectitude. For, as just pointed out, the acts of an institution which is in both nature and origin imperfect cannot be made to square with the perfect law. All that we can do is to ascertain, firstly, in what attitude a legislature must stand to the community to avoid being by its mere existence an embodied wrong; secondly, in what manner it must be constituted so as to exhibit the least incongruity with the moral law; and thirdly, to what sphere its actions must be limited to prevent it from multiplying those breaches of equity it is set up to prevent.

The first condition to be conformed to before a legislature can be established without violating the law of equal freedom is the acknowledgment of the right now under discussion—the right to ignore the state.Hence may be drawn an argument for direct taxation; seeing that only when taxation is direct does repudiation of state burdens become possible.

Upholders of pure despotism may fitly believe state control to be unlimited and unconditional. They who assert that men are made for governments and not governments for men, may consistently hold that no one can remove himself beyond the pale of political organization.

But they who maintain that the people are the only legitimate source of power—that legislative authority is not original, but deputed—cannot deny the right to ignore the state without entangling themselves in an absurdity.

For, if legislative authority is deputed, it follows that those from whom it proceeds are the masters of those on whom it is conferred; it follows further, that as masters they confer the said authority voluntarily; and this implies that they may give or withhold it as they please.

To call that deputed which is wrenched from men whether they will or not, is nonsense. But what is here true of all collectively is equally true of each separately. As a government can rightly act for the people, only when empowered by them, so also can it rightly act for the individual, only when empowered by him.

If A, B, and C debate whether they shall employ an agent to perform for them a certain service, and if whilst A and B agree to do so, C dissents, C cannot equitably be made a party to the agreement in spite of himself. And this must be equally true of thirty as of three; and if of thirty, why not of three hundred, or three thousand, or three millions?

Of the political superstitions lately alluded to, none is so universally diffused as the notion that majorities are omnipotent. Under the impression that the preservation of order will ever require power to be wielded by some party, the moral sense of our time feels that such power cannot rightly be conferred on any but the largest moiety of society. It interprets literally the saying that "the voice of the people is the voice of God," and transferring to the one the sacredness attached to the other, it concludes that from the will of the people, that is, of the majority, there can be no appeal. Yet is this belief entirely erroneous.

Suppose, for the sake of argument, that, struck by some Malthusian panic, a legislature duly representing public opinion were to enact that all children born during the next ten years should be drowned. Does any one think such an enactment would be warrantable? If not, there is evidently a limit to the power of a majority.

Suppose, again, that of two races living together—Celts and Saxons, for example—the most numerous determined to make the others their slaves. Would the authority of the greatest number be in such case valid? If not, there is something to which its authority must be subordinate.

Suppose, once more, that all men having incomes under £50 a year were to resolve upon reducing every income above that amount to their own standard, and appropriating the excess for public purposes. Could their resolution be justified? If not, it must be a third time confessed that there is a law to which the popular voice must defer.

What, then, is that law, if not the law of pure equity—the law of equal freedom?

These restraints, which all would put to the will of the majority, are exactly the restraints set up by that law. We deny the right of a majority to murder, to enslave, or to rob, simply because murder, enslaving, and robbery are violations of that law—violations too gross to be overlooked. But if great violations of it are wrong, so also are smaller ones. If the will of the many cannot supersede the first principle of morality in these cases, neither can it in any. So that, however insignificant the minority, and however trifling the proposed trespass against their rights, no such trespass is permissible.

When we have made our constitution purely democratic, thinks to himself the earnest reformer, we shall have brought government into harmony with absolute justice. Such a faith, though perhaps needful for the age, is a very erroneous one. By no process can coercion be made equitable.

The freest form of government is only the least objectionable form. The rule of the many by the few we call tyranny; the rule of the few by the many is tyranny also, only of a less intense kind. "You shall do as we will, and not as you will," is in either case the declaration; and if the hundred make it to the ninety-nine, instead of the ninety-nine to the hundred, it is only a fraction less immoral. Of two such parties, whichever fulfils this declaration necessarily breaks the law of equal freedom: the only difference being that by the one it is broken in the persons of ninety-nine, whilst by the other it is broken in the persons of a hundred. And the merit of the democratic form of government consists solely in this, that it trespasses against the smallest number.

The very existence of majorities and minorities is indicative of an immoral state. The man whose character harmonizes with the moral law, we found to be one who can obtain complete happiness without diminishing the happiness of his fellows. But the enactment of public arrangements by vote implies a society consisting of men otherwise constituted; implies that the desires of some cannot be satisfied without sacrificing the desires of others; implies that in the pursuit of their happiness the majority inflict a certain amount of unhappiness on the minority; implies, therefore, organic immorality.

Thus, from another point of view, we again perceive that even in its most equitable form it is impossible for government to dissociate itself from evil; and further, that unless the right to ignore the state is recognized, its acts must be essentially criminal.

That a man is free to abandon the benefits and throw off the burdens of citizenship, may indeed be inferred from the admissions of existing authorities and of current opinion. Unprepared as they probably are for so extreme a doctrine as the one here maintained, the radicals of our day yet unwittingly profess their belief in a maxim which obviously embodies this doctrine.

Do we not continually hear them quote Blackstone's assertion that "no subject of England can be constrained to pay any aids or taxes even for the defense of the realm or the support of government, but such as are imposed by his own consent, or that of his representative in parliament?" And what does this mean? It means, say they, that every man should have a vote. True: but it means much more.

If there is any sense in words it is a distinct enunciation of the very right now contended for. In affirming that a man may not be taxed unless he has directly or indirectly given his consent, it affirms that he may refuse to be so taxed; and to refuse to be taxed is to cut all connection with the state.

Perhaps it will be said that this consent is not a specific, but a general one, and that the citizen is understood to have assented to everything his representative may do, when he voted for him. But suppose he did not vote for him, and on the contrary did all in his power to get elected someone holding opposite views. What then?

The reply will probably be that, by taking part in such an election, he tacitly agreed to abide by the decision of the majority. And how if he did not vote at all? Why then he cannot justly complain of any tax, seeing that he made no protest against its imposition.

So, curiously enough, it seems that he gave his consent in whatever way he acted—whether he said yes, whether he said no, or whether he remained neuter! A rather awkward doctrine this. Here stands an unfortunate citizen who is asked if he will pay money for a certain proffered advantage; and whether he employs the only means of expressing his refusal or does not employ it, we are told that he practically agrees, if only the number of others who agree is greater than the number of those who dissent.

And thus we are introduced to the novel principle that A's consent to a thing is not determined by what A says, but by what B may happen to say!

It is for those who quote Blackstone to choose between this absurdity and the doctrine above set forth. Either his maxim implies the right to ignore the state, or it is sheer nonsense.

There is a strange heterogeneity in our political faiths. Systems that have had their day, and are beginning here and there to let the daylight through, are patched with modern notions utterly unlike in quality and color; and men gravely display these systems, wear them, and walk about in them, quite unconscious of their grotesqueness.

This transition state of ours, partaking as it does equally of the past and the future, breeds hybrid theories exhibiting the oddest union of bygone despotism and coming freedom. Here are types of the old organization curiously disguised by germs of the new—peculiarities showing adaptation to a preceding state modified by rudiments that prophecy of something to come—making altogether so chaotic a mixture of relationships that there is no saying to what class these births of the age should be referred.

As ideas must of necessity bear the stamp of the time, it is useless to lament the contentment with which these incongruous beliefs are held. Otherwise it would seem unfortunate that men do not pursue to the end the trains of reasoning which have led to these partial modifications. In the present case, for example, consistency would force them to admit that, on other points besides the one just noticed, they hold opinions and use arguments in which the right to ignore the state is involved.

For what is the meaning of dissent? The time was when a man's faith and his mode of worship were as much determinable by law as his secular acts, and, according to provisions extant in our statute book, are so still. Thanks to the growth of a Protestant spirit, however, we have ignored the state in this matter—wholly in theory, and partly in practice. But how have we done so? By assuming an attitude which, if consistently maintained, implies a right to ignore the state entirely.

Observe the positions of the two parties:

"This is your creed," says the legislator; "you must believe and openly profess what is here set down for you."

"I shall not do anything of the kind," answers the nonconformist; "I will go to prison rather."

"Your religious ordinances," pursues the legislator, "shall be such as we have prescribed. You shall attend the churches we have endowed, and adopt the ceremonies used in them."

"Nothing shall induce me to do so," is the reply; "I altogether deny your power to dictate to me in such matters, and mean to resist to the uttermost."

"Lastly," adds the legislator, "we shall require you to pay such sums of money towards the support of these religious institutions, as we may see fit to ask."

"Not a farthing will you have from me," exclaims our sturdy Independent: "even did I believe in the doctrines of your church (which I do not), I should still rebel against your interference; and if you take my property, it shall be by force and under protest."

What now does this proceeding amount to when regarded in the abstract? It amounts to an assertion by the individual of the right to exercise one of his faculties—the religious sentiment—without let or hindrance, and with no limit save that set up by the equal claims of others.

And what is meant by ignoring the state? Simply an assertion of the right similarly to exercise all the faculties.

The one is just an expansion of the other, rests on the same footing with the other, must stand or fall with the other. Men do indeed speak of civil and religious liberty as different things, but the distinction is quite arbitrary. They are parts of the same whole and cannot philosophically be separated.

"Yes they can," interposes an objector; "assertion of the one is imperative as being a religious duty. The liberty to worship God in the way that seems to him right is a liberty without which a man cannot fulfill what he believes to be divine commands, and therefore conscience requires him to maintain it."

True enough; but how if the same can be asserted of all other liberty? How if maintenance of this also turns out to be a matter of conscience? Have we not seen that human happiness is the divine will, that only by exercising our faculties is this happiness obtainable, and that it is impossible to exercise them without freedom? And if this freedom for the exercise of faculties is a condition without which the divine will cannot be fulfilled, the preservation of it is, by our objector's own showing, a duty.

Or, in other words, it appears not only that the maintenance of liberty of action may be a point of conscience, but that it ought to be one. And thus we are clearly shown that the claims to ignore the state in religious and in secular matters are in essence identical.

The other reason commonly assigned for nonconformity admits of similar treatment. Besides resisting state dictation in the abstract, the dissenter resists it from disapprobation of the doctrines taught. No legislative injunction will make him adopt what he considers an erroneous belief; and, bearing in mind his duty towards his fellow men, he refuses to help through the medium of his purse in disseminating this erroneous belief.

The position is perfectly intelligible. But it is one which either commits its adherents to civil nonconformity also, or leaves them in a dilemma. For why do they refuse to be instrumental in spreading error? Because error is adverse to human happiness. And on what ground is any piece of secular legislation disapproved? For the same reason: because thought adverse to human happiness. How then can it be shown that the state ought to be resisted in the one case and not in the other?

Will any one deliberately assert that if a government demands money from us to aid in teaching what we think will produce evil, we ought to refuse it, but that if the money is for the purpose of doing what we think will produce evil, we ought not to refuse it?

Yet, such is the hopeful proposition which those have to maintain who recognize the right to ignore the state in religious matters, but deny it in civil matters.

The substance of this chapter once more reminds us of the incongruity between a perfect law and an imperfect state. The practicability of the principle here laid down varies directly as social morality. In a thoroughly vicious community its admission would be productive of anarchy. In a completely virtuous one its admission will be both innocuous and inevitable. Progress towards a condition of social health—a condition, that is, in which the remedial measures of legislation will no longer be needed—is progress towards a condition in which those remedial measures will be cast aside, and the authority prescribing them disregarded.

The two changes are of necessity coordinate. That moral sense whose supremacy will make society harmonious and government unnecessary, is the same moral sense which will then make each man assert his freedom even to the extent of ignoring the state—is the same moral sense which, by deterring the majority from coercing the minority, will eventually render government impossible. And as what are merely different manifestations of the same sentiment must bear a constant ratio to each other, the tendency to repudiate governments will increase only at the same rate that governments become needless.

Let not any be alarmed, therefore, at the promulgation of the foregoing doctrine. There are many changes yet to be passed through before it can begin to exercise much influence. Probably a long time will elapse before the right to ignore the state will be generally admitted, even in theory. It will be still longer before it receives legislative recognition. And even then there will be plenty of checks upon the premature exercise of it. A sharp experience will sufficiently instruct those who may too soon abandon legal protection. Whilst, in the majority of men, there is such a love of tried arrangements, and so great a dread of experiments, that they will probably not act upon this right until long after it is safe to do so.

Spafford appeals to a plausible moral intuition shared by most people, certainly including anarcho-capitalists. By “intuition,” I don’t mean a hunch or guess but rather a judgment about a case, not based on an explicit moral theory. An often-cited example of such as intuition is “torturing babies for fun is wrong.” Philosophers who use appeals to moral intuitions start with intuitions that seem plausible and try to draw controversial conclusions from them. Other philosophers reject this procedure as too subjective and unsystematic.

The plausible intuition that Spafford starts from is that the use or threat of force requires justification. Suppose that you think that smoking is bad for people and on that basis use force to prevent people you know from smoking. To most of us, it seems to that you aren’t justified in doing this. The anarcho-capitalist philosopher Michael Huemer uses examples like this to bring into question the legitimacy and authority of the state. If you can’t do this, why is it all right for the state to do it? What is the difference?

Spafford suggests that arguments like Huemer’s can be used to bring private property rights into question. If you have a property right in something, you have the right to exclude anyone else from using it without your permission. If you use force against someone to exclude them, why isn’t this wrong? Spafford offers this example:

Consider the case of a cruise ship that docks at a previously undiscovered island. The passengers are excited to spend the day exploring the island, but, before they have a chance to disembark, one passenger runs to the end of the gangplank and declares, Sorry, but I have decided that this island is for my personal use only! I forbid any of you from setting foot on it—unless, of course, you pay me $50 and take off your shoes before getting off the boat. When the first passenger in line ignores this edict and walks onto the island, the declaration-issuer’s friends rush over and seize the “trespasser” and begin binding her wrists and ankles. She struggles a bit, but after they spray sunscreen in her eyes, she stops resisting and is carried back onto the ship and locked in one of the cabins until she agrees to stay off the island.

Isn’t it reasonable to think that the passenger does not have the right to appropriate the island and exclude others? If so, where does this leave property rights?

The answer to this is obvious, and Spafford anticipates this answer; but I do not think he is able to counter it. Defenders of property will say that the passenger hasn’t met the correct conditions for acquiring property. If the ship had docked on an island that someone owned, why wouldn’t the owner have had the right to force the passengers to leave the island?

Stafford answers that the standard Lockean accounts of property acquisition don’t work. He uses some examples from the philosopher Ed Feser, who at one time held a Lockean view:

According to Feser, a person gains rights over previously unowned natural resources by either (a) gaining control of or (b) sufficiently modifying those resources. Thus, a homesteader who tills the soil of some unowned patch of land or builds a sizeable fence around its perimeter would thereby come to own that land. However, consideration of other cases casts doubt on Feser’s proposal. Consider, for example, the case of a person who deliberately starts a wildfire that scorches an entire forest, blackening thousands of acres of trees and earth. Suppose that a hiker then tries to enter the forest to survey the damage. May the fire-starter have the hiker imprisoned or threaten to shoot her if she does not leave the burned area? Surely not. Thus, the mere modification of land and objects seems insufficient to render coercive.

But, if we agree with Spafford that burning down the forest doesn’t establish ownership of it, this hardly invalidates all claims that doing something to unowned resources is sufficient for acquiring them. Spafford will then demand to know what are the conditions that do result in property acquisition, and specifying them is no easy task. All I claim here, though, is that Spafford hasn’t given us a general reason to doubt that there are legitimate ways to acquire property. What, for example, is wrong with owning your house or your car?

Spafford deploys a bad argument against property rights. He says,

Note that the use of force to control some resource is only necessary if non-coercive forms of control prove inadequate—i.e., one has not established control of the resource through non-coercive means alone. In other words, even if one grants that the non-coercive control of resources entails the permissibility of coercive control of those resources, any use of coercion entails the absence of such non-coercive control. Thus, there can be no instance of coercive exclusion that is permissible in virtue of there being prior non-coercive control of the resource.

This argument has at least two things wrong with it. If you use force against someone who is trying to take your car away from you, it is trivially true that you aren’t while you are struggling with the thief in control of the car. But the relevant fact is that you gained ownership of the car without coercion. Spafford has wrongly carried over intuitions from a case where someone claims ownership while pushing other claimants away to all cases of initial acquisition of property.

A second problem with the argument is that a right to exclude others from using your property does not entail that at every moment while you have this right you are exercising it by coercing others. Your right to exclude means that it is permissible for you to exclude others, not that you are actually excluding them. Spafford has trouble seeing the distinction between your right to something and the activities you engage in in exercising that right. In another example, he says, discussing a case in which a mechanic has worked on your car, that while the work is being done, you have waived your exclusion right over the car. This isn’t correct. The mechanic is using the car with your permission, but you haven’t waived any of your rights. You can tell him at any time to stop work on the car.

Spafford faces a problem that confronts many critics of Lockean appropriation. What is the justification for his own account of the morally proper use of resources? He assumes without argument that people have an equal right to use all resources, so long as they respect the equal rights of others. He is firmly committed to this position, and at one point, he says something incredible. He first suggests that some social anarchists would allow certain kinds of coercive exclusion of others from resource use. He says,

Consider the case of two castaways stranded on an island lush with peanut plants. One castaway is allergic to peanuts but good at catching fish, whereas the other lacks the arm strength and coordination needed to catch fish. The net result of these differences is that the two are able to live equally good lives, one fishing and sleeping on the beach while the other forages for food inland. However, suppose that one day the allergic castaway begins clearcutting the densest area of peanut plants so that she has a place to play soccer. Further, suppose that the destruction of these plants would impose a great hardship on the uncoordinated castaway, as she would then have to spend many more tedious and difficult hours each day foraging for the scarce peanuts that remain. Given these stipulations, would it be permissible for the uncoordinated castaway to use coercion to prevent the allergic castaway from destroying the plants on which her quality of life depends? Some egalitarian anarchists might answer in the affirmative, contending that the permissibility of the coercion is grounded in the fact that it is necessary to ensure that the uncoordinated castaway doesn’t live a worse life than her companion (due to no fault of her own).

He now gets to the incredible part. He says,

Some social anarchists might reject the intuition that coercion is permissible in the peanut case. Given this rejection, they would insist that the coercive control of resources is always impermissible, except when it has been consented to by the victim or, perhaps, when such control is necessary to avoid some sort of moral catastrophe. This position imposes stricter limits on what forms society can permissibly take. Specifically, it would sanction only two forms of resource management, each with its own drawbacks, but both of which avoid the coercion that is omnipresent in regimes of private property (and that persists in a more limited form in the egalitarian anarchist society).

(I don’t think it’s necessary for our purposes to describe these two forms.)

A society where the division of labor is subject to a constant threat of interference would be vastly less productive than a market economy. But never mind this—equal access to all resources must be preserved!

Academics and social scientists today tend toward hyperspecialization, but Dr. Hoppe does not make this mistake. In this approach he joins a long line of important thinkers who did not confine themselves to a narrow academic discipline and did not care to “stay in their lane.” We forget that many twentieth century economists, for example, capably applied knowledge in history, philosophy, logic, anthropology, sociology, epistemology, politics, and ethics to their work—including Ludwig von Mises, Hoppe’s inspiration, and Murray N. Rothbard, Hoppe’s mentor. In that very important sense Hoppe continues and builds on the work of both men.

If you are new to Hoppe’s work, this is an excellent introduction and survey to his syntheses of history, anthropology, property, ethics, and state. If you already know and enjoy Hoppe, you will find here a “Hoppe reader”: many of his best and most representative articles across a range of topics in one accessible volume. Consider it almost a reference guide, from which readers can guide themselves back to his lengthy books and articles. But this book has something for everyone, from his rigorous yet often overlooked implications of capitalism and socialism to his broadside against democracy on property rights grounds. Even the new or casual reader will come away with an excellent understanding of Hoppe’s work and worldview.

The title of course comes from Claude-Frédéric Bastiat, the great nineteenth-century French economic journalist and liberal. Bastiat gave us “The Great Fiction” to describe the government mechanisms by which people attempt to live at the expense of others. The state is always present in Hoppe’s work, whether front and center or lurking in the background. Hoppe’s subtitle, Property, Economy, Society, and the Politics of Decline gives an unsubtle clue as to what readers should expect: a damning indictment of the political world and its twenty-first-century managerial superstates. In Hoppe’s world, the state is a wholly decivilizing institution: a predator rather than protector, a threat to property and peace. Markets and entrepreneurs produce goods, governments produce “bads”: taxation (theft), regulation (semi-ownership, thus semi-socialism), devalued money (central banks), war (defense), injustice (state courts and police), and the ruinous effects of high time preference (democracy). Like Bastiat, Hoppe has no patience for obscuring or soft pedaling the realities of our political world.

Part one of the book deals with the development of human society and the concomitant rise of two often opposing forces, namely property and states. Here Hoppe explains civilization rising against a backdrop of greater productivity enabled by the painfully slow shift from nomadic to agrarian living. Once sufficient calories could be yielded from land, concepts of family and ownership come into greater focus. The Enlightenment and Industrial Revolution create more and more prosperity, a proto-middle class, while feudal and monarchical arrangements face pressure from subjects developing greater wealth and literacy. This pressure explodes in the nineteenth century, as groups of largely decentralized kingdoms, principalities, territories, and city-states come under the full sway of national boundaries and governments. The twentieth century ushers in the era of full democratic government in the West: the Great War washes away the last vestiges of Old Europe, while growing economic and military power places the United States squarely at the helm of an international order.

Hoppe, of course, does not accept at face value the notion of the twentieth century as “liberal,” and in fact finds much of it illiberal. A particular favorite from part one is a chapter from Democracy: The God That Failed titled “On Democracy, Redistribution, and the Destruction of Property.” This essay beautifully encapsulates all of his fundamental critiques of modern mass democracy, namely that it produces bad, shortsighted politicians who care nothing about their nation’s capital stock; bad, shortsighted voters who care nothing about future generations; bad, expansionary economic and foreign policy; and bad, central bank money to pay for it all. Citizens, unlike subjects of yesteryear, enjoy the illusion that government is “us.” But an illusion is all it is, and Hoppe enjoys slaying this most sacred of cows.

Part two focuses on the hugely important but often overlooked relationship between money and the state. While kings and sovereigns once enjoyed debasing money to line their pockets, modern central banks turn seigniorage into something far more systemic and harmful. Fiat money enables politicians to fund welfare and warfare programs unimaginable in previous generations, increasing state power at every turn. It also distorts virtually every economic decision made across society, resulting in gross inefficiency and malinvestment. Society suffers, purchasing power erodes, but an undeserving and state-connected banking class benefits from all the new money. The quintessential Hoppean explanation for this sordid process, namely power, is nicely presented in chapter 9, “Why the State Demands the Control of Money.”

Part three forays into Dr. Hoppe’s economic theory, particularly in the area of method. Much of what we consider to comprise modern economics is wrong, and in particular wrong because it subverts the role of theory with empiricism, statistics, math, and modeling. Human actors apply deeply subjective values to all economic goods, values which change almost constantly. They are not atoms or vectors to be studied by testing hypotheses with data, but volitional beings to which we must apply axiomatic deductive reasoning. Hoppe gives readers a crash course in certainty, uncertainty, and probability, to show their uses and more importantly their limitations in economics.

Part four considers the important subject of intellectual history in the context of the broad Austro-libertarian movement, and includes a truly heartfelt speech from Hoppe on his friend and colleague Rothbard which is sure to move you. It also includes a typically Hoppean critique of Friedrich von Hayek’s political theory, which in Hoppe’s view compares very unfavorably to his work in monetary policy and the knowledge problem. This section finishes with the text of Hoppe’s sweeping talk titled “The Libertarian Quest for a Grand Historical Narrative,” a marvelous narrative about where we have been and where we might be going.

Finally, part five is a collection of interviews with Dr. Hoppe and autobiographical essays, including one conducted by yours truly. These interviews give a better sense of Hoppe as a person and thinker, and greater insight into his development both personally and professionally. Readers will find plenty of intellectual ammunition here, along with answers to many of the simplistic challenges posed to Hoppe’s idealized conception of a private law society.

Reading Hans-Hermann Hoppe is always a pleasure and never a chore, because both the subjects and Dr. Hoppe’s command of them quickly win the reader’s attention and even admiration. Most academic writing is almost unbearable; and as alluded to earlier it is designed to appeal only to a tiny group of PhDs who work in a very limited area or subfield. Hoppe, by contrast, produces academic treatments of much broader and foundational issues which manage to hold appeal for intelligent lay audiences. The footnotes, the diamond-sharp deductive logic, the references to earlier works and thinkers—all the hallmarks of academic journals are there—without the tedium and hubris.

Hoppe is the rare intellectual who never preens or bores, and never loses the plot. He keeps things close to the bone, one might say: not quite sparse but never ornate or superfluous. There are no twenty-page detours into some faintly related topic merely for show, a habit even the best of academics sometimes fall prey to. Not Dr. Hoppe. His work inevitably strips out the nonessential and gets to the root of the issue at hand. Sometimes that essential and unadulterated focus comports with popular sentiment and thinking; oftentimes it does not. Hence his controversial reputation in certain emotive circles. But Hoppe, like any good social scientist, has an obligation to seek truth and help us understand the world. Thus he never appeals to the reader’s existing pretensions or prejudices, but instead always demands we follow the praxeological path of understanding human actors as they really are.

In other words, truth—unadorned and uncomfortable as it may be—is the end goal of any good social scientist. Thus, Dr. Hoppe is an unflinching advocate for reality and logic, and one you cannot ignore.

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Until very recently, free-market economists paid little attention to the entities actually being exchanged on the very market they have advocated so strongly. Wrapped up in the workings and advantages of freedom of trade, enterprise, investment, and the price system, economists tended to lose sight of the things being exchanged on that market. Namely, they lost sight of the fact that when $10,000 is being exchanged for a machine, or $1 for a hula hoop, what is actually being exchanged is the title of ownership to each of these goods. In short, when I buy a hula hoop for $1, what I am actually doing is exchanging my title of ownership to the dollar in exchange for the ownership title to the hula hoop; the retailer is doing the exact opposite.Economists failed to heed the emphasis on titles of ownership underlying exchange stressed by the social philosopher Spencer Heath: "Only those things which are owned can be exchanged or used as instruments of service or exchange. This exchange is not transportation; it is the transfer of ownership or title. This is a social and not a physical process." Spencer Heath, Citadel, Market, and Altar (Baltimore, Md.: Science of Society Foundation, 1957), p. 48. But this means that economists' habitual attempts to be wertfrei, or at the least to confine their advocacy to the processes of trade and exchange, cannot be maintained. For if I and the retailer are indeed to be free to trade the dollar for the hula hoop without coercive interference by third parties, then this can only be done if these economists will proclaim the justice and the propriety of my original ownership of the dollar and the retailer's ownership of the hula hoop.

In short, for an economist to say that X and Y should be free to trade Good A for Good B unmolested by third parties, he must also say that X legitimately and properly owns Good A and that Y legitimately owns Good B. But this means that the free-market economist must have some sort of theory of justice in property rights; he can scarcely say that X properly owns Good A without asserting some sort of theory of justice on behalf of such ownership.

Suppose, for example, that as I am about to purchase the hula hoop, the information arrives that the retailer had really stolen the hoop from Z. Surely not even the supposedly wertfrei economist can continue to blithely endorse the proposed exchange of ownership titles between me and the retailer. For now we find that the retailer's, Y's, title of ownership is improper and unjust, and that he must be forced to return the hoop to Z, the original owner. The economist can then only endorse the proposed exchange between me and Z, rather than Y, for the hula hoop, since he has to acknowledge Z as the proper owner of title to the hoop.

In short, we have two mutually exclusive claimants to the ownership of the hoop. If the economist agrees to endorse only Z's sale of the hoop, then he is implicitly agreeing that Z has the just, and Y the unjust, claim to the hoop. And even if he continues to endorse the sale by Y, then he is implicitly maintaining another theory of property titles: namely, that theft is justified. Whichever way he decides, the economist cannot escape a judgment, a theory of justice in the ownership of property. Furthermore, the economist is not really finished when he proclaims the injustice or theft and endorses Z's proper title. For what is the justification for Z's title to the hoop? Is it only because he is a nonthief?

In recent years, free-market economists Ronald Coase and Harold Demsetz have begun to redress the balance and to focus on the importance of a clear and precise demarcation of property rights for the market economy. They have demonstrated the importance of such demarcation in the allocation of resources and in preventing or compensating for unwanted imposition of "external costs" from the actions of individuals. But Coase and Demsetz have failed to develop any theory of justice in these property rights; or, rather, they have advanced two theories: one, that it "doesn't matter" how the property titles are allocated, so long as they are allocated precisely; and, two, that the titles should be allocated to minimize "total social transaction costs," since a minimization of costs is supposed to be a wertfrei way of benefitting all of society.

There is no space here for a detailed critique of the Coase-Demsetz criteria. Suffice it to say that in a conflict over property titles between a rancher and a farmer for the same piece of land, even if the allocation of title "doesn't matter" for the allocation of resources (a point which itself could be challenged), it certainly matters from the point of view of the rancher and the farmer. And second, that it is impossible to weigh "total social costs" if we fully realize that all costs are subjective to the individual and, therefore, cannot be compared interpersonally.For a welcome recent emphasis on the subjectivity of cost, see James M. Buchanan, Cost and Choice (Chicago: Markham, 1969). Here the important point is that Coase and Demsetz, along with all other utilitarian free-market economists, implicitly or explicitly leave it to the hands of government to define and allocate the titles to private property. Coase and Demsetz, along with all other utilitarian free-market economists, implicitly or explicitly leave it to the hands of government to define and allocate the titles to private property.

It is a curious fact that utilitarian economists, generally so skeptical of the virtues of government intervention, are so content to leave the fundamental underpinning of the market process—the definition of property rights and the allocation of property titles—wholly in the hands of government. Presumably they do so because they themselves have no theory of justice in property rights; and, therefore, place the burden of allocating property titles into the hands of government. Thus, if Smith, Jones, and Doe each own property and are about to exchange their titles, utilitarians simply assert that if these titles are legal (that is, if the government puts the stamp of approval upon them), then they consider those titles to be justified. It is only if someone violates the government's definition of legality (for example, in the case of Y, the thieving retailer) that utilitarians are willing to agree with the general and the governmental view of the injustice of such action. But this means, of course, that, once again, the utilitarians have failed in their wish to escape having a theory of justice in property. Actually they do have such a theory, and it is the surely simplistic one that whatever government defines as legal is right.

As in so many other areas of social philosophy, then, we see that utilitarians, in pursuing their vain goal of being wertfrei, of "scientifically" abjuring any theory of justice, actually have such a theory: namely, putting their stamp of approval on whatever the process by which the government arrives at its allocation of property titles. Furthermore, we find that, as on many similar occasions, utilitarians in their vain quest for the wertfrei really conclude by endorsing as right and just whatever the government happens to decide; that is, by blindly apologizing for the status quo.I do not mean to imply here that no social science or economic analysis can be wertfrei, only that any attempt whatever to apply the analysis to the political arena, however remote, must involve and imply some sort of ethical position.

Let us consider the utilitarian stamp of approval on government allocation of property titles. Can this stamp of approval possibly achieve even the limited utilitarian goal of certain and precise allocation of property titles? Suppose that the government endorses the existing titles to their property held by Smith, Jones, and Doe. Suppose, then, that a faction of government calls for the confiscation of these titles and redistribution of that property to Roe, Brown, and Robinson. The reasons for this program may stem from any number of social theories or even from the brute fact that Roe, Brown, and Robinson have greater political power than the original trio of owners. The reaction to this proposal by free-market economists and other utilitarians is predictable: they will oppose this proposal on the ground that definite and certain property rights, so socially beneficial, are being endangered. But suppose that the government, ignoring the protests of our utilitarians, proceeds anyway and redistributes these titles to property. Roe, Brown, and Robinson are now defined by the government as the proper and legal owners, while any claims to that property by the original trio of Smith, Jones, and Doe are considered improper and illegitimate, if not subversive. What now will be the reaction of our utilitarians?

It should be clear that, since the utilitarians only base their theory of justice in property on whatever the government defines as legal, they can have no groundwork whatever for any call for restoring the property in question to its original owners. They can only, willy-nilly, and, despite any emotional reluctance on their part, simply endorse the new allocation of property titles as defined and endorsed by government. Not only must utilitarians endorse the status quo of property titles but also they must endorse whatever status quo exists and however rapidly the government decides to shift and redistribute such titles. Furthermore, considering the historical record, we may indeed say that relying upon government to be the guardian of property rights is like placing the proverbial fox on guard over the chicken coop.

We see, therefore, that the supposed defense of the free market and of property rights by utilitarians and free-market economists is a very weak reed indeed. Lacking a theory of justice that goes beyond the existing imprimatur of government, utilitarians can only go along with every change and shift of government allocation after they occur, no matter how arbitrary, rapid, or politically motivated such shifts might be. And, since they provide no firm roadblock to governmental reallocations of property, the utilitarians, in the final analysis, can offer no real defense of property rights themselves. Since governmental redefinitions can and will be rapid and arbitrary, they cannot provide long-run certainty for property rights; and, therefore, they cannot even ensure the very social and economic efficiency which they themselves seek.On the arbitrariness and uncertainty of all legislative law, see Bruno Leoni, Freedom and the Law (Los Angeles: Nash, 1972). All this is implied in the pronouncements of utilitarians that any future free society must confine itself to whatever definitions of property titles the government may happen to be endorsing at that moment.

Let us consider a hypothetical example of the failure of the utilitarian defense of private property. Suppose that somehow government becomes persuaded of the necessity to yield to a clamor for a free-market, laissez-faire society. Before dissolving itself, however, it redistributes property titles, granting the ownership of the entire territory of New York to the Rockefeller family, of Massachusetts to the Kennedy family, etc. It then dissolves, ending taxation and all other forms of government intervention in the economy. However, while taxation has been abolished, the Rockefeller, Kennedy, etc., families proceed to dictate to all the residents in what is now "their" territory, exacting what are now called "rents" over all the inhabitants.The point here is not, of course, to criticize all rents per se, but rather to call into question the legitimacy of property titles (here landed property) derived from the coercive actions of government. It seems clear that our utilitarians could have no intellectual armor with which to challenge this new dispensation; indeed, they would have to endorse the Rockefeller, Kennedy, etc., holdings as "private property" equally deserving of support as the ordinary property titles which they had endorsed only a few months previously. All this because the utilitarians have no theory of justice in property beyond endorsement of whatever status quo happens to exist.

Consider, furthermore, the grotesque box in which the utilitarian proponent of freedom places himself in relation to the institution of human slavery. Contemplating the institution of slavery, and the "free" market that once existed in buying, selling, and renting slaves, the utilitarian who must rely on the legal definition of property can only endorse slavery on the ground that the slave masters had purchased their slave titles legally and in good faith. Surely, any endorsement of a "free" market in slaves indicates the inadequacy of utilitarian concepts of property and the need for a theory of justice to provide a groundwork for property rights and a critique of existing official titles to property.

Utilitarianism cannot be supported as a groundwork for property rights or, a fortiori, for the free-market economy. A theory of justice must be arrived at which goes beyond government allocations of property titles, and which can, therefore, serve as a basis for criticizing such allocations. Obviously, in this space I can only outline what I consider to be the correct theory of justice in property rights. This theory has two fundamental premises: (1) the absolute property right of each individual in his own person, his own body; this may be called the right of self-ownership; and (2) the absolute right in material property of the person who first finds an unused material resource and then in some way occupies or transforms that resource by the use of his personal energy. This might be called the homestead principle—the case in which someone, in the phrase of John Locke, has "mixed his labour" with an unused resource. Let Locke summarize these principles:

every man has a property in his own person. This nobody has any right to but himself. The labour of his body and the work of his hands, we may say, are properly his. Whatsoever, then, he removes out of the state that nature hath provided and left it in, he hath mixed his labour with it, and joined to it something that is his own, and thereby makes it his property. It being by him removed from the common state nature placed it in, it hath by this labour something annexed to it that excludes the common right of other men.John Locke, "An Essay Concerning the True, Original, Extent and End of Civil Government," in E. Barker, ed., Social Contract (New York: Oxford University Press, 1948), pp. 17–18.

Let us consider the first principle: the right to self-ownership. This principle asserts the absolute right of each man, by virtue of his (or her) being a human being, to "own" his own body; that is, to control that body free of coercive interference. Since the nature of man is such that each individual must use his mind to learn about himself and the world, to select values, and to choose ends and means in order to survive and flourish, the right to self-ownership gives each man the right to perform these vital activities without being hampered and restricted by coercive molestation.

Consider, then, the alternatives—the consequences of denying each man the right to own his own person. There are only two alternatives: either (1) a certain class of people, A, have the right to own another class, B; or (2) everyone has the right to own his equal quotal share of everyone else. The first alternative implies that, while class A deserves the rights of being human, class B is in reality subhuman and, therefore, deserves no such rights. But since they are indeed human beings, the first alternative contradicts itself in denying natural human rights to one set of humans. Moreover, allowing class A to own class B means that the former is allowed to exploit and, therefore, to live parasitically at the expense of the latter; but, as economics can tell us, this parasitism itself violates the basic economic requirement for human survival: production and exchange.

The second alternative, which we might call "participatory communalism" or "communism," holds that every man should have the right to own his equal quotal share of everyone else. If there are three billion people in the world, then everyone has the right to own one-three-billionth of every other person. In the first place, this ideal itself rests upon an absurdity—proclaiming that every man is entitled to own a part of everyone else and yet is not entitled to own himself. Second, we can picture the viability of such a world—a world in which no man is free to take any action whatever without prior approval or indeed command by everyone else in society. It should be clear that in that sort of "communist" world, no one would be able to do anything, and the human race would quickly perish. But if a world of zero self-ownership and one-hundred-percent other-ownership spells death for the human race, then any steps in that direction also contravene the natural law of what is best for man and his life on earth.

Finally, however, the participatory communist world cannot be put into practice. It is physically impossible for everyone to keep continual tabs on everyone else and, thereby, to exercise his equal quotal share of partial ownership over every other man. In practice, then, any attempt to institute universal and equal other-ownership is utopian and impossible, and supervision and, therefore, control and ownership of others would necessarily devolve upon a specialized group of people who would thereby become a "ruling class." Hence, in practice, any attempt at communist society will automatically become class rule, and we would be back at our rejected first alternative.

We conclude, then, with the premise of absolute universal right of self-ownership as our first principle of justice in property. This principle, of course, automatically rejects slavery as totally incompatible with our primary right.Equally to be rejected is a grotesque proposal by Professor Kenneth E. Boulding, which, however, is a typical suggestion of a market-oriented utilitarian economist. This is a scheme for the government to allow only a certain maximum number of baby-permits per mother, but then to allow a "free" market in the purchase and sale of these baby rights. This plan, of course, denies the right of every mother over her own body. Boulding's plan may be found in Kenneth E. Boulding, The Meaning of the 20th Century (New York: Harper and Row, 1964). For a discussion of the plan, see Edwin G. Dolan, TANSTAAFL: The Economic Strategy for Environmental Crisis (New York: Holt, Rinehart, and Winston, 1971), p. 64.

Let us now turn to the more complex case of property in material objects. For even if every man has the right to self-ownership, people are not floating wraiths; they are not self-subsistent entities; they can only survive and flourish by grappling with the earth around them. They must, for example, stand on land areas; they must also, in order to survive, transform the resources given by nature into "consumer goods," into objects more suitable for their use and consumption. Food must be grown and eaten, minerals must be mined and then transformed into capital, and finally into useful consumer goods, etc. Man, in other words, must own not only his own person, but also material objects for his control and use. How, then, should property titles in these objects be allocated?

Let us consider, as our first example, the case of a sculptor fashioning a work of art out of clay and other materials, and let us simply assume for the moment that he owns these materials while waiving the question of the justification for their ownership. Let us examine the question: who should own the work of art as it emerges from the sculptor's fashioning? The sculpture is, in fact, the sculptor's "creation," not in the sense that he has created matter de novo, but in the sense that he has transformed nature-given matter—the clay—into another form dictated by his own ideas and fashioned by his own hands and energy. Surely, it is a rare person who, with the case put thus, would say that the sculptor does not have the property right in his own product. For if every man has the right to own his own body, and if he must grapple with the material objects of the world in order to survive, then the sculptor has the right to own the product which he has made, by his energy and effort, a veritable extension of his own personality. He has placed the stamp of his person upon the raw material by "mixing his labour" with the clay.

As in the case of the ownership of people's bodies, we again have three logical alternatives: (1) either the transformer, the "creator," has the property right in his creation; or (2) another man or set of men have the right to appropriate it by force without the sculptor's consent; or (3) the "communal" solution—every individual in the world has an equal, quotal share in the ownership of the sculpture. Again, put baldly, there are very few who would not concede the monstrous injustice of confiscating the sculptor's property, either by one or more others, or by the world as a whole. For by what right do they do so? By what right do they appropriate to themselves the product of the creator's mind and energy? (Again, as in the case of bodies, any confiscation in the supposed name of the world as a whole would, in practice, devolve into an oligarchy of confiscators.)

But the case of the sculptor is not qualitatively different from all cases of "production." The man or men who extracted the clay from the ground and sold it to the sculptor were also "producers"; they, too, mixed their ideas and their energy and their technological know-how with the nature-given material to emerge with a useful product. As producers, the sellers of the clay and of the sculptor's tools also mixed their labor with natural materials to transform them into more useful goods and services. All the producers are, therefore, entitled to the ownership of their product.

The chain of material production logically reduces back, then, from consumer goods and works of art to the first producers who gathered or mined the nature-given soil and resources to use and transform them by means of their personal energy. And use of the soil logically reduces back to the legitimate ownership by first users of previously unowned, unused, virginal, nature-given resources. Let us again quote Locke:

He that is nourished by the acorns he picked up under an oak, or the apples he gathered from the trees in the wood, has certainly appropriated them to himself. Nobody can deny but the nourishment is his. I ask then, when did they begin to be his? When he digested? or when he ate? or when he boiled? or when he brought them home? or when he picked them up? And 'tis plain, if the first gathering made them not his, nothing else could. That labour put the distinction between them and common. That added something to them more than Nature, the common mother of all, had done, and so they became his private right. And will anyone say he had no right to those acorns or apples he thus appropriated because he had not the consent of all mankind to make them his? Was it a robbery thus to assume to himself what belonged to all in common? If such a consent as that was necessary, man had starved, notwithstanding the plenty God had given him…. Thus, the grass my horse has bit, the turfs my servant has cut, and the ore I have digged in my place, where I have a right to them in common with others, become my property without the assignation or consent of any body. The labour that was mine, removing them out of that common state they were in, hath fixed my property in them.Locke, An Essay Concerning the True, Original, Extent, and End of Civil Government, p. 18.

If every man owns his own person and therefore his own labor, and if by extension he owns whatever material property he has "created" or gathered out of the previously unused, unowned "state of nature," then what of the logically final question: who has the right to own or control the earth itself? In short, if the gatherer has the right to own the acorns or berries he picks, or the farmer the right to own his crop of wheat or peaches, who has the right to own the land on which these things have grown? It is at this point that Henry George and his followers, who would have gone all the way so far with our analysis, leave the track and deny the individual's right to own the piece of land itself, the ground on which these activities have taken place. The Georgists argue that, while every man should own the goods he produces or creates, since Nature or God created the land itself, no individual has the right to assume ownership of that land. Yet, again, we are faced with our three logical alternatives: either the land itself belongs to the pioneer, the first user, the man who first brings it into production; or it belongs to a group of others, or it belongs to the world as a whole, with every individual owning an equal quotal part of every acre of land. George's option for the last solution hardly solves his moral problem: for if the land itself should belong to God or Nature, then why is it more moral for every acre in the world to be owned by the world as a whole, than to concede individual ownership? In practice, again, it is obviously impossible for every person in the world to exercise his ownership of his three-billionth portion of every acre of the world's surface; in practice, a small oligarchy would do the controlling and owning, rather than the world as a whole.

But apart from these difficulties in the Georgist position, our proposed justification for the ownership of ground land is the same as the justification for the original ownership of all other property. For as we have indicated, no producer really "creates" matter; he takes nature-given matter and transforms it by his personal energy in accordance with his ideas and his vision. But this is precisely what the pioneer—the "homesteader"—does, when he brings previously unused land into his private ownership. Just as the man who makes steel out of iron ore transforms that ore out of his know-how and with his energy, and just as the man who takes the iron out of the ground does the same, so too does the homesteader who clears, fences, cultivates, or builds upon the land. The homesteader, too, has transformed the character and usefulness of the nature-given soil by his labor and his personality. The homesteader is just as legitimately the owner of the property as the sculptor or the manufacturer; he is just as much a "producer" as the others.

Moreover, if a producer is not entitled to the fruits of his labor, who is? It is difficult to see why a newborn Pakistani baby should have a moral claim to a quotal share of ownership of a piece of Iowa land that someone has just transformed into a wheat field and vice versa, of course, for an Iowan baby and a Pakistani farm. Land in its original state is unused and unowned. Georgists and other land communalists may claim that the entire world population "really" owns it, but if no one has yet used it, it is in the real sense owned and controlled by no one. The pioneer, the homesteader, the first user and transformer of this land, is the man who first brings this simple valueless thing into production and use. It is difficult to see the justice of depriving him of ownership in favor of people who have never gotten within a thousand miles of the land and who may not even know of the existence of the property over which they are supposed to have a claim. It is even more difficult to see the justice of a group of outside oligarchs owning the property, and at the expense of expropriating the creator or the homesteader who had originally brought the product into existence.

The moral issue involved here is even clearer if we consider the case of animals. Animals are "economic land," since they are original nature-given resources. Yet, will anyone deny full title to a horse to the man who finds and domesticates it? This is no different from the acorns and berries which are generally conceded to the gatherer. Yet in land, too, the homesteader takes the previously "wild," undomesticated land, and "tames" it by putting it to productive use. Mixing his labor with land sites should give him just as clear a title as in the case of animals.

From our two basic axioms, the right of every man to self-ownership and the right of every man to own previously unused natural resources that he first appropriates or transforms by his labor—the entire system of justification for property rights can be deduced. For if anyone justly owns the land himself and the property that he finds and creates, then he, of course, has the right to exchange that property for the similarly acquired just property of someone else. This establishes the right of free exchange of property, as well as the right to give one's property away to someone who agrees to receive it. Thus, X may own his person and labor and the farm he clears on which he grows wheat; Y owns the fish he catches; Z owns the cabbages he grows and the land under it. But then X has the right to exchange some of his wheat for some of Y's fish (if Y agrees) or Z's cabbages; and when X and Y make a voluntary agreement to exchange wheat for fish, then that fish becomes X's justly acquired property to do with what he wishes, and the wheat becomes Y's just property in precisely the same way. Further, a man may, of course, exchange not only the tangible objects he owns, but also his own labor, which of course he owns as well. Thus, Z may sell his labor services of teaching farmer X's children in return for some of the farmer's produce.

We have thus established the property-right justification for the free-market process. For the free-market economy, as complex as the system appears to be on the surface, is yet nothing more than a vast network of voluntary and mutually agreed upon two-person or two-party exchanges of property titles such as we have seen occurs between wheat and cabbage farmers, or between the farmer and the teacher. In the developed free-market economy, the farmer exchanges his wheat for money. The wheat is bought by the miller who processes and transforms the wheat into flour. The miller sells the bread to the wholesaler, who in turn sells it to the retailer, who finally sells it to the consumer. In the case of the sculptor, he buys the clay and the tools from the producers who dug the clay out of the ground or those who bought the clay from the original miners, and he bought his tools from the manufacturers who, in turn, purchased the raw material from the miners of iron ore.

How "money" enters the equation is a complex process, but it should be clear here that, conceptually, the use of money is equivalent to any useful commodity that is exchanged for wheat, flour, etc. Instead of money, the commodity exchanged could be cloth, iron, or whatever. At each step of the way, mutually beneficial exchanges of property titles—to goods, services, or money—are agreed upon and transacted.

And what of the capital-labor relationship? Here, too, as in the case of the teacher selling his services to the farmer, the laborer sells his services to the manufacturer who has purchased the iron ore or to the shipper who has bought logs from the loggers. The capitalist performs the function of saving money to buy the raw material, and then pays the laborers in advance of sale of the product to the eventual customers.

Many people, including such utilitarian free-market advocates as John Stuart Mill, have been willing to concede the propriety and the justice (if they are not utilitarians) of the producer owning and earning the fruits of his labor. But they balk at one point: inheritance. If Roberto Clemente is ten times as good and "productive" a ball player as Joe Smith, they are willing to concede the justice of Clemente's earning ten times the amount; but what, they ask, is the justification for someone whose only merit is being born a Rockefeller inheriting far more wealth than someone born a Rothbard?

There are several answers that could be given to this question. For example, the natural fact is that every individual must, of necessity, be born into a different condition, at a different time or place, and to different parents. Equality of birth or rearing, therefore, is an impossible chimera. But in the context of our theory of justice in property rights, the answer is to focus not on the recipient—not on the child Rockefeller or the child Rothbard—but to concentrate on the giver, the man who bestows the inheritance. For if Smith and Jones and Clemente have the right to their labor and their property and to exchange the titles to this property for the similarly obtained property of others, then they also have the right to give their property to whomever they wish. The point is not the right of "inheritance" but the right of bequest, a right which derives from the title to property itself. If Roberto Clemente owns his labor and the money he earns from it, then he has the right to give that money to the baby Clemente.

Armed with a theory of justice in property rights, let us now apply it to the often-vexed question of how we should regard existing titles to property.

Among those who call for the adoption of a free market and a free society, the utilitarians, as might be expected, wish to validate all existing property titles, as so defined by the government. But we have seen the inadequacy of this position, most clearly in the case of slavery, but similarly in the validation that it gives to any acts of governmental confiscation or redistribution, including our hypothetical Kennedy and Rockefeller "private" ownership of the territorial area of a State. But how much of a redistribution from existing titles would be implied by the adoption of our theory of justice in property, or of any attempt to put that theory into practice? Isn't it true, as some people charge, that all existing property titles, or at least all land titles, were the result of government grants and coercive redistribution? Would all property titles, therefore, be confiscated in the name of justice? And who would be granted these titles?

Let us first take the easiest case: where existing property has been stolen, as acknowledged by the government (and, therefore, by utilitarians) as well as by our theory of justice. In short, suppose that Smith has stolen a watch from Jones. In that case, there is no difficulty in calling upon Smith to relinquish the watch and to give it back to the true owner, Jones. But what of more difficult cases—in short, where existing property titles are ratified by State confiscation of a previous victim? This could apply either to money, or especially to land titles, since land is a constant, identifiable, fixed quotal share of the earth's surface.

Suppose, first, for example, that the government has either taken land or money from Jones by coercion (either by taxation or its imposed redefinition of property) and has granted the land to Smith or, alternatively, has ratified Smith's direct act of confiscation. What would our policy of justice say then? We would say, along with the general view of crime, that the aggressor and unjust owner, Smith, must be made to disgorge the property title (either land or money) and give it over to its true owner, Jones. Thus, in the case of an identifiable unjust owner and the identifiable victim or just owner, the case is clear: a restoration to the victim of his rightful property. Smith, of course, must not be compensated for this restitution, since compensation would either be enforced unjustly on the victim himself or on the general body of taxpayers. Indeed, there is a far better case for the additional punishment of Smith, but there is no space here to develop the theory of punishment for crime or aggression.

Suppose, next, a second case, in which Smith has stolen a piece of land from Jones but that Jones has died; he leaves, however, an heir, Jones II. In that case, we proceed as before; there is still the identifiable aggressor, Smith, and the identifiable heir of the victim, Jones II, who now is the inherited just owner of the title. Again, Smith must be made to disgorge the land and turn it over to Jones II.

But suppose a third, more difficult case. Smith is still the thief, but Jones and his entire family and heirs have been wiped out, either by Smith himself or in the natural course of events. Jones is intestate; what then should happen to the property? The first principle is that Smith, being the thief, cannot keep the fruits of his aggression; but, in that case, the property becomes unowned and becomes "up for grabs" in the same way as any piece of unowned property. The "homestead principle" becomes applicable in the sense that the first user or occupier of the newly declared unowned property becomes the just and proper owner. The only stipulation is that Smith himself, being the thief, is not eligible for this homesteading.Neither is the government eligible. There is no space here to elaborate my view that government can never be the just owner of property. Suffice it to say here that the government gains its revenue from tax appropriation from production rather than from production itself and, hence, that the concept of just property can never apply to government.

Suppose now a fourth case, and one generally more relevant to problems of land title in the modern world. Smith is not a thief, nor has he directly received the land by government grant; but his title is derived from his ancestor who did so unjustly appropriate title to the property; the ancestor, Smith I, let us say, stole the property from Jones I, the rightful owner. What should be the disposition of the property now? The answer, in our view, completely depends on whether or not Jones's heirs, the surrogates of the identifiable victims, still exist. Suppose, for example, that Smith VI legally "owns" the land, but that Jones VI is still extant and identifiable. Then we would have to say that, while Smith VI himself is not a thief and not punishable as such, his title to the land, being solely derived from inheritance passed down from Smith I, does not give him true ownership, and that he, too, must disgorge the land—without compensation—and yield it into the hands of Jones VI.

But, it might be protested, what of the improvements that Smiths II–VI may have added to the land? Doesn't Smith VI deserve compensation for these legitimately owned additions to the original land received from Jones I? The answer depends on the movability or separability of these improvements. Suppose, for example, that Smith steals a car from Jones and sells it to Robinson. When the car is apprehended, then Robinson, though he purchased it in good faith from Smith, has no title better than Smith's which was nil and, therefore, he must yield up the car to Jones without compensation. (He has been defrauded by Smith and must try to extract compensation out of Smith, not out of the victim Jones.) But suppose that Robinson, in the meantime, has improved the car? The answer depends on whether these improvements are separable from the car itself. If, for example, Robinson has installed a new radio which did not exist before, then he should certainly have the right to take it out before handing the car back to Jones. Similarly, in the case of land, to the extent that Smith VI has simply improved the land itself and mixed his resources inextricably with it, there is nothing he can do; but if, for example, Smith VI or his ancestors built new buildings upon the land, then he should have the right to demolish or cart away these buildings before handing the land over to Jones VI.

But what if Smith I did indeed steal the land from Jones I, but that all of Jones's descendants or heirs are lost in antiquity and cannot be found? What should be the status of the land then? In that case, since Smith VI is not himself a thief, he becomes the legitimate owner of the land on the basis of our homestead principle. For if the land is "unowned" and up for grabs, then Smith VI himself has been occupying and using it, and, therefore, he becomes the just and rightful owner on the homestead basis. Furthermore, all of his descendants have clear and proper title on the basis of being his heirs.

It is clear, then, that even if we can show that the origin of most existing land titles are in coercion and theft, the existing owners are still just and legitimate owners if (a) they themselves did not engage in aggression, and (b) no identifiable heirs of the original victims can be found. In most cases of current land title this will probably be the case. A fortiori, of course, if we simply don't know whether the original land titles were acquired by coercion, then our homestead principle gives the current property owners the benefit of the doubt and establishes them as just and proper owners as well. Thus, the establishment of our theory of justice in property titles will not usually lead to a wholesale turnover of landed property.

In the United States, we have been fortunate enough to largely escape continuing aggression in land titles. It is true that originally the English Crown gave land titles unjustly to favored persons (for example, the territory roughly of New York State to the ownership of the Duke of York), but fortunately these grantees were interested enough in quick returns to subdivide and sell their lands to the actual settlers. As soon as the settlers purchased their land, their titles were legitimate, and so were the titles of all those who inherited or purchased them. Later on, the United States government unfortunately laid claim to all virgin land as the "public domain," and then unjustly sold the land to speculators who had not earned a homestead title. But eventually these speculators sold the land to the actual settlers, and from then on, the land title was proper and legitimate.This legitimacy, of course, does not apply to the vast amount of land in the West still owned by the federal government which it refuses to throw open to homesteading. Our response to this situation must be that the government should throw open all of its public domain to private homesteading without delay.

In South America and much of the undeveloped world, however, matters are considerably different. For here, in many areas, an invading State conquered the lands of peasants, and then parcelled out such lands to various warlords as their "private" fiefs, from then on to extract "rent" from the hapless peasantry. The descendants of the conquistadores still presume to own the land tilled by the descendants of the original peasants, people with a clearly just claim to ownership of the land. In this situation justice requires the vacating of the land titles by these "feudal" or "coercive" landholders (who are in a position equivalent to our hypothetical Rockefellers and Kennedys) and the turning over of the property titles, without compensation, to the individual peasants who are the "true" owners of their land.

Much of the drive for "land reform" by the peasantry of the undeveloped world is precisely motivated by an instinctive application of our theory of justice: by the apprehension of the peasants that the land they have tilled for generations is "their" land and that the landlord's claim is coercive and unjust. It is ironic that, in these numerous cases, the only response of utilitarian free-market advocates is to defend existing land titles, regardless of their injustice, and to tell the peasants to keep quiet and "respect private property." Since the peasants are convinced that the property is their private title, it is no wonder that they fail to be impressed; but since they find the supposed champions of property rights and free-market capitalism to be their staunch enemies, they generally are forced to turn to the only organized groups that, at least rhetorically, champion their claims and are willing to carry out the required rectification of property titles: the socialists and communists.

In short, from simply a utilitarian consideration of consequences, the utilitarian free-marketeers have done very badly in the undeveloped world, the result of their ignoring the fact that others than themselves, however inconveniently, do have a passion for justice. Of course, after socialists or communists take power, they do their best to collectivize peasant land, and one of the prime struggles of socialist society is that of the State versus the peasantry. But even those peasants who are aware of socialist duplicity on the land question may still feel that with the socialists and communists they at least have a fighting chance. And sometimes, of course, the peasants have been able to win and to force communist regimes to keep hands off their newly gained private property: notably in the case of Poland and Yugoslavia.

The utilitarian defense of the status quo will then be least viable—and, therefore, the least utilitarian—in those situations where the status quo is the most glaringly unjust. As often happens, far more than utilitarians will admit, justice and genuine utility are here linked together.

To sum up, all existing property titles may be considered just under the homestead principle, provided (a) that there may never be any property in people; (b) that the existing property owner did not himself steal the property; and particularly (c) that any identifiable just owner (the original victim of theft or his heir) must be accorded his property.

Kinsella's article on LewRockwell.com: "A Simple Libertarian Argument Against Unrestricted Immigration and Open Borders"

Read Stephan Kinsella's Against Intellectual Property at Mises.org/KinsellaBook

Use the code HAPOD for a discount on Democracy: The God That Failed from our bookstore: Mises.org/BuyHoppe

Find more from Jayant Bhandari on his website (JayantGhandari.com) and his Twitter account (@JayantBhandari5).

Use the code HAPOD for a discount on Democracy: The God That Failed from our bookstore: Mises.org/BuyHoppe

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Original Article: "How Government-Owned Streets Prevent Effective Law Enforcement".

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.

Original Article: "It’s Not "Just Property": How Looting Destroys Lives and Low-Income Neighborhoods".

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Original Article: "Why Homeowners Hate Real Estate Developers"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.

Original Article: "How Government Roads Expand Police Power in America".

JEFF DEIST: Your recent talk in Vienna mentioned growing up happy but poor, the son of East German parents who had been driven west during the Cold War by the Soviets. Can you elaborate on the lasting impact their experience had on you, in terms of how you view state power and its attendant evils? Are you in some ways still influenced by their “eastern” roots?

HANS-HERMANN HOPPE: The fact that my parents were both refugees, ending up in the West by the accident of WWII, driven away and separated from their original homes in Soviet-occupied East Germany, played a huge role in our family life. In particular the expropriation of my mother’s family and its expulsion from house and home by the Soviets, in 1946, as so-called East Elbean Junkers, was a constantly recurring topic at home and assumed even more importance after the collapse, in 1989, of East Germany and the following German “reunification.” My mother, as many other victims of communist expropriations, then sought and hoped for the restitution of her property—in which case I would have been set for life. However, as I already knew and correctly predicted by then, this was not going to happen. There was to be no justice. But my parents were shocked and outraged.

The numerous trips we took to visit various relatives in East Germany confirmed my parents’ judgment of the Soviet system. Shortages, waiting lines, empty stores, inferior products, and lousy services. All around controls, spies, and informants. Everywhere grey ugliness and decay. A prison wall built around the whole country to prevent anyone from escaping. And commie-proles droning on endlessly about the great successes achieved under their leadership.

Yet as a little boy and a teenager I did not understand the reason for all this mischief and misery. Indeed, the East German experience did little if anything to shake my own leftist convictions at the time. East Germany, I thought, was just the wrong type of socialism, with the wrong people at the helm.

Apart from their anticommunism, my parents, as most people of their generation, were highly guarded or even timid regarding political pronouncements. Germany had lost a devastating war, and the German population was subjected to a systematic, American-led reeducation campaign, a Charakterwaesche (character-wash), as I was to realize only many years later, of truly enormous proportions, which involved a complete rewriting of history from the victor’s viewpoint, essentially portraying Germans as congenital villains. This made it all the more difficult to finally discover the fundamental importance of private property rights and the evil of statism and so-called public property.

As far as any genuine “eastern” influences are concerned, I am skeptical. Far more important in any case was the fact that my parents were impoverished refugees who eagerly wanted to recover from their losses, get ahead in life, and instill their own will to succeed also in their children. (In fact, empirical studies later on demonstrated the comparatively greater professional success of refugee children as compared to their nonrefugee peers.) However, in the German context you may count my Protestant—Lutheran—upbringing and the character traits typically associated with it, i.e., the “Protestant ethic,” as described by Max Weber, as somehow eastern.

JD: You also mentioned your time at university, studying philosophy under the direction of left-wing critical theorist Jürgen Habermas. Although your political philosophy differs radically from his, discuss his influence on you and your development of “Austrian” class analysis. Is he purely a malign figure, or can we learn from him?

HH: Looking back, I can certainly say that Habermas has been a largely malign figure. He became Germany’s most famous and influential intellectual, and as such played an important role in Germany’s gradual but steady move leftward, both economically and culturally. Indeed, he can be regarded as the high priest of historical and political correctness, of social democracy, and of political centralization.

Nonetheless, my relationship with Habermas, while not close, was cordial, and I learned quite a bit from him, especially from his earlier works such as Erkenntnis und Interesse (Knowledge and Interest). (Since the late 1970s I essentially stopped following his work, as it was increasingly tedious and murky.) In any case, it was Habermas who introduced me to the Anglo-Saxon tradition of analytic philosophy and the philosophy of language. He helped me understand “methodological dualism,” i.e., that the study of objects with which we can communicate (and communicative action) requires different methods than those appropriate for the study of noncommunicative objects (and instrumental action). And contra all empiricist and relativist claims, Habermas always defended the notion of some sort of synthetic a priori truths.

As far as my work on class analysis and the theory of history is concerned, however, it owes nothing to Habermas, who had actually little interest in economics and political economy, but instead to my earlier study of Marx. I wrote the original paper on the subject for a Mises Institute conference on Marx, and I tried to show how, by only substituting State for Business Firms and Taxes for Wages, Marx’s exploitation theory and his theory of history would make perfect sense.

JD: Your speech titled “Coming of Age with Murray” in New York City two years ago reveals much about your personal relationship with the late Murray N. Rothbard. In fact you moved to New York primarily to work with him. Looking back, are you glad to have left Germany for America? Would your career and work look very different had you remained at a European university?

HH: Oh yes, that move was about the best and most important decision I ever made. Given my views at the time, i.e., my Misesian-Rothbardian outlook, an academic career in Germany, even if not entirely impossible, would have been extremely difficult, even with stellar academic credentials. I might have become depressed and given up. Certainly, without constant encouragement such as I would receive from Rothbard in America, I would have written less and then mostly in German, which no one but Germans read.

In the meantime, thanks to the growing influence and worldwide internet presence of the Ludwig von Mises Institute in Auburn, the situation has significantly changed. It is still difficult, but nowadays you can also have a successful academic career in Europe even as an Austrian (but you will have to write in English).

JD: Rothbard remains relevant and controversial today. Why is he so consistently misunderstood? Given your long history with him, both in New York and at UNLV, what do his critics fail to grasp? Was he warm and convivial as his supporters contend, or acerbic and mercurial as per his detractors? Does his work in social theory overshadow his work as an economist?

HH: Rothbard was a genius of the first order. He ranks among the greatest economists, but he was not and did not want to be a mere economist-economist. He was also a great philosopher, sociologist, and historian, and as such became the creator of a grand, integrated intellectual system. Anyone familiar with Rothbard’s entire oeuvre can only stand in awe before his achievement. But there also lies the problem. The sheer volume and the interdisciplinary character of Rothbard’s work makes it difficult for anyone but the most dedicated and talented student to give a full and fair account of his work. Moreover, especially economics, the centerpiece of Rothbard’s system, is a rather dry, technical field with very limited sex appeal. Much easier, then, for the envious, lazy, and talentless to engage in nit-picking. And easier still not to talk about Rothbard’s scholarly work at all, but reduce him to the libertarian activist (that he also was, if only in his spare time and for his own amusement).

As far as Rothbard the man is concerned there is something to both seemingly contradictory statements about his personality. You certainly did not want to become the target of one of Rothbard’s many written missives. As a writer, Rothbard could be merciless and devastating, ready to go in for the argumentative kill. On the other hand, as a person, in social gatherings, he was a softy: warm, convivial, charming, and entertaining.

JD: Rothbard frequently defended you and your work, charging critics with “Hoppephobia.” What did this mean to you as a young scholar? Why does loyalty and gratitude seem so scarce in academia generally, and in libertarian circles?

HH: If you write and take a clear and unambiguous stand on highly contentious issues, you should expect some heat. Otherwise, if you don’t like the heat, stay out of the kitchen. Given what I wrote or said in public (or the way I said or wrote it), I knew that I would be a controversial figure; and as a young man I took a good deal of delight from provocation and vigorous intellectual debate. Nonetheless, I had no idea how downright personal, nasty, and even defamatory and libelous some critics and criticisms could get. In such situations, then, Rothbard’s coming forward in my defense was a welcome relief and gave me a great boost of confidence. After some years in academia, however, I developed quite a thick skin and learned that many a critic and criticism were not worth my attention and best ignored.

As for loyalty and gratitude, it is necessary that a person recognizes and admits that he owes something to another person; that this other person has done something of value for him that deserves to be acknowledged. I tend to agree with your assessment of academia and certain libertarian circles as ranking rather low in this regard. And in both cases I suspect the prevalence of egalitarian ideas to be responsible for this outcome. The typical or “modal” libertarian, as described by Rothbard, is an egalitarian, respect-no-authority guy, with little knowledge of history and world affairs. He fancies himself to have come up with everything he has and knows on his own, as a self-made man, and as such thinks that he owes no one any gratitude or special respect.

The egalitarianism of academia, or more precisely that part of it that is principally concerned with writing and speaking (rather than doing, such as engineering, for instance), is of a different kind. Let’s call this group the intellectuals. Intellectuals generally suffer from an inflated ego. They consider intellectual work and hence themselves as more important than mundane or manual work and workers. In their eyes, then, the fact that they are all subsidized today and kept financially afloat by nonintellectuals is only how things should be anyhow. No need to be thankful for what is self-understood, as far as they are concerned. In this regard, intellectuals are elitists. Vis-à-vis each other, however, they are typically egalitarians. They all equally write and speak, and who is to say that this writing is better or more original than that. True enough, their salaries and their standing in academia may be quite different. However, such differences are solely the result of bureaucratic procedures and criteria that have nothing to do with truth or beauty. Nor does popularity matter as far as truth and beauty are concerned. No need, then, for an intellectual to ever feel less of an intellectual than anyone else.

JD: You mention sharing with Rothbard a profound interest in religion and the sociology of various faiths despite being an agnostic. Have you changed your perspective on Christianity and its influence on the West? Is the post-Christian West going to be a nasty and tribal place, contra the assurances of secularists?

HH: Whether you are a believer or not, there is no way of denying that religion has played a hugely important role in human history and that it is the West, i.e., the part of the world shaped by Latin Christendom in particular, that has surpassed all other world regions both in terms of its material as well as its cultural achievements, and that among its superior cultural achievements in particular is also the idea of natural human rights and human freedom. The Christian notion that each person is created in the image of God contributed to the uniquely Western tradition of individualism and was instrumental in abolishing, at long last, the institution of slavery within the Christian orbit (all the while it lingered on outside the West, even until today). And the institutional separation and jealous competition for social recognition and authority in the West between the Christian church and its hierarchy of popes, cardinals, bishops, and priests, on the one hand, and all worldly power with its hierarchy of emperors, kings, nobles, and heads of households on the other contributed greatly to the uniquely Western tradition of limited (as opposed to absolutist) government.

This happy, power-limiting arrangement began to crumble already in the sixteenth and seventeenth centuries with the Protestant Reformation and the Counter-Reformation following. Today, the various Christian churches are essentially appendices of the state. As such they promote even the mass importation of people of rival faiths into formerly Christian lands, thus further undermining whatever authority they may still possess in public opinion and strengthening at the same time the power of the all-secular, post-Christian state.

JD: Democracy: The God That Failed remains perhaps your best-known and most controversial book. Nearly twenty years later, give us your thoughts on the book’s legacy. Are you happy with its notoriety and impact, or do you wish your work on socialism, property, and ethics was better appreciated?

HH: Indeed, of all of my major writings Democracy has been the bestseller, and it is no exaggeration to say that the book in the meantime has exerted some notable influence in helping desanctify the institution of democracy (majority rule) in public opinion. Naturally, I am quite happy about this. The book has a certain “sex appeal,” if you will. It is interdisciplinary and not too technical, and it offers some new, original, and provocative theoretical theses and insights, combined with alternative, revisionist historical vistas and perspectives. It may be the only major work of mine a person reads and associates with my name. But then, I always hope, there may also be other people to whom it opens the door to some other, possibly more important if less sexy, works of mine.

JD: Both your fans and critics seized on a passage in Democracy arguing that individuals with goals and lifestyles at odds with a libertarian social order would be “physically removed” from that community. Since then you have clarified how this phrase functions as an adjective, not a verb. In other words, people at odds with the agreed-upon terms of a private community simply should live elsewhere, just as one town is physically separate from a nearby town. What are your thoughts about the controversy today?

HH: This harks back to your earlier question concerning Hoppephobia. The whole affair, most likely initiated by one of the usual left-libertarian suspects from the DC beltway, was a deliberate attempt to smear and malign me personally and with that also the program of a realistic or right-libertarianism first outlined in the book.

Essentially, I did not say anything more controversial or scandalous in the short passage than that anyone insisting on wearing a bathing suit on a nude beach may be expelled from this beach (but be free to look for another one), just as anyone insisting on nudity may be expelled from a formal dinner party (but be free to look for another party). In my example, however, it was not nudes but homosexuals that figured. I wrote that in a covenant established for the purpose of protecting family and kin, people openly displaying and habitually promoting homosexuality may be expelled and compelled to look for another place to live. But in some “woke” circles, mentioning homosexuality and expulsion in one and the same sentence apparently leads to intellectual blank-out and a loss of all reading comprehension.

Ultimately, the entire smear campaign failed and even backfired, only increasing my own popularity and the influence of the book.

JD: At your Property and Freedom conference in Turkey you have spoken on the process of “de-civilization,” whereby positive law overtakes natural law under the domination of a monopolized state actor. Property rights and adjudication of conflicts fall under the grasp of this monopoly power. We like your conception of the opposite: a social order emerging from “justice principles,” taking the form of a private-law society—entirely voluntary—more in harmony with simple natural order. It sounds better and more reasonable than anarchism to ordinary people! Are anarcho-capitalism and resulting private “covenant communities” actually far less radical than commonly thought? Are they in fact outgrowths of natural law concepts that many people already accept?

HH: Indeed, yes, and yes again. Even if it appears to be little more than a shift in semantics, for the reasons you mention I have long preferred the terms “private-law society” and “natural order” to “anarcho-capitalism.” Because everyone is familiar with the basics of private law. From our everyday lives, we know what property is and implies and how it is acquired and transferred (and how not). As well, we know what an exchange, an agreement, and a contract are (and what is not to count as such). There is nothing difficult or especially demanding about the natural law of property and contract. Indeed, in many small villages people live by these laws, without the presence or pressure of any outside government police or judge. There is self-policing. Yet whoever polices is subject to the same rules as everyone else. And if need be, in the case of conflict, there is self-arbitration and self-adjudication. But whoever acts as judge or arbiter, too, is subject to natural private law.

The emergence of a natural order ruled by private law, then, is not difficult to explain. What is difficult to explain is the emergence of a state. Why should there be anyone, any institution, not subject to private law? Why should there be someone who can make laws? Why should there be an institution that can exempt itself from the rules applied to everyone else? Why should there be some policemen who cannot violate the law or some judges who cannot break the law? Why, indeed, should there be any ultimate and final judge, exempt from any and all prosecution? Certainly, all of this cannot be the result of an agreement or contract, because no one in his right mind would sign on to a contract which stipulated that in any conflict that might arise between you and me, you will always have the final word.

JD: Let’s turn to immigration. You propose contractual admission of immigrants, with sponsors (or immigrants themselves) funding a bond or liability insurance to pay for any criminal or civil cost imposed on existing taxpayers. Immigrants remain in their new home conditionally for an initial period, subject to revocation of admission for contractual violations. They do not receive “welfare”; citizenship and voting rights come much later. You refer to this system as satisfying the “full cost principle.” In many ways this is far more “open” than open borders proposals, because it requires no checkpoints or intake centers or vast border police agencies. It uses contracts and market forces to shape immigration, rather than political machinations. This seems far more humane and practical, yet you are assailed as anti-immigration. What explains this?

HH: As already touched upon, in some circles the mere mention of two words in one sentence—this time “immigration” and “restriction”—is sufficient to trigger a blank-out. No need to read any further and try to comprehend. First homophobe, then xenophobe. In fact, I have never met a serious advocate of “no immigration, period!” Nor have I ever taken a stand that could be described as anti-immigration. Instead I have always argued for the commonsensical approach of selective immigration.

Ideally, with all pieces of land and everything on them privately owned, there would be a huge variety of entrance requirements, i.e., of degrees, respectively, of openness and closedness. I have described this, for instance, in my piece “Natural Order, the State, and the Immigration Problem.” Airports, roads, shopping malls, hotels, etc., would be rather open, whereas residential associations, private retreats, clubs, etc., might be almost completely closed. In any case, however, all migration would be by invitation and invariably the full cost principle would apply. Either the inviting host or the invited guest or both jointly would have to pay the full cost associated with the guest’s presence. No cost could be shifted and externalized onto third parties, and the inviter and/or invitee would be held liable for any and all damage resulting from the invitation to the property of others.

If and as long as there is a state with so-called public property in place, as happens to be the case in today’s world, then the best one may hope for is an immigration policy that tries to approach this ideal of a natural order. You have mentioned some possible measures in this regard. But to advocate, under current conditions, the adoption of a “free immigration” policy—every foreigner can come in and move and stay around the entire country, no questions asked—is certainly no way to achieve this goal. To the contrary, it would make forced integration and cost-shifting ubiquitous, and quickly end in disaster. Only people devoid of all common sense could possibly advocate any such policy.

JD: In your exchanges with Walter Block about immigration, he argues that all government property ought to be subject to open homesteading by immigrants. Your response is often characterized as “taxpayers should own taxpayer-funded public goods.” But in fact your argument applies only in the context of Block’s argument, to disprove the notion that public property should be viewed as “unowned.” If we must have public property, state agents at least ought to act as trustees of that property on behalf of the taxpayers who fund it. Accurate?

HH: Accurate. Let me only add that in today’s world the sometimes mentioned “wilderness” of mountaintops, swamps, tundra, etc., is no longer truly wild and thus ready to be homesteaded. There is no inch left on earth today that is not claimed to be the “property” of some government. Whatever wilderness there is, then, it is wilderness that has been barred and prevented by some government, i.e., with taxpayer funds, from being homesteaded by private parties (most likely by neighboring property owners). If anyone, it is domestic taxpayers who are the legitimate owners of such wilderness.

And quite apart from this, even if some wilderness were opened for homesteading, it would be neighboring, domestic residents, who had been most immediately and directly barred from doing so before, who should have the first shot at homesteading, well before any distant foreigner.

JD: Hoppean argumentation ethics remains a subject of rigorous debate, most recently between (economist) Robert Murphy and (legal theorist) Stephan Kinsella. How important is a purely logical justification for human liberty, as opposed to Rothbard’s normative natural law arguments or Mises’s utilitarianism? Is the shared human experience of physical personhood the best starting point for arguments against the initiation of violence, i.e., arguments against the state?

HH: There are some questions that can be answered definitively by the performance of a simple experiment. For many others that is not possible. Sometimes we are satisfied with answers that sound plausible or appear convincing on intuitive grounds. But to the curious mind, some questions are of such great importance as to ask for more than just plausibility or intuition.

Transcendental arguments are designed to satisfy this desire for more, i.e., for logical certainty or ultimate justification. They are answers to the skeptic who denies that there is any such thing as ultimate justification and a priori truths. They try to establish, by means of self-reflection, what the skeptic must already presuppose as given and true simply in order to be the skeptic that he is, i.e., to make his skepticism possible. One has reached certainty about something, then, if one can show that even a skeptic must admit to it, if only in order to meaningfully express his very own doubt.

The ethics of argumentation is the answer to the ethical relativist, i.e., to any one person claiming—as a proponent vis-à-vis an opponent in argumentation—that there is no such thing as a rational or objective ethics.

In response to the relativist proponent it is essentially pointed out that by virtue of his own engagement in argumentation he has already effectively rejected his own thesis, because argumentation is an activity, a special, conflict-free form of interaction between a proponent and an opponent with the specific purpose of clarifying and possibly coming to a mutual agreement concerning some rival truth claims. As such, it presupposes the acceptance as valid of such norms or rules of human conduct as make argumentation itself possible. And it is impossible, then, to argue against and deny the validity of such norms without thereby running into a performative or dialectic contradiction.

The praxeological presuppositions of argumentation, then, are twofold—and we all know them from personal experience more generally also as the conditions and requirements of peace and peaceful interactions: first, each person is entitled to exclusive control or ownership of his physical body (that he and only he can control directly, at will) so as to act independently of others and come to a conclusion on his own. And secondly, for the same reason of mutually independent standing or autonomy, both proponent and opponent must be entitled to their respective prior possessions, i.e., the exclusive control of all other, external means of action appropriated indirectly by them prior to and independent of one another.

Rothbard immediately accepted my proof. In fact, he hailed it as a major breakthrough. As for the various criticisms I have encountered, I have not been impressed, to put it mildly.

JD: Are you generally optimistic or pessimistic about the future of the West? Do you think sclerotic, bureaucratic states will yield to happier and more decentralized political arrangements? Or do you think Washington, DC, Brussels, et al. will repeat the terrible mistakes of the twentieth century: aggressive foreign policy, unrestrained central banking, and political globalism?

HH: In the short and medium run, I am pessimistic. True, our living standards have gone up and technological progress allows us to do things not long ago thought impossible, but at the same time the coercive powers of the state have continuously expanded, and private property rights and personal freedom have been correspondingly diminished. The process of political and monetary centralization has proceeded unabated. Central banks create more money and credit out of thin air than ever before. Government debt and obligations have risen to exorbitant heights, so as to make some future default a virtual certainty. All the while taxes and regulations have brought economic growth to a standstill. It is clear, then, that a severe economic meltdown is in the making.

At the same time, throughout most Western countries the populations have been thoroughly dehomogenized by immigration policies favoring multiculturalism. And migration into the West by non-Westerners has been massively increased still as a fallout of the endless US wars and military adventures in the Middle East and elsewhere. Most Western countries now contain within their own native cultures large pockets and clusters of people of not just different, but rival and even hostile cultures.

Combined with a major economic crisis, this makes for an explosive mixture, the ingredients of a civil war.

It is amazing how the ruling elites have so far managed to keep the show running. But there can be no doubt that the day of reckoning must eventually come, and when it does I see two likely scenarios of how to escape the danger of civil war. The first one is the strong man variant, an authoritarian regime that tries to hold all things together by means of centralized, dictatorial powers. And the second variant is that of decentralization: of secession, separation, and disaggregation so as to approach the ideal of a natural order. Naturally, the second variant is the one favored by libertarians (and recommended by Mises). Yet to make this variant win, libertarians have to prepare the ground. The public must be educated about the economic and social advantages of small, competing political units, and it is necessary to find and nurture potential charismatic leaders for the various decentralist and secessionist causes.

JD: Finally, how does living in Turkey affect your perspective? Are old notions of East and West breaking down, and should we consider looking East for allies in the fight for civilization and property?

HH: As mentioned before and emphasized also by Mises, the idea of liberty is originally a Western idea, created by white Western males, and although it has lost some strength there, it is still most prominent and widespread in the West. That does not mean that it is restricted to the West or only accessible to Western minds, however.

If there is anything I have learned from living in various countries and from my many travels, it is that there exists far more sociocultural variety and variance on earth than the typical Westerner might imagine: not just the variety of different countries, but even more so the regional and local variations within each country. Almost everywhere you can find a few libertarians or classical liberals, and you should look out for them wherever they are, of course. But just as we must learn in our private dealings with other individuals how to distinguish between potential converts on the one hand and hopeless cases on the other, so as not to waste our time and effort to no end, so, and for the same reason, we must also learn in our search for allies how to distinguish between hopeful, less hopeful, or even hopeless countries, regions, and localities. And we must realistically recognize that different places offer hugely different and unequal prospects and potential in this regard.

Ownership means full control of the services that can be derived from a good. This catallactic notion of ownership and property rights is not to be confused with the legal definition of ownership and property rights as stated in the laws of various countries. It was the idea of legislators and courts to define the legal concept of property in such a way as to give to the proprietor full protection by the governmental apparatus of coercion and compulsion, and to prevent anybody from encroaching upon his rights. As far as this purpose was adequately realized, the legal concept of property rights corresponded to the catallactic concept.

However, nowadays there are tendencies to abolish the institution of private property by a change in the laws determining the scope of the actions that the proprietor is entitled to undertake with regard to the things that are his property. While retaining the term private property, these reforms aim at the substitution of public ownership for private ownership. This tendency is the characteristic mark of the plans of various schools of Christian socialism and of nationalist socialism. But few of the champions of these schools have been as keen as the Nazi philosopher Othmar Spann, who explicitly declared that the realization of his plans would bring about a state of affairs in which the institution of private property will be preserved only in a "formal sense, while in fact there will be only public ownership."

There is need to mention these things in order to avoid popular fallacies and confusion. In dealing with private property, catallactics deals with control, not with legal terms, concepts, and definitions. Private ownership means that the proprietors determine the employment of the factors of production, while public ownership means that the government controls their employment.

Private property is a human device. It is not sacred. It came into existence in early ages of history, when people with their own power and by their own authority appropriated to themselves what had previously not been anybody's property. Again and again, proprietors were robbed of their property by expropriation. The history of private property can be traced back to a point at which it originated out of acts that were certainly not legal. Virtually every owner is the direct or indirect legal successor of people who acquired ownership either by arbitrary appropriation of ownerless things or by violent spoliation of their predecessor.

However, the fact that legal formalism can trace back every title either to arbitrary appropriation or to violent expropriation has no significance whatever for the conditions of a market society. Ownership in the market economy is no longer linked up with the remote origin of private property. Those events in a far-distant past, hidden in the darkness of primitive mankind's history, are no longer of any concern for our day. For in an unhampered market society, the consumers daily decide anew who should own and how much he should own. The consumers allot control of the means of production to those who know how to use them best for the satisfaction of the most urgent wants of the consumers. Only in a legal and formalistic sense can the owners be considered the successors of appropriators and expropriators. In fact, they are mandataries of the consumers, bound by the operation of the market to serve the consumers best. Capitalism is the consummation of the self-determination of the consumers.

The meaning of private property in the market society is radically different from what it is under a system of each household's autarky. Where each household is economically self-sufficient, the privately owned means of production exclusively serve the proprietor. He alone reaps all the benefits derived from their employment.

In the market society, the proprietors of capital and land can enjoy their property only by employing it for the satisfaction of other people's wants. They must serve the consumers in order to have any advantage from what is their own. The very fact that they own means of production forces them to submit to the wishes of the public.

Ownership is an asset only for those who know how to employ it in the best possible way for the benefit of the consumers.

[This article is excerpted from chapter 24 of Human Action: The Scholar's Edition and is read by Jeff Riggenbach.]

“It’s an amazing fact that the nature of liberty is one of the least-discussed topics in what libertarians like to call ‘the literature of liberty’.” Irfan Khawaja (2009, 155)

J. C. Lester (jclester@gmail.com) is an independent scholar. This essay has benefitted from the critical input of Mark Brady, David McDonagh, and an anonymous referee.

The issue here is ‘liberty’ (from a Latin root), or ‘freedom’ (from an Anglo-Saxon root). But it is not ‘liberty’ in its most general sense: for that also applies outside the social realm, including to such matters as arise in physics and engineering (as any internet search shows; and it can be hard to preclude such references when one is not interested in them). The issue here is only social or interpersonal liberty: the liberty that people have in relation to each other. This essay will sometimes refer to ‘interpersonal liberty’ and sometimes simply to ‘liberty’, but the former is always what is meant.

There is a philosophical approach to libertarianism that is very different from the mainstream, or orthodox, varieties.Three main types are distinguished in Mack (2018, 1): “the natural rights approach, the cooperation-to-mutual-advantage approach, and the indirect utilitarian approach.” It has two principal differences: an abstract theory of interpersonal liberty (i.e., non-propertarian and non-normative); and critical-rationalist epistemologyFor detailed explanations of critical rationalism see, for instance, Popper ([1963] 1978) and Miller (1994). (i.e., no attempt to provide ‘supporting'Supporting justifications' entail circularities, infinite regresses, or dogmatic assumptions. As critical rationalism explains, all observations, arguments, explanations, and even logical inferences rest on, and thus logically amount to, assumptions. They thereby cannot offer support that transcends their assumptions (but those assumptions are either true or false, depending on the external facts). However, they can be criticized and tested—all within a framework of assumptions, of course (and presumably reality will tend to aid true assumptions to withstand criticisms and tests better than false ones, and true ones should resurface even if mistakenly rejected). justifications’This is emphatically not to object to ‘justification’ used in the completely different sense that means explaining a conjecture and squaring (justifying) it with any known criticisms or ostensible counterexamples by adequately responding to them (which cannot, of course, offer any support to the conjecture: it merely appears to remain unrefuted so far). or ‘foundations’).It would be possible to accept the abstract theory of liberty but reject or ignore critical rationalism. But all the logical problems of attempting to support theories are unavoidable. This heterodox philosophical paradigm remains largely unknown and otherwise largely misunderstood. In general attempts to explain different types of libertarianism it is typically completely absent.It is absent in, for instance, Mack (2018), Vossen (2019), Zwolinski (n.d.), and Boaz, (n.d.). This is a factual observation, not a complaint. If for no other reason, therefore, it would seem worthwhile to attempt to explain and defend it in outline; and that is one purpose of this essay. However, this is also an attempt to do this with more clarity, precision, and context than hitherto; and this has prompted some new arguments, explanations, and conjectures.This is partly intended to be a better version of the attempts that were Lester (1997; 2014, ch. 10). The result is still very far from being a pellucidly clearSome typical, and thereby useful, misunderstandings that arise in one anonymous review will be dealt with in footnotes at various points. and completely settled account. It would undoubtedly benefit from greater critical scrutiny if only in order to clarify it further, and it might even be significantly corrected or utterly refuted. But regardless of how right or wrong this theory is, it poses questions and problems that the orthodox varieties do not and which need to be answered and solved.

Whatever the various libertarian theories are stated to be, there appears to be one key insight that is behind them all. This is the realization—if only at an intuitive level—that property rights tend to protect and promote two very important things at once: some sense of interpersonal liberty as people not interfering with, or initiating constraints on, each other’s lives (sometimes generally expressed as ‘live and let live’); and maximal productivity, or economic efficiency, that benefits one and all (sometimes generally expressed as ‘a rising tide lifts all boats’). However, as we shall see, this insight remains philosophically confused in the various orthodox forms of libertarianism: there is no clear analysis and clarification of the distinguishable parts. Instead, there is a conflation of certain kinds of deontological rights, good consequences, property rights, and ‘supporting justifications’; and all the while being oblivious to the (absurd and ironic) fact that there is no explicit theory of interpersonal liberty to explain any of this.Two classic examples are Nozick (1974) and Rothbard ([1973, 1978] 2006). But see virtually any mainstream libertarian text. The philosophical sophistication of the Nozick text obscures the fact that it is at the same time ultimately superficial as regards some of the issues raised in this essay. At the same time, these orthodox positions are often perceived and presented by advocatory texts as being crystal clear and completely cogent.A good short example is Long (2014). And see the critical response that is Lester (2014, ch. 6) Critical texts cite real philosophical problemsFriedman (1989, ch. 41, 42). And see the critical response that is Lester ([2000] 2012, 71-123).,“For Nozick, … there is justice when there is no restriction on freedom. But freedom is then itself defined in terms of non-violation of rights, and the result is a tight definitional circle and no purchase either on the concept of freedom or the concept of justice,” Cohen (1995, 61).,See Sobel (2012, 2014). but they are usually answered with, unwittingly, ad hoc maneuvers.E.g., Block (2011). And see the response that is Lester (2014, ch. 8). The problem is that both the best criticisms and the best defences are fatally flawed insofar as they incorrectly assume, as they usually do, that something approximating to the current orthodox philosophical assumptionsSelf-ownership, homesteading, just property, and either deontologism or consequentialism are somehow ‘foundational’ to libertarianism—and all without an explicit theory of liberty. is necessary and sufficient to explain libertarianism and that supporting justificationsI.e., “supporting justifications” as such, not of any particular assumptions. A review overlooks or misunderstands the references to critical rationalism and asks, “Supporting justifications of what?” are possible. General problems with the orthodox assumptions will be explained in what follows. More-detailed criticisms can be found in the texts cited in the various footnote references. But this essay is primarily a short explanation of the heterodox paradigm.

An adequate philosophical theory of libertarianism needs to make the following distinctions:

1) An abstract theory of interpersonal-liberty-in-itself that is independent of any type of property (i.e., ownership), or normativity.It will later be explained how Hobbes’s account in Leviathan is not adequate.

2) The practical and contingent, derived, objective applications of the abstract theory.

3) The separate moral and value defences of the abstract theory and its objective applications.

4) At every stage the abandonment of ‘supporting justifications’ in favour of critical rationalism, which explicitly uses conjectures and criticisms.

That these distinctions are needed should become clearer as this explanation proceeds. This approach appears to be sufficiently radical to amount to a different philosophical paradigm of libertarianism. And this is a fortiori true if also combined with the extreme version of the, implicit, classical-liberal/libertarian compatibility conjecture: there is no systematic practical clash between interpersonal liberty (or the libertarian ideology) and want-satisfaction welfare (or preference-utilitarian morals). Some general philosophical explanations of this compatibility will be suggested at various points, but there cannot be a comprehensive social scientific defence of this conjecture here. The following account attempts a new, short, explanation of just such theories of liberty and libertarianism.

There are various competing conceptions of interpersonal liberty. But there are only two dominant conceptions in both common sense and in political or social philosophy. They are not negative liberty and positive liberty, as might be supposed. Rather, they are both types of so-called ‘negative liberty’. One conception is that of people not initiating constraints on each other. This is something that could, as far as is practical, be universally observed: everyone could have maximal such liberty at the same time. This is more or less the conception that John Locke (1632–1704) uses in his Second Treatise of Government (1690).For instance, in section 57: “Liberty is freedom from restraint and violence by others; and this can’t be had where there is no law. This freedom is not—as some say it is—a freedom for every man to do whatever he wants to do (for who could be free if every other man’s whims might dominate him?); rather, it is a freedom to dispose in any way he wants of his person, his actions, his possessions, and his whole property—not to be subject in any of this to the arbitrary will of anyone else but freely to follow his own will, all within whatever limits are set by the laws that he is under.” However, as we shall see later, bringing in “property” and “law” at this stage is partly what prevents this account from being the abstract theory of liberty that will be argued to be necessary. The other conception is that of people not being constraints in any way on each other. And this is something that will, in practice, be a universal zero-sum game: someone can gain such liberty only at the expense of someone else’s loss of such liberty. This is more or less the conception that Thomas Hobbes (1588–1679) uses in his Leviathan (1651), but here restricted only to interpersonal constraints—which Hobbes does not do.For instance, in chapter xxi. Of the liberty of subjects, “Liberty, or FREEDOME, signifieth (properly) the absence of Opposition; (by Opposition, I mean externall Impediments of motion;)” (“Liberty What”); and “A FREE-MAN, is ‘he, that in those things, which by his strength and wit he is able to do, is not hindred to doe what he has a will to’” (“What It Is To Be Free”). And so we see that Hobbes’s account relates to zero-sum action. Neither conception is usually explicitly, clearly, and abstractly theorized, even by libertarian philosophers. Consequently, people sometimes switch between one and the other, or conflate the two, without realizing that this is what they are doing.Such due, general, acknowledgements to Locke and Hobbes are not intended to imply that what follows is about the details or implications of their specific theories of liberty.

‘Libertarianism’, in the social or political sense, is a modern name for a long-existing subset of classical liberalism:For instance: “political philosophy that takes individual liberty to be the primary political value. It may be understood as a form of liberalism ….” (Boaz n.d.) “full-fledged libertarianism, as opposed to more moderate forms of classical liberalism.” (Zwolinski n.d.) “Depending on the context, libertarianism can be seen as either the contemporary name for classical liberalism, adopted to avoid confusion in those countries where liberalism is widely understood to denote advocacy of expansive government powers, or as a more radical version of classical liberalism.” (Conway 2008, 295–98). that which advocates maximum interpersonal liberty and either a minimal ‘night watchman’ state (minarchy) or no state (anarchy).On anarchism, see especially Molinari ([1849] 1977), and Bastiat ([1850] 2007). But there are also Jakob Mauvillon (1743–94), Julius Faucher (1820–78), and various others. Hence libertarianism (avant la lettre) seems to have long been be a type of classical liberalism, contra S. Freeman (2001). It is less clear that the politically-correct “liberalism” defended in that essay is entirely a version of classical liberalism. The version of interpersonal liberty that libertarianism tends to assume is no-initiated-constraint liberty. This will be the primary focus here. However, it sometimes assumes no-constraint liberty. A clearer and more explicit theory of each can avoid much philosophical confusion and solve many related philosophical problems. This is useful not only for libertarianism; it will also apply to the common-sense conceptions whether or not they are being used by libertarians.

Some self-described libertarian texts make the characterisation of ‘libertarianism’ more precise. They assume that libertarianism involves “foundational philosophical commitments”“Most of the libertarian theories we have surveyed in this article have a common structure: foundational philosophical commitments are set out, theories are built upon them, and practical conclusions are derived from those theories.” (Zwolinski n.d.) to some combination of certain deontological rights,The most well-known being Nozick (1974). or self-ownership,Which even “left libertarianism” makes foundational. See Vallentyne, Steiner, and Otsuka (2005). or the non-aggression principle (or axiom),For instance, Block (2003). or ‘just’ (i.e., ‘libertarian’) private property, etc. This mightOr, therefore, it also might not. This is not to imply, as a JLS review incorrectly supposes is intended, that all foundationalists would reject this as a form of libertarianism. However, some responses appear to do so; not least, Block (2019) which, for instance, calls “private property rights, the be-all, and end-all of libertarianism, along with the NAP” (p. 142). Reply in progress. be seen as implying that the overall approach taken here is ‘not, real, libertarianism’. Such a position would appear to be somewhat like a Catholic rejecting Protestantism as ‘not, real, Christianity’. It would be dogmatism rather than precision. As what follows is explained as a heterodox paradigm of libertarianism in which abstract liberty is explicitly theorized and very similar practical implications are derived, it would seem perverse to deny that it is a form of libertarianism. If anything, it appears to be more coherently libertarian than the mainstream varieties.

The Philosophical Problem and Its Intuitive but Incorrect Solutions

A ‘practical theory of interpersonal liberty’ can be explained as an attempted account of what interpersonal liberty involves in contingent practice as regards rules and consequences. This can be done by using an intuition that implies a tacit theoryA quoted JLS review comment with interspersed replies: This “suggests that intuitions about liberty are based on tacit theories of interpersonal liberty”. Yes, intuitions that rules and consequences can be categorized as fitting or not fitting liberty in practice thereby imply possession of some sort of theory, however muddled or protean, of abstract liberty to sort them. However, the far more important—non-psychological—matter here is that the possibility of an explicit, abstract theory of liberty is implied by such categorization. “But it isn’t clear that such theories have to be based on complete theories of interpersonal liberty”. It is clear that they rarely are; they are usually inchoate and tacit. Why next mention “in particular theories of libertarian rights”? Why bring in rights at this stage? Before one can coherently assert “libertarian rights” one must first determine what is non-normatively libertarian (what factually fits liberty); whether there is a right to that is a separate, later, and normative question. “Someone might, […] if Popper is right, have some theory in mind, but it might not be a worked-out but tacit complete theory of interpersonal liberty.” Of course it isn’t “worked-out” or “complete”. It would hardly be tacit if it were. of interpersonal liberty; and this is what most orthodox accounts of libertarianism do. But if we are explicitly to derive these rules and consequences, then we first need to have an explicit, abstract theory of interpersonal liberty. An ‘abstract theory of interpersonal liberty’ can be explained as an attempted account of what interpersonal liberty is in itself before any contingent practical applications.

How is an abstract theory of the liberty of libertarianism—and thereby also of the relevant dominant common-sense conception—to be understood? To have a theory of liberty that inherently involves particular property rules and particular moral rights is not to have a clearer and stronger theory. Rather, it is to attempt to have an unfalsifiable or uncriticisable theory. And that, as Karl Popper explained, is not clearer and stronger: it is really to avoid saying anything substantive at all. It is certainly to have no proper theory of liberty. Instead, it is in effect to assume the legitimacy or morality of certain rules or rights and then stipulatively or persuasively—and thereby vacuously—define those rules or rights as ‘libertarian’ and their flouting as ‘unlibertarian’ (or even ‘aggression’The idea that libertarianism is about the absence of aggression, or the Non-Aggression Principle (NAP), or Non-Aggression Axiom—as found in Block (2003), for instance—means, it is explained, that one should “not initiate (or threaten) violence against the person or legitimately owned property of another.” Even if we interpret “violence” to mean only ‘violations’, this raises two crucial problems. 1) How do we know that any so-called “legitimately owned property” actually fits interpersonal liberty (after all, not all property rights fit liberty) unless we have an explicit abstract theory of liberty? 2) If “non-aggression” is absolute (as “non” ipso facto implies), then how can any ‘boundary crossings’, such as even the smallest pollution, be allowed or otherwise dealt with? Rothbard and his followers attempt answers (see, for instance, Block (2011, esp. 2.2–2.5); but they do not work (see in response, Lester [2014, ch. 8, esp. 2.2–2.5])., or—still worse—‘coercion’The narrow, plain-English meaning of ‘coercion’ is “the use of force to persuade someone to do something that they are unwilling to do” (https://dictionary.cambridge.org/dictionary/english/coercion), or “[a]ctual or threatened force for the purpose of compelling action by another person” (https://en.wiktionary.org/wiki/coercion). In this sense, legitimate coercion is not a contradiction in terms. A libertarian society would use legitimate coercion to defend liberty (and sometimes coercion is contractual or even the whole point of some libertarian interaction: boxers are using coercion on each other). However, libertarian texts sometimes use ‘coercion’ to mean any action that is ‘unlibertarian’ or flouts ‘libertarian’ property rights. For instance, “…liberty is by definition an absence of coercion…”; Machan (1998, 184).). Texts that are critical of libertarianism often note this. Therefore, it is better not to tie a theory of interpersonal liberty to specific property rules or to specific moral rights. Then it can be used independently to assess and explain whether any property rule or any moral right is in accord with liberty. Moreover, it is necessary that some such abstract theory is possible. For it is always coherent to ask whether, and how, some property rule or moral right is compatible with interpersonal liberty as a factual matter—rather than by some ideological definition of ‘liberty’ or ‘libertarianism’.A quoted JLS review comment followed by a reply: “This assumes that in order to answer the question, one must have a theory of interpersonal liberty. But couldn’t one attempt to answer the question by pre-theoretical intuitions about liberty?” No, “pre-theoretical intuitions about liberty” cannot explain “whether, and how, some property rule or moral right is compatible with interpersonal liberty as a factual matter”. At most they can assign an intuitive libertarian category to the “property rule or moral right”. And if mainstream libertarianism—of all ideologies—cannot give a coherent answer to such a question, then it is in a state of philosophical confusion that is acutely ironic: it cannot; it is. In any case, the correct eleutherology (philosophical study and theorizing concerning interpersonal liberty) is a fundamental philosophical problem—not only one for libertarians. It is surely no less important than the correct epistemology, for instance. Therefore, if the following account is not the correct abstract theory of interpersonal liberty, still there must be such an abstract liberty to be correctly theorized and it is important that it be attempted.

Is it possible to formulate a libertarian theory of interpersonal liberty that is sufficiently abstract such that it is both non-propertarian and non-normative? First consider the dominant ‘Lockean’ conception. Conceptually, liberty is always about the absence of some kind of constraints on something. Here it is about the absence of some kind of constraints on people by people: interpersonal constraints (it is not about intrapersonal constraints—limits within a person—or the constraints of the natural world). More precisely here, it must be some sense of the absence of people initiating—whether intentionally or not—relevant constraints on each other in some way: a purely reactive or defensive constraint would preserve interpersonal liberty; a proactive or offensive constraint would reduce interpersonal liberty. But what, in the most abstract sense, is it about a person that cannot be proactively constrained by other people if he is to have his interpersonal liberty? This is the key question.

As we have seen, it cannot be either his property or his rights as such—however intuitive such answers may appear.What is currently intuitive for holders of any theories may change for them in the light of a perceived better alternative. It may, of course, be some of, or all of, or only his property or rights where these are compatible with liberty. But that brings us back to the problem. Without an independent, explicit, and abstract theory of liberty, we cannot determine with any clarity what is compatible with liberty. The other main intuitive contender is actions. That also runs into clear difficulties. Proactive constraints on possible actions that someone does not want to perform may not be cared about, or even noticed; so they will not be in any way oppressive (felt as constraining). And some proactive constraints on wanted actions will be perceived as much more oppressive than others in a way that cannot be explained merely in terms of actions. Moreover, sometimes it is not an action but some other wanted state of affairs that might be being constrained; and, again, in a way that admits of theoretically unexplained degrees of oppression. Therefore, abstract interpersonal liberty also does not appear to be about the absence of proactive constraints on actions as such.

The Counter-Intuitive but Correct Solution

So what is being relevantly constrained? The clues are in the references to people’s wants. It is the proactive constraining of the satisfaction of wants. This is the most general description of what we do not want others to proactively constrain with respect to ourselves. And, therefore, it seems to fit what is required for the abstract theory of liberty, despite being a counter-intuitive answer for most orthodox libertarians. Hence we can theorize such ‘libertarian liberty’ as ‘the absence of interpersonal proactively-imposed constraints on want-satisfaction’ (or ‘preference-satisfaction’: as no distinction is made here). Ex hypothesi, this rules out both proactively imposing wants themselves (by—ipso facto unwanted—violent threats, fraud, secret drugging, etc.) and want-satisfactions that themselves would proactively constrain another person’s want-satisfactions (for constraints on them would not be proactive but reactive). Otherwise, the wants may be indefinitely many, heterogeneous in nature, sometimes apparently incommensurable, varying in intensity and importance, biological necessities, or entirely contingent and transitory.

A focus on—and aggregation of ostensibly disparate types of—want-satisfactions ought not to seem too strange. Such want-satisfaction is fairly well understood in economics and in utilitarianism: whatever diverse things people actually want, they must in some sense be obtaining ex ante utility (or usefulness) from them; and people do make some kind of utility-maximising trade-offs among all of their own very different types of wants. Want-satisfaction, in itself, is even one interpretation of ‘utility’ in economics and in preference utilitarianism. Preference utilitarianism is distinguished from the other types by not necessarily having a positive conscious sensation as an effect or a goal. It has only a conscious ‘utility’ as a cause or motive: at the thought of achieving whatever is wanted (even if that is never experienced or known to come about by the person who wants it to be). Consequently, happy delusions are ruled out—unless those happen to be what someone spontaneously does want. Hence preference-utility (or want-satisfaction) is part of what helps us to make sense of the abstract conception of liberty and also of liberty’s ultimate congruence with maximizing one conception of human welfare. For human welfare is rightly perceived as the other main social desideratum, but wrongly perceived as often in serious and systematic conflict with liberty.As already stated, this conjecture cannot be defended here in social scientific terms. That is primarily a task for economists.

A possible—even likely—criticism may be that this is, therefore, really some strange variety, or subset, of utilitarianism being presented as libertarianism. But positively promoting utility is no part of this abstract theory of liberty, let alone using some people for the benefit of others. The theory solely rules out proactive interpersonal constraints on individuals achieving their (non-proactively-constraining) goals. Utility does not even need to be mentioned. However, it is sometimes convenient to speak in terms of utility in order to explain the congruence of liberty with free-market economics and preference-utilitarian welfare.

A further criticism may be that, nevertheless, there are still some interpersonal-utility comparisons implied by this theory, and that this is—at the very least—problematic. And here it has to be conceded that an element of interpersonal-utility comparison is indeed implied. It appears to be theoretically unavoidable for the abstract theory. However, as we shall see later, it is only necessary to make the plausible assumption that people are very broadly similar in their responses to certain very fundamental choices. This is not to suppose, or require, or imply either complete homogeneity or any cardinality of people’s want-satisfaction responses.At this point a review makes a somewhat muddled intervention: “if rights and non-aggression are just contingently related to liberty, how is it that wants are intrinsically connected to liberty in a way rights are not? Unless ‘wants’ and ‘liberty’ are equivalent, the inherent connection between the two calls out for an explanation that is not given.” A reply is best given in stages. 1) It is always best to accurately quote rather than to assume that a paraphrase is accurate. 2) To make a conceptual distinction between two things is not to imply that they are only “contingently related” (any particular number is conceptually distinct from mathematics as a subject, but they are necessarily related). 3) A positive theory of interpersonal liberty and what it entails in practice appears to be conceptually separable from a normative theory of “rights and non-aggression” and what they entail in practice. 4) It is explained in the text how wants relate to an abstract (non-propertarian and non-normative) theory of interpersonal liberty. 5) Rights are either propertarian or normative, and so cannot be part of any such abstract theory.

Now that the abstract theory of interpersonal liberty has been theorized as “the absence of interpersonal proactively-imposed constraints on want-satisfaction”, it may be convenient to abbreviate this unwieldy expression. “No” is shorter than “the absence of”; we are unlikely to forget that it is “interpersonal”, so that can usually be omitted; but “proactively” is crucial here, so best included (usually, at least); “constraints on” someone’s “want-satisfaction” (from what it otherwise would have been) is an ‘imposed cost’ to him (in the sense of the opposite of a merely withheld benefit). Therefore, the full formulation can conveniently be abbreviated to ‘no proactively-imposed costs’ (or more briefly, ‘no proactive impositions’). Ten words have been reduced to four (or three). Whenever an abbreviated formulation is used, the full theory will be implied. Thus any alleged ‘proactively-imposed cost’ must in principle be translatable into the longer formulation. But none of these particular words really matter. The same abstract theory of liberty might be expressed in a different way, as long as the general idea is understood. (And it is now possible simply to add—by analogy with all of the foregoing explanation—that the no-constraint, ‘Hobbesian’, theory of interpersonal liberty will be ‘no impositions’.)

Note that this verbal formulation is not a definition of the word ‘liberty’. It is a philosophical theory about the nature of the abstract liberty that libertarianism, and common sense, presupposes or entails. Definitions attempt to provide the meanings of words (whether by usage or by stipulation). Theories attempt to provide descriptions of the world. And the world includes the realm of all abstractions (which is also inhabited by all the entities of logic and mathematics). It is very remiss to fail to make, or fail to grasp, this crucial distinction. It is part of the philosophical philistinism of common sense when philosophy is seen as “merely arguing about words.” Indeed, one orthodox response to what is being discussed here is that it is mere semantics that does not really contradict or correct anything in mainstream libertarianism.Private communication. Name withheld to protect the guilty. As ought to be clear, that response does not bear serious philosophical scrutiny.A review asks, “How is it that the meanings of words and descriptions of the world are so separate?” Put as simply as possible, to define what a word means (“God”, “phlogiston”, “Yeti”) is not to assert that the definition describes a real thing. Here we appear to have a real abstract thing—a tacit theory of abstract libertarian liberty—and we are attempting to provide an explicit theory that accurately describes it.

This may still appear to be too unlike any theory of what libertarian liberty plausibly could be. But we have seen that orthodox libertarianism has no proper abstract theory of liberty, and that abstract liberty cannot be explained in terms of property, or rights, or actions. That mainstream libertarianism does not have an explicit abstract theory of interpersonal liberty is as strange and scandalous as it would be if utilitarianism were to offer no explicit abstract theory of utility (in fact there are several). It might also be thought that this unorthodox account has not been given a, sufficient, ‘supporting justification’. And that is correct. For, as critical rationalism explains, ‘supporting justifications’ are logically impossible. Nevertheless, it would still be possible to further explain and defend this abstract account of interpersonal liberty at an abstract level. But rather than do that in this new, short, explanation, it will now be applied to the apparent contingent circumstances of the world. Will it produce the results that libertarianism requires? If it does, then that should itself help to explain and defend it.

As initially stated, the focus has been on the no-initiated-constraint—‘Lockean’—view of interpersonal liberty. But there are self-described ‘Hobbesian’ libertarians.Such as Hillel Steiner and Jan Narveson. It should be illuminating to show how both of the main abstract theories of interpersonal liberty explained here can be applied to derive practical conclusions. These are hypothetical derivations concerning what the application of abstract liberty factually, or positively, entails; they are not advocatory, or normative. Then there is also the issue of whether these approaches are in any way different in their practical outcomes.

Applying No-Proactive-Imposition Liberty

Here interpersonal liberty is interpreted as being free from peoples’ proactively-imposed constraints on our want/preference-satisfactions; that is, people are not initiating interferences—whether intentionally or not—on our having what we want. If no one is proactively constraining us in this way, then we have full interpersonal liberty. If Adam initiates any control on—interferes with—Eve’s body against Eve’s preferences, then that is a proactive constraint on Eve: the body that, contingently, Eve more or less is. We can imagine a world where a person (understood as a unitary consciousness with appropriate capacities) does not care about control of their body or is not physically attached to a particular body (and can easily move to a different one). In either case, liberty might have different practical implications. But in the reality we seem to observe, for Adam to flout Eve’s preferences as regards her body is not for Adam to exercise his own interpersonal liberty—as here conceived—but to exercise power over another person. And if Eve manages to prevent this, then she is not, significantly, proactively imposing on Adam (except, for instance, to the trivial, and reciprocal, degree that her body comprises natural resources that Adam might otherwise have usedTherefore, even this example does have some conflict in applying pure liberty. In which case it is immediately clear that all that can be achieved is the more libertarian option (maximising liberty) and not perfect liberty. Another example might be the non-trivial disutility proactively imposed on Adam by Eve’s existence and rejection of him versus the extreme disutility of Eve if Adam were to force himself upon her to reduce his disutility.) but reactively defending herself.A quoted JLS review comment with interspersed replies: “The author plausibly conjectures that the disutility to an individual from allowing interferences with his body will normally outweigh the utility gained by someone who interferes with it.” That utilitarian comparison may be true, however what fits abstract liberty is not calculated by what is utilitarian. The correct abstract libertarian comparison is that the proactively imposed disutility on person A of interferences with A’s body by person B far outweighs any proactively imposed disutility on B by his being required not thus to interfere. However, the basic idea can also be explained intrapersonally: it is far less of a proactively imposed cost to be required not to interfere with other’s bodies than it is to be required to suffer their interference with yours. This “seems very plausible for two-person cases, but […] what if one person, or the members of a small minority, is hated by a vast number of people and elimination of the hated would increase the utility of the majority?” Or, rather, what if it would decrease the proactively imposed disutility of the majority that the existence of one person, or a minority, causes? This is somewhat similar to one of the many criticisms dealt with in Lester ([2000] 2012): “A Critic of Religion” (pp. 66–69) (not all of those criticisms and replies could be incorporated into this relatively brief exposition). However, to reply directly but briefly, consider the universalized and long-term effects of institutionalizing a rule that a sufficiently hated person, or minority, can be put to death to minimize the proactively imposed cost that their mere existence causes. This would universally undermine toleration and stoke up hatred and fear. No one would dare to become too well known in case that somehow turned to infamy. To even express an opinion in public might become a serious risk. Therefore, such a rule would appear to allow more proactive impositions that not allowing it. Expressed individually, it is a lesser proactively imposed cost by far to know that someone you hate continues to live (even though you never need to see him or hear anything about him: if you choose to find out about him—or choose to experience media that might mention him—then that is not proactively imposed on you) than it is to live in fear that you, or any one of the many individuals that you value, can be killed if enough people somehow come to feel sufficient hatred. Hence, having ultimate control of one’s body normally follows from having (more strictly, maximally applying) such liberty. This factual and contingent consequence is before needing to assume the legal institution of property (or needing to assume morals either). However, in order better to protect this ultimate control of one’s body, it is efficient to institute self-ownership (which can be done with spontaneously-arising lawOr ‘natural law’, but only in the same sense that there are natural languages. rather than by state commandSee, for instance, Benson (1990).).

With external resources (that is, resources external to people’s bodies) it might be supposed that, logically, we at least need to derive self-ownership first and proceed from that. This does not appear to be the case, for the explanation runs independently: self-ownership does not need to be mentioned, or presupposed, or implied. In fact, a living human body can be thought of as simply one type of resource; just one that contingently happens to be tied to a particular person (intellectually conceived) with very strong and stable fundamental wants or preferences about controlling it. However, because bodies are more or less what we are, and external resources are not, the situation with external resources is somewhat different.

Once we have begun to useThere need be no labor-mingling. It is possible to find a use for something by its remaining as it was found: a beautiful tree outside our abode, or the sunlight that falls daily on us. Neither need labor-mingling be using something: to walk across mud is to mix one’s labor of walking with that mud, but not thereby to use the mud (which is, we may suppose, a mere nuisance). Hence, it is use that is fundamental. a natural resource for some purpose, then it typically proactivelyA review asserts that “no account of what ‘proactively’ means or describes is adequately given”. Why is this needed? ‘Proactive’ is in most dictionaries; it is the antonym of ‘reactive’. Perhaps the review means ‘proactively imposed’. However, a little above in the text that expression is explained as “initiating interferences”. And earlier still the text explains “a purely reactive or defensive constraint would preserve interpersonal liberty; a proactive or offensive constraint would reduce interpersonal liberty”. Can this be made plainer? The basic idea is more generally expressed simply as an ‘interference’. But rather than belabor this point further, it is probably easier to deal with specific examples as they arise. imposes a significant cost on us if someone takes that resource from us or uses it in a way that flouts our purposes. By possessing and controlling it we might proactively impose a cost on other people too; but this is mainly to the, usually small and reciprocal, extent of the unmodified resource’s want-satisfaction value to them. For to be denied a benefit that someone else has somehow produced—such as a wooden cabin—is not in itself to be proactively imposed on.However, to simplify matters, this ignores discussions of costs relating to envy, frustrated desire, lost status, ‘utility monsters’, and other mainly ‘self-inflicted’, or moral hazard, or reciprocal examples: all of which it would, at least overall and in the long term, proactively impose more to allow to limit ultimate control by initial use and subsequent voluntarily agreed transfer. But see the index of Lester ([2000] 2012) for relevant discussions of such things.,A review asserts that “the claim that ownership does not proactively frustrate the non-owners’ preferences is ad hoc at this point.” Several responses are relevant. 1) Accurate quotation is better than inaccurate attempted paraphrase. 2) There is no such assertion or implication. 3) This is “at this point” about ultimate control and not about “ownership”. 4) It is stated in the main text that “we might proactively impose a cost on other people too; but this is mainly to the, usually small and reciprocal, extent of the unmodified resource’s want-satisfaction value to them.” 5) It is stated in the footnote that “to simplify matters, this ignores discussions of costs relating to envy, frustrated desire, lost status, ‘utility monsters’, and other mainly ‘self-inflicted’, or moral hazard, or reciprocal examples …” (and a reference to discussions of such issues is given). 6) There is a severe limit on how much detail is possible in this relatively short explanation. Therefore, it appears that the least proactiveA review asserts that “it is not clear how degrees of proactivity are even relevant at this point.” It is not about “degrees of proactivity” but ‘degrees of proactively imposed cost’. It has already been explained how these can be on both sides with both a person’s body and external resources. In all such, ubiquitous, cases liberty can only be maximized. imposition on people’s preference-satisfactions is usually to allow ultimate control to the initial user,But exceptions can be imagined, such as where this monopolizes a vital natural resource that other people would themselves have discovered. and thereafter control by voluntarily agreed transferA review asserts that the “conclusion on this point is insufficiently supported”. This is, again, to overlook, or reject without explanation, the assumed epistemology that is cited and outlined earlier. It would only be relevant to produce a criticism that is inconsistent with the text. (as mentioned above, these interpersonal comparisons plausibly assume only that people are very broadly similar in their responses to certain fundamental choices). Assuming the theory of liberty, this entails that it usually maximally observes, or instantiates, liberty to have personal ultimate control of external resources where one has initiated a use (or subsequently received them by voluntarily agreed transfer). This factual and contingent consequence is also before needing to assume the legal institution of property (or needing to assume morals). However, in order better to protect liberty, it is efficient to institute property rights in such resources.A review asserts that “the notion that property and trade maximize liberty (and not merely want satisfaction) […] requires both [1] data to show that property and trade do satisfy wants more than the alternatives and [2] an explanation of how those satisfied wants are indeed of the type that are included in the theory of liberty.” Replies to both points follow. 1) This is philosophy and not social science, so empirical “data” cannot usually be more than background assumptions. Assuming critical rationalism (as this essay does), which includes falsificationism, no amount of “data” can “show” (i.e., support or justify) anything. What has here been called the “classical-liberal/libertarian compatibility conjecture” cannot be defended here apart from a few passing philosophical aspects. 2) A philosophical explanation has been provided of the fundamental relationship between want-satisfaction and the property and trade that is implied by applying the abstract theory.

In short, we can derive both self-ownership and external private property (usually arising from initial use and thereafter voluntarily agreed transfer) because, contingently (for we can imagine worlds where this is not so), they maximally observe such interpersonal liberty. They are not what interpersonal liberty is in abstract theory, but what maximum interpersonal liberty entails in practice (hence they are not, philosophically, the ‘foundational’ assumptions of libertarianism—as is often supposed). And once self-ownership and such property are thus derived from maximally observing abstract liberty, we can use them as strong, prima facie, positive rules as to what is ‘libertarian’: that is, factually maximally liberty-instantiating in practice. Therefore, we have arrived at the two main rules that libertarians intuit to fit liberty, but now with an explicit, non-propertarian, non-normative, abstract theory of liberty to explain that intuition.

Such ‘rule libertarianism’ (but non-moral at this stage) is analogous with rule utilitarianism. This may sound odd mainly because orthodox libertarianism jumps straight to normative rules without any explicit non-normative, act-libertarian, abstract theory. It might even seem that this abstract theory necessarily implies act-libertarianism. But that seems to be as mistaken as the view that utilitarianism necessarily implies act-utilitarianism instead of rule-utilitarianism.If the compatibility conjecture is true, then libertarian rules are also utilitarian rules. Now that these practical property rules are derived, it is only necessary to go back to the abstract theory of interpersonal liberty in problem cases or to answer further philosophical questions.

However, there is an immediate and obvious problem that has already been touched on with respect to deriving self-ownership and external-resource ownership. Very often a near-absence of proactive impositions is impossible because there is a significant reciprocal clash. For instance, either you suffer the smoke-pollution from my fire or I suffer going without warmth and cooking: both the allowance and the disallowance of the fire will proactively impose, but on different people (confused criticisms of deontological or rule libertarianism often see only the allowance of pollution as imposingFor instance, Zwolinski (2015). And see the reply that is Lester ([2011] 2016, ch. 31).).Either of us could move our dwelling places, of course. But that would be, we may assume, an even greater proactive imposition on whichever side did this. In such cases it is impossible to achieve anywhere near perfect liberty or to apply any plausible interpretation of the so-called ‘non-aggression principle’, for liberty can only be maximized as best as is practical; and this might involve compromise or compensation. It is important not to misunderstand this point. Dealing with inevitable clashes by maximising liberty might appear to be collectively consequentialist (in some non-moral sense at this stage, at least). But that can’t be right; for no one’s liberty is curtailed in order to promote the maximum liberty of other people in general. It is simply that maximisation is all that is possible when specific liberties conflict. These specific liberties might include indefinitely large groups of indeterminate people (‘the public’), and be best dealt with by a class, or representative, law suit. But even such ‘collective’ minimising of proactively imposed costs on indeterminate people is not ‘collectivist’ in any way that overrides libertarian individualism in principle. As a consequence, applying this theory of liberty inherently internalizes externalities (but in a pre-propertarian sense) as far as is practical and thereby tends to be economically efficient. And this is one significant philosophical link between liberty or libertarianism and want-satisfaction or preference-utilitarianism.

Once all this is understood, it is possible to apply the abstract theory of liberty to derive relatively precise and clear implications for an indefinite variety of other issues within libertarianism. For instance, intellectual property, restitution and retribution, emergency situations, etc.As found throughout Lester ([2000] 2012, [2011] 2016, 2014). But none of this can be attempted here.

Applying No-Imposition Liberty

As we have seen, a straightforward no-constraint-on-actions approach to interpersonal liberty is in itself more or less zero-sum: if you have more interpersonal liberty, then someone else has just that much less. By this conception, a slave-owner qua slave-owner has more liberty where, and to the exact extent that, his slaves have less: whatever he can enforce that the slaves cannot prevent. Such zero-sum interpersonal liberty cannot in itself be maximized or protected; it can only be competed over or redistributed for some non-liberty reason—such as utility or equality. Therefore, it cannot be the liberty required by most versions of libertarianism (and one common-sense conception). Yet some libertarian texts do seem to accept it. They usually opt for something along the lines of ‘maximum like (i.e., similar or equal) [valuable] liberty for all’—the word ‘valuable’ often being implicit.For instance, “every man may claim the fullest liberty to exercise his faculties compatible with the possession of like liberty to every other man” and “each has freedom to do all that he wills provided that he infringes not the equal freedom of any other”; Spencer (1851, ch. 4, sec. 3). More recently, “everyone has an equal right to the most extensive liberty compatible with the like liberty for all”; Rawls (1971, sec. 11). Hence, in these theories, liberty-in-itself cannot be the criterion or the goal that is to be maximized or protected. They have the rather different criterion or goal of valuable liberties that all can share equally.

However, if the subjective intensities of interpersonal impositions are taken into account, then this does allow for a liberty-maximising interpretation. Adam might prefer to have ultimate control of Eve’s body. And Eve prefers that Adam doesn’t. In the event of such clashes of no-imposition liberty, the most ‘libertarian’ (i.e., liberty-instantiating) approach is to have whichever option is the lesser constraint.With the possibility of compensation in certain cases. Perhaps where there is no similar reciprocity, for instance. Almost universally, it is a greater constraint on one’s preference-satisfactions to have any aspects of one’s body under someone else’s ultimate control than it is to be denied any similar control of another person’s body (or to have any other system of bodily control). Therefore, no-imposition liberty is maximally observed if people have ultimate control of their own bodies. This factual consequence is before the legal institution of property (and also before morals) needs to be assumed. However, an efficient way to protect this ultimate control of one’s body is then to institutionalize this as the property right of self-ownership.

A similar type of argument also applies to the control of all other resources. It is typically a greater constraint on our preference-satisfactions for other people to deny us ultimate control of the resources we already use (and thereafter receive by voluntarily agreed transfer), than it is to be denied access to resources that others are already using. Etc., etc.A review asserts that “[1] The argument of [this section] seems to apply equally well to the author’s argument, [2] for the author never shows that want satisfaction is a non-zero-sum game, [3] nor does the author make a convincing case that interpersonal liberty, as defined by rights or some other criteria, is actually zero sum.” There appears to be confusion here. 1) This section shows how it is possible to avoid the zero-sum-game interpretation of ‘Hobbesian’ liberty “if the subjective intensities of interpersonal impositions are taken into account”. 2) This essay’s main theory is not about mere want-satisfaction but the absence of proactive constraints on want-satisfaction. 3) Interpersonal liberty as somehow “defined by rights” may very well not be zero-sum. But, for the reasons explained, that cannot be an abstract theory of liberty (which does indeed use “some other criteria”).

Do These Two Theories Have Any Different Practical Outcomes?

In light of these two explanations of interpersonal liberty, one important question immediately arises: are they fully equivalent in terms of what they entail in practice? Both conceptions of interpersonal liberty appear—at least initially—to have the same practical implications. Thus one could explain interpersonal liberty using either. With the no-imposition approach, we still have to say that a slave-owner is having his liberty lessened if his slaves are freed without his consent; just not as much liberty as his slaves gain by being freed. Similarly, a would-be murderer has less liberty if his target-victim escapes; just not as much as his target-victim preserves his liberty by escaping that intended murder. This seems to be a coherent account. However, it is not how people mainly think about interpersonal liberty—either as self-described libertarians or otherwise. People typically think that when someone escapes proactively-imposed slavery he gains liberty; but his previous master has lost only his power over him. And the would-be murderer does not have his liberty lessened if his target-victim escapes him; his target-victim’s liberty is simply preserved. Thus the no-imposition view fails to capture the intuitions that people usually have (as a matter of fact: this is not to advocate anything here) that there is a real causal and also moral difference between withholding a benefit and proactively imposing a cost even when the outcomes are the same. Consider a well-known example in the philosophical literature: coming across a drowning child in a shallow pond. Not saving the child will usually be viewed as morally reprehensible and despicable, but it is not usually viewed as causally or morally equivalent to pushing a child into the pond so that he drowns: to the equivalent of murder.Matters would be different if one were contractually employed as a lifeguard: then not saving the child would be proactively imposing by breaking one’s contractual duties (on deriving contracts see Lester ([2000] 2012, 80–85). Hence it is closer to the main libertarian, and also more popular, approach to view abstract interpersonal liberty as the absence of people’s proactively-imposed constraints on our preference-satisfactions. And that fact possibly means that it is more stable and less costly to preserve. If so, other things being equal, more liberty should result. Thus that may be one important practical difference, after all.

Nevertheless, there are—as mentioned—some self-described “Hobbesian” libertarians (although they would probably not give the same account as here). And there are also anti-libertarians that take a Hobbesian approach to liberty. Therefore, it is useful to be able to explain both of these two approaches. It is also possible that one of these approaches is in some way logically incoherent or in some other way unfixably faulty. In which case, it is good to have the other to fall back on. But if they are both logically incoherent or unfixably faulty, then that would mean starting again. For it seems that there must be a tacit, non-propertarian, non-normative, abstract conception of interpersonal liberty that distinguishes between those rights, property rules, and activities that instantiate (or fit) liberty and those that do not. And so an explicit account of that conception should be possible.

An abstract theory of interpersonal liberty and of what it entails in practice has now been broadly explained. Orthodox libertarianism brings morals into the picture before this has been done. But it seems that only after this has been done can it be fully coherent to ask ‘how does liberty and what it entails relate to morals?’ Given—as seems to be the case—that there cannot be any supporting justifications, it can only be a bold conjecture that such abstract and practical libertarianism is morally preferable to any alternative. This conjecture needs to be defended in the light of any criticisms that arise. It can be explained and defended how there does not appear to be any significant clash between libertarianism and the most defensible versions of various morally desirable things: rights and duties, justice, social justice, a social contract, human flourishing, human welfare, etc. But this does not mean that libertarianism is thereby morally supported by any of these things (or any combination of them). It remains a separate conjecture that libertarianism is morally desirable, and all moral criticisms are potential refutations that require adequate responses.A review suggests, without any explanation (or ‘justification’), that this short section should be omitted. Perhaps the implied reason is that it is better to say nothing about libertarian morals rather than to fail to produce a scholarly length ‘justification’ of what is being explained here. But to say nothing may leave it mysterious to many readers how morals are supposed to relate to libertarianism with this theory. Or it may be thought that morals are still what will give it a ‘supporting justification’. Or it may be supposed that morals are implied to be not needed.

This philosophical essay is, ineluctably, more than averagely broad and speculative. Consequently, even if it were not assuming critical rationalism, it is not being presented as completely clear and convincing. However, it would be remiss not to conclude with some boldA JLS review notes the Popperian approach to bold conjectures but suggests that “it does not follow from accepting this methodology that one must make bold and extravagant comments about the value of one’s conjectures”. However, no specific examples are quoted or explained to be “extravagant”. And none of the comments ought to be read as intentionally “extravagant”, although a sound criticism may reveal them to be so. conjectures that ought to be eminently criticisable. As regards interpersonal liberty, the abstract theory captures and explains it. As regards libertarianism, a “paradigm shift”To put it in the terms used and popularized by Thomas Kuhn. is required. The fundamental philosophy involved with mainstream libertarianism is a refuted and “degenerating research programme”.To put it in the terms used by Imre Lakatos. Referring to Popper, Kuhn, and Lakatos might seem to be epistemologically promiscuous and inconsistent. However, the different expressions seem to capture important phenomena. Also, Kuhn’s approach can be interpreted as more sociological than epistemological. And Lakatos did not see his own work as contradicting Popper’s basic epistemology. The philosophy involved with this new paradigm is an unrefuted and highly fruitful one. It offers a clearer understanding, better and more comprehensive solutions to problems, and more convincing replies to criticisms. However, despite its radical and important differences, the new paradigm is not fundamentally ideologically at odds with libertarianism itself—although that is sometimes the mainstream perception. For it reaches more or less the same conclusionsIt deals precisely with any exceptions in a principled way where mainstream libertarianism is either unable to answer or is forced to make ad hoc assumptions. but with greater philosophical clarity and cogency.

So far, this heterodox paradigm has been largely unnoticed or ignored. Where it has occasionally been subjected to criticismFor instance, Gordon and Modugno (2003), Frederick (2013, 2105). it appears to have been misunderstood.Replies to the critical texts listed in the previous footnote can be found here: Lester (2014, ch. 9, 10; 2017). Links to other replies to reviews: http://www.la-articles.org.uk/lwa.htm. This is only to be expected. It is sufficiently radically different from the current orthodoxy to confuse most mainstream libertarians, even philosophers.As illustrated by the review quoted throughout. It is still ‘axiomatic’ to them that self-ownership, ‘just’ property, and some version of morality are somehow ‘foundational’ to explaining and ‘justifying’ libertarianism philosophically (and all without an explicit, abstract theory of liberty), despite the increasingly obvious problems with such assumptions. It will only slowly become clear that it is necessary to make the philosophical distinctions of abstract liberty, applied liberty, and moral defenses, while using critical-rationalist epistemology.A review objects that this essay “has provided nowhere near the argument necessary” for its concluding conjectures. Of course, conjectures cannot be supported by arguments: only explained and defended. However, there have been short explanations of 1) the fundamental philosophical problems with mainstream libertarianism, and 2) how an alternative approach can solve those problems. The review has offered no sound criticism of any part of these explanations. Hence it “has provided nowhere near the argument necessary” as a criticism to refute the concluding conjectures.

Venezuelans have become accustomed to the view whereby oil and all natural resources belong to the citizens. The mercantilist and socialist media has broadcast and instilled this false idea. The educational system also espouses this erroneous narrative. However, Venezuelans have neither received the proceeds from oil extraction, royalties, taxes and dividends nor been allowed to possess equity shares in the business. On the contrary, because Petróleos de Venezuela Sociedad Anónima (PDVSA, Venezuela’s oil company) is a state-owned company, governments are the only direct recipients of those benefits, which confers upon them a tremendous economic power and considerable independence from Venezuelan tax payers.

State ownership of the commanding heights of the economy is not an original policy created in the Chávez-Maduro regime, but an exclusionary economic institution resulting from an increasingly dominant combination of democratic socialism and mercantilism implemented by elites in power decades before the advent of Chávez (Faría and Filardo 2015). With such a huge economic power concentrated in the hands of political and economic elites, representatives of “the socialism of the 21st century” have been able to promote a varied array of destabilizing activities abroad and to increase their power hold in the country, which has morphed into an internationally recognized tyranny. Hence the prescience of Mises’s wisdom:

If control of production is shifted from the hands of entrepreneurs, daily anew elected by a plebiscite of the consumers into the hands of the supreme commander of the ‘industrial armies’ or of the ‘armed workers’, neither representative government nor any civil liberties can survive. (Mises 2008).

This paper, which is also inspired by (Rothbard 1992), abides by the principles of not confiscating people’s money, keeping taxes as low and simple as possible, and not allowing government ownership of firms. Furthermore, following the general approach to the privatization process argued in (Acevedo 2018), we present a proposal to desocialize not only PDVSA but all Venezuela’s state-owned companies and assets.

We understand that this process is difficult but not impossible to apply. In 2017 Transparencia Venezuela reported 526 state-owned companies. Therefore, other structural reforms necessarily have to accompany such property devolvement from the state domain to the private sphere; nonetheless, we will develop them in separate papers: monetary freedom, freedom to trade, rule of law and independence of the judicial system, flexibility of labor laws, minimization of government expenditures, and the systematic privatization of public services, among others.

In this paper, we explain the relevancy of desocializing enterprises in Venezuela and propose a desocialization law. In a nutshell, firstly, we discuss the historical skepticism on the capacities of Venezuelans to enjoy total economic freedom and be real shareholders of the enterprises currently run by the state. Secondly, we analyze the historical process of desocialization in countries with characteristics similar to those of today’s Venezuela. Thirdly, we propose a desocialization law justified with the socialist rhetoric that claims Venezuelans are the owners of the companies, thus to convert this fiction into reality, putting an end to deceptive and self-serving socialist narratives.

In addition, this paper provides a preliminary exploration of the issue of equally distributing among Venezuelans taxes and royalties that corporations in the oil sector are today legally forced to transfer to the government. The final goal is to starve the government constraining it to live off the people, a necessary condition for the firm establishment of the rule of law and democracy, contributing to replace the currently perverse practice whereby the people live off the government (Faría 2008).

Finally, we conclude that it is better to distribute shares among all Venezuelan citizens by birth aged eighteen years or older, while selling a relevant stake to foreign and domestic investors to attract managerial expertise. We contend that our proposal is better adapted to Venezuela’s institutional fragility than if we were to adopt other well-known alternatives implemented by Eastern European countries and England under the Thatcher government.

In this section, we explore the roots of the belief, mainly disseminated by politicians and certain scholars, that Venezuelans are not capable of handling their own freedom and wealth in a proper manner. It is important to understand the origin of that stance because when we publicly state our proposal on the effective distribution of shares among all Venezuelan citizens by birth, aged eighteen years or older, we have faced hard skepticism, based upon an alleged lack of knowledge or ability of the average people.

Such underestimation is widespread and not only an exclusive characteristic of politicians and other elites. On social media, the lack of trust concerning how beneficiaries would manage their shares is commonly expressed. The populist rhetoric, implemented since 1958, has instilled a strong bias, to the point that there are people who do not believe in the power of healthy incentives and individual freedom but do believe in bureaucrats and other elitist groups deciding on behalf of all citizens. Nevertheless, this situation has a historical root since politicians and power elites have always undervalued the ability of Venezuelans.

After a brief review of Venezuela’s history, it is relatively easy to understand that the bulk of the independence heroes did not embrace liberal or libertarian ideas at all. The father of the nation, best known as the “Liberator,” Simón Bolívar, stated “Generally speaking, our fellow citizens are not yet ready to take on the full and independent exercise of their rights, because they lack the political virtues marking the true citizen of a Republic” (Bolívar [1812] 2003a, 6)

Nonetheless, that was not the only sentence expressing reluctance to believe in his fellow countrymen which the Liberator stated in his life. “Until our compatriots acquire the political skills and virtues that distinguish our brothers to the north, entirely popular systems, far from being favorable to us, will, I greatly fear, lead to our ruin” (Bolívar [1815] 2003b, 23). He also said:

Freedom, says Rousseau, is a succulent food but hard to digest. Our weakened citizens will have to strengthen their spirits mightily before they succeed in digesting the healthful nourishment of freedom. Their arms and legs numbed by chains, their sight dimmed in dark dungeons, and stricken by the plague of servility, will they ever be capable of marching with firm steps toward the august temple of Freedom? (Bolívar [1819] 2003c, 34)

Another sentence attributed to Bolívar, showing the dawn of this “historical curse,” is: “these gentlemen believed that they were in Greece, building air republics that are not consistent with the situation and reality of the Venezuelan people, not prepared for the supreme good of freedom” (Acevedo and Andrade 2018, 1). In this statement, Bolívar referred to the people who wrote the first constitution of Venezuela in 1811, which was—by the way—federalist and “inspired in the US constitution and the politic liberalism of that moment” (Acevedo and Andrade 2018, 1).

Aguiar (2018, 1) argues that Bolivar’s sentence in Cartagena in 1812, “the Venezuelan people, not prepared for the supreme good of freedom,” has been used and applied in the political context in Venezuela in at least two specific moments, 1959 and 1999. Venezuelan politicians and power elites have used—and keep using—the same phrase to justify the need for a “big, powerful and indulgent dad”—represented by a big state, and a person—the president—whom people have to trust and let decide everything on behalf of everybody.

It was in 1821 when, finally, the independence of Venezuela was reached. Nevertheless, as Faría and Montesinos (2016, 214) state “…while Americans founders wanted freedom, Venezuelan generals (caudillos) wanted independence from Spain…. Venezuela’s independence was established in 1821 by European descendants and for European descendants.”

From 1821 to 1957, Venezuela did not embark on a “real” democracy as it did from 1958—with all of its weaknesses and defects. Before this year, many caudillos—who took power and control of the nation through revolts and/or incipient forms of democracy—ruled the country. Other particular characteristics of this term were political and constitutional uncertainties—25 constitutions were “made to cover the desires and needs of the “caudillo” who ruled the country… federalism was increased and decreased depending on the interests of the government” (Acevedo and Andrade 2018, 1). Nevertheless, in the first half of the 20th century, Venezuelans tasted just one part of freedom, Acevedo and Cirocco (2017, 5) state, about the 1914 to 1957 timeframe:

…during those years, of the five presidents we had, four were dictators and generals of the army. Our civil and political rights were restricted. We didn’t have freedom of the press, for example; we didn’t have universal suffrage. But, while we lived under dictatorships, we could at least enjoy high levels of economic freedom.

When Rómulo Betancourt, a Social Democrat, won the presidential election in December 1958, the democratic era started in Venezuela. For the first time, citizens enjoyed civil and political rights that did not exist before, nevertheless, such “gifts” of democracy came along with a cost, economic freedom. Acevedo and Cirocco (2017, 6) said about Betancourt that “he started destroying the economic institutions we had by implementing price controls, rent controls, and other regulations we hadn’t had before. On top of that, he and his allies created a new constitution that was hostile to private property.” The worst of all this is that, currently, Betancourt’s admirers and a great number of social media influencers still justify those policies, saying that Venezuelans were not prepared to enjoy total freedom.

In addition to the politicians and elites’ arrogance that underestimates the capacities of Venezuelans, we found other potentially limiting factors for the implementation of our proposal, which involves embracing high levels of economic freedom: cultural factors such as trust in othersSee Arrow (1972). and the gap between individualism and collectivism;See Heine (2018). the historical origin of the country’s laws;See La Porta, Lopez-de- Silanes, and Shleifer (2008). and the legacy of human capital.See Faría and Montesinos (2016) and Bennett et al. (2017).

Faría and Montesinos (2016, 225) argue about the importance of the above-mentioned factors. First, trusting others is necessary to embrace economic freedom, but “Venezuela is among the countries of the world with the lowest trust level.” With regard to the gap between individualism and collectivism, these authors state that individualistic societies privilege natural rights while collectivistic societies create a population characterized by conformity and “discourage individuals from dissent and standing out.”Individualistic cultures prefer rules applied to everyone, whereas collectivistic cultures emphasize friendship for the administration of justice, see Bennett et al. (2019). Not surprisingly, on measuring individualism, Venezuela is located in the lowest quartile among the rated countries. The origin of a country’s legal system can explain the level of state meddling: French civil legal tradition allows more interventionism than the English common law system. Venezuela, these authors say, “can be construed as an extreme case of a country with a legal system originating in French civil law” (Faría and Montesinos 2016a, 226). There is “strong evidence suggesting that cognitive skills, a proxy for the quality of education, have a systematic positive effect on the quality of economic institutions” (Faría and Montesinos 2016, 227), which represents another serious problem because, as they also state, “Lamentably, a great misfortune still plagues Venezuela’s educational quality… Venezuela within Latin America ranks next-to-last in translating years of schooling into cognitive skills, as measured by international test scores” (Faría and Montesinos 2016, 227).

Finally, the context explained in this section cannot be omitted: the bias against freedom and the distrust regarding individual capacities that the historical and political processes have created, with the intent to preserve an omnipotent, interventionist and socialist state assuring the monopolistic management and control of power and of the commanding heights of the economy.

At this moment (circa March 2019), Venezuela is one of the most commented news stories around the world. President Trump’s administration in the US and at least 30 more countries are leading efforts to help Venezuelans recover freedom. Nonetheless, this attempt seems to just focus on the “political freedom” arena, because the recovery of “democracy” is apparently the unique objective. Sadly, Venezuela has experienced that just democracy is not enough for long-run prosperity. Indeed, Venezuelans enjoyed such a political system for more than 40 years, but rooted in an omnipotent state, overwhelmingly independent of its citizens in fiscal terms and considered the “big dad” (Acevedo and Cirocco 2017, Faría 2019). In our view, this has been the main cause of the progressive deterioration leading to the current tyranny, a cause that will continue even in the case of a potential change of the rulers.

Since the main objective of this paper is to propose a privatization program—based upon the Austrian School’s view, to the best extent possible—it is important to start our theoretical framework by reviewing the specialized literature on this matter. Rothbard (1992, 66) shows the guidelines that we have adapted after considering the particular situation of Venezuela. He argues that “you cannot plan markets” in a desocialization strategy and that the only thing you can do is “set people free so that they can interact and exchange, and thereby develop markets themselves” (Rothbard 1992, 66). He explains the impossibility of planning capital markets, as occurred in the failed attempts of some Western economies to develop stock exchanges. For these reasons, Rothbard (1992, 66) explains “stock markets cannot be planned… you cannot have markets in titles to capital if there are still virtually no private owners of capital in existence.”

Nevertheless, the history of Eastern European countries demonstrated that some privatization programs have succeeded. For example, the Georgia case, after a Social-Democrat government and some attempts of privatization involving a lot of corruption, cronyism, and political influences, the new real pro- free market government started a privatization program headed by Bendukidze. To the best of our knowledge, it is one of the most successful ones that we have researched during the writing of this proposal. Some other attempts of desocializing enterprises, with relative success, are not difficult to find in recent history. The privatization program headed by Lewandowski in Poland, with all its pros and cons, is another clear example that when rulers let free markets rule, things go right.

For the sake of brevity, in this research, we just address the main issue of desocializing the enterprises currently owned and managed by the government. Nevertheless, we develop proposals for similar processes that should take place in other areas, such as taxes and money, in separate papers. We are quite conscious that this is not an isolated action and that, on the contrary, it should be implemented as part of a general plan which minimizes or prevents government’s meddling in critical economic issues.

Problems Desocialization of Enterprises Will Face

In this paper, we try to cover the most relevant privatization topics of Venezuela’s enterprises, based upon its current situation; nevertheless, the literature on this matter is wide and varied. Since Venezuela would be in a breakpoint by the moment of a potential implementation of this proposal,We admit that the only chance our proposal has to be implemented is that a new real pro-free market government be established. Nevertheless, the political history and the current closeness of the Interim President, the fact that his political party belongs to the International Socialist, and the highly publicized Keynesian “The Morning After” plan, best known in country as “Plan País,” make it almost impossible for our desocialization proposal to be considered in the short run. Our hope is that someday, as in Georgia, the free-market principles win not only the battle of ideas but also the political war taking place in Venezuela. we need to analyze the historical problems and failures of such a complex action as privatization. The people and the government implementing our program might understand that desocializing—in any economy—“is almost never painless” (Kikeri and Nellis 2002, 20). Strictly speaking, some attempts at privatizing in other countries have ended in tremendous failures,See (Li, Wang, Cheung, and Jiang 2011). because as Carter (2013, 108–09) argues, “privatization involves changing institutional archetypes which structure the governmental, societal, and economic arrangements and behaviors; it can be both challenging and problematic.” However, those failures are the proof of what Rothbard (1992) stated: the bulk of Western economists who were consulted on how to desocialize and build a free market economy had to handle not only the obstruction of bureaucrats but also their own confusions and misunderstandings about how real free markets function.Rothbard (1992) says: “Western economists have accepted the view that there is no calculation problem under socialism.” For this reason a great part of them have failed in their wrong attempts to set up a real free market economy.

Therefore, when a country is breaking the chains of socialism or communism and wants to desocialize, it is not only important to transfer the ownership from the public sector to private hands, but to really implement a free-market economy as well. In a general context, we understand a real free-market economy as one in which the state is limited and minimal, totally dependent on citizens, and unable to intervene in the economy, where natural rights are constitutionally enshrined and highly protected, and where private property and wealth—well created and acquired—are sacred. With such an economy, we are confident that our proposal will overcome the possible cons of privatization that Goodman and Loveman (1991, 4) argue. These authors say, “Neither public nor private managers will always act in the best interests of their shareholders,” nevertheless free markets will give managers the incentive to be efficient or, otherwise, competition will push them off the market. Following these authors’ reasoning, when the new privatized enterprises have free competition, the presence of other companies will be an excellent factor “to discipline managerial behavior” (Goodman and Loveman 1991, 4). Nonetheless, if a free-market economy is not implemented, although Venezuela’s rulers apply any proposal of privatization, “continued governmental involvement will likely be necessary” (Goodman, and Loveman 1991, 5)

Other problems that privatization processes bring along with them are corruption and cronyism. The example of Uganda in the 1990s is representative. The government controlled the complete privatization process, and, although the International Monetary Fund (IMF) and the World Bank (WB) argued that this African country was a great example of economic recovery, and—as Venezuelan Keynesians expect to have—these institutions provided Uganda with hard financial support.“The Morning After Plan” or “Plan País” involves borrowing at least 100 billion US$ from the IMF to finance the recovery of state-owned enterprises, subsidies to producers, and other Keynesian strategies which just represent more state interventionism. Some economists who are also deputies of the National Assembly—belonging to the opposition faction—have declared that public expenditures will not be decreased but exponentially increased to “re-activate” the economy. Haussman, the “father of this plan,” is a former Minister of the Central Planning Economy Office of the second term of Carlos Andrés Pérez, and currently Director of the Center of International Development (CID) at Harvard. He has publicly declared that the way he sees the Venezuelan economy now is analogous to a taxi driver who has his car but no money to buy gasoline, so with his plan he will be “given” the gasoline for free. We accept that, at this moment, the critical conditions of Venezuela require the implementation of some social helps, but we would agree if such helps were provided through direct subsidies; in other words, by subsidizing the demand and not the supply. In a nutshell, this plan is just the second chance of a failing plan applied by Keynesians in Venezuela in the 1980s, according to which the state will continue to be the great owner of the commanding heights, boost the economy through public expenditure financed with more debt, monopolize the monetary market, have the power to control and intervene, and promote a false free-market economy. The Keynesian plan mainly aims at solving short term problems associated with the business cycle, while paying little attention to the economic institutional quality which determines whether the economy experiences high and sustained economic growth (Cirocco, Faria, Morales, and Navarro 2019). Despite funds and advice provided by international donors, the lack of transparency and ability to check the “government divestiture decisions, privatization could be a highly manipulative process” (Tangri, and Mwenda 2001, 118). As the cited authors state, the lack of punishment in corruption and cronyism cases has left the door open for politicians to continue with this improper behavior. “Discriminatory and corrupt privatizations have been common because political leaders have wanted public companies to be divested to their favored clients” (Tangri and Mwenda 2001, 118).

Nevertheless, Uganda is not the only example of these vices. We admit that it is almost impossible to totally eradicate corruption and cronyism from post-socialist and post-communist economies immediately, which is a reason why limiting the independency and management of the state is needed in the process. We briefly comment on the transition of the former Soviet Union, and some Central and Eastern European privatization processes (perhaps, the biggest in history) to understand the problems they faced. (Kaufmann, and Siegelbaum 1996, 419–20) counted the terrific number of 188,000 among small, medium and large scale enterprises privatized, but they also stated that “corruption has reached endemic levels in the transition economies.” In Georgia, the privatization process started after its independence in 1992; nevertheless, corruption and cronyism surrounded it up to the “Rose Revolution,” when the political fight was won by Mikheil Saakashvili, who assigned Kakha Bendukidze as Minister of Economy (Burakova and Lawson, 2013).

However, history demonstrates that desocializing a country involves facing some problems. But there are also good examples of how to succeed with the lowest—or null—state interventionism, support of the rulers, and “setting their subjects free, as fast and as completely as it takes to unlock their shackles” (Rothbard 1992, 66). Briefly, our desocialization proposal will face some problems, but they will be overcome with the implementation of a real free-market economy and by minimizing the presence, influence and management of the state in the process. This is an indispensable condition to succeed in any desocialization plan for Venezuela, as Rothbard (1992, 66) indicates “freeing only a few areas at a time, will only impose continuous distortions that will cripple the workings of the market and discredit it in the eyes of an already fearful and suspicious public.”

Why Desocialize Enterprises?

A devastated economy is the worst thing people can live through. The latest statistics and indicators show that in Venezuela the scarcity of products have risen to 80 percent, hyperinflation forecasts by the IMF reached the 10 million percent level for 2019 (IMF, 2018), and the humanitarian crisis is internationally recognized. When basic goods and services are not affordable for citizens, they start to think about how to solve that problem and, believe it or not, most of the people find the answer in a phrase attributed to Rothbard: Privatize Everything!

Why is it so important to privatize? (Rider and Zajicek 1995, 135) explain a paramount advantage: firms “become more efficient and more responsive to their customer’s needs.” There is no doubt that private management is far better than governmental management, and “the stimulus that private ownership gives to innovation” (Rider and Zajicek 1995, 135) is important to overcome the problems that a post-socialist country will come across. Another reason is to reduce the size of the state and stop interventionism in the economy;See Rider and Zajicek 1995, Carter 2013, Lewandowski 1996, and Brooks 2004. indeed, this should be the most important goal of any post-socialist or post-communist country.

Hoppe (2011) suggests that privatization is required even to avoid all conflicts among people, given scarcity, and that the consequent private property must be clearly defined for such purpose. Hazlitt (1996, 210), in turn, indicates that public wealth derives from property in private hands, used for the production of goods and services for the market, and it serves people “just as much as—in fact, far more effectively than—if it were owned and operated by the government.”

As we pointed out, transferring the property of enterprises owned and managed by governments to private hands is a process sensitive to corruption, cronyism and other problems, which can be minimized if appropriate actions are followed. But if prosperity, efficiency and the total dependence of the government on its citizens is the path a country wants to go through, privatization is one of the most important plans to be performed.

Which Is the Best Method to Desocialize Enterprises?

Another great problem involved in this process is how to privatize, which we decided to analyze in a different section. As we have argued before, the literature in this field is wide; nevertheless, we focused our efforts and research on the current situation of Venezuela. This is why we do not include some experiences, although the United States, Canada, the United Kingdom, and other institutionally better countries around the world have great examples of how governments manage and head the privatization processes.See McDavid (1985), Moore (1992), Brooks (2004), Brunsdon and Corssmit (1998), David (1988), McMeekin (1999), and Goodman and Loveman (1991). Venezuela is very far away of the reality and context where those examples succeeded. Countries included in this paper are the closest to the social, political, and economic conditions of Venezuela.

Rothbard (1992, 73) explains the egalitarian handouts method, meaning that each “citizen receives in the mail one day an aliquot share of ownership of various previously state-owned properties,” but he does not agree with this procedure because “the number of people would be too much and shares too few to allow every person to have a share” (Rothbard 1992, 73). He also comments about the voucher system in which “each citizen receives basic certificates, which could be exchanged for a certain number or variety of shares” (Rothbard 1992, 73). However, Rothbard does not agree with this method either, but proposes and supports the homestead principle that states “assets are to devolve, not upon the general abstract public as in the handout principle, but upon those who have actually worked upon these resources: that is, their respective workers, peasants, and managers” (Rothbard 1992, 73). Another method Rothbard analyzes is the public auction, according to which the government sells everything to the highest bidder; nevertheless, he immediately asks, “Why does government deserve to own the revenue from the sale of these assets?” (Rothbard 1992, 75). Finally, the fourth principle analyzed in his paper is returning all stolen—or nationalized or expropriated—properties to their legitimate owners, but he says that for many reasons, “there are no owners to identify” (Rothbard 1992, 75).

Following (Rider and Zajicek, 1995), there are at least six common methods of privatization in post-socialist or post-communist economies. The voucher method, explained above; it has been implemented with some varieties like mutual funds and freedom to trade vouchers. Notwithstanding, this method should be highly popular among population, it faces some cons. It does not report any profit to the government—which is a strength in our view—and populist politicians—and interest groups—argue that it is acceptable to scam people who do not have any financial knowledge and who would value a couple of coins more than a share. Nonetheless, the National Mutual Funds applied by Lewandowski in Poland,See Hunter and Ryan (2004), Rider and Zajicek (1995), and Lewandowski (1996). and other proved settings in different countries—like the non-tradable condition for a couple of years—have demonstrated that it is possible to overcome those problems.

The public auction is one of the best methods to privatize small enterprises, but the great problem is that transition economies are vulnerable to be corrupted by revealing relevant information and directly assigning to favorite bidders. Nonetheless, there is nothing that transparent auction systems and solid free market institutions cannot overcome. Georgia, after its independence in 1992, began a privatization process but, as Lawson, and Powell (2018) say, it “was mostly corrupt and limited. Comprehensive privatization did not begin until 2004, when Kakha Bendukidze declared that ‘everything was for sale except Georgia’s honor.’” Bendukidze started a public auction with no limitations or restrictions; everybody could bid for any asset, even Russians with the resentments that Georgians could have against them. Everyone was able to check out on the www.privatization.ge website who bid, how much, and what the last bid was. Under Bendukidze’s leadership, privatization was a complete success because he eradicated corruption and cronyism (Lawson and Powell 2018).

The third method that Rider and Zajicek (1995) present is employee privatization, which falls under the homestead principle supported by Rothbard (1992). The problem with this method is that if the privatization is only to employees, the “desocializers” might consider that the bulk of the beneficiaries would be former communists—or socialists.Even people who supported or committed human right crimes, or foreigners from “friendly countries” of the former governments, i.e. in Venezuela there are a lot of Venezuelan military personnel, and Cuban military personnel, and civil employees who are employees and managers from many years ago in some “strategic enterprises” such as the oil industry and others. Do they deserve—more than the rest of Venezuelans—to be the new owners of enterprises such as PDVSA or some other multi-billion dollar company? In other words, the great part of the employees in a former socialist or communist country belonged to the former government. The fourth method is the Initial Public Offering, which allows government to raise funds, but the results have been “massive oversubscription… it is a costly and time-consuming procedure… high transaction costs and public discontent” (Rider and Zajicek 1995, 138), and finally, those who really benefit from this method are “insiders and a few professional speculators” (Rider and Zajicek 1995, 138).

The Liquidation and the (direct) Sales to Foreign Investors are the last methods that Rider and Zajicek (1995) explain. Despite some advantages of these mechanisms (for example, liquidation allows to divide and sell the entity in several parts and foreign investors have “deeper pockets than domestic residents” (Rider and Zajicek 1995, 139), the disadvantages—mostly related to cronyism and corruption—and then, bad experiences related to them are greater than the pros.

The proposal that we formalize in this paper follows Acevedo’s (2018) plan, which encompasses minimum state intervention, the impossibility for the government to vote, seventy per cent of the shares delivered to Venezuelans, special conditions for the expropriated people, certain limitations on the percentage of shares owned, and a special restriction of three years on selling or transferring shares for all Venezuelans who previously received them as part of the process.

We agree with the four general recommendations that Rothbard (1992) provides about desocialization processes: 1) drastic reduction in taxes, government expenditures, and government employment; 2) returning property of the assets owned by the government to the original expropriated owners or their heirs, or granting shares to productive workers and peasants who had worked on these assets; 3) honoring complete and secure property rights in the sense of providing complete freedom to transfer property; and 4) depriving the government the power to create new money. However, for reasons of applicability due to the current situation of the country—one of chronic widespread corruption, at extreme levels, particular cultural characteristics, and the fact that industries were effectively bought by the government when they were nationalized—and in light of previous experiences of other countries undertaking similar privatization processes, some restrictions are included in our proposal, especially concerning points 2) and 3) of Rothbard’s paper. Moreover, if expropriated owners were fully compensated, then it is natural that the legitimate owners should be the Venezuelans.

This paper is aimed at proposing a desocialization of enterprises law in light of the current situation of Venezuela. After analyzing relevant experiences in former communists and socialist countries, we have developed this draft of law with the intent to overcome some errors captured in its previous attempts, as in Acevedo (2018). It is worth remarking that this program just encompasses desocializing enterprises and assets currently managed by the government, although the desocialization of other fundamental pillars of the Venezuelan economy is of paramount importance as well. Gradual steps towards this ultimate goal of desocializing an economy are not effective. On the contrary, as Rothbard (1992, 69) argues, those steps “…could, and should, be instituted immediately and all at once.”

Circa March 2019, Venezuela is going through serious economic problems and aiming at potentially getting rid of a socialist and tyrannical regime and at establishing a new government that will surely fall into the “charms” of a democratic socialism with total control of the commanding heights of the economy, once again. From a humanitarian perspective, a change in the Venezuela’s political arena would be a gain, since the current humanitarian crisis would be relieved. Nonetheless, our desocialization proposal will continue to be seen—we greatly fear—as the work of some promoters of freedom who intend to lead the country towards a real path of prosperity, but not taken into consideration.

A Draft of the Desocialization of Enterprises Law

Generalities

1. The scope of this law involves all State-Owned Enterprises (SOE) and State-Owned Assets (SOA).

2. The Beneficiaries (B) are all Venezuelans by birth and aged at least 18 years at the moment when the desocialization process takes place, residents or not in Venezuela. They will have to enroll in the private national or international financial institution of their preference, which will represent them throughout the process.

3. The Desocialization Board (DB) will head the process.

3.1 The DB will be formed as follow: one (1) representative per financial institution having at least 4 percent of the total Venezuelans enrolled in the process; one (1) representative per branch of the state: executive, judicial and legislative.

3.2 All representatives have “voice” in the process, but just financial institutions’ representatives have the right to vote in a proportion defined by the number of Venezuelans they represent.

3.3 If a financial institution does not represent 4 percent of the total Venezuelans enrolled in the process, it can delegate its representation functions to another institution.

3.4 All official and unofficial meetings of the DB will be broadcast live, recorded, and published, for transparency purposes.

3.5 All communications among the representatives will be considered public and will have to be recorded.

4. A Financial Rescue Fund (FRF) will be created as a fund managed by the DB to rescue some SOEs and pay liabilities. Funds will come from the process itself.

Classification

5. The DB will categorize the SOEs and SOAs into six groups:

5.1 Desocialization Group: those SOEs fulfilling the desocialization process requirements.

5.2 Rescuable Group: those SOEs that can reach the requirements of the Desocialization Group upon following this process.

5.3 Public Auction: those SOEs that this process could not rescue and SOAs not classified as Clearance Assets.

5.4 Clearance Assets: all SOAs totally depreciated or in junk conditions.

5.5 Expropriated Assets or Enterprises: all those enterprises and/or assets expropriated or nationalized against the will of their former owners.

5.6 Social Assets: all those assets related to social programs given to citizens with no full property.

Procedure

6. The Present Value of all certified reserves of natural resources of each SOE and/or SOA will be included in their respective accountability.

7. For Social Assets: the DB will immediately transfer, along with the corresponding tenure, the full property of the asset to the citizens, without restrictions in the rights to sell, mortgage, build, or rent. Citizens will not pay any fee for the property transfer process.

8. For Expropriated Assets or Enterprises: The DB, based upon consistent proofs, will proceed as follows

8.1 If the governmental administration indemnified the former owner by paying a price lower than the real value of the asset at that moment, the DB will transfer the property back to the former owner. The former owner will return the surplus resulting from the difference between the current value and the received amount minus the difference between the value at the moment of the expropriation and the received amount; if that final difference is negative the DB will transfer the property immediately to the former owner with no fees, and the difference will be paid through the FRF.

8.2 If the administration did not indemnify the former owner for the expropriated assets or enterprises, the DB will immediately transfer the property to their former owners. If the difference between the current and past value is negative, the DB will pay such difference through the FRF.

9. For Clearance Assets: the DB will open a public sale process, using a technological system based on blockchain, and sell these assets in batches. The system will be transparent, with full public access to information about prices, buyers, and sale conditions. Up to 25 percent of the raised funds will be destined to pay the fees and other expenses associated with this process, including those related to the DB. The DB will deposit the rest of the funds in the FRF.

10. For Public Auction: the DB will auction each SOE and SOA through a technological system based on blockchain. The system will be transparent, with full public access to information about prices, buyers, and sale conditions. Up to 12.5 percent of the raised funds will be destined to pay the fees and other expenses associated with this process, including those related to the DB. The DB will deposit the rest of the funds in the FRF.

11. For the Rescuable and Desocialization Group: the DB will establish a desocialization date for each one and estimate liabilities for each company, even considering the human resources liabilities, and including them in the balance sheet up to the date of the property transfer.

Desocialization Process

12. For companies with Total Assets greater than Total Liabilities, by 30 percent or more: the DB will capitalize liabilities and transfer the property as follows

12.1 Through a liabilities-equity swap, each creditor, and employee, will obtain an exact amount in shares than the enterprise owes them.

12.2 70 percent of the rest in identical parts to B, in the form of shares.

12.3 The new Board of Directors of the enterprise, elected by the new shareholders through their legal representatives, will sell the remaining 30 percent of the equity with a premium no more than 30 percent, considering the initial restriction in point 16 below. Up to 10 percent of the raised funds will be destined to pay the fees and other administrative expenses associated with the process, including those related to the DB. The DB will deposit the rest of the funds in the FRF.

13. Companies with Total Assets less than Total Liabilities or Total Assets higher than Total Liabilities by less than 30 percent, even 0 percent:

13.1 The DB will determine if creditors can be proportionally paid, with no more than 30 percent of the available FRF at the moment, an amount sufficient to make Total Assets greater than Total Liabilities, by 30 percent or more. The procedure described in point 12 will be followed then.

13.2 If the DB determines that more than the 30 percent of the available FRF is required and that there is at least another SOE classified in the desocialization group, then the DB will have to wait up to the end of the process to analyze if this SOE can be rescued through the FRF. If, at the end of the process, this is the last SOE classified in the Rescuable Group and there are enough funds in the FRF, then the DB will use those funds required to accomplish the proportion of Total Assets and Liabilities described in point 13.1. If there are not enough funds in the FRF to accomplish the proportion of Total Assets to Total Liabilities described in point 13.1, and to rescue the last SOE classified as Rescuable, the DB will re-classify it into the Public Auction Group.

Remainder of the Financial Rescue Fund

14. If the desocialization process ends and the FRF still has funds, the DB will proceed as follows:

14.1 It will pay a desocialization process premium, in proportion to the represented B, to each member of the DB of the financial institutions. The grand total of this bonus will not be more than the 10 percent of the available funds.

14.2 The rest of the funds will be distributed proportionally among all SOEs that followed point 12 up to the amount of the premium that point 12.3 establishes.

14.3 If, after following point 14.2, the FRF still has funds, the DB will distribute them in equal parts to B.

Final Considerations

15. The property of all SOEs and SOAs that this desocialization program encompasses will include the property of the corresponding soil and subsoil.

16. For a term of 3 years, after the day of the official desocialization, neither any person nor any company can buy and/or hold more than 3 percent of the equity of any SOEs desocialized through point 12. Nevertheless, a person or institution can represent, through a legal power, more than 3 percent of the total equity.

17. There is no other limitation to foreigners than the one stated in this law.

18. New shareholders will be able to immediately transfer, back debts or sell their shares. Nevertheless, those shares given to B following point 12.2 will be non-negotiable and non-transferable for 3 years from the day that B receives them.

19. Immediately after the desocialization day of each enterprise, new owners and employees will privately bargain new rules and laws of their labor contract. They can establish new private deals and rules considering or not the national’s labor legal framework.

Taxes and Royalties from the Oil Sector Distributed among All Venezuelans

Following Faría and Filardo (2015) and Faría (2019), the main objective of our proposal is to “starve the government” and make it completely dependent on its citizens. So a crucial and complementary part of our proposal encompasses letting all the oil proceeds, paid in US dollars to governments as taxes and royalties by the transnational companies for the activities they carry out in country, be deposited directly into the accounts of Venezuelans by birth and of legal age. A measure of such nature would reduce the economic power of governments and would force them to come to their citizens to negotiate the tax rate levied on those proceeds. The civil society, in turn, would have more power to demand services of higher quality, and one of the fundamental bases of a long-lasting democracy would have been established: a government with an absolute fiscal dependence on its people.At present, the government is more than 50% independent of its people because it directly receives oil proceeds.

The delivery of all oil proceeds to Venezuelans confers upon them power and responsibility since it limits the state, on preventing it from directly receiving money which does not result from the efforts of its people; the state, in turn, would only survive by applying a reasonable tax burden to citizens.

We will cover this specific aspect of the reform, in more detail, in a separate paper about desocializing taxes.

Although it might seem unorthodox, mainly due to some restrictions imposed, our proposal results from considering the current economic and social conditions prevailing in Venezuela, as well as previous privatization experiences in other countries. Certain aspects of this work are still being explored and/or revisited, so it could be subject to change in the future.

We think that two of the most critical points of discussion are associated with the initial restrictions imposed: 1) the impossibility for a new shareholder to sell his/her shares during the first three years, and 2) the impossibility for a private company or person to purchase more than 3 per cent of the equity.

Previous experiences in other countries, where citizens felt cheated by the new private approach, exchanged their shares for food or alcohol right after obtaining the stock, and started blaming the program before the performance of the privatized companies stabilized, were the main reason to impose the constraint of not allowing selling during the first three years. Nevertheless, it has to be emphasized that this restrictive measure is applicable just to shares received according to point 12.2 of our law proposal. Other forms of acquisition are not affected by this temporary sell restriction (i.e. if employees receive shares as part of their labor benefits).

On the other hand, the impossibility for an institution or person to acquire more than 3 percent of the total equity is another restriction of the proposal, imposed with the intent of avoiding cartelization at the early stages of the privatization process. According to point 16 of the law, besides, any person or institution can represent more than 3 percent of the total assets.

Selling shares in batches to different buyers, selling under futures contracts, actively participating in the company (in the board of directors, for instance), or transferring their voting rights to institutions are options available for the new shareholders, so restrictions should not represent a significant problem.

As stated before, we are still working to cover other aspects of the privatization of the Venezuelan state-owned assets, so this proposal might be subject to change; restrictions could be eliminated or re-adapted as part of the research process.

Our present work should be framed in a more general approach embracing the deregulation of the labor markets, a radical simplification of the taxation system, the elimination of the minimum wage, the opening of the economy, and the eradication of the state’s monopoly of money, among others. At Econintech.org, we are working on all of those margins as well.

The life of primitive man was an unceasing struggle against the scantiness of the nature-given means for his sustenance. In this desperate effort to secure bare survival, many individuals and whole families, tribes, and races succumbed. Primitive man was always haunted by the specter of death from starvation. Civilization has freed us from these perils. Human life is menaced day and night by innumerable dangers; it can be destroyed at any instant by natural forces which are beyond control or at least cannot be controlled at the present stage of our knowledge and our potentialities. But the horror of starvation no longer terrifies people living in a capitalist society. He who is able to work earns much more than is needed for bare sustenance.

There are also, of course, disabled people who are incapable of work. Then there are invalids who can perform a small quantity of work; but their disability prevents them from earning as much as normal workers do; sometimes the wage rates they could earn are so low that they could not maintain themselves. These people can keep body and soul together only if other people help them. The next of kin, friends, the charity of benefactors and endowments, and communal poor relief take care of the destitute. Alms folk do not cooperate in the social process of production; as far as the provision of the means for the satisfaction of wants is concerned, they do not act; they live because other people look after them. The problems of poor relief are problems of the arrangement of consumption, not of the arrangement of production activities. They are as such beyond the frame of a theory of human action that refers only to the provision of the means required for consumption, not to the way in which these means are consumed. Catallactic theory deals with the methods adopted for the charitable support of the destitute only as far as they can possibly affect the supply of labor. It has sometimes happened that the policies applied in poor relief have encouraged unwillingness to work and the idleness of able-bodied adults.

In the capitalist society there prevails a tendency toward a steady increase in the per capita quota of capital invested. The accumulation of capital soars above the increase in population figures. Consequently the marginal productivity of labor, wage rates, and the wage earners' standard of living tend to rise continually. But this improvement in well-being is not the manifestation of the operation of an inevitable law of human evolution; it is a tendency resulting from the interplay of forces that can freely produce their effects only under capitalism. It is possible and, if we take into account the direction of present-day policies, even not unlikely that capital consumption on the one hand and an increase or an insufficient drop in population figures on the other hand will reverse things. Then it could happen that men will again learn literally what starvation means and that the relation of the quantity of capital goods available and population figures will become so unfavorable as to make part of the workers earn less than a bare subsistence. The mere approach to such conditions would certainly cause irreconcilable dissensions within society, conflicts the violence of which must result in a complete disintegration of all societal bonds. The social division of labor cannot be preserved if part of the cooperating members of society are doomed to earn less than a bare subsistence.

The notion of a physiological minimum of subsistence to which the "iron law of wages" refers and which demagogues put forward again and again is of no use for a catallactic theory of the determination of wage rates. One of the foundations upon which social cooperation rests is the fact that labor performed according to the principle of the division of labor is so much more productive than the efforts of isolated individuals that able-bodied people are not troubled by the fear of starvation that daily threatened their forebears. Within a capitalist commonwealth the minimum of subsistence plays no catallactic role.

Furthermore, the notion of a physiological minimum of subsistence lacks that precision and scientific rigor that people have ascribed to it. Primitive man, adjusted to a more animal-like than human existence, could keep himself alive under conditions that are literally unbearable to his dainty scions pampered by capitalism. There is no such thing as a physiologically and biologically determined minimum of subsistence, valid for every specimen of the zoological species homo sapiens. No more tenable is the idea that a definite quantity of calories is needed to keep a man healthy and progenitive, and a further definite quantity to replace the energy expended in working. The appeal to such notions of cattle breeding and the vivisection of guinea pigs does not aid the economist in his endeavors to comprehend the problems of purposive human action. The "iron law of wages" and the essentially identical Marxian doctrine of the determination of "the value of labor power" by "the working time necessary for its production, consequently also for its reproduction,"Cf. Marx, Das Kapital (7th ed. Hamburg, 1914), I, 133. In the Communist Manifesto (Section II) Marx and Engels formulate their doctrine in this way: "The average price of wage labor is the minimum wage, i.e., that quantum of means of subsistence which is absolutely required to keep the laborer in bare existence as laborer." It "merely suffices to prolong and reproduce a bare existence." are the least tenable of all that has ever been taught in the field of catallactics.

Yet it was possible to attach some meaning to the ideas implied in the iron law of wages. If one sees in the wage earner merely a chattel and believes that he plays no other role in society, if one assumes that he aims at no other satisfaction then feeding and proliferation and does not know of any employment for his earnings other than the procurement of those animal satisfactions, one may consider the iron law as a theory of the determination of wage rates. In fact the classical economists, frustrated by their abortive value theory, could not think of any other solution of the problem involved. For Torrens and Ricardo, the theorem that the natural price of labor is the price that enables the wage earners to subsist and to perpetuate their race without any increase or diminution was the logically inescapable inference from their untenable value theory. But when their epigones saw that they could no longer satisfy themselves with this manifestly preposterous law, they resorted to a modification of it that was tantamount to a complete abandonment of any attempt to provide an economic explanation of the determination of wage rates. They tried to preserve the cherished notion of the minimum of subsistence by substituting the concept of a "social" minimum for the concept of a physiological minimum. They no longer spoke of the minimum required for the necessary subsistence of the laborer and for the preservation of an undiminished supply of labor; they spoke instead of the minimum required for the preservation of a standard of living sanctified by historical tradition and inherited customs and habits. While daily experience taught impressively that, under capitalism, real wage rates and the wage earners' standard of living were steadily rising, while it became from day to day more obvious that the traditional walls separating the various strata of the population could no longer be preserved, because the social improvement in the conditions of the industrial workers demolished the vested ideas of social rank and dignity, these doctrinaires announced that old customs and social convention determine the height of wage rates. Only people blinded by preconceived prejudices and party bias could resort to such an explanation in an age in which industry supplies the consumption of the masses again and again with new commodities hitherto unknown and makes accessible to the average worker satisfactions of which no king could dream in the past.

It is not especially remarkable that the Prussian Historical School of the wirtschaftliche Staatswissenschaften viewed wage rates no less than commodity prices and interest rates as "historical categories" and that in dealing with wage rates it had recourse to the concept of "income adequate to the individual's hierarchical station in the social scale of ranks." It was the essence of the teachings of this school to deny the existence of economics and to substitute history for it. But it is amazing that Marx and the Marxians did not recognize that their endorsement of this spurious doctrine entirely disintegrated the body of the so-called Marxian system of economics. When the articles and dissertations published in England in the early 1860s convinced Marx that it was no longer permissible to cling unswervingly to the wage theory of the classical economists, he modified his theory of the value of labor power. He declared that "the extent of the so-called natural wants and the manner in which they are satisfied, are in themselves a product of historical evolution" and "depend to a large extent on the degree of civilization attained by any given country and, among other factors, especially on the conditions and customs and pretensions concerning the standard of life under which the class of free laborers has been formed." Thus "a historical and moral element enter into the determination of the value of labor power." But when Marx adds that nonetheless "for a given country at any given time, the average quantity of indispensable necessaries of life is a given fact,"Cf. Marx, Das Kapital, p. 134. Italics are mine. The term used by Marx which in the text is translated as "necessaries of life" is "Lebensmittel." The Muret-Sanders Dictionary (16th ed.) translates this term "articles of food, provisions, victuals, grub." he contradicts himself and misleads the reader. What he has in mind is no longer the "indispensable necessaries," but the things considered indispensable from a traditional point of view, the means necessary for the preservation of a standard of living adequate to the workers' station in the traditional social hierarchy. The recourse to such an explanation means virtually the renunciation of any economic or catallactic elucidation of the determination of wage rates. Wage rates are explained as a datum of history. They are no longer seen as a market phenomenon, but as a factor originating outside of the interplay of the forces operating on the market.

However, even those who believe that the height of wage rates as they are actually paid and received in reality are forced upon the market from without as a datum cannot avoid developing a theory that explains the determination of wage rates as the outcome of the valuations and decisions of the consumers. Without such a catallactic theory of wages, no economic analysis of the market can be complete and logically satisfactory. It is simply nonsensical to restrict the catallactic disquisitions to the problems of the determination of commodity prices and interest rates and to accept wage rates as a historical datum. An economic theory worthy of the name must be in a position to assert with regard to wage rates more than that they are determined by a "historical and moral element." The characteristic mark of economics is that it explains the exchange ratios manifested in market transactions as market phenomena the determination of which is subject to a regularity in the concatenation and sequence of events. It is precisely this that distinguishes economic conception from the historical understanding, theory from history.

We can well imagine a historical situation in which the height of wage rates is forced upon the market by the interference of external compulsion and coercion. Such institutional fixing of wage rates is one of the most important features of our age of interventionist policies. But with regard to such a state of affairs it is the task of economics to investigate what effects are brought about by the disparity between the two wage rates, the potential rate that the unhampered market would have produced by the interplay of the supply of and the demand for labor on the one hand, and on the other the rate that external compulsion and coercion impose upon the parties to the market transactions.

It is true, wage earners are imbued with the idea that wages must be at least high enough to enable them to maintain a standard of living adequate to their station in the hierarchical gradation of society. Every single worker has his particular opinion about the claims he is entitled to raise on account of "status," "rank," "tradition," and "custom" in the same way as he has his particular opinion about his own efficiency and his own achievements. But such pretensions and self-complacent assumptions are without any relevance for the determination of wage rates. They limit neither the upward nor the downward movement of wage rates. The wage earner must sometimes satisfy himself with much less than what, according to his opinion, is adequate to his rank and efficiency. If he is offered more than he expected, he pockets the surplus without a qualm. The age of laissez-faire for which the iron law and Marx's doctrine of the historically determined formation of wage rates claim validity witnessed a progressive, although sometimes temporarily interrupted, tendency for real wage rates to rise. The wage earners' standard of living rose to a height unprecedented in history and never thought of in earlier periods.

The labor unions pretend that nominal wage rates at least must always be raised in accordance with the changes occurring in the monetary unit's purchasing power in such a way as to secure to the wage earner the unabated enjoyment of the previous standard of living. They raise these claims also with regard to wartime conditions and the measures adopted for the financing of war expenditure. In their opinion even in wartime neither inflation nor the withholding of income taxes must affect the worker's take-home real wage rates. This doctrine tacitly implies the thesis of the Communist Manifesto that "the working men have no country" and have "nothing to lose but their chains"; consequently they are neutral in the wars waged by the bourgeois exploiters and do not care whether their nation conquers or is conquered. It is not the task of economics to scrutinize these statements. It only has to establish the fact that it does not matter what kind of justification is advanced in favor of the enforcement of wage rates higher than those the unhampered labor market would have determined. If as a result of such claims real wage rates are really raised above the height consonant with the marginal productivity of the various types of labor concerned, the unavoidable consequences must appear without any regard to the underlying philosophy.

The same is valid with regard to the confused doctrine that wage earners are entitled to claim for themselves all the benefits derived from improvements in what union officers call the productivity of labor. On the unhampered labor market wage rates always tend toward the point at which they coincide with the marginal productivity of labor. The concept of the productivity of labor in general is no less empty than all other universal concepts of this kind, e.g., the concept of the value of iron or gold in general. To speak of the productivity of labor in a sense other than that of the marginal productivity is meaningless. What these union officers have in mind is an ethical justification of their policies. However, the economic consequences of these policies are not affected by the pretexts advanced in their favor.

Wage rates are ultimately determined by the value the wage earner's fellow citizens attach to his services and achievements. Labor is appraised like a commodity not because the entrepreneurs and capitalists are hardhearted and callous but because they are unconditionally subject to the supremacy of the pitiless consumers. The consumers are not prepared to satisfy anybody's pretensions, presumptions, and self-conceit. They want to be served in the cheapest way.

This article is excerpted from chapter 21 of Human Action, the Scholar's Edition and is read by Jeff Riggenbach.

Economist Ryan McMaken, editor of Mises.org, joins Jeff Deist to wrestle with this important and relevant book. Don't miss their great discussion of immigration toward the end of the podcast, referencing Professor Ben Powell's recent paper "Solving the Misesian Migration Conundrum". And use the code HAPOD for a discount on Nation, State, and Economy from our bookstore.

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This is the reality of man lording over man, and it's been that way for eons. Ugly, just plain ugly. And it doesn't matter the span or purpose of the governing entity. This ugly reality holds equally true for the fist-fighting Taiwanese legislator as for the insult-hurling band booster. Power corrupts at all levels.

One other aspect of governance appears to be consistent at every level: the broader the scope of the proposed plan or idea, the further they reach beyond the stated bounds of the entity, the more receptive a hearing that the entity's council will give to the idea. Everyone dreams grandiose dreams, whether during solitary reflective moments or while monopolizing the public microphone. But it's the bully at the public mic, entertaining the media and sparse audience, whose dreams we must fear.

Given that these aspects are inherent in the essence of power, the issue is not how to improve systems of governance, but how to control their scope.

Because enforced contract law and full property rights are the foundations of freedom, governance systems should be based on enforceable contracts that defend property rights. The concepts of general welfare and public good have no place in such systems, as the intent of those ideals is to break contracts and trespass on property.

Governance — government — must be limited in a manner that is akin to a legal, binding contract, where rights are understood and unchanging. While a contract-based system will not change the ugly aspects of the lording class, it will limit the effects that the omnipotent and omniscient have on your pursuit of happiness.

The best way to compare the current systems of unbounded authority with that of contract-based systems is to attend meetings of a homeowners association and meetings at a local township hall. Both entities have documents that define the span and purpose of their respective assemblies, yet only the contract-based system shows any real restraint. Certainly, both dream of utopia, but only the homeowners association must accept the inherent realities of signed agreements.

In Ohio, townships can pass comprehensive plans and zoning codes in order to create orderly communities. Zoning codes are supposed to provide hard, fast rules akin to a written contract between community members with township officials acting as enforcers. Yet, zoning codes are perceived by the marginal vote getters and their appointed minions as something else entirely. In the hands of the township officials, zoning codes are, in the words of Barbossa from Pirates of the Caribbean when referring to the concept of parley, "…more what you'd call 'guidelines' than actual rules."

Consider this situation: You moved into an area that is zoned as a conservation district where developments are limited to 1 home per acre, with natural exteriors, and abundant green space. You desired to live in your neighborhood since it is within the conservation district, an area that meets the development standards you prefer. You had assumed that the zoning codes in place would protect you from development based on subjectively lower standards.

After living in your new home for a year or so, you catch a notice in the local paper that your township is considering a proposed development on the fallow farm fields and woods that abut your backyard. So, you attend the zoning hearings to see what will become of your backyard vista. At those meetings you quickly remember the prescient words of Barbossa.

The zoning commissioners are willing to trade homes per acre, natural exteriors, and green space for a donation of an offsite piece of land for a future community park or fire station. Sure, you hold the zoning codes — still in force — in your hands as if it is a contract to be enforced by the township, yet the zoning commissioners and township trustees see that document as the starting point for exactions and extractions; what the developer considers extortion by other means.

You can complain and shout, but the governance system that you have encountered has no consideration for your assumed contract. The commissioners and trustees only care about their grandiose plans for a utopian community. Your long-term vision of your local neighborhood, based on current regulations, just met their long-term vision of posterity; the one where future residents sing praises to the plans and vision of the current ruling elite.

Now, consider the homeowners association (HOA). Certainly, the same taste of power has corrupted the key players. They have dreams too, but their dreams are limited by the restrictive covenant that governs use of the property covered by the association. Sure, they send out a monthly newsletter with words of wisdom regarding how residents should live their lives, but they can't do anything about it. The concepts of general welfare and public good are not defined on the deed filed at the county offices as purposes of the association.

Now, I'm not saying that some residents will not suffer the occasional annoyance as HOA trustees hold the color pallet against your mailbox to verify the hue of the stain which you applied, but they can't change the usage of your neighbor's property from residential to commercial. Nor can they subdivide properties or dig up sidewalks. The HOA members have utopian dreams, but contracts limit their reality to mending fences and mulching entrance ways.

Other than showing excessive exuberance at times, the HOAs are typically indicted in the press when the singular property owner wants to turn his front yard into a memorial for the flag, replete with search lights and a continually repeating sample of Taps. What's worse, the property owner knowingly agreed to such restrictions prior to purchasing the property. The homeowner, attempting to trample on the agreement, is hailed as the last defender of Lady Liberty herself, while the HOA, defending its contract with all homeowners, is perceived as evil incarnate.

Such inconveniences and annoyances are nothing compared to the damaged resulting from unbounded governance. As you move up the governmental food chain, you will find that each subsequent level reaps more damage, more ills. At the federal level, it is as if no bounds exist anymore. Sure, the separate branches mention the Constitution, but only as a means to pervert its moral authority.

Some will claim that the Constitution is our written contract, binding rule of law, and restrictive covenant, yet its perversion would seem to imply that contract governments, whether constitutional public or anarcho-libertarian private, are bound to fail.

But, not so fast. For the private supplier of governance, the entrepreneur across the street offering a similar service is enough of a threat to keep private governing bodies in line.

On the other hand, the political class simply requires rumblings from the masses. Rumble, and they shall fear. Shout, and they shall bend. Scream, and they shall wither.

The ilk that sit at the head of the table, whether local, state, or national, are most concerned about keeping their power and status. These are not men and women of principles. They are simply power seekers. They will wither and do as told once this great nation says, "Stop! Respect the Constitution." They would rather flip and flop than risk the next election.

The ruling elite know this, that's why they utilize a coerced education system to perpetuate their nonsense. Yet, a simple booklet such as the comic version of Hayek's Road to Serfdom can turn enough minds to shake the tables of power. But, just because many have lost sight of "Don't Tread on Me," doesn't mean all is lost. A little more education, a stronger tug on the collar of the elected, and the direction toward socialism could reverse overnight.

So, whether your concept of government is constitutional public or anarcho-libertarian private, contract governments will work. They'll be messy, the public version will take conviction of the governed, but their scope will not creep onto your property and liberty.

[Originally published March 2007.]

The socialists and communists propose to cure poverty by seizing private property, particularly property in the means of production, and turning it over to be operated by the government.

What the advocates of all expropriation schemes fail to realize is that property in private hands used for the production of goods and services for the market is already for all practical purposes public wealth. It is serving the public just as much as—in fact, far more effectively than—if it were owned and operated by the government.

Suppose a single rich man were to invest his capital in a railroad owned by himself alone. He could not use this merely to transport his own family and their personal goods. That would be ruinously wasteful. If he wished to make a profit on his investment, he would have to use his railroad to transport the public and their goods. He would have to devote his railroad to a public use.

And unlike a government agency, the private owner is obliged by self-preservation to try to avoid losses, which means that he is forced to run his railroad economically and efficiently. And also unlike a government agency, the private capitalist is nearly always obliged to face competition—which means to make the services he provides or the goods he sells superior or at least equal to those provided by his competitors. Therefore the private capitalist normally serves the public far better than the government could if it took over his property. Looked at from the standpoint of the service they provide, the private railroads today are worth vastly more to the public than to their owners.

Though socialists chronically fail to understand it, there is nothing original in the theme just stated. It was hinted at in Adam Smith:

Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily leads him to prefer that employment which is most advantageous to the society.Adam Smith, Wealth of Nations, 1776, Bk. IV, Ch. II.

At another point Adam Smith was even more explicit:

Every prodigal appears to be a public enemy, and every frugal man a public benefactor. … The principle which prompts to save, is the desire of bettering our condition. … An augmentation of fortune is the means by which the greater part of men propose and wish to better their condition. … And the most likely way of augmenting their fortune, is to save and accumulate some part of what they desire. … [The funds they accumulate] are destined for the maintenance of productive labor. … The productive powers of the same number of laborers cannot be increased, but in consequence either of some addition and improvement to those machines and instruments which facilitate and abridge labor; or of a more proper division and distribution of employment. In either case an additional capital is almost always required.Ibid., Bk. II, Ch. Ill.

One of them was George E. Roberts, director of the U.S. Mint under three Presidents, who was responsible for the Monthly Economic Letter of the National City Bank of New York from 1914 until 1940.

An example often cited by Roberts was Henry Ford and his automobile plant. Roberts pointed out in the July letter of 1918 that the portion of the profits of Henry Ford's automobile business that he had invested in the development and manufacture of a farm tractor was not devoted to Ford's private wants; nor was that portion which he invested in furnaces for making steel; nor that portion invested in workingmen's houses.

If Henry Ford had exceptional talent for the direction of large productive enterprises the public had no reason to regret that he had an income of $50,000,000 a year with which to enlarge his operations. If that income came to him because he had a genius for industrial management, the results to the public were probably larger than they would have been if the $50,000,000 had been arbitrarily distributed at 50 cents per head to all the [then, 1918] population of the country.

In brief, only that portion of his income which the owner spends upon his own or his dependents' consumption is devoted to him or to them. All the rest is devoted to the public as completely as though the title of ownership was in the State. The individual may toil, study, contrive and save, but all that he saves inures to others.

In the history of economic thought, however, it is astonishing how much this truth was neglected or forgotten, even by some of Smith's most eminent successors. But the theorem has been revived, and some of its corollaries more explicitly examined, by several writers in the present century.

But the Ford Motor Company, from the profits of which the original owner drew so little for his own personal needs, is not a unique example in American business. Perhaps the greater part of private profits are today reinvested in industry to pay for increased production and service for the public.

Let us see what happened, for example, to all the corporate profits in the United States in 1968, fifty years after George Roberts was writing about the Ford Company. These aggregate net profits amounted before taxes to a total of $88.7 billion (or one eighth of the total national income in that year of $712.7 billion).

Out of these profits the corporations had to pay 46 percent, or $40.6 billion, to the government in taxes. The public, of course, got directly whatever benefit these provided. Corporate profits after taxes then amounted to $48.2 billion, or less than 7 percent of the national income.

These profits after taxes, moreover, averaged only 4 cents for every dollar of sales. This meant that for every dollar that the corporations took in from sales, they paid out 96 cents—partly for taxes, but mainly for wages and for supplies from others.

But by no means all of the $48.2 billion earned after taxes went to the stockholders of the corporations in dividends. More than half—$24.9 billion—was retained or reinvested in the business. Only $23.3 billion went to the stockholders in dividends.

There is nothing untypical in these 1968 corporate reinvestment figures. In every one of the six years preceding 1968 the amount of funds retained for reinvestment exceeded the total amount paid out in dividends.

Moreover, even the $25 billion figure understates corporate reinvestment in 1968. For in that year the corporations suffered $46.5 billion depreciation on their old plant and equipment. Nearly all of this was reinvested in repairs to old equipment or to complete replacement. The $24.9 billion represented reinvestment of profits in additional or greatly improved equipment.

And even the $23.3 billion that finally went to stockholders was not all retained by them to be spent on their personal consumption. A great deal of it was reinvested in new enterprises. The exact amount is not precisely ascertainable; but the U.S. Department of Commerce estimates that total personal savings in 1968 exceeded $40 billion.

Thus because of both corporate and personal saving, an ever-increasing supply is produced of finished goods and services to be shared by the American masses.

In a modern economy, in brief, those who save and invest can hardly help but serve the public. As Mises has put it:

In the market society the proprietors of capital and land can enjoy their property only by employing it for the satisfaction of other people's wants. They must serve the consumers in order to have any advantage from what is their own. The very fact that they own means of production forces them to submit to the wishes of the public. Ownership is an asset only for those who know how to employ it in the best possible way for the benefit of the consumers. It is a social function.Ludwig von Mises, Human Action, 3rd Rev. Ed., Chicago: Henry Regnery Co., 1966, p. 684.

It follows from this that the rich can do most good for the poor if they refrain from ostentation and extravagance, and if instead they save and invest their savings in industries producing goods for the masses.

F. A. Harper has gone so far as to write: "Both fact and logic seem to me to support the view that savings invested in privately owned economic tools of production amount to an act of charity. And further, I believe it to be—as a type—the greatest economic charity of all.""The Greatest Economic Charity." Essay in symposium On Freedom and Free Enterprise, Mary Sennholz, ed., Van Nostrand, 1956, p. 99.

Professor Harper supports this view by quoting from, among others, Samuel Johnson, who once said: "You are much surer that you are doing good when you pay money to those who work, as a recompense of their labor, than when you give money merely in charity."James Boswell, The Life of Samuel Johnson, Boston: Charles E. Lauriat Co., 1925, Vol. II, p. 636.

So, saving and sound investment may be the most important benefit that the rich can confer on the poor.

This theme has found expression in this century by a deplorably small number of writers. One of the most persuasive was Hartley Withers, a former editor of the London Economist, who published an ingratiating little book in 1914, a few weeks before the outbreak of the First World War, called Poverty and Waste.Hartley Withers, Poverty and Waste, London: Smith, Elder, 1914; 2nd Rev. Ed., John Murray, 1931. The contention of his book is that when a wealthy man spends money on luxuries he causes the production of luxuries and so diverts capital, energy, and labor from the production of necessaries, and so makes necessaries scarce and dear for the poor. Withers does not ask him

to give his money away, for he would probably do more harm than good thereby, unless he did it very carefully and skilfully; but only to invest part of what he now spends on luxuries so that more capital may be available for the output of necessaries. So that by the simultaneous process of increasing the supply of capital and diminishing the demand for luxuries the wages of the poor may be increased and the supply of their needs may be cheapened; and he himself may feel more comfortable in the enjoyment of his income.Ibid., p. 139.

Yet in spite of the authority of the classical economists and the inherent strength of the arguments for saving and investment, the gospel of spending has an even older history. One of the chief tenets of the "new economics" of our time is that saving is not only ridiculous but the chief cause of depressions and unemployment.

Adam Smith's arguments for saving and investment were at least partly a refutation of some of the mercantilist doctrines thriving in the century before he wrote. Professor Eli Heckscher, in his Mercantilism (Vol. II, 1935), quotes a number of examples of what he calls "the deep-rooted belief in the utility of luxury and the evil of thrift. Thrift, in fact, was regarded as the cause of unemployment, and for two reasons: in the first place, because real income was believed to diminish by the amount of money which did not enter into exchange, and secondly, because saving was believed to withdraw money from circulation."Vol. II, p. 208.

An example of how persistent these fallacies were, long after Adam Smith's refutation, is found in the words that the sailor-turned-novelist, Captain Marryat, put into the mouth of his hero, Mr. Midshipman Easy, in his novel by that name published in 1836:

The luxury, the pampered state, the idleness—if you please, the wickedness—of the rich, all contribute to the support, the comfort, and the employment of the poor. You may behold extravagance—it is a vice; but that very extravagance circulates money, and the vice of one contributes to the happiness of many. The only vice which is not redeemed by producing commensurate good, is avarice.

Mr. Midshipman Easy is supposed to have learned this wisdom in the navy, but it is almost an exact summary of the doctrine preached in Bernard Mandeville's Fable of the Bees in 1714.

Now though this doctrine is false in its attack on thrift, there is an important germ of truth in it. The rich can hardly prevent themselves from helping the poor to some extent, almost regardless of how they spend or save their money. So far from the wealth of the rich being the cause of the poverty of the poor, as the immemorial popular fallacy has it, the poor are made less poor by their economic relations with the rich. Even if the rich spend their money foolishly and wastefully, they give employment to the poor as servants, as suppliers, even as panderers to their vices. But what is too often forgotten is that if the rich saved and invested their money they would not only give employment to just as many people producing capital goods, but that as a result of the reduced costs of production and the increased supply of consumer goods which this investment brought about, the real wages of the workers and the supply of goods and services available to them would greatly increase.

What is also forgotten by the defenders of luxury spending is that, though it improves the condition of the poor who cater to it, it also increases their dissatisfaction, unrest, and resentment. The result is envy of and sullenness toward those who are making them better off.

The first eminent economist who attempted to refute Adam Smith's proposition that "every prodigal appears to be a public enemy, and every frugal man a public benefactor" was Thomas R. Malthus. Malthus's objections were partly well taken and partly fallacious. I have examined them rather fully in another place;The Failure of the "New Economics," Van Nostrand, 1959, pp. 40–43 and 355–362. and I shall content myself here with quoting a few lines from the answer that a greater economist than Malthus, David Ricardo, made at the time (circa 1814–21): "Mr. Malthus never appears to remember that to save is to spend, as surely as what he exclusively calls spending. … I deny that the wants of consumers generally are diminished by parsimony—they are transferred with the power to consume to another set of consumers."Notes on Malthus (Sraffa edition), p. 449 and p. 309.

It remained for a few influential modern writers to launch an all-out attack on saving. One of them was Bernard Shaw. In a shamelessly ignorant and silly book,George Bernard Shaw, The Intelligent Woman's Guide to Socialism and Capitalism, Brentano, 1928, p. 7. Shaw actually argued that net saving in a community was not even possible—because food does not keep! "The notion that we could all save together is silly. … Peter must spend what Paul saves, or Paul's savings will go rotten. Between the two nothing is saved. The nation as a whole must bake its bread and eat it as it goes along. … When you see the rich man's wife (or anyone else's wife) shaking her head over the thriftlessness of the poor because they do not all save, pity the poor lady's ignorance, but do not irritate the poor by repeating her nonsense to them."

Shaw's statement is nonsense compounded. He talks as if men and women, in the Britain and America of 1928, existed at the level of the lower animals, and lived by bread alone. It might have occurred to him that in a modern society food production and food consumption form only a small fraction of total production and consumption. In the United States today, food and beverages account for only 13 percent, or about one eighth, of the gross national product. It should further have occurred to Shaw that even though each individual crop is harvested only during a few weeks of the year, the food supply must be at least sufficiently conserved to last a nation the year round.

And even in the most primitive agricultural societies some food has to be saved even beyond a year, if the society is to survive. The tribe that consumes that part of the corn that it should be setting aside as seed for next year's crop is doomed to starvation.

But neither in a modern nor in a primitive society is it primarily food that is saved from year to year. So far as the individual is concerned, what he nominally saves is money. (This used to consist of the precious metals, gold and silver, which kept extremely well, and did not constantly lose their value like today's universal paper currencies.) What the individual really saves is the consumption goods and services he refrains from demanding, so releasing labor and other resources for the production of more and better capital goods. The great bulk of primitive as of modern savings went into improving housing, land, and tools.

Shaw's argument falls into a reductio ad absurdum when it proves that there can be no net saving at all by the nation as a whole. What would Shaw make of the present U.S. Department of Commerce figures showing that there is in fact net national saving every year? (In the five years 1967—71 gross private domestic investment averaged annually about 14 percent of the U.S. gross national product.) If Shaw had merely looked around him, he would have seen how saving went into enlarging and improving the nation's productive equipment and into an increase in each decade in labor's productivity and in real wages.

Shaw threw himself into economic controversy all his life; but he never condescended to look up the facts and never understood even some kindergarten economic principles.

We have yet to discuss the views of the most influential opponent of saving in our time—John Maynard Keynes.

It is widely believed, especially by his disciples, that Lord Keynes did not condemn saving until, in a sudden vision on his road to Damascus, the truth flashed upon him and he published it in The General Theory of Employment, Interest, and Money in 1936. All this is apocryphal. Keynes disparaged saving almost from the beginning of his career. He was warning his countrymen in a broadcast address in January, 1931, that "whenever you save five shillings, you put a man out of work for a day." And long before that, in his Economic Consequences of the Peace, published in 1920, he was writing passages like this:

The railways of the world which [the nineteenth century] built as a monument to posterity, were, not less than the Pyramids of Egypt, the work of labor which was not free to consume in immediate enjoyment the full equivalent of its efforts.

Thus this remarkable system depended for its growth on a double bluff or deception. On the one hand the laboring classes accepted from ignorance or powerlessness, or were compelled, persuaded, or cajoled by custom, convention, authority and the well-established order of Society into accepting, a situation in which they could call their own very little of the cake that they and Nature an  the capitalists were cooperating to produce. And on the other hand the capitalist classes were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. The duty of 'saving' became nine-tenths of virtue and the growth of the cake the object of true religion. There grew round the nonconsumption of the cake all those instincts of puritanism which in other ages has withdrawn itself from the world and has neglected the arts of production as well as those of enjoyment. And so the cake increased; but to what end was not clearly contemplated. Individuals would be exhorted not so much to abstain as to defer, and to cultivate the pleasures of security and anticipation. Saving was for old age or for your children; but this was only in theory—the virtue of the cake was that it was never to be consumed, neither by you nor by your children after you. (Pp. 19–20.)

This passage illustrates the irresponsible flippancy that runs through so much of Keynes's work. It was clearly written tongue-in-cheek. In the very next sentences Keynes made a left-handed retraction: "In writing thus I do not necessarily disparage the practices of that generation. In the unconscious recesses of its being Society knew what it was about," etc.

Yet he let his derision stand to do its harm.

If we accepted Keynes's original passage as sincerely written, we would have to point out in reply: (1) The railways of the world cannot be seriously compared with the pyramids of Egypt, because the railways enormously improved the production, transportation, and availability of goods and services for the masses. (2) There was no bluff and no deception. The workers who built the railroads were perfectly "free" to consume in immediate enjoyment the full equivalent of their efforts. It was the capitalist classes that did nearly all the saving, not the workers. (3) Even the capitalist classes did consume most of their slice of the cake; they were simply wise enough to refrain from consuming all of it in any single year.

This point is so fundamental, and both Keynes and his disciples have so confused themselves and others with their mockery and intellectual somersaults, that it is worth making the matter plain by constructing an illustrative table.

Let us assume that in Ruritania, as a result of net annual saving and investment of 10 percent of output, there is over the long run an average increase in real production of 3 percent a year. Then the picture of economic growth we get over a ten-year period runs like this in terms of index numbers:

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(These results do not differ too widely from what has been happening in recent years in the United States.)

What this table illustrates is that total production in Ruritania increases each year because of the net saving (and consequent investment), and would not increase without it. The saving is used year after year to increase the quantity and improve the quality of existing machinery or other capital equipment, and so to increase the output of both consumption and capital goods.

Each year there is a larger and larger "cake." Each year, it is true, not all of the currently produced cake is consumed. But there is no irrational or cumulative consumer restraint. For each year a larger and larger cake is in fact consumed; until even at the end of five years (in our illustration), the annual consumers' cake alone is equal to the combined producers' and consumers' cakes of the first year. Moreover, the capital equipment—the ability to produce goods—is now 12 percent greater than in the first year. And by the tenth year the ability to produce goods is 30 percent greater than in the first year; the total cake produced is 30 percent greater than in the first year, and the consumer's cake alone is more than 17 percent greater than the combined consumers' and producers' cakes in the first year.

There is a further point to be taken into account. Our table is built on the assumption that there has been a net annual saving and investment of 10 percent a year; but in order to achieve this, Ruritania will probably have to have a gross annual saving and investment of, say, twice as much, or 20 percent, to cover the repairs, depreciation and deterioration taking place every year in housing, roads, trucks, factories, equipment. This is a consideration for which no room can be found in Keynes's simplistic and mocking cake analogy. The same kind of reasoning which would make it seem silly to save for new capital would also make it seem silly to save enough even to replace old capital.

In a Keynesian world, in which saving was a sin, production would go lower and lower, and the world would get poorer and poorer.

In the illustrative table I have by implication assumed the long-run equality of saving and investment. Keynes himself shifted his concepts and definitions of both saving and investment repeatedly. In his General Theory the discussion of their relation is hopelessly confused. At one point (p. 74) he tells us that saving and investment are "necessarily equal" and "merely different aspects of the same thing." At another point (p. 21) he is telling us that they are "two essentially different activities" without e'ren a "nexus."

Let us, putting all this aside, try to look at the matter both simply and realistically. Let us define saving as an excess of production over consumption; and let us define investment as the employment of this unconsumed excess to create additional means of production. Then though saving and investment are not always necessarily equal, over the long run they tend to equality.

New capital is formed by production combined with saving. Before there can be a given amount of investment, there must be a preceding equal amount of saving. Saving is the first half of the action necessary for more investment. "To complete the act of forming capital it is of course necessary to complement the negative factor of saving with the positive factor of devoting the thing saved to a productive purpose.Eugen von Böhm-Bawerk, Positive Theory of Capital, 1891, South Holland, Ill.: Libertarian Press, 1959, p. 104. … [But) saving is an indispensable condition precedent to the formation of capital.Ibid.

Keynes constantly deplored saving while praising investment, persistently forgetting that the second was impossible without the first.

Of course it is most desirable economically that whatever is saved should also be invested, and in addition invested prudently and wisely. But in the modern world, investment follows or accompanies saving almost automatically. Few people in the Western world today keep their money under the floor boards. Even the poorer savers put their money out at interest in savings banks; and those banks act as intermediaries to take care of the more direct forms of investment. Even if a man deposits a relatively large sum in an inactive checking account, the bank in which he deposits, trying always to maximize its profits or to minimize losses, seeks to keep itself "fully loaned up"—that is, with close to the minimum necessary cash reserves. If there is insufficient demand at the time for commercial loans, the bank will buy Treasury bills or notes. The result in the United States, for example, is that a bank in New York or Chicago would normally lend out five sixths of the "hoarder's" deposit; and a "country bank" would lend out even more of it.Of course, to repeat, a saver can do the most economic good, both for himself and his community, if he invests most of his savings, and invests them prudently and wisely. But–contrary to the message of the mercantilists and the Keynesians—even if he "hoards" his savings he may often benefit both himself and the community and at least under normal conditions do no harm.

To understand more clearly why this is so it may be instructive to begin by distinguishing between three kinds of ( or motives for) saving, and three groups of savers—roughly the poor, the middle class, and the wealthy.

Let us call the most necessary kind, which even the poorest must practice, "rent-day saving." Men buy and pay for things over different time periods. They buy and pay for food, for the most part, daily. They pay rent weekly or monthly. They buy major articles of clothing once or twice a year. A man who earns $10 a day cannot afford to spend $10 a day on food and drink. He can spend on them, say, not more than $6 a day, and must put aside $4 a day from which to pay out part at the end of the month for rent, light, and heat, and another part for a winter overcoat at the end of six months, and so on. This is the kind of saving necessary to ensure one's ability to spend throughout the year. "Rent-day saving" can symbolize all the saving necessary to pay for regularly recurrent and unavoidable living expenses. Obviously this kind of saving, sustained only for weeks or a season, and varying in time as among individuals, can in no circumstances be held responsible for business depressions. It is utter irresponsibility on the part of the Bernard Shaws to ridicule it.

The next kind of saving, which applies especially to the middle classes, is what we may call "rainy-day saving." This is saving against such possible though not inevitable contingencies as loss of a job, illness in the family, or the like.

It is this "rainy-day saving" that the Keynesians most deplore, and from which they fear the direst consequences. Yet even in extreme cases it does not, except in very special cyclical circumstances, tend to bring about any depression or economic slowdown.

Let us consider, for example, a society consisting entirely of "hoarders" or "misers." They are hoarders or misers in this sense: that they all assume they are going to live till 70 but will be forced to retire at 60; and they want to have as much to spend in each of their last ten years as in their 40 working years from 20 to 60. This means that each family will save one fifth of its annual income over 40 years in order to have the same amount to spend in each of its final ten years.

We are deliberately assuming the extreme case, so let us assume that the money saved is not invested in a business or in stocks or bonds, is not even put in a savings bank, earns no interest, but is simply "hoarded."

This of course would permit no economic improvement whatever. But if it were the regular permanent way of life in that community, at least it would not lead to a depression. The people who refrained from buying a certain amount of consumers' goods and services would not be bidding up their prices; they would simply be leaving them for others to buy. If this saving for old age were the regular and expected way of life, and not some sudden unanticipated mania for saving, the manufacturers of consumer goods would not have produced an oversupply to be left on their hands; the older people in their seventh decade would in fact be spending more than similarly aged people in a "spending" society, and the unspent savings of those who died would revert to the spending stream. Over a long period, year by year, there would be just as much spent as in a "spending" society.

Let us remember that money saved, in an evenly rotating economy, where there is neither monetary inflation nor deflation, does not go out of existence. Savings, even when they are not invested in production goods, are merely deferred or postponed spending. The money stays somewhere and is always finally spent. In the long run, in a society with a relatively stable ratio between hoarders and spenders, savings are constantly coming back into the spending stream, through old-age spending or through deaths, keeping the stream at an even flow.

What we are trying to understand is merely the effect of saving per se, and not of sudden and unanticipated changes in spending and saving. Therefore we are abstracting from the effects produced by unexpected changes in spending and saving or changes in the supply of money. If even a heavy amount of saving were the regular way of life in a community, the relative production and prices of consumers' and producers' goods would already be adjusted to this. Of course, if a depression sets in from some other cause, and the prices of securities and of goods begin to fall, and people suddenly fear the loss of their jobs, or a further fall in prices, this may lead to a massive and unanticipated increase in saving (or more exactly in non-spending) and this may of course intensify a depression already begun from other causes. But depressions cannot be blamed on regular, planned, anticipated saving.

Some readers may contend that I have not yet imagined the most extreme case of saving—a society, say, all the members of which perpetually save more than half as much as they earn, and keep saving, not for old age, or for any reasonable contingency, but simply because of a "religion" of saving. In brief, these would be the cake nonconsumers of Keynes's satire. But even such an imaginary society involves a contradiction of terms. If the members of that society intended always to live at their existing modest or even mean level, why would they keep exerting themselves to produce more than they ever expected to consume? That would be pathologic to the point of insanity. Keynes's allegory of the extent of supposed nineteenth-century thrift was purely an hallucination.

We come finally to the third type of saving—what we may call "capitalist" saving. This is saving that is put aside for investment in industry—either directly, or indirectly in the form of savings bank deposits. It is saving that yields interest or profits. The saver hopes, in his old age or even earlier, to live on the income yielded by his investments rather than by consuming his saved capital.

This type of "capitalist" saving was until recently confined to the very rich. Indeed, even the very rich were not able to take advantage of this type of saving until the modern development of banks and corporations. As late as the beginning of the eighteenth century we hear of London merchants on their retirement taking a chest of gold coin with them to the country with the intention of gradually drawing on that hoard for the rest of their lives.F. A. Hayek, Profits, Interest and Investment, London: George Routledge, 1939, pp. 162–163. See also the numerous cases mentioned in G. M. Trevelyan's English Social History, David McKay, 1942. Today the greater part even of the American middle classes, however, enjoy the advantage of capitalist saving.

To sum up. Contrary to age-old prejudices, the wealth of the rich is not the cause of the poverty of the poor, but helps to alleviate that poverty. No matter whether it is their intention or not, almost anything that the rich can legally do tends to help the poor. The spending of the rich gives employment to the poor. But the saving of the rich, and their investment of these savings in the means of production, gives just as much employment, and in addition makes that employment constantly more productive and more highly paid, while it also constantly increases and cheapens the production of necessities and amenities for the masses.

The rich should of course be directly charitable in the conventional sense, to people who because of illness, disability or other misfortune cannot take employment or earn enough. Conventional forms of private charity should constantly be extended. But the most effective charity on the part of the rich is to live simply, to avoid extravagance and ostentatious display, and to save and invest so as to provide more people with increasingly productive jobs, and to provide the masses with an ever-greater abundance of the necessities and amenities of life

Liberalism: In the Classical Tradition by Ludwig von Mises"Was Mises a Neoliberal?" by Jeff Deist"Immigration Roundtable: Ludwig von Mises" by Jeff Deist

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In the context of historical opposition to slavery, even the initial demand for immediate and unconditional abolition was extreme. Nevertheless, the radical libertarian tradition always embraced more than just the call for simple abolition. Besides calling for the return of the plantations to the slaves and recognizing their right to reparations, the radicals advocated the right of the slaves to rebel, either individually or en masse, and to resort to violence in their own self-defense, and to call on those outside the slave system to come to their assistance. In following their libertarian heritage, the radicals saw that the natural fact that slaves were people (and that each slave was born in possession of a separate mind and separate body) implied the absolute right of all slaves to live their lives free of coercive interference. Any unjust interference with a person's self-ownership rights gave the victim the right to repel invasion.

By opposing unjust and criminal property titles in people and in land, the radical libertarian was attacking not only the individual slave master but also the government that sanctioned the master's claim. Radical abolitionists, historically, had a tendency to support individualist-anarchism because they recognized the superior claims of natural law and natural justice (proceeding from the self-ownership and homesteading axioms) over civil law and state jurisprudence.Lewis Perry, Radical Abolitionism: Anarchy and the Government of God in Antislavery Thought (Ithaca: Cornell University Press, 1973). Radical abolitionists and libertarians influenced public opinion in the only way possible to them. To be consistent with their position, they had to agitate for immediate abolition. To have dropped this demand would not only have undercut their claim to be abolitionists but would also have seriously undermined their principled attack on slavery as injustice.

In Great Britain and its New World colonies, the practice of enslaving African Negroes was beneficial to certain commercial and political interests. Slavery appeared as an extension of feudalism, which had all but vanished from the British scene by the l 700's. When apologists for slavery were called upon to defend the system, they justified it by citing arguments that held the Negro to be in bondage because of prior 1) captivity, 2) debt, 3) crime, 4) sale, or 5) birth.

One of the earliest legal critics of slavery in Britain was George Wallace, an Edinburgh lawyer, who attacked slavery in his treatise on Scottish law, which was published in 1760. Wallace disputed all the attempted justifications of slavery. He concluded that all of the traditional arguments for slavery were equally absurd. According to Wallace, the ancient jurists and Roman lawyers reasoned that captives taken in a lawful war might rightfully be put to death. However, if out of humanity, their conquerors spared them, then they might rightfully be made slaves. Wallace thought this was wrong: "for justice allows and necessity requires us to do them [the captives] no more ill, than is absolutely necessary, in order to incapacitate them from hurting us, and from being serviceable to our enemies during the continuance of the war."George Wallace, A System of the Principles of the Law of Scotland, Part I (Edinburgh, Scotland, 1760}, p. 92. (Copies obtained from the University of Glasgow.) This did not justify holding them in a perpetual state of slavery.

Wallace also considered slavery in the New World. He was quick to show that there the traditional justifications for slavery held no plausibility.

We all know, that they are purchased from their princes, who pretend to have a right to dispose of them, and that they are like other commodities, transported by the merchants, who have bought them, into America, in order to be exposed to sale. If this trade admits of a moral or rational justification, every crime, even the most atrocious, may be justified. Government was instituted for the good of mankind: Kings, princes, governors are not proprietors of those, who are subject to their authority; they have not a right to make them miserable. … Of course, they have not a right to dispose of their liberty, and to sell them for slaves. Besides, no man has a right to acquire or to purchase them; men and their liberty are not "in commercio"; they are not either saleable or purchaseable. One; therefore, has nobody but himself to blame, in case he shall find himself deprived of a man, whom he had thought he had, by buying for a price, made his own; for he dealt in a trade, which was illicit, and was prohibited by the most obvious dictates of humanity. For these reasons, every one of those unfortunate men, who are pretended to be slaves, has a right to be declared to be free, for he never lost his liberty; he could not lose it; his prince had no power to dispose of him. Of course, the sale was … ipso jure" void. This right he carries with him, and is entitled every where to get it declared.Ibid., p. 95.

Although the common law of England did not openly endorse slavery, neither did it immediately emancipate slaves upon their entering England. The West Indian planters had obtained an informal Crown decision in 1729 that recognized the master's property rights in his slaves, if they accompanied him to England. It was not until 1772, when Granville Sharp obtained a judgment in Somerset v. Stewart, that slaves could not forcibly be removed from England against their will. Wallace, even before Sharp, argued that it was the duty of the common law judges to declare all slaves in England and Scotland to be free.

I know it has been said, that questions, concerning the states of persons ought to be determined by the Law of the country, to which they belong; and that, therefore, one, who would be declared to be a slave in America, ought, in case he should happen to be imported into Britain, to be adjudged, according to the Law of America, to be a slave: A doctrine, than which nothing can be more barbarous. Ought the judges of any country, out of the respect to the Law of another, show no respect to their kind and to humanity? Out of respect to a law, which is in no sort obligatory upon them, ought they to disregard the Law of Nature, which is obligatory on all men at all times, and in all places? Are any laws so binding as the eternal laws of justice?Ibid., p. 96.

Anticipating the protests of West Indian planters and slave owners, Wallace acknowledged that the abolition of slavery might result in a disruption of their business, but he also thought that in the long run, abolition would be beneficial to everyone. He demonstrated the absurdity of the argument that the colonies would be ruined if slavery were prohibited by comparing the situation to that of highway robbery.

The purses of highwaymen would be empty, in case robbery were totally abolished; but have men the right to acquire riches by such cruel, such flagitious means? Has a robber a right to acquire money by going out to the highway? Have men a right to acquire it by rendering their fellow-creatures miserable? … No; there is such a thing as justice, to which the most sacred regard is due. It ought to be inviolably observed.Ibid.

The 17th- and 18th-century English natural-law theorists were not always consistent in their adherence to the self-ownership principle. But Wallace would undoubtedly have been sympathetic to the following mid-18th century statement:

If nature has made any thing a man's own, his mind and body are so. At least it is evident, that whatever right one man has in his mind and body, another man must have the same right in his; that is, as far as we can judge from any appearance in nature, each man has an equal right in his own mind and body respectively. But no man's mind and body can be his own, unless the faculties of both, that is, his judgment, his will, and his powers of acting are so. Now he, who has a right in his faculties of judging of choosing and of acting, is no slave. And since nature, which gave every man a right in his own mind and body, gave him a right likewise to these faculties; the consequence is, that nature has not placed any man in a state of slavery.Thomas Rutherforth, Institutes of Natural Law (3rd Ed., Philadelphia: William Young, 1799), p. 458. (Book I, Chapter XX, Section iii). (First ed. published in England, 1754) (Copy obtained from Johns Hopkins University.)

Nevertheless, Wallace asserted that it was the community's superior interest in the individual which would prevent him from making a slave of himself or from killing himself.Wallace, System, pp. 93–94. Despite this inconsistency in his thought, Wallace offers a very good example of radical opposition to slavery.

In concluding his arguments, Wallace cited from Book XV of Montesquieu's The Spirit of the Laws. Montesquieu had also influenced the French encyclopedists, especially Chevalier Louis de Jaucourt, author of articles on' the slave trade and natural equality in Diderot's Encyclopedia. Perhaps drawing on Wallace, de Jaucourt "was able to rise above the qualifications engendered by Montesquieu's tolerance for institutional differences" and to bring forth "one of the most lucid applications to slavery of the natural rights philosophy."David Brion Davis, The Problem of Slavery in Western Culture (Ithaca: Cornell University Press, 1966), pp. 416–417. See also Davis, "New Sidelights on Early Antislavery Radicalism," 28 William and Mary Quarterly (1971), pp. 585–594.

There is not, therefore, a single one of these unfortunate people regarded only as slaves who does not have the right to be declared free, since he has never lost his freedom, which he could not lose and which his prince, his father, and any person whatsoever in the world had not the power to dispose of. Consequently the sale that has been completed is invalid in itself. This Negro does not divest himself and can never divest himself of his natural right; he carries it everywhere with him, and he can demand everywhere that he be allowed to enjoy it. It is therefore, patent inhumanity on the part of judges in free countries where he is transported, not to emancipate him immediately by declaring him free, since he is their fellow man, having a soul like them.Denis Diderot, The Encyclopedia, ed. and trans. by Stephen Gendzier (New York: Harper Torchbooks, 1967), p. 230.

In commenting on this passage, David Brion Davis noted that both Wallace and de Jaucourt were "repelled by the idea that local civil law could establish a condition which infringed upon basic human rights. If there were no supreme and eternal law which applied equally to all men, then any kind of banditry might be cloaked with legal forms." According to them, "a slave was not really a slave but a man grievously wronged. His right to escape was as certain as that of a man cornered by highwaymen. Any court refusing to grant a slave his immediate liberty was flouting eternal justice and was, by implication, no longer a valid court."Davis, The Problem of Slavery, pp. 416–417. These ideas, as shall be seen, were taken up by the American abolitionists of the 19th century.

Anthony Benezet, a Philadelphia Quaker, popularized Wallace's ideas in pre-revolutionary America. In 1762, in Philadelphia, Benezet published A Short Account of that Part of Africa, Inhabited by the Negroes … and the Manner by Which the Slave Trade ls Carried On. Benezet identified Wallace as "the author of the doctrine that 'every one of those unfortunate men, who are pretended to be slaves, has a right to be declared to be free, for he never lost his liberty.'"Davis, "New Sidelights," pp. 590–591. According to Davis, Benezet further disseminated Wallace's words in 1766 in his own A Caution lo Great Britain and her Colonies, in a Short Representation of the Calamitous Stale of the Enslaved Negroes in the British Dominions. Benezet was "a kind of middleman of ideas who was led by antislavery zeal to collect and disseminate a radical, secular philosophy."Ibid., p. 592. Benezet also quoted selectively from a pamphlet by J. Philmore published in London in 1760, entitled Two Dialogues on the Man-Trade.

Although Benezet was not willing to acknowledge it in his extract of this pamphlet which appeared in his 1762 edition of A Short Account … Philmore's Two Dialogues on the Man-Trade contained "the most radical antislavery doctrine … found in any publication that appeared before the French Revolution."Ibid., pp. 592–591. In the Two Dialogues, the author starts out by asserting that African blacks are men, the same as European whites; and that as men, they are upon a plane of equality in the state of nature. Regardless of circumstances, "unjustly to deprive a man of his property, is theft, or of his life, is murder, whatever colour he is of, and the murder of a man, that has black skin, or black hair, is as great a sin, as that of a man, that has white skin, or white hair."J. Philmore, Two Dialogues on the Man-Trade (London: Printed for J. Waugh, 1760), p. 10. This declaration sets the tone for labelling slavery and the slave trade, the equivalents of man-stealing and kidnapping. "Can any thing be more cruel and barbarous, than to seize upon human creatures, and take them away by force, from their friends and relations, for ever, … and drive them like hogs to market, there to be sold for slaves, for life?"Ibid., pp. 16–17.

All concerned in the slave trade were accomplices in it, and all that encouraged it were accessories to the crime. This included those who purchased slaves, for "the receiver is as bad as the thief."Ibid., p. 20. "For those purchasers then to deprive them of their liberty, and by force keep them in their possession, in whom they have no right (supposing one man could be the property of another) and who never injured them in the least, nor forfeited their liberty, to keep them in bonds, and carry them away captives, is properly speaking man-stealing."Ibid., p. 21. Those merchants who contrived to have the slave traders do the stealing from Africa were as guilty of injustice as those who actually committed the crimes. The often terrible, inhumane treatment which the slaves received in transit on sea also reflected back on their abductors: "Whosoever does, by unjust force and violence, deprive another of his liberty, and, while he has him in his power, reduces him to such a condition, and gives him such treatment, as evidently endangers his life, and in the event do actually deprive him of his life, is guilty of murder."Ibid., p. 37.

The truly radical statements in the Two Dialogues were yet to come. No matter that civil governments sanctioned slavery and the slave trade; Philmore pointed out that natural law is unalterable:

No legislature on earth, which is the supreme power in every civil society, can alter the nature of things, or make that to be lawful, which is contrary to the law of God, the supreme legislator and governor of the world. Mischief may be framed and established by a law, but if it be, it is mischief still, as much so, as it was before it was established, though it's being so may make men insensible of their guilt, or bold and fearless in the perpetration of it.Ibid., p. 45.

The law of nature also justified the use of force by the slaves:

[B]lack men … who are by unjust force deprived of their liberty, and held in slavery, as they have none upon earth to appeal to, may lawfully repel that force with force, and to recover their liberty, destroy their oppressors: and not only so, but it is the duty of others, white as well as black, to assist those miserable creatures, if they can, in their attempts to deliver themselves out of slavery, and to rescue them out of the hands of cruel tyrants.Ibid., p. 54.

Civil laws which defined slaves as property and which therefore categorized the rescue of slaves as theft or robbery were

unrighteous laws, as they are made not in defense of innocence, but in defense, and for the encouragement of injustice, oppression, and cruelty, and are contrary to the law of nature, the law of him, before whose tribunal the governors of this world, as well as the governed must appear, in the great day of account: for by this law we are obliged to relieve the distressed, and to defend or rescue the injured and oppressed, when and so far as it lies in our power.Ibid., pp. 54–55.

Whereas Wallace "had exhorted judges to free Negroes illegally and unjustly held down by force," the author of Two Dialogues "said that slaves could rightfully free themselves." "To justify this uncompromising approval of slave violence" the author appealed "to the 'higher law' doctrine of Cicero."Davis, "New Sidelights," pp. 593–594. The argument, however, did not end with the call for rebellion by the slaves. Any nation would be justified in demanding that England free all the slaves in her colonies. If England refused to liberate them, England would become an aggressor nation. New ground was broken "by condemning England and other slave-trading countries as aggressor nations that had long been 'at war and enmity with mankind in general."'Ibid., p. 594. Whoever Philmore might have been, slavery, for him, was simply an issue of justice and morality. "The inconveniences or worldly disadvantages arising from adhering to our duty, and acting according to the moral obligations we are under, let them ever be so great, are of no consideration at all in the eye of reason, nor can they have any weight with, or influence upon an honest virtuous mind, when set against these obligations [of justice]."Philmore, Two Dialogues, pp. 60–61.

The ideas disseminated by Wallace and Benezet, and especially those of Philmore, illustrate the revolutionary possibilities of early antislavery thought in English and American circles. These arguments struck out in two directions. First, if government were allowed to justify slavery and the slave trade, then it could justify any form of crime or criminality at all. It was important to radical libertarians, then as now, to be able to identify just and unjust property titles without relying on government law. Secondly, if these early antislavery radicals were successful and could nullify governmental justifications for slavery, then they could apply the same line of natural-law reasoning to other forms of governmentally sanctioned injustices, such as taxation and conscription. No government that upheld such injustices could have any legitimacy in their eyes.Davis, The Problem of Slavery in the Age of Revolution, 1770–1823 (Ithaca: Cornell University Press, 1975), p. 271.

Of all the early English radicals, Granville Sharp (1735–1813) adopted this line of reasoning most consistently, as his life would illustrate. From 1765 until his death, Sharp was inextricably bound up with the English abolitionist movement. In that year, Sharp encountered a young Negro, whose master from Barbados had abandoned him in London. In the first of many similar episodes, the Negro was subsequently captured by agents of the master and held pending his return to the West Indies, where he would be resold as a slave. Sharp's lawyer friends told him that English courts enforced the colonial laws of slavery and that it was foolish to try to prevent the Negro from being returned to the West Indies against his will. Sharp noted that "he could not believe that the Laws of England were really so injurious to natural Rights, as so many great lawyers, for political reasons had been pleased to assert."F. O. Shyllon, Black Slaves in Britain (London: Oxford University Press, 1974), pp. 22–23. Sharp then devoted several years to the study of English law that he might better advocate the cause of the Negro on English soil. The result of his studies was the publication of a book in 1769, A Representation of the Injustice and Dangerous Tendency of Tolerating Slavery in England.

In his first antislavery tract he refuted the opinion of two Crown counselors, who 40 years earlier had justified the upholding of colonial slave laws in England. Sharp produced the opinion of Lord Chief Justice Holt, who many years earlier, had determined that every slave coming into England thereby became free. "He vigorously rejected the plea of private property in a black as if in a horse or dog. This he regarded as a preposterous, 'very insufficient and defective' claim, because the comparing of a man to a beast 'is unnatural and unjust'. The claim of private property was maintainable only if 'the pretended proprietors' could prove that a slave 'is neither man, woman nor child: and if they are not able to do this, how can they presume to consider such a person as property or a thing to be demanded in action?"' Sharp contended "that men are rendered obnoxious to the law by their offenses and not by their particular denomination, rank, parentage, color or country … True justice makes no respect of persons, and can never deny to any one that blessing to which all mankind have an undoubted right, their natural liberty."Ibid., pp. 31–33.

Sharp's greatest triumph occurred in the case of Somerset v. Stewart. Chief Justice Mansfield of the King's Bench had to decide whether Stewart had the right, which he claimed as the master of Somerset, to remove him by force and against his will out of England and to consign him to slavery in the West Indies. The case was decided in favor of Somerset, but it only settled two narrow points of English law. A master could not seize his slave and remove him from England against the slave's will. A slave could secure a writ of habeas corpus to prevent that removal.William M. Wiecek, "Somerset: Lord Mansfield and the Legitimacy of Slavery in the Anglo-American World," 42 University of Chicago Law Review (Fall 1974), pp. 86–46. The decision did not legally declare slaves free the moment they landed in England, nor did it abolish slavery there. Mansfield only declared that there was no positive Jaw enforcing slavery in England and that when the actions of the slave masters were contrary to the Habeas Corpus Act, the slaves might rely on the Act itself for legal relief.

In 1783, Sharp became involved in another court case which.concerned the death of 132 slaves aboard the slave ship Zong. The slaves were thrown overboard by the crew members of the Zong and the ship owners commenced an action against their underwriters for the value of the lost slave property. Eventually the insurers were bound to pay for the loss, since in the eyes of the court, the slaves were still property.

Sharp was instrumental in publicizing the case and he prepared his own manuscript, "An Account of the Murder of One Hundred and Thirty-Two Slaves on Board the Ship Zong". Invoking both natural and divine Jaw, Sharp attacked on two fronts. First he disputed that there was any case for pleading "necessity" in the death of the slaves. (A shortage of water allegedly· necessitated throwing the slaves overboard.) Even if there were grounds for such a plea (which the Court evidence did not develop) Sharp thought that the plea of "necessity" was never a sufficient excuse for the murder of innocent people. Secondly, he disputed that the slaves lost their claim to humanity just because they were slaves. Sharp pointed out that the supposed property in the persons of the slaves was a very limited kind of property, limited by the inevitable consideration of their human nature. Consequently, the property of the injured Africans in their own lives, despite their status as slaves, was infinitely superior to any claim of the slave dealers. The indispensable point under consideration was that the act of jettison was "the case of throwing over living men: and that, notwithstanding they are, in one sense, unhappily considered as goods or chattels (to the eternal disgrace of this nation!), yet they are still men; that their existence in human nature, and their natural rights as men, nay as brethren, still remains!"Shyllon, Black Slaves, p. 196. Sharp's commentary on the inexcusable plea of necessity probably remains unique in the history of English law:

Thus one hundred and thirty-two innocent human persons were willfully put to a violent death, not on account of any mutiny or insurrection, nor even through fear of any such, … but merely on a pretended plea of necessity through want of water. … So that, even if the plea of necessity for the willful murder of the innocent persons was at all admissible (which it can never be) in a case of want or scarcity, yet no such necessity existed in the present case; because it is proved, even by their own evidence, that the stock of water was sufficient to have held out till the time that an ample supply was actually received.—But there can never be a necessity for the willful murder of an innocent man, notwithstanding the high authority of those learned and dignified persons who seem to have conceived a contrary idea, because willful murder is one of the worst evils that happen among men; so that the plea of necessity to destroy a few men in order to save many, is not only the adoption of a declared damnable doctrine ("Let us do evil that good may come!"), which is extreme wickedness, but is also extreme ignorance; for it is obvious that death of many by misfortune, which is properly in the hand of Divine Providence, is not near so great an evil as the murder of a few, of even of one innocent man—the former being the loss of only temporal lives, but the latter endangers the eternal souls, not only of the miserable aggressors themselves, but the souls of all their indiscriminate abettors and favourers. God's vengeance is so clearly denounced against willful murder, that it is certainly a malum in se of the most flagrant and odious nature, such as cannot, without extreme ignorance of the English common law, be admitted as a legal justification. ... And therefore, whenever a man willfully takes the life of an innocent man on pretense of necessity to save his own, in any case where se-defendendo will not hold (which requires proof of an actual attack by the deceased, who therefore is not an innocent man), … such a man, I say, is guilty of a felonious homicide. ...Ibid., pp. 194–197.

Sharp had a many-faceted personality and he managed, for the most part, to integrate his radical libertarian attitude into his other activities. He was one of the founders, in 1787, of the English Committee to Abolish the Slave Trade. He favored the American cause during the Revolutionary War and went so far as to resign his post in the Munitions Department because of his American advocacy. He wrote in favor of The People's Natural Right to a Share in the Legislature; Against Attempts to Tax America and to Make Laws for her Against her Consent (1774). Sharp opposed standing armies and wrote a series of tracts on "Free Militias". He wrote against the prevailing practice of dueling in his Remarks on the Opinions of Some of the Most Celebrated Writers on Common Law, Respecting the Distinction Between Manslaughter and Murder (1773). In 1778, he published An Address to the People of England; Being the Protest of a Private Person Against Every Suspension of Law that Is Liable to Injure or Endanger Personal Security.

Part of this Address was directed against the practice of impressing seamen into the Royal Navy. Sharp also outlined his views on justice, government, and national emergencies. No government could ever be justified in suspending the law even in times of national emergency. "There never can be any necessity for injustice," wrote Sharp. "No necessity, therefore, whatever, can justify the adoption of an unrighteous or unjust measure, by any legislature upon earth. … "Granville Sharp, An Address to the People of England: Being the Protest of a Private Person Against Every Suspension of Law That is Liable to Injure or Endanger Personal Security (London, 1778), p. 46. (Copy obtained from Duke University Library). In his attack on impressment, Sharp nearly equated it with slavery. He described the practice of pressing seamen "as a warrant to take a man by force, to drag him away, like a thief, to a floating prison; … that by imprisonment and duress he may be compelled to enter into an involuntary servitude."Sharp, Address, p. 57. Those who resisted the press officers, Sharp maintained, were acting legally, in defense of their own freedom and against unjust violence. And such resistors were "not deemed guilty of murder even if they kill the assailants, provided the killing be inevitable in their defense; and that they cannot otherwise maintain their rights. —Nay men are not only justified in defending themselves with force and arms but may also legally defend and rescue any other persons whatever that is attacked or oppressed by unlawful violence."Ibid., p. 71. This was Philmore's reasoning applied to sailors. Although Sharp never drew the conclusion, in logic how did the situation of a pressed seamen differ from that of a Negro slave?

Sharp represents a strong link in the historical chain of English liberty. He actively cooperated with English and American Quaker abolitionists and he advocated the cause of the American colonists. Although Sharp did not point it out, there was a great inconsistency in the American colonists waging a war for their own freedoms, while at the same time many of them held slaves in bondage. One contemporary American pointed out this contradiction:

The Africans, and the blacks in servitude among us, were really as much included in these assertions [of the Declaration of Independence, etc.] as ourselves, and their right, unalienable right to liberty, and to procure and possess property, is as much asserted as ours, if they be men; and if we have not allowed them to enjoy these unalienable rights, but violently deprived them of liberty and property, and still taking as far as in our power all liberty and property from the nations in Africa, we are guilty of a ridiculous, wicked contradiction and inconsistence, and practically authorize any nation or people, who have power to do it, to make us their slaves. The whole of our war with Britain was a contest for liberty, by which we, when brought to the severest test, practically adhered to the above assertions, so far as they concerned ourselves at least; and we declared in words and actions that we chose rather to die than to be slaves, or have our liberty and property taken from us. We viewed the British in an odious and contemptible light, purely because they were attempting to deprive us by violence in some measure of those unalienable rights; but if at the same time, or since, we have taken or withheld these same rights from the Africans or any of our fellow-men, we have justified the inhabitants of Britain in all they have done against us. … Samuel Hopkins, Timely Articles on Slavery (Miami, Fla.: Mnemosyne Pub., 1969), p. 617.

In late 1774, shortly after his arrival in America, Tom Paine penned an anonymous criticism of "African Slavery in America". Paine equated slavery with man-stealing and kidnapping and demonstrated that the buying and selling of slaves was not an "ordinary" commercial transaction. '"The equation of slaves with stolen property" had radical implications.Davis, Problem of Slavery in Age of Revolution, p. 269. Paine wrote:

Such men [the purchasers of slaves] may as well join with a known band of robbers, buy their ill-got goods, and help on the trade; ignorance is no more pleadable in one case than in the other; the sellers plainly own how they obtain them [the slaves]. But none can lawfully buy without evidence that they are not concurring with men-stealers; and as the true owner has a right to reclaim his goods that were stolen, and sold; so the slave, who is proper owner of his [own] freedom, has a right to reclaim it, however often sold.Thomas Paine, Works of Thomas Paine (ed. W. Vander Weyde, Ne.:  Rochelle, N.Y.: Thomas Paine Historical Assn., 1925), II, 5.

By comparing slave traders to bands of pirates and robbers, the early radicals made a telling case for justice in property titles. If an owner could recover his stolen property, regardless of how many times over it had been sold—even if those purchasing it were innocent of any knowledge that it was stolen property—then how much more rightful was the claim of any slave? Every purchaser was placed on notice that he was dealing in men, and according to the revolutionary ideals, all men had a right to their liberty. This was pointed out as early as 1776:

If your neighbor buys a horse … of any thief who stole it from you, while he had no thought it was stolen, would you not think you had a right to demand your horse of your neighbor, and pronounce him very unjust if he should refuse to deliver him to you … ? And have not your [African] servants as great a right to themselves, to their liberty, as you have to your stolen horse? They have been stolen and sold, and you have bought them, in your own wrong, when you had much more reason to think they were stolen than he who bought your horse. … Hopkins, Timely Articles, p. 575.

This same author, Samuel Hopkins, compared slave traders to pirates, much to their discomfort:

It is granted by all, that common pirates may be punished by the laws of any state, when apprehended, wherever or in whatever part of the world their crimes were committed. … [T)he slave trader who buys and sells his fellow-men, by which traffic he is the means of death of many, and of reducing others to the most miserable bondage during life, is as really an enemy to mankind as the pirate, and violates common law, which is, or ought to be, the law of all nations, and is guilty of crimes of greater magnitude, exercises more inhumanity and cruelty, sheds more blood, and plunders more, and commits greater outrages against his fellow-men than most of those who are called pirates. In short, if any men deserve the name of pirates, these [slave traders] ought to be considered in the first and highest class of them.Ibid., p. 622.

Hopkins decried slavery and advocated that upon its abolition, the slave owners should compensate their freed slaves. He believed that slave holders should repair the injuries done to their slaves, so far as it was in their power.Ibid., p. 561. Another American who closely followed Hopkins' reasoning was David Rice, who published Slavery Inconsistent with Justice and Good Policy in 1793. Rice wrote that the owners of slaves "are the licenced robbers, and not the just proprietors, of what they claim. Freeing them [the slaves] is not depriving [their owners] of property, but restoring it to the right owner; it is suffering the unlawful captive to escape. It is not wronging the master, but doing justice to the slave, restoring him to himself. The master, it is true, is wronged; … but this is his own fault, … and not [the fault] of the law that does justice to the oppressed."David Rice, Slavery Inconsistent with Justice and Good Policy (New York: Arno Press, 1969), p. 13.

Although Rice and Hopkins and Thomas Paine serve as examples of early American opponents of slavery, the only really significant movement against slavery in colonial America took place among the Quakers. The Quakers did what no other opponents of slavery were willing to do. They eventually determined to (and in fact did) voluntarily abolish slavery and slaveholding among the members of their religion. Those who refused were disowned from the Society. The Quakers asserted that slaves were "prize" goods, that is, captives of war, violence, cruelty, and oppression, of theft and robbery of the highest nature. The use of prize goods or any goods obtained through illegitimate means was inconsistent with their testimony towards peace and nonviolence. Therefore it was only consistent that they forego the purchase and services of human beings who had been bodily captured and enslaved, even though they themselves had not been involved in the original violence.Thomas R. Drake, Quakers and Slavery in America (New Haven: Yale University Press, 1950), pp. 4, 76, and 14–15.

Not only did the Quakers believe in and practice abolition, but they actually paid over reparations to their former slaves, as compensation for their past unpaid services. In this sense, they may have been the only "ruling class" ever to voluntarily relinquish their power over others. This in itself (their willingness to pay compensation and voluntarily manumit their slaves) distinguished them from all other abolitionists and libertarians.Ibid., pp. 76–77. The Yearly Meetings in Philadelphia and London were at first slow to make disownment the penalty for participating in the slave trade and for owning slaves. Probably the first Quaker protest against slavery was directed to the Philadelphia Meeting in 1688. The signers denounced slavery in clear, unequivocal terms:

Now tho' they are black, we cannot conceive there is more liberty to have them slaves, as it is to have other white ones. There is a saying, that we shall do to all men, like as we will be done ourselves: making no difference of what generation, descent, or Color they are. And those who steal or rob men, and those who buy or purchase them, are they not all alike? Here is liberty of Conscience, which is right and reasonable, here ought to be likewise liberty of the body, except of evildoers, which is another case. But to bring men hither, or to rob and sell them against their will, we stand against. … What thing in the world can be done worse towards us then if men should rob or steal us away and sell us for slaves. … Being now this is not done at that manner we will be done at, therefore we contradict and are against this traffic of men body. And we who profess that it is not lawful to steal, must likewise avoid to purchase such things as are stolen, but rather help to stop this robbing and stealing if possible and such men ought to be delivered out of the hands of the Robbers and set free as well as in Europe. Then is Pennsylvania to have a good report. …

If once these slaves (which they say are so wicked and stubborn men) should join themselves, fight for their freedom and handle their masters and mistresses, as they did handle them before; will these masters and mistresses take the sword at hand and war against these poor slaves, like we are able to believe, some will not refuse to do? Or have these Negroes not as much right to fight for their freedom, as you have to keep them slaves?Samuel Pennypacker, "The Settlement of Germantown and the Causes which Led to It", 4 Pennsylvania Magazine of History and Biography (1860), pp. 29–30.

Ralph Sandiford (1693–1733), an English Quaker who settled in Philadelphia, did much to agitate the question of slavery among the Quakers. While some Meetings had called for a stop to the importation of new slaves, Sandiford called for a prohibition on the purchase of all previously imported slaves. Sandiford, and other Quakers, attacked the slave trade since it was based on plunder and war in Africa. Furthermore, they condemned Quaker participation in the slave trade, since any profits it yielded to the merchants were ultimately grounded in violence. As the Quaker protest of 1688 pointed out, there was an inherent contradiction in Quakers owning slaves. Not only did domestic slavery rest on war and violence in Africa, but it meant the forcible and aggressive subjugation of men, women, and children at one's own doorstep, if one were a slaveholder. Although Quakers were traditionally merciful slave masters, how could they (or their overseers) use violence against a slave who disobeyed or simply claimed his or her own rightful freedom?See Murray N. Rothbard, Conceived in Liberty (New Rochelle, N.Y.: Arlington House, 1975), II, Chap. 31, "The Quakers and the Abolition of Slavery." An historical novel, treating in part the problems of Quaker violence in dealing with their slaves, is Jan de Hartog, The Peaceable Kingdom (Greenwich, Conn.: Fawcett Pub., 1971).

Although Sandiford was unsuccessful in his attempt to persuade the Yearly Meetings in Philadelphia, his cause was taken up by another English Quaker, who had migrated to Barbados, and thence to Philadelphia in 1731. Benjamin Lay is remembered in legends of spectacular nonconformity, and his protests against slavery were much in the style of a "Cynic philosopher or radical perfectionist".Davis, Problem of Slavery in Western Culture, p. 323.

He went to a Quaker meeting clothed in sackcloth, and denounced the wealthy slave masters. In winter he sat outside a meetinghouse, one leg and foot bare in the snow; and when people expressed concern for his health, he asked them why they were blind to the sufferings of their scantily clad Negroes. When ejected from a meetinghouse, he lay in front of the door in the rain, and made the congregation step over his body. He supposedly kidnapped the child of a slaveowner, in order to show the father, if only for a few hours, how it felt to have a child taken away. His most famous exploit occurred at the Quaker meeting in Burlington. To dramatize the coercive basis of slavery, Lay put on a military uniform, complete with sword, which he disguised under the conventional Quaker cloak. Then he endorsed a bladder filled with pokeberry juice within the empty covers of a folio volume, which presumably represented the Bible. After rising in meeting to castigate the slave owners, he finally told his enemies that they might as well throw off the plain coat of Quakerism, as he himself now did, standing forth in the dress of war. Men who forcibly held their brothers in bondage, he cried, would be no less justified in the eyes of God if they plunged a sword into the hearts of their slaves. At this point Lay thrust his sword into his "Bible," and the red juice gushed out, spattering the horrified Friends who sat nearby.Ibid., pp. 323–324. Davis cites Roberts Vaux, Memoirs of the Lives of Benjamin Lay and Ralph Sandiford (Philadelphia, 1815), pp. 25–27.

"Lay denounced Quaker slaveholders as 'a parcel of hypocrites and deceivers'. The Quaker ministers who held slaves especially raised his ire, for their hypocrisy set an example for all Quakers. Lay pointed out that slavery, just as in the case of murder, was a criminal assault on Christ's gospel of love. Lay not only went unheeded but was forcibly ejected from Quaker meetings."Rothbard, Conceived in Liberty, p. 176.

Although Sandiford and Lay met with little success, their message was broadcast by John Woolman, a New Jersey Quaker born in 1720. Woolman's work as a scribe brought slavery vividly to his attention. One day in 1742, his employer decided to sell his Negro and ordered Woolman to prepare the bill of sale. "The thoughts of writing an instrument of slavery for one of my fellow creatures gave me trouble and I was distressed in my mind about it."Quoted in Drake, Quakers and Slavery, p. 52. Suddenly Woolman realized the truly pervasive nature of the slave system and eventually decided to devote the rest of his life to crusading for the abolition of slavery.Rothbard, Conceived in Liberty, p. 176. Woolman went up and down the colonies, exhorting Quakers to take a principled stand against slavery. In his Journal he wrote of the slaves: "These are a people by whose labor the other inhabitants are in a great measure supported. … These are a people who have made no agreement to serve us, and who have not forfeited their liberty."Quoted in ibid., p. 176. "The great impact of John Woolman is eternal testimony to the effect that ideas and moral conscience can have upon the actions of men. For while many Quakers had a vested economic interest in slaves, this interest and its ally, natural inertia, could not prevail against the spiritual moral principles proclaimed by the lone Quaker."Ibid., p. 177. More and more Quakers took up the cause of abolition, until finally the Philadelphia Yearly Meeting in 1758 called upon all Quakers to free their slaves and to grant them a terminal allowance, which was a means of compensating them to some extent for their prior servitude.

The action of the influential Philadelphia Meeting in 1758, helped convince Quakers in other colonies that they, too, should cease their involvement with slavery and the slave trade. The Quakers were undoubtedly influenced by the secular ideas of natural rights which were increasingly receiving attention resulting from the political conflicts with England. The Quakers realized that "not only benevolent Christian morality but also basic justice required freedom for every man. Justice and the very nature of man required freedom for all. Woolman had already proclaimed that 'liberty was a natural right of all men equally"; and now the Philadelphia Meeting of 1765, reaffirming its decree of seven years before, reasoned the necessity of abolition so that all Quakers might 'acquit themselves with justice, and equity toward a people, who by an unwarrantable custom' had been 'unjustly deprived of the common privileges of mankind."'Ibid., p. 178. The Quaker policy towards the Indians also evinced their general concern about injustice and valid land titles.Davis, Problem of Slavery in Western Culture, pp. 330–332.

The appeal to justice also brought Quaker attention to bear on the main problem of domestic slavery: namely, the continuing aggression required to keep a slave in bondage at the home or plantation. "Now the Quakers saw fully that aggression against the natural liberty of Negroes occurred not only at the time of their initial enslavement or importation, but all the time that they were kept in bondage. Gradualist arguments about 'preparing' the Negroes for freedom had now also to be swept aside."Rothbard, Conceived in Liberty, pp. 178–179. One Quaker historian explained:

If Negroes had been deprived of natural liberty, not only when they had been forcibly transported from Africa, but every minute they were held in bondage under whatever pretext, justice required that the God-given freedom be "restored". In this light a master conferred no boon when he liberated a slave; he gave belatedly what he had hitherto "withheld" and simply ceased to "detain" a person who was, and always had been, free. This idea soon pervaded official Quaker language and provided Friends with an unfailing encouragement to fight slaveholding in the "world" at large. Ending a wicked usurpation of control over a man's life was as clearly a public duty as saving him from drowning, an obligation so positive as to relegate the spiritual or economic preparation of the slave for freedom to a position where it could not rightly control the decision to manumit or not.Sydney V. James, A People Among Peoples: Quaker Benevolence in 18th Century America (Cambridge: Harvard University Press, 1963), p. 223. See also Rothbard, Conceived in Liberty, p. 179.

The Friends' concept of natural liberty thus led them to take actions to remove human interference with the divinely decreed freedom of every slave. Adopting the ideas of the rationalist Enlightenment and the natural-rights theorists, they came to believe that individual freedom was a good in itself and a necessary condition for leading a virtuous life.Rothbard, Conceived in Liberty. p. 179. Where a Quaker had been invading that freedom, that Quaker could himself act to remove that invasion. Where the Quaker had tampered with a slave's freedom, the Quaker had the power to undo the damage. "[C]onvinced natural rights existed apart from the will of the civil community, or even in the face of contrary laws, the Quaker reformers … could use a right to liberty as a grounds for defying a legal protection of slavery."James, A People Among Peoples, pp. 224–225.

The Friends finally conceived of their obligation as more than simply not owning slaves or not partaking in the slave trade. Disassociating from slavery was not enough to save their own souls; they also had to repair the injustices they had perpetrated. The Quakers in general held the conviction that colonial America owed a great deal to the labor of the Negro people and that while whites enjoyed the benefits, they should be prepared to repay them for it.Ibid., p. 231. Friends put their Negroes on a free labor basis retroactively, compensating their ex-slaves for their past labor and deducting the costs of their past upkeep. Quaker meetings took Negro outsiders under their care, not so much to protect the reputation of the Truth, as to do justice and Jet members assist each other in virtue and benevolence.Ibid., p. 232. Liberating slaves often meant an end to high social rank and plantation life for well-to-do Friends. Many in Maryland and North Carolina left their farm lands for the cities or resettled new lands in the West. Some undoubtedly turned their land over to those who had formerly been forced to work it.Ibid., p. 233. See also the story in Hartog, The Peaceable Kingdom.

The typical Quaker attitude was expressed many times over and is illustrated in the following example taken from a report of the monthly meeting of New Garden, Pennsylvania in November 1778:

Agreeably to our appointment, we have several times met and considered the case committed to us, respecting the uneasiness mentioned by T.W., concerning the negro formerly possessed by his father [W.W.], and having carefully inquired into the circumstances, do find that W.W., about 16 years ago, set free from a state of slavery the said negro named Caesar, on condition that he would behave himself justly and honestly, and also that he would lay up, or deposit in his, or some other safe hand, the sum of three pounds yearly, that in case he should be sick or lame, he might not be chargeable to his said master's estate. ln consequence of the said condition the said Caesar had laid up forty-two pounds, which appears to us to be his just property, and all the heirs of W.W. [now being deceased) who are arrived at full age, (except one, who resides in Virginia) cheerfully agree to let him have it. But as the said Caesar informs us that he has no present use or necessity for the said money, he agreed to have it deposited in the hands of J.P., and proposed to advise with him, when any occasion occurred for applying it; with which we are well satisfied.

It also further appears that said Caesar served his master in the capacity of a slave, something more than ten years after he was twenty-one years of age; and upon careful inquiry, we find that he was tenderly used during said time, and nursed in the small pox, which he had very heavily, and it was long before he recovered; so that we have reason to believe it took at least one year to defray the expense thereof. These things, the said Caesar fully acknowledges; and further informs that his master allowed him sundry privileges during said term, whereby he made for himself at least five pounds a year, besides being well clothed and accommodated.

After considering all the circumstances of his case, we are unanimously of the mind, that the further sum of five pounds a year for the nine years he was in useful health, ought to be allowed him out of the said estate [of W.W.], which the heirs now present and of age, also agree to; and it is agreed with the said Caesar's consent, to be deposited with the other sum.

And as the instrument of writing by which the said W.W. declared the said Caesar free, is conditional, and we apprehend not sufficient to secure his freedom, the heirs aforesaid have executed a manumission suited to the occasion.A Brief Statement of the Rise and Progress of the Testimony of the Religious Society of Friends, Against Slavery and the Slave Trade (Philadelphia: Joseph and William Kite, by the direction of the Yearly Meeting of the Society of Friends, 1843), pp. 35–36. (Copy from Haverford College Library.)

The minutes of other meetings exhibit the same care in seeing that justice was done. In 1785, the Burlington Quarterly Meeting informs us "that two Friends having each set a slave at liberty, expressed a desire to make a proper allowance for the time they were continued in their service, after they came of age; after divers times deliberating thereon, Friends to whose care such cases had been referred, advised that the sums should be ascertained by indifferent persons; and one of the negroes being deceased, the sum adjudged due in that case, should be divided and paid to the next of kin, as in cases of intestates' estates; which advice the Friends have readily accepted, and have taken measures to carry into effect."Ibid., p. 40.

One of the best-known and most moving histories of Quaker manumission and compensation involves Warner Mifflin and his family, long standing Quakers from Virginia and Delaware. Warner Mifflin was born in 1745 on the eastern shore of Virginia, where Quakers were few and slaveholders plentiful. When he was 14 years of age, an encounter with one of his father's Negroes converted him to antislavery principles:

Being in the field with my father's slaves, a young man among them questioned me whether I thought it could be right that they should be toiling in order to raise me, and that I might be sent to school, and by and by their children must do so for mine. Some little irritation at first took place in my feelings, but his reasonings so impressed me as never to be erased from my mind. Before I arrived at the age of manhood, I determined never to be a slave-holder.Mary S. Locke, Antislavery in America from the Introduction of African Slaves to the Prohibition of the Slave Trade, 1619–1808 (Boston: Ginn & Co., 1901), pp. 37–38. See also "Warner Mifflin," Appleton's Cyclopedia of American Biography (New York, 1888), IV, 319.

His resolution never to own a slave was for a time overcome by the pressures of circumstance and marriage. Nevertheless he did overcome the temptation for wealth and position based on slavery. Finally in 1774 and 1775, Warner Mifflin manumitted all of his slaves, and his father soon followed suit.

On the day fixed for the manumission of his slaves, Warner Mifflin called them into his room, one after another. He informed them of his intention to give them freedom and this conversation was recorded as having passed between Mifflin and one of his slaves:

Well, my friend James, how old art thou? "I am twenty-nine and a half years, master," Thou should'st have been free, as thy white brethren are, at twenty-one. Religion and humanity enjoin me this day to give thee thy liberty; and justice requires me to pay thee for eight years and a half service at the rate of ninety-one pounds, twelve shillings, and sixpence, owing to thee; but thou art young and healthy; thou had'st better work for thy living; my intention is to give thee a bond for it, bearing interest at seven and a half per cent. Thou hast no master now but God and the laws.Ibid., p. 319.

Highly typical of Mifflin's story is the following extract from one of the deeds of manumission which he executed in 1775:

I, Warner Mifflin, of Kent County on Delaware, Merchant, fully persuaded in my Conscience that it is a Sin of a deep dye to make Slaves of my fellow Creatures, or to Continue them in Slavery, and believing it to be impossible to Obtain that Peace my Soul Desires while my Hands are found full of injustice, as by unjustly detaining in Bondage, those that have as just and Equitable Right to their Freedom and Liberty of their persons as myself— Therefore for remedying the same I do hereby declare all the Negroes I have hereafter particularly Named, Absolutely Free, them and their Posterity forever, from me, my Heirs, Executors, Adrns., and every of them. To witt [here Mifflin gives the names and ages of the slaves being manumitted] ...

    [The Deed of Manumission concludes by Mifflin stating that it is his] intention to clear them from Slavery, to me, my Heirs, or Assigns forever,—believing Freedom to be their Natural and just right. Hilda Justice, Life and Ancestry of Warner Mifflin, Friend, Philanthropist, Patriot (Phila.: Ferris and Leach, 1905), pp. 112–115.

In another deed of manumission, written in the same year, Mifflin's father wrote, that

being convinced of the Iniquity and Injustice of retaining my fellow Creatures in Bondage (it being contrary to the standing and perpetual Command injoined by our blessed Lord to his followers, to do unto others as we would they should do by us) and also further believing that after such Manifestation and Conviction made known, the continuing in Violation thereof will incur his displeasure, and debar me from the Enjoyment of the Peace promised to his faithful Followers, and therefore believing it to by my Indispensable Duty, in Obedience to his Requiring and Command, as aforesaid, to grant to them their natural, just, and inherent right and Privilege, the Liberty of their Persons (which they are entitled to by Nature) under the Consideration and Conviction aforesaid, I do hereby manumit and set absolutely free from a State of Slavery and unnatural Bondage the following particularly named Negroes. ...Ibid., pp. 117–118.

During the Revolutionary War, Mifflin became very unpopular because of his strict adherence to his peace principles and particularly because of his refusal to use "continental" bills of credit or congressional paper money, on the grounds that they were "engines of war". Warner Mifflin, "Statement Concerning His Refusal to Use and Circulate Continental Currency," 1779. (Copy obtained from Friends Historical Library, Swarthmore College). See also Peter Brock, Pacifism in the United States (Princeton: Princeton University Press, 1968), p. 207. It required no little courage to live out his customs in a community adverse to his beliefs. His absolutist position was reinforced by his vision of the Inner Light, so that he was determined that "if every farthing we possessed was seized for the purpose of supporting war, and I was informed that it should all go, unless I voluntarily give a shilling, I was satisfied I should not so redeem it."Justice, Warner Mifflin, p. 91. See also Isaac Sharpless, A History of Quaker Government in Pennsylvania (Phila.: T. S. Leach, n.d.), p. 258. Warner Mifflin was on almost every committee of the Yearly Meeting and Meeting for Sufferings. He visited both Howe and Washington during the Revolutionary War, at great personal risk to himself. In 1782 he appeared before the Virginia Assembly and in 1783 before the Continental Congress, to plead the case for the abolition of slavery. In 1791, he petitioned Congress on the subject of slavery:

I am ... impelled, by a sense of duty to the Sovereign of the Universe, and the dictates of humanity, to open my mouth for the dumb, in the cause of such as are appointed to destruction. … I think it my duty to tell you plainly, that I believe the blood of the slain, and the oppression exercised in Africa, promoted by Americans, and in this country also, will stick to the skirts of every individual of your body, who exercise the powers of Legislation, and do not exert their talents to clear themselves of this abomination, when they shall be arraigned before the tremendous bar of the judgment-seat of him who will not fail to do right, in rendering unto every man his due. … And here I think I can show, that our nation [by participating in the slave trade] are revolting from the law of God, the law of reason and humanity, and the just principles of government; and with rapid strides [are] establishing tyranny and oppression. …Justice, Warner Mifflin, pp. 190–193.

Mifflin was not concerned only with manumitting his slaves: his strictures on noninvolvement went so far as to include banning the use of products of slave labor. "[B]eing brought into deep feeling for the oppressions of the poor Africans, in the West Indies, I have not been easy with indulging myself in using the produce of their labor, since; lest it should, even in a small degree, contribute towards the continued existence of a trade, which interests the planters in keeping up the numbers of their groaning laborers."Ibid., pp. 91–92. This attitude was fairly typical of many conscientious Quakers and eventually its practice blossomed out into what was known as the Free Produce Movement.

Both Benjamin Lay and John Woolman advocated abstention from the use of slave products. They both refused to use sugar, a staple product of West Indian slavery, and Lay, the eccentric, refused to clothe himself in cotton from the South. The question was one of individual abstinence, as well as a tactic of widespread boycott. Non-Quaker abolitionists were also involved in the movement. Between 1826 and 1856, some twenty-six free-produce societies were formed in the United States. Many prominent abolitionists, such as William Lloyd Garrison, espoused the free-produce cause for a time, hoping that it might become a major factor in the abolition crusade. When that anticipation failed to materialize, the boycott, as an organized protest, was carried on by the Quakers.See Ruth Nuermberger, The Free Produce Movement: A Quaker Protest Against Slavery (Durham, N.C.: Duke University Press, 1942), esp. Ch. 1.

Thomas Branagan was one of the first non-Quakers to denounce the use of slave labor products. His experience as a slave overseer in Antigua influenced his antislavery writings, which were written from Philadelphia between 1801 and 1807. One of his early essays was titled, "Buying Stolen Goods Synonymous with Stealing." In this essay he asks:

[C]an a Christian do a thing that is absolutely wrong, (though it may appear small in the eyes of the world.) and persist in doing that thing, yet maintain his integrity, and remain guiltless? It is impossible. If, therefore, to buy and use the price and produce of human blood (though custom has rendered it fashionable and human laws made it legal) is wrong.…Thomas Branagan, The Guardian Genius of the Federal Union (New York: for the author, 1840), p. 31. Also quoted in Nuermberger, Free Produce, p. 9.

According to Branagan, slavery depended on the consumption of its produce.

Refuse this produce, and slavery must cease. Say not that individual influence is small. Every aggregate must be composed of a collection of individuals. Though individual influence be small, the influence of collected numbers is irresistible.Branagan, Guardian Genius, p. 33.

The free-produce societies, such as the Free Produce Society of Pennsylvania and the American Free Produce Association, never met with much success, although they tried to remedy the inconvenience of not using slave produce by importing foreign goods. The idea would never attract large numbers of people, unless they were first motivated by the requirements of justice. To the Quakers, for example, a question of conscience was involved. The conscientious could go to any ends to remove themselves from the taint of slavery. For others, the justification for boycotting the products of slave labor was less intense. A favorite argument was that no person would knowingly buy a previously stolen horse from a horse thief. Those who refused to join the free-produce movement argued that buying a cotton garment (made from southern cotton) was not akin to buying a stolen horse. The cotton garment was at least one step removed from the theft or slavery. These questioners asked what would happen when the farmer used a stolen horse to plow his crops? Would the purchaser of the farmer's produce be implicated in the prior theft, particularly if he was aware that the horse used to plow the crops had been stolen? Of course, to the Quaker way of thinking one should boycott the farmer if one knew he was using a stolen horse and refused to return it to its rightful owner.Aileen S. Kraditor, Means and Ends in American Abolitionism (New York: Pantheon Books, 1967), p. 218.

William Lloyd Garrison, radical and uncompromising though he was, argued that slave labor products were so inextricably mixed up with commerce and daily life "that, to attempt to seek the subversion of slavery by refusing to use them, or to attach moral guilt to the consumer of them, is, in our opinion, preposterous and unjust. …" Supporters of Garrison's position likened the abstinence of the Quakers to "the bailing out of the ocean with a teaspoon." Garrison thought that if abolitionists must never use products tainted with oppression "we must needs go out of the world to escape contamination," and that the argument proved too much because it would require abstention of commodities produced by the Russian serfs and other oppressed people.Ibid., pp. 219–220.

The most radical faction of the abolition movement, which Garrison led from the late 1830's onward to the Civil War, was marked by its demands for immediate abolition of slavery, nonparticipation in any government that sanctioned slavery, and in the belief that nonviolent protest and nonresistance was the best way to agitate for change. Garrison shared, in large part, the Quaker belief in nonviolence, for he understood that the argument against slavery was part of the much larger question regarding the use of coercion by one man against another. Garrison understood that the slavery of the Negroes was only a particular instance of universal coercion. He put forth the general principle that under no pretext has any man the right to use coercion over his fellows. What distinguished Garrison and the Quakers, however, from other radical natural-law theorists and opponents of slavery, was the fact that they did not allow the use of force in self-defense. They did not believe that good could come from evil means under any circumstances. In their view, force, even if used in self-defense, was an evil means. In 1835, when Garrison was threatened by a Boston mob, he proclaimed his fidelity to the ideal of nonviolence: "I will perish sooner than raise my hand against any man, even in self-defense, and let none of my friends resort to violence for my protection."Fanny Garrison Villard, William Lloyd Garrison On Non-Resistance (New York: Nation Press, 1924), p. xi.

According to the Garrisonian view, it was wrong for men to participate in government, since government rested on coercion. Garrison and his followers were called quasi-anarchists or "no-government" men by their detractors. It was true that the Garrisonian nonresistants did proscribe all office holding or voting. Under their view, a majority should not coerce a minority. Henry Clarke Wright, an abolitionist and associate of Garrison, elaborated:

It is wrong to hold an office in which we must consent to be vested with life-taking or war-making powers or to come under an obligation to use it. ... It is wrong to vote for others to office which it is wrong for us to hold. We must look to the character of the office itself and not to the candidate or measures he proposes, however good these may be. To exercise the franchise even to effect the abolition of slavery would be wrong, would be to vote for murder to prevent theft.Brock, Pacifism, p. 599.

These nonresistants were perplexed by John Brown's raid on Harper's Ferry. On the one hand, they hated the institution of slavery. On the other, they rejected the use of violence in any form to secure any end, however desirable. Regardless of their pacifist stand, many nonresistants sympathized with Brown's efforts. Speaking at a protest meeting on the day of Brown's execution, Garrison said:

I am a non-resistant—a believer in the inviolability of human life under all circumstances; I, therefore, in the name of God disarm John Brown and every slave in the South. But I do not stop there; if I did I should be a monster. I also disarm in the name of God every slaveholder and tyrant in the world. … I am a non-resistant, and I not only desire, but I have labored unremittingly to effect the peaceful abolition of slavery … yet as a peace man—an "ultra" peace man—I am prepared to say: "Success to every slave insurrection in the South, and in every slave country." I do not see how I compromise or stain my peace profession in making that declaration. Whenever there is a contest between the oppressed and the oppressor … God knows that my heart must be with the oppressed and against the oppressor. … I thank God when men who believe in the right and duty of wielding carnal weapons are so far advanced that they will take those weapons out of the scale of despotism, and throw them into the scale of freedom.Ibid., p. 683.

Henry Clarke Wright wrote a pamphlet shortly after John Brown's execution entitled, No Rights, No Duties: Or Slaveholders, as such, Have No Rights, Slaves as such Owe No Duties. An Answer to a Letter from Hon. Henry Wilson, Touching Resistance to Slaveholders Being the Right and Duty of the Slaves, and of the People of the States of the North.Henry Clarke Wright, No Rights, No Duties (Boston: for the author, 1860). (Copy obtained from the Library of Congress).

The thesis he presented was simple. Slaves have no obligations at all to their masters, who good or bad, deserve no more respect of consideration than a gang of pirates or kidnappers. Freedom must be won by the slaves themselves in alliance with their sympathizers among white freemen—by all and every means that the latter would feel justified in using against 'burglars, incendiaries, and highway robbers, who might threaten them. 'It is the duty of the people and States of the North to invade slaveholding States to free the slaves, and annihilate the power that enslaves them.' There are but two sides in the conflict to break up these kidnapping, piratical hordes of the South, called States. … You must fight for liberty or slavery—for the pirates or their victims."Brock, Pacifism, p. 684

Then will be seen "the truth of the motto—no rights, no duties—and that no slaveholder, as such, has any rights, and that no man owes him any duties, except to compel him to cease to steal and enslave men, and to let" the oppressed go free."Wright, No Rights, p. 25.

Wright's effort was directed, not so much at renouncing his firmly held view against the use of violence, as to demonstrate to those who believed in the natural right of self-defense that John Brown's course was perfectly consistent with their professed beliefs. According to Wright, "the slaves of George Washington had as good a right to cut their master's throat as he had to throw his cannon balls and bombshells from Dorchester Heights upon the British in Boston harbor."In Truman Nelson, Documents of Upheaval (New York: Hill and Wang, 1966), p. 230. Another supporter of John Brown was Henry David Thoreau. At the news of John Brown's capture, Thoreau was on fire, arguing with his neighbors, giving speeches, and generally supporting John Brown's course of action. Thoreau approved of the raid at Harper's Ferry and in his "A Plea for Captain John Brown" he remarked,

It was his [Brown's] peculiar doctrine that a man has a perfect right to interfere by force with the slaveholder, in order to rescue the slave. I agree with him. Those who are continually shocked by slavery have some right to be shocked by the violent death of the slaveholder, but no others. Such will be more shocked by his life than his death. I shall not be forward to think him mistaken in his method who quickest succeeds to liberate the slave. I speak for the slave when I say that I prefer the philanthropy of John Brown to that philanthropy which neither shoots nor liberates me. … We preserve the so-called peace of our community by deeds of petty violence everyday. Look at the policeman's billy and handcuffs! Look at the jail! Look at the gallows! … I think I know that the mass of my countrymen think that the only righteous use of Sharp's rifles and revolvers is to fight duels with them when we are insulted by other nations or to hunt Indians or shoot fugitive slaves with them, or the like. I think that for once the Sharp's rifles and revolvers were employed in a righteous cause. The tools were in the hands of one who could use them.Henry David Thoreau, The Writings of Henry David Thoreau (New York: AMS Press, 1968), IV, 433–434. See also Gilman M. Ostrander, "Emerson, Thoreau, and John Brown," 53 Studies in Philology (1956), pp. 723–724.

Of course, Thoreau had always been sympathetic to antislavery views. In his days at Walden in 1846, one of his reasons for refusing to pay the poll tax was that the Massachusetts state government sanctioned slavery and enforced the fugitive slave laws. When Thoreau and John Brown met in the late 1850's, they were immediately on good terms with one another. Several days before his execution, Brown was asked what he had in mind when he made his attack on the Harper's Ferry arsenal. Brown answered: "I knew there were a great many guns there that would be of service to me, and if I could conquer Virginia the balance of the Southern states could nearly conquer themselves, there being such a large number of slaves in them."Jules Abels, Man On Fire: John Brown and the Cause of Liberty (New York: Macmillan, 1971). p. 242. According to the Chatham Constitution of May 1858, Brown intended no offensive warfare against the South, but only to restore the inherent rights of the Negroes there. "Not revolution, but justice, not aggression, but defense."James Redpath, The Public Life of John Brown (Boston: Thayer and Eldridge, 1860), p. 233.

Had Brown and his men been successful, they would have implemented the designs of Lysander Spooner's "Plan for the Abolition of Slavery". This manifesto was printed in the summer of 1858, and included a notice to the "Non-Slaveholders of the South". Brown was familiar with Spooner and the two had met in Boston sometime between May 10 and June 2, 1859. At that time, Brown requested that Spooner cease circulation of his broadside since its further publication might embarrass Brown's future plans. After the failure of the raid at Harper's Ferry, Spooner's "Plan" was published in a New York newspaper and was described as Gerrit Smith's blueprint for Brown's expedition. In a subsequent suit for libel, Smith (using Spooner as his attorney) settled the case out of court. The Spooner manifesto offered a consistent rationale for Brown's attack, but Spooner in latter correspondence made it very clear that Brown knew nothing of it until after it was printed.C. Shively, ed., The Collected Works of Lysander Spooner, Vol. IV, Anti-Slavery Writings (Weston, Mass.: M & S Press, 1971), esp. "Introduction," to "A Plan for the Abolition of Slavery," and "To the Non-Slaveholders of the South", pp. 4–7. The two men arrived at the same conclusions independently, both reasoning from the commonly shared premise that the slave could rightfully resist the oppression of the slaveholder and that by-standers could legitimately go to the assistance of the slaves.

Spooner's reasoning was based on the following four principles:

1. That the slaves have a natural right to their liberty.

2.  That they have a natural right to compensation (so far as the property of the Slaveholders and their abettors can compensate them) for the wrongs they have suffered.

3. That so long as the government under which they live refuse to give them liberty or compensation they have the right to take it by stratagem or force.

4.  That it is the duty of all, who can, to assist them ·in such an enterprise.Spooner, "To the Non-Slaveholders of the South," column I.

Based on these premises, Spooner urged that all political institutions of the slaveholders be spurned and ignored. In their place should be established governments which recognized slaveholding as a crime and which granted to the slaves civil actions for damages for the wrongs already committed against them. The slaves should be recognized as the rightful owners of the plantations they had worked and which would be awarded to them for the damages they had already suffered. The non-slaveholders of the South were also encouraged to form vigilance committees or leagues of freedom, whose duty it should be to see that justice was done to the slaves and that punishment was meted out to the slaveholders.

Realizing that some might object to the distribution of the slaveholders' property to the slaves, Spooner wrote:

Perhaps some may say that this taking of property by the Slaves would be stealing, and should not be encouraged. The answer is that it would not be stealing, it would be simply taking justice into their own hands and redressing their own wrongs. The State of Slavery is a state of war. In this case it is a just war, on the part of the negroes—a war for liberty and a recompense for injuries; and necessity justifies them in carrying it on by the only means their oppressors have left to them. In war, the plunder of enemies is as legitimate as the killing of them; and stratagem is as legitimate as open force. The right of the Slaves, therefore, in this war, to take property, is as clear as their right to take life; and their right to do it secretly is as clear as their right to do it openly. And as this will probably be the most effective mode of operation for the present, they ought to be taught, encouraged, and assisted to do it to the utmost, so long as they are unable to meet their enemies in the open field. And to call this taking of property stealing, is as false and unjust as it would be to call the taking of life, in just war, murder.Ibid.

Spooner's reasoning rested on the recognition of the slave's rightful claim to personal liberty as well as to reparation for having been enslaved. To achieve liberty and compensation required that the slaves escape from their masters and form guerrilla bands, and assemble the means to sustain themselves in war against the slaveholders. "These bands could do a good work of kidnapping individual slaveholders, holding them as hostages for the good behavior of whites remaining on the plantation, compelling them to execute deeds of emancipation, and conveyances of their property to their slaves."Ibid., column 2. On this point, Spooner adds that no objection could be made to the fact that deeds of emanicpation and conveyances of property may have been made under duress. "[I]nasmuch as such contracts would be nothing more than justice; and men may rightfully be coerced to do justice," they could not be contested. If the property of the slaveholder could not be converted to the use of the slaves, then Spooner advised its destruction. Spooner suggested that the white non-slaveholders of the South abandon their present governments: "Pay not taxes to their government, if you can either resist them or evade them; as witness and juror give no testimony and no verdicts in support of any slaveholding claims."

Those whites who voluntarily assisted the slaveholders in keeping their slaves in bondage were the object of special attention by Spooner:

You are one of the main pillars of the Slave system. You stand ready to do all that vile and inhuman work, which must be done by somebody, but which the more decent Slaveholders themselves will not do. … If you are thus indifferent as to whom you serve, we advise you henceforth to serve the Slaves, instead of their masters. Turn about, and help the robbed to rob their robbers. The former can afford to pay you better than the latter. Help them to get possession of the property which is rightfully their due, and they can afford to give you liberal commissions. Help them flog individual Slaveholders, and they can afford to pay you ten times as much as you ever received for flogging Slaves. … Be true to the Slaves, and we hope they will pay you well for your services. Be false to them, and we hope they will kill you.Ibid., column 3.

Spooner's position on the right of the slaves to commission assistance based on a sharing of the proceeds of plunder realized from just wars against their masters may have been unique in radical libertarian history:

If it is right for the Slaves to take the property of their masters, to compensate their wrongs, it is right for you [the non-slaveholders of the South] to help them. … It will be perfectly easy for you, by combining with the Slaves, to put them in possession of the plantations on which they labor, and of all the property upon them. They could afford to pay you well for doing them such a service. They could afford to let you share with them in the division of the property taken. We hope you [the non-slaveholders of the South] will adopt this measure. It will not only be right in itself; it will be the noblest act of your lives, provided you do not take too large a share to yourselves; and provided also that you afterwards faithfully protect the Slaves in their liberty, and the property assigned to them.Ibid.

In his "Plan for the Abolition of Slavery" Spooner addressed himself to those Northerners who were willing to go to the aid of the slaves. He recognized that "when a human being is set upon by a robber, ravisher, murderer, or tyrant of any kind, it is the duty of bystanders to go to his or her rescue by force, if need be. In general nothing will excuse men in the nonperformance of this duty, except the pressure of higher duties (if there be such), inability to afford relief, or too great danger to themselves or others." Legislation notwithstanding, "it is the duty of the non-slaveholders of this country, in their private capacity as individuals—without asking the permission or waiting the movements of the government—to go to the rescue of the Slaves from the hands of their oppressors."Spooner, "A Plan for the Abolition of Slavery," column I.

Private war against the slaveholders of the South was what Spooner advocated. It was John Brown who first put Spooner's reasoning into practice. As Spooner said,

[I]n revolutions of this nature, it is necessary that private individuals should take the first steps. The tea must be thrown overboard, the Bastile must be torn down, the first gun must be fired, by private persons, before a new government can be organized, or the old one be forced (for nothing but danger to itself will force it) to adopt the measures which the insurgents have in view.

If the American governments, State or national, would abolish Slavery, we would leave the work in their hands, but as they do not, and apparently will not, we propose to force them to do it, or to do it ourselves, in defiance of them.Ibid., column 3.

No one, except John Brown, was more radical or daring in calling for the abolition of slavery. In 1859, Spooner was still committed to favoring some type of government. As the Civil War progressed, Spooner continued to spin out the implications of his natural-law reasoning. By the late 1860's he had carried his natural-rights theory to its infinitely radical conclusion: individualist anarchism.Murray N. Rothbard, '"Introduction,' Lysander Spooner, Natural Law, or the Science of Justice," Libertarian Forum (Sept. 1974), p. 1.

Another man who openly advocated and used violence against the Southern slaveholders was John Fairfield, a native Virginian. Fairfield's first attempt at rescuing a slave involved one belonging to his own uncle. The two of them made plans to go to Ohio and then onto Canada. "The arrangement was … made for Bill [the slave] to take one of his master's horses, and make his escape the night before Fairfield started, and wait for him at a rendezvous appointed."Reminiscences of Levi Coffin, Reputed President of the Underground Railroad (Cincinnati: Robert Clarke & Co., 1880), p. 429. The escape was the first of many successful ones for Fairfield. When he related the story, many years later, he justified the horse-stealing as well as the slave-stealing:

No! [I wasn't afraid of the death penalty either for horse-stealing or slave-stealing.] I knew that Bill had earned several horses for his master, and he took only one. Bill had been a faithful fellow, and worked hard for many years, and that horse was all the pay he got. As to Negro-stealing, I would steal all the slaves in Virginia if I could.Ibid., p. 430.

Fairfield's success in conducting slaves from Virginia to Canada was soon well known. Slaves who had accumulated small amounts of money offered to pay him if he undertook conducting them to freedom. A young man anxious for adventure and excitement, Fairfield undertook these missions. He would obtain the names of masters and slaves and an exact knowledge of the localities to be visited, together with other information that might aid his escape plans. Often he would take the names of specific slaves to be freed. These would generally be given to him by other freed slaves who hoped to get the remainder of their families out of the South. Fairfield would go South, into the neighborhood where the slaves lived. While establishing false credentials with the slaveowners, he would make secret contact with the slaves and make arrangements for their escape. Then suddenly he would disappear from the locality and several slaves would be missing at the same time.

Fairfield engaged in this business for over 12 years and it was said that he aided several thousand slaves to freedom and Canada. He was a wicked or noble man (depending on one's point of view), daring and reckless in his actions, but faithful to the trust reposed in him and benevolent to the poor. He seemed to have no personal fear and was always ready to risk his own life and liberty in order to rescue the slaves. His inveterate hatred of slavery was his sole motivation. He believed that every slave was justly entitled to his freedom, and that if any person came between him and liberty, that the slave had the perfect right to shoot him down. Fairfield always went heavily armed and never scrupled to use his weapons whenever he thought the occasion required. He thereby clearly differed from many of the Quakers who participated in the Underground Railroad.

Fairfield was always ready to take money from the slaves for his services, if they were able to pay, but if they did not offer, or were unable to pay, he helped them all the same. He was equally ready and willing to spend his own money, and to part with his last dollar, in order to effect the escape of a slave. Several times, he was betrayed and arrested in the South, but he managed to get out of prison without being tried due to his connections with the Freemasons. He broke out of jail once or twice and escaped. He often had to undergo hardship and privations for the sake of effecting a rescue. One of the fugitives he rescued later said:

I never saw such a man as Fairfield. He told us he would take us out of slavery or die in the attempt, if we would do our part, which we promised to do. We all agreed to fight till we died, rather than be captured. Fairfield said he wanted no cowards in the company; if we were attacked and one of us showed cowardice or started to run, he would shoot him down."Ibid., pp. 443–444.

Fairfield's attitude was "shoot to kill and make the devils [the slaveholders and slave-catchers] run". When Levi Coffin, the Quaker and unofficial president of the Underground Railroad, reproved him for trying to kill anyone, Fairfield exclaimed:

Slaveholders are all devils, and it is no harm to kill the devil. I do not intend to hurt people if they keep out of the way, but if they step between me and liberty, they must take the consequences. When I undertake to conduct slaves out of bondage I feel that it is my duty to defend them, even to the last drop of my blood.Ibid., p. 445.

Such is the radical libertarian attitude against slavery and a fitting conclusion to our survey of antislavery thought. If this review of history proves anything, it must demonstrate that ideas have consequences and that individuals who are determined to seek justice in their own lives can successfully do so. The Quakers, especially Sandiford, Lay, Woolman, and Mifflin, prove that in the realm of human justice, people do make a difference. Men can move mountains, if they only so desire. Justice in human affairs is instantaneously attainable, if only enough people will it.Murray N. Rothbard, "Why Be Libertarian?", in Egalitarianism as a Revolt Against Nature, and Other Essays (Washington: Libertarian Review Press, 1974), p. 149. In the case of slavery, there is absolutely no question of what constitutes justice for the libertarian: no slave should ever have been enslaved or kept in bondage, and those who were enslaved are entitled to their immediate freedom and compensation.

The radical libertarian tradition in antislavery thought illustrates the passion for justice which all true libertarians should exhibit. It also shows why libertarians must always be abolitionists: they would, if they could, abolish all invasions of liberty immediately. Their battle cry and attitude was set forth by William Lloyd Garrison: "I have need to be all on fire, for I have mountains of ice about me to melt."Quoted in Rothbard, "Why Be Libertarian?", p. 151. This spirit marks the radical libertarian tradition and it must ever serve as the mark of the man dedicated to the cause of liberty everywhere.

In this 1981 lecture, Walter Block discusses the importance of allowing private markets — and not government planners — to decide how land and housing is used by those who buy, sell, and rent it.

Presented at the School of Law, Dalhousie University (Halifax, Nova Scotia, Canada) on 29 January 1981. [1:30:56]

The many contradictions among different philosophical theories have caused much confusion over the years. Unfortunately, too few teachers and textbooks explain the basic principles that could help students discriminate intelligently among them and understand the ethical code which fosters freedom, morality and social cooperation.

Thus, Henry Hazlitt deserves special credit for bringing logic and clarity to the subject.

His book, The Foundations of Morality, was first published in 1964. After having been out of print for several years, it is again available thanks to Nash and the Institute for Humane Studies. [The Mises Institute offers an edition published by the Foundation for Economic Education in 2007.]

The author is primarily an economist, a student of human action. As a result, he is a strong advocate of individual freedom and responsibility. He has long been a close personal friend and associate of Professor Ludwig von Mises, the "dean" of free market economics, to whom he acknowledges a great intellectual indebtedness.

With this background, he is well qualified to discuss the ethics of social cooperation. His many years of "apprenticeship" as essayist, book reviewer and columnist (New York Times, Wall Street Journal, Newsweek, The Freeman, National Review and many others) prepared him well for explaining complex matters simply.

The reader may wish to pause, ponder and reflect from time to time on the ideas and concepts presented, but the author's reasoning is clear, his prose unambiguous and most chapters delightfully short.

Mr. Hazlitt's position is that "the interests of the individual and the interests of society," when "rightly understood" are in harmony, not conflict. His goal in writing this book was "to present a 'unified theory' of law, morals and manners" which could be logically explained and defended in the light of modern economics and the principles of' jurisprudence.

This reviewer believes most readers will agree that Mr. Hazlitt succeeded. He has marshalled the ideas of many philosophers and analyzed them with careful logic. He has explained many of the contradictions among them, thus disposing of much confusion. He has formulated a consistent moral philosophy based on an understanding of the ethical principles, so frequently ignored in today's "permissive" climate, which promote peaceful social cooperation and free enterprise production.

Mr. Hazlitt points out that our complex market economy requires peaceful and voluntary social cooperation. The preservation of the market is essential for large scale production and thus for the very survival of most of us. Therefore, social cooperation is the very most important means available to individuals for attaining their various personal ends. This means that social cooperation is also at the same time a well worthwhile goal. Let Mr. Hazlitt speak for himself.

For each of us social cooperation is of course not the ultimate end but a means. … But it is a means so central, so universal, so indispensable to the realization of practically all our other ends, that there is little harm in regarding it as an end in itself, and even in treating it as if it were the goal of ethics. In fact, precisely because none of us knows exactly what would give most satisfaction or happiness to others, the best test of our actions or rules of action is the extent to which they promote a social cooperation that best enables each of us to pursue his own ends.

Without social cooperation modern man could not achieve the barest fraction of the ends and satisfactions that he has achieved with it. The very subsistence of the immense majority of us depends upon it.

The system of philosophy outlined in the book is a form of utilitarianism, "insofar as it holds that actions or rules of action are to be judged by their consequences and their tendency to promote human happiness."

However, Mr. Hazlitt prefers a shorter term, "utilism," or perhaps "rule utilism" to stress the importance of adhering consistently to general rules. He suggests also two other possible names — "mutualism" or "cooperatism" — which he thinks more adequately reflect the central role of social cooperation in the ethical system described.

The criterion for judging the consistency or inconsistency of a specific rule or action with this ethical system is always whether or not it promotes social cooperation. Mr. Hazlitt reasons from the thesis that social cooperation is of benefit to everyone. Even those who might at times like to lie, cheat, rob or kill for personal short-run gain can usually be persuaded of the longer-run advantages of social cooperation, i.e., of refraining from lying, cheating, robbing or stealing.

Even the most self-centered individual, in fact, needing not only to be protected against the aggression of others, but wanting the active cooperation of others, finds it to his interest to defend and uphold a set of moral (as well as legal) rules that forbid breaking promises, cheating, stealing, assault, and murder, and in addition a set of moral rules that enjoin cooperation, helpfulness, and kindness.

The predominant moral code in a society is compared with language or "common law." Society does not impose a moral code on the individual. It is a set of rules, hammered out bit by bit over many centuries:

[O]ur moral rules are continuously framed and modified. They are not framed by some abstract and disembodied collectivity called "society" and then imposed on an "individual" who is in some way separate from society. We impose them (by praise and censure, approbation and disapprobation, promise and warning, reward and punishment) on each other, and most of us consciously or unconsciously accept them for ourselves.

This moral code grew up spontaneously, like language, religion, manners, and law. It is the product of the experience of immemorial generations, of the interrelations of millions of people and the interplay of millions of minds. The morality of common sense is a sort of common law, with an indefinitely wider jurisdiction than ordinary common law, and based on a practically infinite number of particular cases. … [T]he traditional moral rules … crystallize the experience and moral wisdom of the race.

But what about religion, you say? Doesn't a moral code have to rest on a religious basis? The fundamental thesis of this book, as noted, is that reason and logic are sufficient to explain and defend the code of ethics which fosters and preserves social cooperation.

Yet, the author does not ignore religion. He calls attention to similarities among the world's great religions and the contradictions in some of them. Religion and morality reinforce one another very often, he says, although not always and not necessarily. Here is his description of their relationship.

In human history religion and morality are like two streams that sometimes run parallel, sometimes merge, sometimes separate, sometimes seem independent and sometimes interdependent. But morality is older than any living religion and probably older than all religion. [W]hile religious faith is not indispensable [to the moral code] …, it must be recognized in the present state of civilization as a powerful force in securing the observance that exists.

The most powerful religious belief supporting morality, however, seems to me … the belief in a God who sees and knows our every action, our every impulse and our every thought, who judges us with exact justice, and who, whether or not He rewards us for our good deeds and punishes us for our evil ones, approves of our good deeds and disapproves of our evil ones.

Yet it is not the function of the moral philosopher, as such, to proclaim the truth of this religious faith or to try to maintain it. His function is, rather, to insist on the rational basis of all morality, to point out that it does not need any supernatural assumptions, and to show that the rules of morality are or ought to be those rules of conduct that tend most to increase human cooperation, happiness and well-being in this our present life.

Mr. Hazlitt discusses many perplexing ideas and concepts such as natural rights, natural law, justice, selfishness, and altruism; right, wrong, truth, honesty, duty, moral obligation, free will vs. determinism, politeness, and "white lies." Anyone who has speculated on these problems without reaching satisfactory conclusions, as has this reviewer, will no doubt find his analyzes and comments both stimulating and enlightening.

The book contains numerous quotations from the works of early and recent philosophers, which the author always analyzes for their consistency with social cooperation. Except for a few technical philosophical terms — such as tautology (repetition of the same idea in different words), eudaemonism (the doctrine that happiness is the final goal of all human action) and teleotic (an adjective derived from the Greek meaning end, design, purpose or final cause) — readers should not find anything in the book really difficult to understand.

As they follow the author's line of thought, they will discover that reason and logic come to the defense of morality; order and a common sense ethical code evolve from philosophical chaos.

Mr. Hazlitt has long been a noted free market economist — one of the very best. His introductory Economics In One Lesson is a long time best seller. The Failure of the "New Economics," a careful critique of Keynes, is a real contribution to economic theory. With the publication of The Foundations of Morality in 1964, he added another very important feather to his cap as a moral philosopher. It is good to have it in print again.

To summarize, the author explains again and again, in the course of the book under review, that the rules of ethics are neither arbitrary nor illogical. They are not mere matters of opinion. They are workable, acceptable, moral rules developed over long periods of time. They must be adhered to consistently and may not be willfully violated without detriment to social cooperation.

In this age of permissiveness, when everyone is encouraged "to do his own thing" and few see any urgency in respecting the rights of others, it is a rare philosopher who recognizes that the consistent adherence to a set of ethical rules promotes social cooperation and benefits everyone in society.

Perhaps a free market economist, whose very field of study encompasses the role of social cooperation, is the most appropriate person to explain the logic of this position. This book should live through the centuries.

It is argued below that land use regulations are the result of public sector responses to demands of politically powerful special interest groups, rather than attempts to correct for market failures.Stigler and several others advanced this economic theory of regulation primarily as an explanation of industrial regulation. See George Stigler, "The Theory of Economic Regulation," Bell Journal of Economics and Management Science 2 (Spring 1971): 3–27; Bruce Benson, "Observations on Supply of Regulation in the Context of Stigler's Theory of Economic Regulation," Pennsylvania State University, Working Paper, March 1981; Benson, "Regulation — the Demand and Supply of Property Rights," Appalachian Business Review (Special Issue on Regulation) 8 (1981): 22–28; Samuel Peltzman, "Towards a More General Theory of Regulation," Journal of Law and Economics 19 (August 1976): 211–40; and Richard Posner, "Theories of Economic Regulation, Bell Journal of Economics and Management Science 5 (Autumn 1974): 335-58. For a discussion of supporting evidence, see Benson, "Observations on the Supply of Regulation." Furthermore, changes in regulatory policies occur because of changes in interest group strength. This argument is not new. Sanders, for example, recently made similar observations.William Sanders, "Property Rights and the Political Economy of Resource Scarcity: Comment," American Journal of Agricultural Economics 61 (February 1979): 116–18. For a sample of discussions of the important role of interest groups in land use regulation, also see: Benjamin Bobo and David Shulman, "Managing California's Coast: The Problem of Housing Distribution," California Management Review 20 (Fall 1977): 74–80; Robert Healy, Land Use and the States (Baltimore: John Hopkins University Press, 1976); and Robert Linowes and Don T. Allensworth, The Politics of Land Use (New York: Praeger Publishers, 1973). However, discussion, more detailed than Sanders', concerning land use regulation in the context of this "economic theory of regulation" (as named by PosnerPosner, "Theories of Economic Regulation.") is warranted in order to determine the consequences of this process. Prior to an examination of the demand and supply process, however, a specification of exactly what is being demanded and supplied is required.

The objects of interest group demands and the functions of government regulators are: a) the assignment of property rights, and b) enforcement of each property rights assignment.Stigler, Peltzman, and others contend that the object being demanded and supplied is a transfer of wealth. (See Stigler, "The Theory of Economic Regulation"; and Peltzman, "Towards a More General Theory.") However, a property rights view provides several important insights into the regulatory process and eliminates a number of the criticisms of the economic theory of regulation. For discussion of this point, see the following by the present author: "Observations on the Supply of Regulation," and "Regulation — the Demand and Supply." As Stubblebine noted:

Every individual seeks those property rights modifications which he believes will improve his welfare. Since property rights condition behavior, he seeks those modifications which will induce others to make choices conveying on him an increased sense of satisfaction.William Craig Stubblebine, "On Property Rights and Institutions," in Henry Manne, ed., The Economics of Legal Relations (St. Paul: West Publishing, 1972), p. 15.

When rights are modified or reassigned, there are at least two groups involved. One gains at the expense of another. A property right is a resource, and the demand for a scarce resource leads to a conflict of interest. New property rights are created when the rights to own something become desirable. However, in the case of private land in the United States it can be assumed that all rights belong to landowners, whether explicitly or implicitly defined. (This claim is made in light of the beliefs detailed below concerning land use rights during the early history of the country.) Consequently, whenever property rights are reassigned to a group other than landowners, there is a cost to the landowners. Thus, there are at least two, and possibly several, interests in conflict whenever property rights to private land are modified.

The demand for property rights to land use can be divided into two categories — the derived demand for rights to use land as a productive input, and the demand for consumptive rights to land arising from the direct utility a user receives. Consumptive rights include the rights to use land for recreation, and for such aesthetic purposes as preservation of scenic views and open space. (Consumptive benefits may result from productive rights, for example, when recreational services are produced on the land.) Private individuals may own land primarily because they desire rights to productive uses of land, consumptive uses of land, or both. Many public rights to land are rights to consumptive uses. The primary focus in this paper will be on nonlandowner demand for public consumptive rights to land. Such public rights usually prevent private productive land uses, as well as private consumptive uses, and are opposed by landowners.

Property rights generally are considered to be assigned either to private individuals or to the "public". However, designation of property rights as "public" does not mean that all members of society benefit. The "public" may have to bear the cost of maintaining a particular assignment of rights, but only those who use the rights benefit from the assignment.

The distinction between "individual'' and "public" is a legal fiction, not readily translated into reality. The benefits ... may extend only to the owner of the property in question, to his immediate neighbors, to the community, the region, or conceivably, the entire world. The legal dichotomy does not readily admit such gradations of "public" versus "private."Rutherford Platt, The Open Space Decision Process (Chicago: University of Chicago Press, 1972), p. 16.

Thus individuals and groups desire "public" rights to private land if those rights allow use of the land in ways which benefit them.

Stigler proposed an "economic theory of regulation" in which he contended that interest groups demand regulation from their political representatives.Stigler, "The Theory of Economic Regulation." This political market distributes regulatory favors to those with the highest effective demand. A small group with a large per capita interest tends to dominate over a larger group with more diffuse interests. Small interest groups generally dominate because of the relationship between group size and the cost of obtaining favorable regulation. There are two costs involved. One is the cost of information. Voting is infrequent and usually concerned with a package of issues. Thus, individuals must incur costs to inform themselves about particular issues and politicians. This investment is not worthwhile unless the expected gains are relatively large compared to alternative investments (after all, the desired rights could be purchased through a private market exchange). Consequently, when the potential per capita gain is small, individuals will have relatively weak incentives to obtain the information. In addition, there are costs of organizing. Individuals must first recognize their interest (obtain information) and then organize to express that interest to politicians. The expression of interests includes mobilizing votes and money, as well as informing representatives of the group's desires and political strengths. These organizing costs tend to rise faster than group size.See Posner ("Theories of Economic Regulation") for a detailed discussion of the costs of organization.

In addition to the above observations made by Stigler on the demand for regulation, certain other factors should be noted. First, Peltzman observed that more than one interest group can obtain benefits from a particular regulatory policy. Second, Hirschleifer pointed out that regulators themselves constitute an interest group which benefits from regulation and which may demand regulation. Finally, an interest group may be forced to organize and demand regulation in order to avoid losses due to regulation benefiting another interest group. Thus, the number of groups interested in any particular area of regulation (e.g., land use) can change over time, and, further, the politically dominant interest group can change.See Peltzman, "Towards a More General Theory"; Jack Hirshleifer, "Comment," Journal of Law and Economics 19 (August 1976): 241-44; and Benson, "Regulation — the Demand and Supply."

Stubblebine recognized four mechanisms through which rights modifications are made: "private exchange of rights" and "collective or legislative action" (both of which are permitted), and "private crime" and ' social revolution" (which are proscribed).Stubblebine, "On Property Rights and Institutions," p. 10. The prime concern of this discussion is "collective or legislative action" for modification of property rights. Governments regulate by creating and enforcing rights, and by modifying existing rights assignments.

The institutional makeup of the political regulatory supply process generally depends upon the size of the regulatory jurisdiction. Regulation is often supplied by elected commissions in small local jurisdictions. In larger areas (i.e., some states or metropolitan counties) elected representatives may delegate regulatory powers to an appointed commission. And, if the regulatory authority is concerned with a very large area, a bureaucratic agency may perform the regulatory function. This is often the case when the federal government is involved (for example, the Forest Service or the Bureau of Land Management). In the cases of appointed commissions or bureaucratic agencies, elected representatives typically assign property rights and then delegate enforcement powers to a regulatory body.In many cases, of course, regulatory authorities have power both to make property rights assignments and to enforce the assignments. (See Benson, "Observations on the Supply of Regulation.")

Peltzman developed a model of economic regulation by elected officials.Peltzman, "Towards a More General Theory." His model need not be repeated here but certain conclusions are worth noting.

1) An elected representative tends to favor the politically most powerful interest group(s). Similarly, the legislature reflects the demand of the group which exerts the greatest political pressure to obtain desired results. In Samuels' words:

opportunities for gain, whether pecuniary profit or other advantage, accrue to those who can use government.... If income distribution and risk allocation is a partial function of law then the law is an object of control for economic or other gain ... whether the instances be tariff protection, oil subsidies, real estate agents' attempts to ban "for sale" signs on private homes or any other type of property rights.Warren Samuels, "Interrelations Between Legal and Economic Processes,'' Journal of Law and Economics 14 (October 1971): 444.

The group which most desires a property right will be the group willing to give the most for the right in terms of votes, contributions, and so on.

2) When there are differences among members of an interest group, the benefits (or costs) which result from a particular rights assignment differ among members.

3) The favored interest group(s) is not favored to the extent that it could be. The reason this conclusion (as well as conclusion 2) holds is that the "marginal political return of a transfer must equal the marginal political cost" in order for an elected official to maintain his majority.Peltzman, "Towards a More General Theory," p. 217. Thus, in assigning rights, elected regulators wish to have the marginal benefits which accrue to the favored interest group(s) equal the marginal costs which accrue to the losers.Since elected representatives wish to meet the marginal conditions of the political exchange, it follows that the regulatory process should efficiently accomplish what it is designed to do (grant benefits to powerful special interests). For example, Posner concluded: "A corollary of the economic theory of regulation is that the regulatory process can be expected to operate with reasonable efficiency to achieve its ends. The ends are the product of a struggle between interest groups, but ... it would be contrary to the usual assumptions of economics to argue that wasteful or inappropriate means would be chosen to achieve those ends" (Posner, "Theories of Economic Regulation," p. 350).

Elected officials often delegate many regulatory powers to bureaucratic agencies and/or commissions, particularly at the state and federal levels. Regulatory powers are delegated to agencies and commissions because of the high transaction costs of decision-making in a large group (i.e., a legislature).See Benson, "Observations on the Supply of Regulation." Of course, when regulatory powers are delegated to agencies or commissions, the incentives of these bureaucrats and commissioners must also be examined. These regulatory authorities can be viewed as firms producing a service or a set of services — namely, the enforcement of legislatively determined property rights assignments. The enforcement services are exchanged for a budget. This type of exchange has been modeled by Niskanen,William Niskanen, Bureaucracy and Representative Government (Chicago: Aldine-Atherton, 1971); and Niskanen, "Bureaucrats and Politicians," Journal of Law and Economics 18 (December 1975): 617–43. and his model has been modified to fit the supply of regulation in the context of the economic theory of regulation.See Benson, "Observations on the Supply of Regulation." Space constraints prevent presenting this model here but a brief summary of relevant assumptions and conclusions follows.

The important assumptions pertaining to each regulator ( commissioner or bureaucratic agency manager) are: 1) he is a utility maximizer, and 2) his utility is a function of income and non-monetary perquisites associated with his position (i.e., prestige, power, social and physical amenities, etc.). The level of regulatory enforcement preferred by a regulator is then assumed to depend upon the regulator's incentive structure as it relates to his utility function. Since both income and perquisites are directly related to bureau size, but generally only perquisites are related to commission size, the tendency for over-enforcement is stronger for a regulatory bureau than for a regulatory commission. However, both types of regulators prefer an output of regulation which exceeds the desires of the legislature. In addition, agencies and commissions are motivated to regulate inefficiently since a regulator typically can appropriate part of the budget allocated by legislators for his own benefit.Ibid.

Now, will legislators allow regulators to over-regulate and to regulate inefficiently? Their efforts to maximize a majority vote are constrained. Legislators have at least two functions to perform: 1) choosing the appropriate rights assignments, and 2) controlling regulators. Time and staff resources must be allocated between these two functions while attempting to maintain a majority. In this constrained majority-maintaining effort, legislators are willing to allow regulators to be inefficient and to over-enforce, but not to the degree that regulators wish.Ibid. A legislator's choices are obviously not quite this simple, but the implication, in any case, is that a lawmaker faces a trade-off between the benefits of monitoring regulators (increased efficiency) and the benefits he can obtain by directing his time and staff to other activities (i.e., determining which interest groups are most powerful and what those groups are demanding). Thus, legislators simply cannot control agencies perfectly and, at the same time, determine the politically optimal rights assignment.

If this model of supply and demand in property rights approximates reality, certain historical facts should be observable. For example, since property rights assignments have been changing, there should be evidence that the dominant interest group also has changed. Furthermore, since there are many political units with control over the property rights within their respective spatial jurisdictions, property rights assignments should vary from one jurisdiction to another if the dominant interest groups vary.

At the time of the American Revolution, the dogma of laissez faire expounded by Locke and Blackstone was widely accepted in America. Blackstone wrote:

So great moreover is the regard of the law for private property, that it will not authorize the least violation of it; no, not even for the general good of the whole community. If a new road, for instance, were to be made through the grounds of a private person, it might perhaps be extensively beneficial to the public; but the law permits no man, or set of men, to do this without consent of the owner of the land. In vain it may be urged, that the good of the individual ought to yield to that of the community; for it would be dangerous to allow any private man, or even any public tribunal, to be judge of this common good, and to decide whether it be expedient or no. Besides the public good is in nothing more essentially interested than in the protection of every individual's private rights, as modelled by the municipal law.William Blackstone, Commentaries on Laws of England (Chicago: Callaghan and Co., 1899), pp. 127–28.

As a result of this wide acceptance of and demand for individual rights, the landowner had basically acquired the right to use his land as he saw fit. Productive landowners made up the dominant interest group concerned with land use rights, and the dominant land use was agriculture. American urban settlements in 1790 accounted for less than three percent of the nation's population. Thus, as Anderson and Hill noted, through the first half of the nineteenth century, the government at both the state and national levels "moved rapidly towards a policy of establishing private rights in land."Terry Anderson and Peter J. Hill, "The Role of Private Property in the History of American Agriculture, 1776–1976," American Journal of Agricultural Economics 8 (December 1975): 940. Even when limitations on land use began to develop, they were justified on the basis of protection of private property (rather than of public welfare). For example, the "willingness to modify private property rights in the name of defending property values is characteristic of the early protagonists of zoning."John Delafons, Land-Use Controls in the United States (Cambridge, Mass: The MIT Press, 1969), p. 33.

In recent history, however, restriction of private property rights has become accepted by the courts. Limitations have been placed on the freedom of land use in the form of zoning and planning regulations. Public easements and the elimination of all private rights through the law of eminent domain and police power have been legalized. These limitations have been intensifying and increasing. Today when an individual buys a tract of land, he finds a smaller bundle of property rights associated with that land than was available a century or even a decade ago. Along with private restrictive covenants and other controls, he may find he can use his land only for certain purposes, build only certain kinds of structures, and occupy only a prescribed portion of his land up to a certain height. Often he cannot be sure of what his rights are, or what they will be in the future.

Rights to land have been transferred from private landowners either through police power or eminent domain. These two legal doctrines can be separated by the way the costs of a property rights transfers are allocated. If the landowner bears the costs, the rights modification resulted from police power. If the "public" bears all or part of the cost and the landowner receives compensation, the modification was provided through eminent domain. Although the two concepts are obviously different, the line between them is often unclear. However, in this brief historical summary of the development of land use regulation the two powers will be discussed separately.

An examination of the application of non-compensatory public measures to control the use of private land could start with the earliest settlements of the colonies. The controls that existed at that time generally applied only within urban areas and were used to curtail only the most obvious nuisances. Between the seventeenth and twentieth centuries the use of police power increased only slightly. However, by 1916 the regulation of private land use in urban areas had begun. In that year New York City adopted the nation's first comprehensive zoning law and the idea spread rapidly. An application of zoning by the town of Euclid, Ohio was upheld by the United States Supreme Court in 1926 and the planning revolution was legitimated.

From their inception local zoning and other land use restrictions have been exclusionary devices in the hands of local landowners, used primarily to protect property values and preserve existing characteristics of their communities. Typically then, the interest groups in conflict at the local level are residential landowner "citizens associations" (generally made up of only a small portion of the total citizenry), and developers who wish to establish some activity which the citizens association opposes.See Linowes and Allensworth, The Politics of Land Use. Local chambers of commerce may, at times, support a citizens association (if the association disputes commercial development that would establish competitors for existing businesses), or may oppose the citizens association (if the proposed development might significantly expand local markets). Other local groups may also enter the regulatory arena regarding particular projects which will positively or negatively impact them.

In addition to protecting interests, zoning has functioned also as a means of transferring consumptive benefits to the public. Interest groups desiring such public consumptive rights then also play a role at the local level, but the local citizens association often is the group seeking such rights. The claim that police power has been used to provide public consumptive rights to land might be difficult to prove, since it is supposed to prevent harm, not provide benefits. However, in many cases public consumptive benefits are secondary, if not primary results. For example, hazard zoning, which segregates land uses with respect to physical classifications, has been used to limit private land use. The fact that land subject to hazard zoning provides recreational benefits to nonlandowners in the form of open space and scenery, as well as conservation of wildlife, has not invalidated such zoning. In McCarthy v. City of Manhattan Beach (1953), the California court upheld the designation of a "Beach Recreation District" and prohibited development by owners of shoreline property, despite the obvious intention to preserve the shoreline for public enjoyment. The designation was upheld because of hazards posed by storms.Subdivision exactions, which require developers to dedicate part of their land as a park, are also examples of how landowners are forced by regulators to provide public recreational use of private land. The point is:

Who is to say what is a public use? The law is what common sense would indicate; in essence, it holds that something serves a public purpose if the public thinks so. This, in practice, means what the legislature says the public wants, and though the two are not always synonymous, the courts tend to go along; if the public through its elected representatives designates a public purpose to be served, the courts reason, this justifies exercise of the public's power.William Whyte, Securing Open Space for Urban America: Conservation Easements (Washington, D.C.: Urban Land Institute, 1968), p. 16.

"Public" ownership of rights does not mean everyone benefits.

The general trend has been towards more and more use of police power to prevent certain types of land use and provide public consumptive rights to nonlandowners. Although the trend is most noticeable in urban areas, rural zoning is nevertheless in use. Wisconsin first authorized rural zoning by counties in 1923, and in 1929 its original act was amended to authorize the use of zoning to "regulate, restrict, and determine the areas in which agriculture, forestry, and recreation may be conducted." The recreation districts permitted resorts, recreational properties, residences, and forestry uses but excluded new agricultural developments and most industries. In this way, zoning has forced private landowners to produce recreation services even though that need not be the most profitable use of their land.

The first state-wide land use law was passed by Hawaii in 1960, and during the I 970's a number of states passed legislative measures broadening the role of state and regional agencies in land use control. State-wide zoning, rural zoning and other rural land use controls have developed primarily in states with relatively large urban and small rural, agricultural populations.

When compensation is paid to landowners, the transfer of property rights falls under the legal heading of eminent domain. As early as 1811, New York City provided for the taking of land for seven parks on Manhattan Island. Again the assigning of public property rights first took place in an urban area. In fact, the use of eminent domain by state and local governments preceded recognition of similar powers in the federal government, and largely resulted from the demand for urban parks. The urban park movement really started with the demand for, and purchase of, 840 acres to create Manhattan's Central Park in I 858. New York was soon followed by Boston, Chicago, St. Louis, and San Francisco.

The approval of eminent domain, first granted for fee simple public ownership of urban parks, has since been extended to include a variety of public land uses. The "public use" requirement has not been strongly challenged when land has been taken for open space and/ or recreation. Again, of course, public ownership does not mean everyone benefits. Stroup and Baden pointed out, for example, that

various interest groups as well as interested individuals attempt to influence the forest service in its exercise of discretion. For example, the forest supervisor might be encouraged to restrict snowmobiles from a winter feeding area or refrain from road building on a watershed feeding a prime trout area.... Within this context it is unreasonable to expect politics to be absent from the management of the forest service.Richard Stroup and John Baden, "Externality, Property Rights, and the Management of Our National Forests," Journal of Law and Economics 13 (October 1973): 303–305.

If demand is strong enough, a group can obtain exclusive rights to "public" property, even though the costs are shared by many others (taxpayers).

Eminent domain does not have to lead to fee simple public ownership. The acquisition of "air rights" to property fronting on Boston's Copley Square was upheld in Attorney General v. Williams in 1899. Condemnation of interests less than fee simple did not become common until the metropolitan explosion of the 1950's, however. Acquisition of public easements for conservation, scenic, and other, related purposes through eminent domain has since occurred widely in open space and recreation planning.

State governments have joined local governments in using eminent domain to establish public rights. In fact, "acquisition of land by the states is being given new impetus by the emphasis on outdoor recreation generated by a rise in population and increased mobility and income of the people" and substantial federal financial aid for acquiring land for recreational purposes has "accelerated state-acquisition programs, particularly in the East." American Forest Products Industries, Government Land Acquisition (Washington, D.C.: AFPI, 1965), p. 13.

Eminent domain is also being increasingly used by federal agencies to provide public rights. Before 1900 the dominant federal public land policy was disposal of the public domain. After that date reservation of remaining public lands became the dominant policy, and by 1934 the public domain was virtually closed. Even before 1934, however, the federal government had been adding to its land holdings. In 1911 Congress passed the Weeks Law, which authorized land acquisition to conserve "the navigability of navigable rivers," and since then the federal land holdings have been increasing. In fact, "emphasis of the federal government today in its public land policies is on acquisition," and since the late fifties and early sixties the "movement to acquire large areas of rural land for recreation has been gaining momentum."Ibid. Agencies that have authority to buy land for purposes such as public works, national defense, and conservation now include additional acreage for recreation and other public uses in acquisition plans. Public consumptive uses of federal land may in fact be the primary or only purpose of acquisition in many cases. While most of the public domain is in relatively rural areas, the bulk of the land acquired in the twentieth century is in states with large urban populations. Why are such land use rights being transferred?

A trend which appears to be directly related to increasing public ownership was noted several times in the preceding discussion: the increase in the absolute and relative size of the urban population. At the same time rural per capita disposable income has continued to be lower than urban income. Thus, political power has shifted away from the rural agricultural sector towards the urban sector, since political power involves votes (population) and money. As the urban population has come to dominate the rural population, first local and then state and federal agencies have begun to transfer property rights from the private landowner to the public.

By examining the California vote for Proposition 20, the location of the demand for public consumptive rights is evident. Proposition 20 set up regulations for the entire California "Coastal Zone", defined as the area from three miles off the coast, inland to the highest elevation of the coastal mountain range. It passed by a 55 to 45 percent margin. The measure passed in 32 of California's 58 counties, including all of the populous counties around Los Angeles, San Diego, and San Francisco. In rural counties, such as Humboldt and Del Norte along the far north coast, it failed miserably. An analysis of the vote found that Proposition 20 did best in counties with a high degree of urbanization. The yes vote was negatively correlated with location along the coast.Healy, Land Use and the United States, p. 73. Residents of the area to be regulated resisted the transfer of regulatory powers to some nonlocal government body because more interest groups have access to state ( or federal) officials than to local officials. See, for example, the discussion of state zoning in Wisconsin in Charles Geisler and Oscar Martinson, "Local Control of Land Use: Profile of a Problem," Land Economics 52 (August 1976): 371–82. Only local residents can significantly affect local official's reelection efforts. However, at the state level, nonlocal interests may be able to significantly impact local land use since nonlocal interests have a great deal to do with reelection efforts of many state office holders.

Vlassin noted that there has been a continued shift of land into non-agricultural uses in the East and in areas near rapidly growing metropolitan areas. National trends in net land use changes seem slight or moderate, but land use changes adjacent to metropolitan areas have been significant. There obviously are many uses involved here, including intensive urban uses and extensive non-agricultural uses. Publicly provided productive rights include transportation. Private consumptive uses include non-farm rural residences. In addition, "all manner of public recreation facilities and services are being demanded, ranging from large multiple purpose parks and forests to more specialized facilities such as playgrounds, beaches, public lakes and streams, wildlife refuges and areas, wilderness areas, scenic highways and trails, scenic overlooks, public campgrounds and picnic areas."Raymond Vlassin, "Some Key Issues and Challenges Posed by Nonagricultural Demands for Rural Environments," American Journal of Agricultural Economics 53 (May 1972): 238. Some of these demands result in transfer of all rights from the private to the public sector through eminent domain. Some involve transfer of certain rights from landowners to the public through either eminent domain or police power. All transfers are made because urban based interest groups increasingly dominate the political regulatory process.

Greenwood and Edwards noticed the direct relationship between urbanization and the demand for public rights to land and wrote: "The more urbanized we become, the more we seem to cherish the thought of open space."Neal Greenwood and J. M. B. Edwards, Human Environments and Natural Systems (North Scituate, Mass.: Duxbury Press, 1973), p. 290. An alternative explanation of this observation can be offered. Urban population is growing, and its income and leisure time are increasing. Therefore, the demand groups desiring public rights are willing to pay more to apply political pressure than in the past. The more urbanized an area becomes, the more powerful are interest groups which desire public consumptive rights. Open space has always been "cherished," but now the demand for public open space is being recognized and the property rights are being transferred to nonlandowners by the government. Terms such as "changes in taste" or "gradual awakening of public interest" need not be used to explain what appears to be changes in demand for public rights to land. In more and more cases, the politically dominant interest group is shifting from landowners to nonlandowners. As this continual change takes place government agencies transfer the rights.

Indications for the future are that this process of property rights transfer to the public sector will continue.

Since the United States population ... may increase by as much as 50 to 100 million people by the year 2000, we can be absolutely certain that the amount of resources demanded [for public consumptive land uses] will also increase. Since there is every indication that the population increase will concentrate in the metropolitan and megalopolitan areas, this increased demand will have its origin in the metropolitan areas and will have its impact in nonmetropolitan areas, namely the rural environment.Vlassin, "Some Key Issues and Challenges," p. 239.

With increasing demand for more rights, there will be continual transfer of property rights from the private sector to the public sector. These future property rights transfers should be more noticeable in and near urban areas and in urbanized states, although increased federal pressure resulting from growing domination of national politics by urban based interests will cause gradual changes in predominantly rural states.

In addition to the changing property rights associated with increased urbanization, there is anecdotal evidence which indicates that land use regulation can be explained by the economic theory of regulation. Recall that Peltzman predicted elected representatives should differentiate between members of interests groups, and favor more than one interest group whenever possible. This implies that, when the relative strengths of interest groups vary over a regulatory jurisdiction or between jurisdictions, we should find different land use policies.

Property rights assignments for public uses of land do vary greatly from state to state and region to region. One example can be seen in the access to public waterways. Donald Levi, while discussing the Missouri case of Elder v. Delcour, pointed out: this case "clearly establishes that the public has the right to fish and otherwise use certain riparian waters for recreational purposes" in Missouri, but "in many states ... the right of the public to use natural lakes and streams may differ substantially or be unclear."Donald Levi, Agricultural Law (Columbia, Mo.: Lucas Brothers Publishers, 1976), p. 225. This results because local and/ or state agencies have power to assign property rights, and because state and federal agencies can discriminate spatially.Federal agencies, as well as many state agencies, can discriminate between spatially separated interest groups. In this way there can be differing property rights assignments, even under a common jurisdiction. Stroup and Baden pointed out, for example, that regional forest service supervisors often have power to assign rights (Stroup and Baden, "Externality, Property Rights, and the Management of Our National Forests," pp. 304–305). Since some states and localities are more urbanized than others, relative interest group strength varies from state to state and locality to locality.

Peltzman also concluded that regulators will not act as perfect brokers for one interest group. An example of a land use regulator's not favoring one interest group to the total exclusion of another, less powerful interest arises in the context of California's Proposition 20 (on coastal zoning). First, note that Deacon and Shapiro found that the plan was most favored by the upper-income and well educated strata of society.Robert Deacon and Perry Shapiro, "Private Preferences for Collective Goods Revealed Through Voting Referenda," American Economic Review 65 (December 1975): 943–55. Bobo and Shulman similarly concluded that "it can be argued, given vague references to distributional equity, that the purpose of the act, like most planning, was to preserve, protect, and restore coastal resources for the present and future generation of upper-income individuals," and, indeed, evidence indicates that the implementation of coastal zoning has typically meant exclusion of low-income people from select areas.Bobo and Shulman, "Managing California's Coast," p. 76. However, this does not mean that the relatively well-to-do are the only group favored, to the exclusion of all others. For example, the State Commission denied a permit application of the Santa Monica Redevelopment Agency for 1,400 high-income apartments because the project did not include low- or moderate-income housing and publicly usable open space.California Coastal Zone Conservation Commission Appeal No. 103–73. The agency redesigned the project to include 100 units of moderate-income housing for the elderly, 400 condominiums, and 8 acres of public park. The commission then granted a permit for the 100 units of moderate-income housing. Why? Obviously the elderly are increasingly well organized, and their demands are being recognized even though the result is not completely favorable to high-income groups.

One particular set of property rights deserves mention before moving to the impact of the observed trends. Landowners sometimes have the right to compensation when their land use rights are taken. However, this right has never been clearly defined, and there is growing pressure to increase the number of rights which can be transferred without compensation. For example, see Fred Bossleman, David Callies, and J. Banta, The Taking Issue (Washington, D.C.: Government Printing Office, 1973), pp. 318–19; Stroup and Baden, "Externality, Property Rights, and the Management of Our National Forests," pp. 150–57; and Healy, Land Use and the United States, p. 177. Regulators (and courts) are continually expanding the concept of the police power to limit or regulate property rights. Because, like any other right, the right to compensation is subject to regulatory interpretation and definition, regulatory authorities can attenuate this right if powerful special interests demand attenuation. Furthermore, as with other property rights assignments, the rights to compensation vary from one jurisdiction to another.

The legal limits of how stringently a city or state can regulate the use of land without paying compensation to the owner are currently in flux. At issue is just how broad an interpretation one should give to the Fifth Amendment guarantee known as the "taking clause" ... "nor shall private property be taken for public use without just compensation." Some would argue that the clause goes no farther than to prohibit physical seizure of or outright use of property by the government; others claim that it makes a wide range of regulations subject to compensation. Courts in various states have handed down widely varying rulings.Healy, Land Use and the United States, p. 177.

It appears that as demand for public rights increases individuals can expect a further weakening of the right to compensation for the loss of rights.

There are several implications of the observed trends of changing rights and increasing state and federal involvement. These implications relate to political efficiency, the cost and size of government, productive and allocative efficiency, and social welfare.

First note that, as state and federal land use regulation becomes more important, there is increasing delegation of regulatory powers to commissioners and bureaucrats, both of whom (as discussed above) have incentives to over-regulate and to regulate inefficiently. As a result, the negative impact on losers of any regulatory policy is relatively large when the policy is enforced by a commission or bureau. Therefore these losers have greater incentives to organize and express demands to regulators. The government may respond by compensating this new interest group without taking too much from other organized interests. If so, then still another unorganized group will find itself losing rights or paying higher taxes and have increased incentives to organize. The government sector grows in order to deal with increasing demands from more and more organized interest groups. Furthermore, once an interest group is organized, the most significant costs of demanding government favors have been overcome. Often, the interest group begins to demand rights other than those originally sought. If its demand is strong enough, government responds. The very nature of the political regulatory process tends to cause the regulatory system to grow and rights assignments to be modified with increasing frequency.Benson, "Regulation — the Demand and Supply."

Certainty increases the longer a given property rights assignment exists. One purpose for assigning property rights to land is to allow individual planning to incorporate more accurate predictions. Demsetz pointed out: "Should the practice of involuntary reassignment [of property rights] become common, all confidence in the longevity of property rights will be reduced and all long-run consequences of using property rights in various ways will tend to be neglected."Harold Demsetz, "Some Aspects of Property Rights," Journal of Law and Economics 9 (October 1966): 67. Reassignments of property rights are becoming "common," particularly near urban areas. Therefore, "confidence in the longevity" is being reduced more in urban than in rural areas. Landowners near urban areas are becoming very uncertain because of continually changing rights assignments and the expectation of more changes in the future. For example: "The passage of Proposition 20 has left many builders and developers stranded on the beach, cut off from financing and wondering where they go from here."Healy, Land Use and the United States, p. 88. The effective average cost curve must be relatively high for a producer facing relatively greater uncertainty, because the producer requires a greater return (normal profit) to induce him to stay in that activity.See Melvin Greenut, A Theory of the Firm in Economic Space (Austin, Tx.: Lone Star Publishers, 1971). Therefore urban area production with land as an input involves higher costs. There are transportation costs and other accessibility factors which increase the value of land near cities, but this analysis indicates that other factors (less uncertainty and a larger bundle of property rights) make rural land relatively more valuable and partially offset accessibility factors. There is a higher cost of production to rural area producers due to the capitalization of the resulting relatively high land rents. The long-run result has to be a higher price of output and lower quantity of commodities produced with land as an input, all other things being equal.There are other consequences of the uncertainty created by property rights reassignments. If the producer knew what his rights were going to be in the future he could choose the most efficient means of production, given those rights. When he is uncertain about future rights he may choose an inefficient means of production, given the rights assignments that do develop. Of course, under uncertainty the producer also tends to make fewer changes because he is less sure of the present value of future costs and benefits.

There is also a cost to society that results directly from the increasing public ownership of rights:

Public attitudes toward outdoor recreation are probably more varied than they appear. But the kind of attitude that seems most in evidence is nothing less than a national scandal. For most Americans the word "public" seems to denote "up for grabs." The word "use" does not, for them, imply sharing in common or enjoying and preserving but rather using up, exploiting and discarding. In short, the philosophy seems to be that in public parks anyone can do anything because "after all, I pay taxes."Greenwood and Edwards, Human Environment and Natural Systems, pp. 303–304.

The increased land damage associated with public rights can result from two factors. First, if the users do not have to pay, there is overuse because of excess demand. Secondly, the fact that rights are assigned to the public rather than private individuals, in itself, implies the attitude described above. Demsetz explained that this results from individual incentives associated with benefits and costs of public rights. When a right is publicly owned, the form of ownership fails to concentrate the costs of use on the individual. When he maximizes his utility with respect to the public right, he tends to overuse the right since some of the costs are born by others (other users and non-using taxpayers). The value of the land diminishes more quickly than under private ownership of all rights.Demsetz, "Towards a Theory of Property Rights," American Economic Review 57 (May 1967): 354–57.

The cost of maintaining a public assignment of property rights tends to be higher than the costs associated with private rights, as the above argument by Demsetz indicates. It is conceivable that users of public rights might agree to curtail their use, if negotiating and policing costs were zero. Each would have to agree to abridge his rights. However, it is difficult (costly) for a large number of persons to reach a mutually satisfactory agreement, especially when any holdout can use the right as much as he wishes. Even if an agreement could be reached, the policing costs would be high, since there is always an incentive to break the agreement in order to maximize individual utility.

Much of the maintenance costs of a property rights assignment are associated with preventing conflicts or negotiating settlements. There are externalities (and therefore conflicts) associated with private property rights. The owner of land use rights does not control the rights to other individuals' land. He has no incentive (without negotiations or policing) to consider them. The same kind of externality exists in the case public property rights, only it is more costly. Demsetz explained that a system of private, rather than public, rights has fewer conflicts to arbitrate or prevent, and that when a conflict occurs fewer people are involved. Therefore, maintaining a system of private rights to land should be less costly and involve a smaller government sector. Correspondingly, the trend toward transfer of private rights to public rights implies that the regulatory sector must grow.Demsetz, "Towards a Theory of Property Rights," American Economic Review 57 (May 1967): 354–57.

The excuse often used for taking private rights is that individuals have been using those rights to create negative externalities. However, assignment of rights to the public also results in negative externalities. Demsetz points out that the negative externalities associated with public ownership tend to be greater than with private ownership.Ibid. These external costs are partially reflected in the maintenance costs of the regulatory agency. However, no regulatory system ever forces internalization of all external costs. It can be argued that the non-internalized externalities will be greater with public rights assignments, since the externalities created are greater. If these costs are not completely internalized, the long-run effect is a reduction in the value of land being damaged. This is another cost which landowners have to bear (or which taxpayers bear, if compensation is paid or if the land is publicly owned).Land being damaged is less productive so there is another difference in costs between producers near the urban areas and producers in more rural areas. Landowners near urban areas must spend more to repair damages and maintain productivity. Again, the rent received by more rural landowners is capitalized into the land values and the cost of production is higher. Product price must be higher and output lower relative to what it would be with rights assigned to private individuals.

The traditional explanation of regulation is that the government steps in to prevent or adjust for market failure. The "invisible hand" has failed to guide the actions of self-interested individuals for the benefit of society because of externalities or monopoly power. In other words, what is good for the individual is not good for society, so regulation is required. An alternative explanation of regulation has been offered here. Regulation is simply the way in which self-interested public officials provide benefits, in the form of property rights, to self-interested individuals who form interest groups. If this is true, then government regulation appears to be creating more externalities than it prevents. This results because what is good for individuals who demand and supply regulatory changes in property rights is not good for society as a whole. This "government failure" may in fact be more costly to society than any market failure.

The members of the Anti-Corn-Law League were very much interested in liberty though they did not often discuss the concept in abstract philosophical terms. The members of the League were practical men, better able and more willing to identify and condemn specific political, social, or economic impediments to freedom than to enumerate its philosophical hallmarks. One of the themes found most frequently among the reform ideas of the ACLLers is their abiding distrust and disdain for what they termed aristocratic misrule and class legislation. The members of the League regarded the corn laws as the most glaring example of aristocratic misrule, but in their opposition to this perceived foundation of landlordism, they often found themselves expressing opposition more broadly to what they termed the vestiges of feudalism or the legacy of the so-called Norman Yoke. Their desire to rid Britain of aristocratic misrule and class legislation prompted many Leaguers to oppose not just the corn laws but landlordism, the established church, and all the traditions and privileges that in their view restricted liberty.

The members of the Anti-Corn-Law League tended to view aristocratic privilege and influence in political and social institutions as well as economic relationships as forms of monopoly, and monopoly was something Leaguers opposed in all its variations. This fact is central to an understanding of the nature and scope of opposition to aristocratic misrule by the ACLL. Leaguers were pan of an emerging liberal consensus that placed a very high value on freedom from the constraints of the state, particularly with respect to economic affairs; they opposed the legacy of medieval restrictions and regulations on manufacturing and trade, and deeply resented the continued influence of a privileged landed aristocracy. This developing and cardinal liberal doctrine is in many ways summed up in opposition to monopoly in all its manifestations, and the ACLL was no small contributor to this tradition. Leaguers sometimes recognized monopoly in facets of life that seemed removed from economics.

The Anti-Corn-Law League regarded free trade as an issue of liberty no less than as a matter of economic practicality. Edward Baines, a prominent spokesman for the ACLL and editor of the Leeds Mercury, linked free trade and liberty in The League when he declared:

"Free Trade" means perfect freedom for every kind of industry; and it includes liberty to every man to employ his money or his labour in the way that he himself thinks most advantageous, and to buy and sell wherever he can do so with the greatest profit.

This freedom is man's natural right. Of course it ought not to be invaded in society, unless such invasion can be shown to be necessary for the general good of the community. ... It is obvious that this must be the general rule and practice in every community. ... And upon this rule all Governments do and must act in 999 out of 1000 cases. This rule of Freedom of Industry — which contains in it, when practically applied. an admirable self-regulating and self-adjusting principle — determines how many men shall engage in each particular employment, so as to keep the wants of the community duly supplied."To the Right Honourable The Earl of Harewood, President of the Yorkshire Society," The League, 16 March 1844.

In his argument Baines advanced two important and related ideas: that freedom was a matter of natural right and that it was economically sound. He accused landed protectionists of inflicting a great and oppressive evil upon the country by violating the principle of freedom of industry with the continuation of the corn laws.Ibid. In his declarations Baines echoed the assertions of Adam Smith who had concluded that protectionism was harmful economically, internationally, and socially. Smith had argued that Britain's protectionist policies were posited upon two fallacies: (1) the balance-of-trade fallacy or the notion that it was always better to make goods at home, and (2) the political assumption that a government-led economy would progress more rapidly than a natural one.Frank Fish Walker, Jr., "British Liberalism: Some Philosophical Origins: The Contributions of Adam Smith, Thomas Robert Malthus, Jeremy Bentham, and Herbert Spencer'' (Ph.D. diss., Stanford University, 1957), pp. 35-38. Walker provides an analysis of Smith's Lectures of Justice, Police, Revenue and Arms. Smith believed that mercantilism not only slowed economic progress but also produced domestic social inequalities. In his view, the solution to an intolerable system of privilege was a self-regulating system of natural liberty.Ibid., pp. 37-38.

Richard Cobden, J. B. Smith, and Joseph Brotherton were other League leaders who shared the views of Baines on the relation between natural right and natural law. As early as 1837 J.B. Smith expressed on behalf of Brotherton, who was then a candidate in the Salford parliamentary election opposition to the entire "system of the Corn Laws," as well as "all other monopolies which interfere with & obstruct the general prosperity of the country.""To the Inhabitants of the Borough of Salford," Election Address of Joseph Brotherton, 28 June 1837, J. B. Smith Papers, AD-MCRL. The manuscript is in Smith's hand, and his daughter, Lady Durning-Lawrence, states that her father wrote the address on behalf of Brotherton. Cobden emphasized the inexorable power of freedom of trade as a matter of natural law in his early pamphlet, England, Ireland, and America, arguing that "violence and force never prevail against the natural wants and wishes of mankind; in other words that despotic laws against freedom of trade can never be executed."Richard Cobden, England, Ireland, and America (London: Simpkin, 1835), p. 3. Cobden provides an analysis of the effectiveness of Napoleon's Continental System. See also John MacCunn, Six Radical Thinkers (New York: Russell, 1907), pp. 88-95. The League expressed a quite similar view in "Exportation of Machinery. Effects of the Corn Laws," ACLC, 2 July 1840. Cobden not only equated restrictions on commerce with tyranny but also believed that free trade marked the rebirth of man's right to exchange freely the products of his labor, intelligence, and capital rather than serving the interests of the privileged classes."Liberte et protection, lettres de M. Richard Cobden,'' offprint from Journal des économistes, pp. 235-39, Cobden Papers, WS-PRO.

The agitation against the corn laws embodied by the Anti-Corn-Law League gave a focus to the sentiment opposing all forms of monopoly; many Leaguers believed that the corn laws were the foundation of an entire system of economic, social, and political privilege and that the whole edifice of aristocratic misgovernment and landlordism would be undermined if the corn laws were removed.On the general theme of the corn laws as the focus of a variety of reform interests, see William Cunningham, Rise and Decline of the Free Trade Movement (Cambridge: Cambridge University Press, 1905), pp. 67-74; Alexander Llewellyn, The Decade of Reform: The 1830s (New York: St. Martin's 1971), pp. 142-43; and McCord, Anti-Corn-Law League, pp. 15-21. The Bread Eater's Advocate, the organ of the short-lived National Daily Bread Society, which the League attempted to launch in 1841, made explicit the view that the corn law was "the keystone by which other monopolies are upheld, monopoly in trade, monopoly in legislation, monopoly in religion,""Address to the Council of the National Anti-Corn-Law League," Bread Eater's Advocate, 1  September 1841; see also Fay, Corn Laws and Social England, pp. 402-3. and hailed the repeal of the corn laws as "the first of a series of deep and searching reforms."Ibid. See R. B. McCallum, The Liberal Party from Earl Grey to Asquith (London: Gollancz, 1963), pp. 46-47; G. S. R. Kitson Clark, "The Repeal of the Corn Laws and the Politics of the Forties,'' Economic History Review, 2nd Series, 4 (1951-1952): 12-13; Fay, Corn Laws and Social England, pp. 396-402; and the contemporary pamphlet, Joseph Barker, Blessings of Free Trade . . . and How They May Be Increased and Made Lasting (N.P.: n.p., 1846), pp. 10-11. Opponents of repeal feared the truth of such assertions; see, for example George Calven Holland, Suggestions Towards Improving the Present System of Corn Laws (London: Ollivier, 1841), p. 3. Referring to the corn law, Holland wrote, ''It is the keystone of the arch on which rest the present orders of the state, and to disturb its position would ultimately introduce insecurity and anarchy.'' See also Robert M. Stewart, The Politics of Protection: Lord Derby and the Protectionist Party, 1841-52 (Cambridge: Cambridge University Press, 1971), passim. Opponents of the Anti-Corn-Law League charged that the organization regarded repeal as the first step toward the redistribution of property and republicanism. The League denied such charges, which had appeared in the Berkshire Herald, in "Groundless Alarms, Who's Afear'd?" ABTC, 5 May 1841.

That the Anti-Corn-Law League opposed monopoly in all its variations does not diminish the fact that monopolies of trade were the form of monopoly most directly related to its interests, and clearly the corn laws were the most irksome and significant of these. Of this more will be said in a moment. Particularly in a period of acute economic distress, the ACLL tended to judge issues of monopoly and reform by the standard of how directly they affected the condition of trade, but it was difficult to view the corn laws as an issue entirely separable from politics. After all, the corn laws had been enacted by the legislature; thus the monopoly of the corn laws seemed to be an obvious example of a political monopoly of power held by the aristocratic landowners.

The danger of political monopoly was a theme often found in League newspapers. The League took the view that piecemeal reforms could have little effect so long as the real problem was with the system of monopoly."When Will Trade Improve?" ACLC, 16 July 1840. Members of the League were quite concerned with what they regarded as the increasing threat of foreign competition in manufacturing from both Europe and America, which they believed presented Britain with imminent danger of permanent loss of markets and domestic economic decline. They were very much aware of the dependence of British manufactures on foreign trade and regarded increased foreign trade as essential to economic revival and progress. See, for example, "untitled," ACLC, 28 May 1839; "Machinery for Belgium," 17 September 1839; "Dr. Bowring's Mission," 15 October 1839; ''American Manufacture,'' 10 December 1839; ''Rather Ominous,'' 10 December 1839; "German Commercial League and Dr. Bowring," 23 June 1840; "Progress of Trade Between England, the Great Manufacturing Country, and Russia, Germany, and Prussia, the Great Corn Growing Countries," 21 May 1840; and "Expulsion of Another Manufacturing Process," 31 December 1840. See also "Operatives — Our Dependence on Foreign Trade," ACLC 28 May 1839; and Sidney Smith's lectures in the ACLC, 11 June and 9 July 1839. See "To the Right Honourable The Earl of Harewood, President of the Yorkshire Society," The League, 16 March 1844; and definitions of "competition" and "com laws" in "Correspondence," ABTC, 14 February 1840. In 1840 the Anti-Corn-Law Circular declared, ''The disease is in the SYSTEM, and there it must be attacked. It arises from HEAVY TAXATION AND especially from the LANDLORD'S TAX UPON BREAD.""Address to the Working Classes," ACLC, 26 March 1840. Later that year the same League organ criticized "the present imperfect state of the House of Commons," and accused the landed interests in Parliament of plundering the nation of millions of pounds annually and of causing widespread suffering by their unprincipled and extravagant conduct of the government."Corn Laws and the Agricultural Population," ACLC, 10 September 1840 (reprinted from Prentice's Manchester Tunes); "The Burden of the Food Taxes Estimated in Money," 19 November 1840; ''The House of Commons Itself Charging the Aristocracy with Plundering the Nation of Fifty Millions a Year," 19 November 1840. Charles Pelham Villiers made similar charges in his motion to resolve the House of Commons into a committee to consider the corn laws in 1838, Annual Register, 1838, vol. 80 (London: Knight, 1839), pp. 171-72. For an indication of the sort of suggestions the ACLL received on the issue of political reform, see A. Woodrow to G. Wilson, 18 April 1840, G. Wilson Papers, AD-MCRL. Woodrow called the mixed theory of government a "Monster of Absurdity" and advised the League Chairman, "Before you can reasonably expect to get rid of the corn laws you must strike at the root from whence they spring-change your form of government from the 'Aristocratic' to a 'Representative."' The Anti-Bread-Tax Circular went further in its criticism of parliament, characterizing it as ''a landowners club or trades' union assembly, passing laws to enrich themselves by the impoverishment of the millions they pretend to represent.""Circular," ABTC, 24 March 1842. The article went on to denounce the income tax as a tool introduced when landlords first "warred with the nascent libenies of Europe."

In 1843 the League newspaper asserted that the monopoly of the corn laws was the instrument by which a despotic aristocratic government maintained its arbitrary power, and the following spring The League published a letter from William Griffiths, a Wesleyan minister, which stated that the landocracy "as much represents the inhabitants of the moon as the people. ...""Monopoly Viewed in Connexion with Despotism," The League, 25 November 1843. Griffiths' letter linked the struggle for civil and political liberty:

The Corn law is one fruit of class legislation; and class legislation is at variance with the principles of the British constitution, and deeply prejudicial to the rights of the people. ... The League is teaching the people of this country in what way most effectively, and yet most peaceably, to work out their civil and political emancipation. It aims to enlighten the public mind, and, by means of guiding public opinion, of effecting important political changes.''To the Secretary of the Anti-Corn Law League," The League, 23 March 1844. For a discussion of the ACLL use of public opinion and the advantage of the large body of public sentiment to which the League directed its appeal, see G. S. R. Kitson Clark, "The Electorate and the Repeal of the Corn Laws," Transactions of the Royal Historical Society, 5th Series, 1 (1951): 109-26. There is also some evidence to suggest that opponents of repeal saw the corn laws as essential to the existing political and social system of the nation, Opponents of the 1838 Villiers motion in the House of Commons — the annual test of repeal strength in the Commons — argued in the debate that it was essential to preserve the corn laws "as a political institution — that they were essential to the preservation of our old constitutional system." See Annual Register, 1838, vol. 80, pp. 171-72.

The Leaguers believed that the industrial revolution had brought about fundamental changes in society and economy and that a political system based upon an aristocratic monopoly of power was no longer appropriate. To free-traders the corn laws were not only the most glaring example of the abuses of such a political structure, they were its very foundation. Repeal of the corn laws, in their view, would strike directly at aristocratic misrule and landlordism, for once the monopoly of power of the landed interests was broken by putting an end to protection, the existing system could not long remain unaltered.For a discussion of Cobden and the "new dispensation" of civilization wrought by industrialization, see MacCunn, Six Radical Thinkers, pp. 88-98. See also Cunningham, Rise and Decline of Free Trade Movement, pp. 66-84, and Llewellyn, Decade of Reform, pp. 142-64.

The Anti-Corn-Law League was concerned with forms of monopoly apart from politics as well. Leaguers tended to view the established church as a monopoly of religion and the military as a monopolists' institution, and about these issues more will be said in a moment. Free-traders were also highly critical of the extent to which the corn laws tended to provide a monopoly of capital to the landed interests, literally at the expense of industry, labor, and commerce. A pamphlet by one Leaguer charged landowners with sacrificing the commercial and monetary interests of the nation at "the unholy shrine of Baronial avarice."A Member of the Anti-Corn-Law Association in the Hundred of Bassetlaw, The Corn Laws a National Evil ... (Chesterfield: Atkinson, 1840), p. 3. Similar feelings were expressed at League meetings, in lectures, and in the Anti-Bread-Tax Circular.The Anti-Bread-Tax Circular carried a report of a free trade demonstration held in Edinburgh in early 1843, at which the following lengthy resolution was adopted:That the agriculture of Great Britain has been greatly improved, and the value of land immensely enhanced, by the aid of her manufactures and commerce, while the landowners have ill-requitted the advantages which they have derived from capital, enterprise, and industry of their fellow-subjects, by imposing shackles on trade, and especially by the imposition of the corn and provision laws, which are at once unjust in principle, immoral in tendency, and disastrous in operation, and will be ruinous in their ultimate consequences, as well as to agriculture and landowners themselves, as to the manufacturing and mercantile classes; and that this opinion has been abundantly verified by the experience of the last four years, during which the nation has been reaping the fruits of its unwise, unnatural, and oppressive legislation, in the decline of its trade, the destruction of capital, and the physical, moral, and social deterioration of its operative population. See "Provincial Meetings," ABTC, 24 January 1843. Leaguers believed that the effect of the corn laws was to divert some capital to agriculture and to misdirect capital toward foreign investments, to the detriment of Britain."George Rickardson Porter, Esq.," ABTC, 21 April 1841; "James Deacon Hume, Esq.," ABTC, 21 April 1841; "Why ls Employment So Scarce?" ACLC, 10 September 1840. See Barnes, History of English Corn Laws, pp. 265-66, especially Cobden's speech to the Commons. Capital for agricultural improvement was an important consideration in the implementation of repeal of the corn laws. D. C. Moore has given considerable attention to this issue in "The Corn Laws and High Farming,'' Economic History Review, 2nd Series, 18 (1965-1966): 544-62. See also Betty Kemp, "Reflections on the Repeal of the Corn Laws," Victorian Studies 5 (March 1962): 189-204; and ''The Great Anti-Corn-Law Meetings and Banquets in Manchester,'' ABTC, 1 February 1843, at which R. H. Greg discussed the need for agricultural capital for improvements in order to increase productivity. Leaguers were jealous of the capital that went abroad and dismayed at the extent to which landlords tended not to use the capital which was diverted to agriculture for improvements.

One should not forget that the main focus of the Anti-Corn-Law League was upon the repeal of the corn laws and that they were especially interested in the effect repeal could have upon the state of the economy as a whole."When Will Trade Improve?" ACLC, 16 July 1840. The League regarded the monopoly of the corn laws as having been imposed by a parliament dominated by landlords who passed the laws in order to raise their own rent receipts and to hinder competition. Competition was defined by the League as ''the great balance of power between commercial classes and individuals, whether agriculturalists, manufacturers or merchants. ...''"Correspondence," ABTC, 14 February 1843. See also Morley, Cobden, p. 179. Leaguers viewed monopoly — especially one upon a necessity of life — as being both evil and absurd.Ibid. An article by Edward Baines in the Anti-Bread-Tax Circular condemned the short-sightedness of monopolist policies and argued that by refusing to take the corn of foreign nations, such nations were prevented from obtaining the capital with which to purchase British manufactured goods. Over time, according to Baines, other nations would be driven to manufacture things for themselves and would develop to such an extent that they would begin to threaten British manufactures on the world market. Baines cited the examples of Saxon production of hosiery, Prussian manufacture of cutlery, and Swiss printing of calico."Address to the Boroughs, and c. of England,'' ABTC, 16 June 1841, reprinted from the Leeds Mercury. Similar assertions may be found in the account of the debate on Villiers' motion in 1839 for a committee of inquiry, found in the Annual Register, 1839, vol. 81, pp. 30-31.

Perhaps the most sophisticated analysis of the effects of the monopoly of the corn laws by a member of the League was James Wilson's Influences of the Corn Laws, first published in 1839. In this book Wilson advanced three closely related propositions: (1) that the corn laws produced consequences harmful to all classes of the community; (2) that the agricultural interest itself derived great injury from the existing corn laws and that the value of their property would be enhanced by adoption of "a free and liberal policy with respect to trade in corn"; and (3) that manufacturing interests and the working classes would also derive incalculable benefit from free trade and that the average rates of both wages and profits would be increased by the general increase in prosperity that would result from repeal.James Wilson, Influences of the Corn Laws, As Affecting All Classes of the Community, and Particularly the Landed Interests (London: Longman, 1840), pp. v-vii, 1-6.

It was Wilson's conviction that the prosperity of the whole community was derived from the prosperity of its several parts and that no single interest could be helped by monopoly to the injury of others and still be of benefit to the whole.Ibid. In his discussion of the period from 1815 to 1839, Wilson identified two interests with regard to the corn laws. The first was the interest of the landowners who, in Wilson's view, had used the corn monopoly to protect the value of their property, maintain their contracts and leases, and protect their industry from foreign competition. The second was the interest of the merchants, manufacturers, and mechanics who argued that protection increased the prices of the necessities of life and caused distress and unemployment, as well as a host of other social and economic ills. Wilson argued for a coincidence of interests and suggested that "individuals, communities or countries can only be prosperous in proportion to the prosperity of the whole.'' In his argument for an identity of economic interests, Wilson outlined the main features of aristocratic misrule with respect to the corn laws and attacked the assumptions upon which protection had been based. At the heart of Wilson's argument was the insight that the corn laws, instead of stabilizing prices, had in fact contributed to their fluctuation inasmuch as agriculture, in contrast to industrial production, required a relatively greater lead-time for shifts of production to become felt in the marketplace. Wilson argued that the repeal of the corn laws would raise agricultural prices in relation to the costs of production as well as avoid wild fluctuations in price by stimulating capital improvements in agriculture and encouraging greater economy of labor by introducing machinery. The advantage of this competitive free-trade economy over the existing corn monopoly would be, according to Wilson, the stimulation of productivity increases, and increased productivity of grain was Wilson's solution to the threat of foreign competition. He stated that supply would increase

by the application of more ingenuity, labour and economy, causing altogether so much lessened cost, that the lower price at which an article can profitably be sold will always cause consumption to keep pace with production; and in this case, as the article still yields a profit at the low price, no reaction will ensue.Ibid., pp. 57-58. To the problem of demand for grain being relatively inelastic, Wilson argued that population increases would cause demand to keep pace with productivity increases in agriculture. Wilson demonstrated his conclusions concerning price fluctuations, improvements, and competition by means of a fairly detailed statistical analysis of agricultural production and price levels during the period 1815- 1839. He argued, for example, that the low prices of 1814-1815 had had the effects of discouraging production of domestic corn, attracting less capital for improvement, and reducing the demand for arable land as well as for labor. The result of this situation, in Wilson's analysis, was significantly less cultivation of corn in 1816; this decrease, coupled with a particularly bad season, produced the shortages and the extremely high corn prices of 1817. In Wilson's view, the high prices of 1817-94s./quarter — tended to encourage production, which led to oversupply and ruinous prices by 1822, when wheat sold for as little as 43s,3d./quarter. See pp. 16-23. The impact of Wilson's book was considerable. The book itself and its main arguments were cited many times by the League in its newspapers and by League leaders and spokesmen in their speeches and writings. Archibald Prentice, for example, employed not a few of Wilson's arguments in the series of lectures he delivered in northern agricultural districts in 1842. See "Farmers and the Corn Laws," ABTC, 13 December 1842, reprinted from the Chester Chronicle.

A moment ago it was suggested that members of the Anti-Corn-Law League found that their opposition to what they regarded as the foundation of landlordism led them to criticism of landlordism itself. The term landlordism was often employed by the League, but it was seldom more than vaguely defined. It referred broadly to the political power, social influence, and economic control on the part of those who lived on receipts from their rent rolls, but it also referred, more narrowly, to the laws, traditions, and privileges that determined the relations between landowners and tenants. Members of the ACLL were opposed to the legacy of medieval regulation of trade and industry, and they regarded landlordism as a pernicious vestige of feudalism that the progress of a new industrial age should have swept away. Landlordism was the source of aristocratic power and misrule, and Leaguers believed that if the foundation of landlordism, the corn laws, could be undermined, the hold of landed aristocrats upon the reins of economic, social, and political control would be broken or at least seriously weakened.Apart from opposing landlordism as antithetical to free trade, as a vestige of feudal privilege, or as the political or social system of the corn laws, the League had other incentives for criticism of the elements of landlordism. Leaguers actively sought the support of both tenant farmers and agricultural laborers; this was especially so after the spring of 1843, when the League began a direct and extensive effort to obtain support from agriculturalists for repeal of the corn laws. There is little doubt that expression of sympathy for the problems and aspirations of tenants and laborers was of considerable importance in the effort to attract their support.

The League depicted the struggle against the corn laws as a struggle against the landowners and suggested that class legislation was responsible for the condition of the country. That this view was espoused by the propaganda machine of the League does not diminish the fact that it was sincerely held. The problem, according to the League newspaper, was a political and social system in which power resided in a parliament of landlords:

The Imperial Parliament is a landlord Parliament. Its laws are the decrees of landlords. The internal and subordinate government of the country, the county management, the quarter sessions, the labours of the magisterial office, — all or nearly all, is in the hands of the landlords."The Landowners. What Have They Done?" The League, 30 December 1843.

The Anti-Bread-Tax Circular reported on a lecture by J.C. Fitzgerald in Liverpool, in which he asserted that destruction of the barriers to trade would open a breach in the citadel of aristocratic power and corruption through which the middle and working classes would then pour."Lecture by Mr. J.C. Fitzgerald, A.B.," ABTC, 14 March 1843. And in a letter to Cobden, W. Cooke Taylor, a prominent League writer, described the repeal agitation as the latest campaign in the old war against the Norman Yoke.Taylor to Cobden, December 1841, Cobden Papers, WS-PRO. Taylor wrote:Viewed merely in a historical point of view, the struggle between the industrial spirit of the Saxon race, & the military despotism of the Normans is one of the most interesting on record. Every insurrection from 1066 to the present day was more or less designed to set industry free from the trammels which had been imposed upon it by feudalism. Wat Tyler took up arms against an unjust system of taxation; Ship-money, tonnage and poundage were the main causes of the Great Civil War, & the Hanoverian succession was chiefly effected by mercantile interests.     Taylor's historical analysis may be open to question, but his letter illustrates the extent to which free-traders viewed their agitation as a battle against feudal privilege and landlordism. James Wilson took a view of the repeal agitation quite similar to that of Taylor. See James Ashley Moncure, "James Wilson and The Economist, 1805-1860" (Ph.D. diss., Columbia University, 1960), pp. 166-67.     Cobden, Bright, Fox, and other prominent League spokesmen took up the themes of feudal privilege and landlordism in their agitation against the corn laws. See Hansard 's Parliamentary Debates, 3rd series, vol. 78 (London: Hansard, 1803-1891), pp. 785-810. This speech by Richard Cobden to the House of Commons was also cited by Prentice in History of the Anti-Corn-Law League, pp. 305-9. See also John W. Derry, The Radical Tradition: Tom Paine to Lloyd George (New York: St. Martin's, 1967), p. 216; McCord, Anti-Corn-Law League, pp. 20-21; and Barnes, History of English Corn Laws, pp. 211-16. See ''Specimens of the Aristocratical Contempt for the People," ABTC, 19 May 1841. The ACLL advertised in The League, 23 December 1843, a book highly critical of artistocrats by J. J. Macintyre entitled The Influence of Aristocracies on the Revolutions of Nations Considered in Relation to the Present Circumstances of the British Empire. See also M. A. Fitzsimons, "Britain in the 1840s: Reflections in Relevance," Review of Politics 31 (October 1969): 52; "Miscellaneous. The League Agitation," The League, 6 April 1844, reprinted from Tait's Magazine.     For more on the theme of the Norman Yoke, consult Theodore Barth, "A Jubilee of Free Trade and Democracy,'' in Henry Dunckley, et al., eds., Richard Cobden and the Jubilee of Free Trade (London: Unwin, 1896), pp. 122-66 and especially p. 133. See also Cobden, "Liberte et protection," offprint from Journal des économistes, pp. 236-38, Cobden Papers, WS-PRO; Ausubel, Bright, p. viii; Richard B. O'Brien, John Bright (London: Nelson, 1913), pp. 28-52 passim; John Bright, Notes for a Speech at Free Trade Hall, 10 January 1849, Bright Papers, British Museum Add. MSS. 43,392; and John Bright, Notes for a Speech on the Irish Question at Free Trade Hall, 25 October 1849, Bright Papers, British Museum Add. MSS. 43,392. See too Richard Garnett, Life of W. J. Fox, Public Teacher and Social Reformer, 1786-1864 (London: Lane, 1910), pp. 264-65, speech delivered by Fox at Covent Garden Theatre on 7 August 1844.

That the Anti-Corn-Law League took considerable interest in landlordism as a system of economic control, political power, and social influence seems clear enough, but they also demonstrated concern with those elements of landlordism which pertained to the relationship between landlord and tenant. The League gave a fair amount of attention to the plight of farmers and agricultural laborers, and it placed a good deal of emphasis on conditions of distress in agricultural districts as well as in urban areas.See, for example, "The Labourers of Dorsetshire," ABTC, 21 March 1843. The League blamed the corn laws, and thus the landowners, for the degradation of agriculture and demanded better living and working conditions for farm laborers, facilitation of improvements, fair rents, changes in landholding tenure, and abolition of the game laws. At the height of the ACLL appeal to agriculture in late 1843, The League declared,

Until the landowners of this country have abandoned their monopoly, surrendered their obsolete feudalities, and granted long and rational leases, we trust that whenever the hypocritical exhortions of the lords of the soil to tenants to "perform their duty to the labourers" are heard some tenant-farmers will start up and say, "YOU, THE LANDOWNERS, ARE ALONE TO BLAME FOR THE PRESENT CONDITION OF THE AGRICULTURAL LABOURERS, BECAUSE YOU HAVE SACRIFICED THE WELFARE OF THE COMMUNITY AND THE INDEPENDENCE OF THE TENANT-FARMER TO YOUR GREED FOR RENT, YOUR DELIGHT IN SELFISH PLEASURES, AND YOUR LUST FOR POLITICAL POWER."Agriculture," The League, 30 December 1843.

The appeal of the ACLL to farmers contained two main arguments: the first was that the corn laws protected the interests of landlords by raising rents more than they protected the interests of farmers by raising prices; and the second was that the general economic prosperity they believed would result from repeal would be of greater benefit to farmers than that which they might derive from the protection of high duties on corn.Richard Cobden, Total Repeal, Speech by R. Cobden, Esq., M.P., in the House of Commons on Monday, May 15 (Manchester: ACLL, 1843): ''The Protection-to-Labour Fallacy Exploded,'' ACLC, 27 August 1840; "The Farmers' Interests Best Consulted by a Regular Importation of Corn,'' ABTC, 13 December 1842; and ''The Great Anti-Corn-Law Meetings and Banquets in Manchester,'' ABTC, 1 February 1843. The widely distributed League tract, Facts for Farmers (Manchester: Gadsby, n.d.) argued (pp. 1-4) that neither tenants nor agricultural laborers derived any real benefit from the corn laws and accused landlords of being ''guilty of all the evils, crimes, miseries, and physical and moral deteriorations which are inflicted upon the people by the corn laws.'' The problem that faced British agriculture, with or without protection, was profitability. Leaguers believed that agriculture could remain profitable only so long as its productivity showed signs of increase, and improvements were, in their view, essential to this process. ''Improvements in Agriculture the Best Protecting Duty," ACLC, 3 September 1839; "Improved Farming — Who is to Begin?" The League, 21 September 1844; "High Farming vs. Monopoly," The League, 21 September 1844, Cobden had long held the view that aristocrats stood in the way of capital improvements in general; see Cobden, England, Ireland, and America, pp. 30-34, as well as Cobden to Bright, "private," 1 October 1849, Cobden Papers, British Museum Add. MSS. 43,649.

At the annual meeting of the Anti-Corn-Law League in January of 1843, an entire session was devoted to discussion of the effects of the corn laws upon the agricultural classes. One important theme of this discussion was the need for agricultural improvements. R. H. Greg, a well-known member of the ACLL, expressed the view that agricultural productivity could be as much as quadrupled if capital were reinvested in agriculture rather than siphoned off in higher and higher rents.''The Great Anti-Corn-Law Meetings and Banquets in Manchester,'' ABTC, 1 February 1843. Resolutions were passed without opposition which asserted that profitability could be restored to agriculture by better management and that repeal of the corn laws was the fastest method by which to relieve agriculture by permitting the tenant farmer to "be better able to enter into new arrangements with his landlord, experience less wasting of his capital, and be stimulated to increased production."Ibid.

The Anti-Corn-Law League urged "high farming" as a solution to the difficulties of agriculture because it regarded productivity increases as essential to sustained prosperity. The League asserted that improved farming required longer leases and fairer rents to permit efficient capitalization and investment for competitive production."Improved Farming — Who is to Begin?" The League, 21 September 1844; and "High Farming vs. Monopoly," The League, 21 September 1844. The importance of better management of estates and agricultural improvements in the process of repeal of the corn laws was perhaps first recognized by D. C. Moore in "The Corn Laws and High Farming" in Economic History Review. Moore was interested in those elements of Peel's 1846 Corn Importation Bill which were intended to encourage and facilitate high farming. Moore emphasized that Peel was largely an agriculturalist in outlook and recognized the value of high farming. Under Peel's bill, repeal was not immediate but to be phased in over a period of three years. The heart of Moore's analysis is his discussion of the specific provisions of the bill and Peel's general scheme for agricultural improvement, which was to facilitate the development of high farming. Of great significance, according to Moore, was government assistance for loans to improve drainage, which, though not of an enormous amount, did much to popularize high farming through introduction of technological improvement. Moore asserts that Peel's Corn Importation Bill was an aid to agricultural improvement and that the provisions of the bill that dealt with improvements were of considerable importance in getting a sufficient number of agriculturalists to accept repeal. The Anti-Corn-Law League opposed "compensations" to farmers in the form of drainage loans, arguing that such loans drawn from the public treasury bore "a strong family likeness to protection against competition" and were "marvelously apt to be metamorphosed, when the public is not looking, into gifts." See "The Compensation," The League, 31 January 1846. In 1845 the League announced plans to purchase a model farm in Buckinghamshire to demonstrate that insecurity of tenure and high rents were the reasons that farmers lacked sufficient capital to make essential improvements for profitable agricultural production.Annual Register, 1845, vol. 87; pp. 63-65. Cobden spoke on March 13, 1845. In a letter to George Wilson, Richard Cobden described the project as "a model farm with a model lease-model offices & model cottages with gardens to prove our faith in our principles that the soil is capable of as great & profitable development as manufactures." See Cobden to Wilson, undated, Friday, G. Wilson Papers, AD MCRL. The letter was almost certainly written on Friday, 14 March 1845, for in it Cobden refers to his speech on Thursday. In the letter Cobden outlined his discussion of the project with John Bright and mentions that purchase of such an estate could lead to the creation of a thousand new county voters. He suggests that the money be raised in £60 shares and believes that it could be collected within a fortnight. Cobden emphasizes that some "first rate farmer" should take the lease and that for the time being nothing should be said about the creation of new electors.

One member of the Anti-Corn-Law League, Charles Sherriff of Gloucestershire, argued at the 1843 annual meeting of the League that during the Napoleonic Wars farmers had made money not because prices were high but because they were relatively higher than the rates for which rents had been calculated. Sherriff stated that as soon as existing engagements between landlords and tenants had expired, rents were increased and farmers made no more money than they had before prices had begun to rise at all. Since the reimposition of the corn laws in 1815, asserted Sherriff, farmers had benefited only from rising prices and not from risen ones. Sherriff expressed the conviction, amidst the approving shouts of his listeners, that every lowering of the corn duty on the sliding scale without a corresponding abatement of rents further damaged the position of farmers.''The Great Anti-Corn-Law Meetings and Banquets in Manchester,'' ABTC, 1 February 1843. According to Sherriff,This is the way farmers have been protected, protected from everything but poverty, dependency, and debasement. I see no prospect of better times for the farmer until prices get down as low as they can. Open the ports, and prices and rents will fall at once, and not in the slow farmer-killing way they have done since the war. Your manufactures would revive; your operatives would fill themselves; the consumption of the country would increase amazingly. Ships would clear out, laden with goods, and return with corn. I think the prices of farm produce would begin to rise, and farmers reap the benefit; rents would also rise. In its appeals to landlords, the ACLL employed the argument that repeal of the corn laws would at the very least not diminish rents and would likely have the effect of increasing them. On the surface it may appear that this view was inconsistent with the assertions the League made with respect to rents in its appeals to farmers, and one must remain cautious in accepting the assertions of a propaganda machine. Yet, there is considerable evidence to suggest that Leaguers believed that under a system of free trade, profits, prices, and wages would all increase — and that they would do so faster than rents; thus rents might increase absolutely while declining in relative terms. See "The Free Importation of Foreign Corn Must Raise the Landlords' Rents," ACLC, 20 August 1839. See also "Dialogue Between a Landlord and a Merchant," ACLC, 20 August 1839; Arthur Morse, Agriculture and the Corn Law. Prize Essay Showing Injurious Effects of the Corn Law Upon Tenant Farmers, and Farm Labourers (Manchester: Haycraft, 1842), pp. 1-16.

In addition to concern for the problems of high rents, the Anti-Corn-Law League expressed considerable sympathy with the desire of farmers for greater security of tenure, seeing such a development as crucial to improvements. Late in 1843 the League advocated "long and rational leases" and attempted to give this demand definition in their newspaper. The League suggested leases of twenty-one years' duration with provisions for punctual payment of rent; rights of tenants to consume the hay, straw, and roots produced on their holdings; and provisions to leave fallow an appropriate amount of land to prevent exhaustion of the soil. The League also called for provision of decent cottages and for such improvements as drainage and removal of fences and hedgerows."Agriculture,'' The League, 30 December 1843. See also ''The Great Anti-Corn-Law Meetings and Banquets in Manchester," ABTC, 7 February 1843; "Land Tenure Inquiry in England," The League, 16 December 1843; "Security of Tenure," The League, 13 September 1843; and "Leases Essential to Agricultural Improvements," The League, 31 August I 844, reprinted from British and Foreign Review.

The aspect of the relationship between tenants and their landlords that received the greatest attention from the Anti-Corn-Law League was the aristocratic privilege of the game laws. The game laws were those statutory provisions which reserved the hunting of wild game to the owners of the land and imposed what were often stiff criminal penalties for poaching. These laws were an enormous irritation to farmers who annually lost a portion of their crops to hares and birds, which they were prohibited from controlling, and the game laws were an impediment to those who might like to supplement their meager diets — particularly in times of such severe economic distress — with fresh meat from the hunt.

League newspapers carried articles that complained about the game laws, and such reports became a regular feature of The League from the spring of 1844 until repeal of the corn laws. These articles pointed out the damage to agricultural production caused by wild game, attempted to show connection between rural crime and the game laws, and lamented the penalties imposed upon those convicted of poaching."The Bread Taxers' Hunt," ACLL, 17 December 1840, reprinted from The Sun; "Game & Crime," The League, 30 March 1844. See also "Game"; "A Country Gentleman on the Game Laws"; "Game-Preserving and Incendaries"; "The Game Laws: The Farmer's Bane, the Pea-sant's Curse"; and "Poaching Extraordinary" — all in The League, 13 July 1844, and all reprinted from the Brighton Herald. See P. B. Munsche's recent study, Gentlemen and Poachers: The English Game Laws, 1671-1831 (Cambridge: Cambridge University Press, 1981) as well as "Rural Crime — The Game Laws," The League, 8 June 1844; "Effects of the Game Laws," The League, 24 August 1844, reprinted from the Leeds Mercury; "What Make (sic] Poachers," The League, 31 August 1844; and "Anti Game-Law Meeting," The League, 27 June 1846. In reports written by the Anti-Corn-Law League and those reprinted from other newspapers, the game laws were characterized as a legacy of the Norman Yoke and as a prime example of aristocratic privilege and landlordism. The game laws, complained one article in the League organ, had made wild animals the private property of the landowners, giving them additional income from the sale of game, saying that the landlords had personal pecuniary interest in protecting game because,

... the more game there is, the more profit for them; and this is the more admirable because the increase of game is attended with no increase of expense, and all the game is ... kept by the farmers. The hares and rabbits, the pheasants and the partridges feed on the farmer's corn; but he dares not touch one of them; though fed by him, the game, whether bird or beast, is claimed by the landlord as his property. The English landlord, in verity is a man who gathers what another has sown; to take what another had fed, claims it as his property, sends it to market, and places the money got from the sale in his own pocket. This is the landlord's notion of equity, justice, and fair dealing."Game," The League, l3 July 1844, reprinted from the Brighton Herald. See also ''Game-Law Oppression. The Modern Forest Laws," The League, 2 November 1844. Harriet Martineau's book, Forest and Game Law Tales, 3 vols. (London: Moxon, 1845), emphasized the same theme. See "Review," The League, 17 January 1846.

The ACLL attributed much rural crime to the game laws, charging landlords with taking land out of production for preservation of game and with imposing by class legislation the economic conditions that led to poaching. The League regarded arrests for poaching as a measure of economic distress, reporting that between 1842 and 1843 poaching offenses had increased by well over 100 percent."Rural Crime — The Game Laws," The League, 8 June 1844; "Effect of the Game Laws," The League, 24 August 1844; "Game and Crime," The League, 30 March 1844; and numerous reports under the heading "The Game Laws," in The League, 11 January 1845.

Anti-Corn-Law Leaguers opposed landlordism as a vestige of feudal privilege and as an impediment to progress, but their antipathy to aristocratic misrule and the social and political domination of landlords went quite beyond agricultural considerations and economic relationships. In a variety of ways the Leaguers viewed the established church as a noxious example of aristocratic misrule. Leaguers were dismayed at the lack of support the Church of England displayed for what Leaguers perceived as a fundamental issue of morality, and they accused the established church of having a pecuniary interest in a continuation of the corn monopoly. A great many Leaguers bitterly opposed tithes and church rates and expressed strong sentiments in opposition to establishment itself.

One of the few Anglican clergymen who took an active part in the agitations of the League was the Reverend Thomas Spencer of Hinton near Bath. Spencer and other Leaguers emphasized almost from the beginning that repeal was a religious question and that alleviation of the sorrows of the poor and the feeding of the hungry were moral duties to be fulfilled by opposing the corn laws. In 1839 Spencer appealed to Dissenters, urging them not to gratify Anglicans with indifference to the issue and not to be intimidated by charges which might come from churchmen that opposition to the corn laws was somehow subversive in nature. He wrote,

... nothing gratifies the high churchman more than to see a timid line of conduct on the part of dissenters, in any question in which their principles are involved. He rejoices to see a man silent, and shrinking from the post of danger, lest he should be called a political dissenter, the ally of Papists and Socinians, the companion of radicals and infidels."The Repeal of the Corn Laws a Religious Question," ACLC, 26 November 1839, reprinted from The Patriot. The League itself appears to have tried to use the moral argument to encourage greater support from the Anglican clergy, or at the very least to demonstrate their indifference to suffering, when it published a review of a book that detailed the conditions of the laboring poor and that was directed specifically to Anglican clergymen. See "Review," ACLC, 1 October 1841. The book being reviewed was An Address to the Clergy of the Established Church Showing the Tendency of Starvation to Engender Epidemic Disease, by "A Physician,'' and published in London by Roulston and Hughes in 1841.

Four years later Spencer argued in another pamphlet that religious men had an obligation to be politically active and called on men of conscience to "use all peaceful means to accomplish wise and salutary reforms in church and state."Thomas Spencer, Religion & Politics: Or, Ought Religious Men to Be Political? (London: Green, 1843), passim. Spencer, who became known as the Anti-Corn-Law Curate, produced a pamphlet in 1840 that was designed to appeal to his co-religionists. The Prayerbook Opposed to the Corn Laws: Or, Who Are the Nonconformists? used the church catechism and the scriptures to explain that the corn laws were contrary to the prayer of Jesus that each man should have his daily bread. The League took considerable interest in this pamphlet, publishing portions of it in the Anti-Corn-Law Circular, and Spencer apparently had a thousand copies sent to the League during the summer of that year. Two years later the League published an address to farmers that cited the teachings of Thomas Cranmer, in which the Anglican martyr had asserted that the excessive corn prices of his time were equivalent to theft in the eyes of God. Thus the ACLL attempted to enlist the support of Anglicans as well as Dissenters, though not often with great success. See Thomas Spencer, The Prayer Book Opposed to the Corn Laws: Or, Who Are the Nonconformists? (London: Green, 1840), passim. This pamphlet was extracted by the ACLL as ''The Prayerbook Opposed to the Corn Laws; Or, Who are the Nonconformists?" in ACLC, 21 May 1840. See Spencer to ACLL Office (Wilson?) 25 July 1840, ACLL-Letterbook, AD-MCRL. References to Thomas Cranmer appeared as "An Address to Farmers, at Over, in Cheshire," ABTC, 3 November 1842. The address had originally been delivered by Rev. Gilbert Elliott on 26 October 1842, when Prentice had met with a deputation from Northwich to plan a conference of farmers.

The Anti-Corn-Law League was disappointed with the degree of support they received from the clergy of the established church. Only a handful of Anglicans were among the more than 800 clergymen who attended the Conference of Ministers of Religion in August of 1841.Two issues of the ABTC were entirely devoted to this conference — 12 August 1841 and 26 August 1841. See also the ACLL's Report of the Conference of Ministers of All Denominations on the Corn Laws (Manchester: Gadsby, 1841). Support from and participation by the Anglican clergy was so slight that the League felt it necessary to counter charges that the conference was a sectarian meeting of Dissenters from which Anglicans had been excluded and which amounted to "a conspiracy for overthrow of Mother Church."''Opinions of the Press Regarding the National Conference of Ministers at Manchester,'' ABTC, 29 July 1841. The charge of conspiracy had first appeared in the Blackburn Standard on 21 July and had been reported by other papers including the Bolton Free Press. See "To the Editor of the Anti-Bread-Tax Circular," ABTC, 29 July 1841. This letter from Rev. J. W, Massie denies the charges and emphasizes that the clergy from the Church of England had been invited and that some were in fact planning to attend.

The League accused the clergy of the Church of England of opposing repeal because they were themselves beneficiaries of the corn monopoly. The Anti-Corn-Law Almanack published a list of "mitred bread taxers" in 1840, and the League urged the widest possible distribution of the almanacks, including placement in all public locations."The Anti-Corn-Law Almanack," ACLC, 19 November 1840. In 1842 the League accused its clerical opponents in the Church of England of opposing repeal because they had ''a direct pecuniary interest in raising the price of bread ... and in starving the poor."''Corn Law Consistency — Our Clerical Opponents,'' ABTC, 27 December 1842. Cogden repeated the same charge at an ACLL meeting in Bradford, which was reported in ''Provincial Meetings,'' ABTC, 11 January 1843. The prominent spokesman of the League, Col. T. P. Thompson, explained in the Anti-Bread-Tax Circular that tithes had been converted,

not into a permanent payment in money, but into a permanent payment of so many quarters of corn, or the value thereof. And what is the effect of this? Manifestly to attach the interests of the clergy forever, and forever to the conservation of the corn laws. A clergyman is to receive annually the value of. say 100 quarters of com. If corn is at 80s. a quarter, he is to have £400 a-year; and if at 20s., he is to have £100.Ibid.

The League asserted that the selfish interests of the landlords were the same as those of the clergy of the established church in a variety of ways. An early issue of the Anti-Corn-Law Circular explicitly included the established church in its indictment of aristocratic misrule and urged denunciation of the corn laws as exactions of the Church of England."The Corn Law the Cause of Revolution," ACLC, 1 October 1839. The article complained that the opponents of repeal in the Church of England ''will insolently thrust in our face their fat establishment, and make the necessity of preserving it in its plethoric condition one of the chief arguments for supporting pauper robbery." League leader J.B. Smith assured Sidney Smith just prior to the latter's departure on a lecture tour in 1839 that the state church was "fair game," though he advised that it would be best to avoid sectarian views and remarks that might give offense on religious grounds.J. B. Smith to Sidney Smith, 3 July 1839, J. B. Smith Papers, AD-MCRL. Smith warns his reader not to reveal his Unitarian views, writing, "Above all do not let the cloven foot be seen [Unitarianism] such is the ignorance & prejudice of people that the fact of a man being a Socinian is enough to destroy the effect of everything he says on any other subject." In a report denouncing tithes and Sir Robert Peel's defense of the corn laws as just compensation for the tax burdens borne by the landed interest, the Anti-Bread-Tax Circular relied on a characterization from the Nonconformist. The latter asserted that the state church was peculiarly an institution of the landed aristocracy, describing it as "a convenient and pleasant pasture ground upon which younger sons and dependent relatives may feed in quiet — a luxuriant prairie offering abundance to those who would else be supernumeraries on the estate.""Sir Robert Peel," ABTC, 15 August 1841. An anonymous pamphlet, The Church and The League, published by the Anti-Corn-Law League printer, John Gadsby, charged the aristocracy and its church establishment with opposing cheap bread and declared,

That the Bishops and the hosts of Clergymen who are sighing for Episcopal dignities should hate and oppose the Anti-Corn-Law League will not be a matter of surprise to those who have studied the history of Priestcraft. The League is the foe of aristocratic injustice, and the State-Church is the creature and tool of the Aristocracy.The Church and the League (Manchester: Gadsby, n.d.), pp. 1-8.

Perhaps the boldest assertion of a coincidence of interests between the established church and the landlords to be published by the League appeared in the form of a letter to the editor of the Anti-Bread-Tax Circular in 1841. The letter included an extract from the Dorset Chronicle in which, "with blushing effrontery it is acknowledged that the existence of the Church of England is staked on the corn laws.''"The Parsons and the Corn Laws," ABTC, 29 July 1841. The extract from the Dorset Chronicle charged Dissenting ministers with opposing the corn laws, in part, because they knew,

that with the corn laws, and the farmers, and the landlords, the Church itself will fall: that bound as they are by the Tithe Commutation Act; the clergy of the Church of England are dependent upon the price of com. ...Ibid.

Tithes, even in commuted form, and church rates were sources of considerable resentment to many Leaguers, especially to Dissenters. Leaguers regarded tithes as a form of church taxation that, by its nature, infringed upon political and religious liberty; many Leaguers expressed the view that tithes were a land tax not fairly home by the landowners themselves.McCord, Anti-Corn-Law League, pp. 15-17; ''A Voice from the Board of Trade,'' ACLC, 26 March 1840; J. D. Hume, Evidence on Import Duties (Manchester: ACLL, n.d.). The League newspaper published a parable from Bulwer's England and the English which depicted Industry as a great giant fettered by tithes and bounties. Sec "The Giant Industry in Fetters," ACLC, 10 September 1840. See also "Questions for the Times," ACLL Circulars and Tickets, SSL-MCRL, and W. J. Fox, "The Politica1 Influence of a Church Establishment," in Lectures Addressed Mainly to the Working Classes 1845-49, 4 vols. (London: Charles Fox, 1845-1849), vol. I, pp. 285-99. Leaguers opposed tithes also as a land tax not fairly borne by the landowners themselves. The ACLL reprinted pamphlets by J. D. Hume on this subject, including extracts from a series of letters by Hume in Evidence on Import Duties, in which Hume was highly critical of the corn laws, asserting that they acted as a form of tax-relief for landlords by shifting the burden of land taxation to laborers and manufacturers. W. J. Fox took a quite similar view. As an organization the Anti-Corn-Law League did not express strong opposition to church rates, but many prominent members of the League were openly critical of such taxes.Joseph Brotherton was an early opponent of church rates and so was Joseph Hume; in 1834 both men supported Lord Althorp's plan for removal of church rates and for putting the cost of upkeep and repair of church property on the land tax. See Brotherton to J. B, Smith, 21 April 1834, J, 8. Smith Papers, AD-MCRL. J. 8. Smith emphasized his opposition to church rates when he stood for Parliament at Blackburn in 1837, See Election Broadside of J. 8. Smith, 19 July 1837, J. 8. Smith Papers, AD-MCRL. Rev. Thomas Spencer mentioned church rates as among laws that religious men with the welfare of mankind at heart should examine — and oppose — in order to accomplish necessary reforms of both church and state, See Spencer's pamphlet, Religion & Politics, pp. 14-16.     In an address to electors published in The League for the City of London by-election of 1843, the League author followed the example of the Council and disavowed participation in general politics, but he called the attention of electors and readers alike to the fact that the monopolists' candidate, Mr. Baring, supported the perpetuation of church rates and that he had endorsed the education bill during the previous parliamentary session. See "To the Electors of the City of London," The League, 14 October 1843, and "Questions for the Times,'' ACLL Circulars and Tickets, SSL-MCRL. John Bright was the most outspoken League critic of church rates, particularly following the highly controversial referendum over church rates in Rochdale during the summer of 1840.John Bright, Address to the Inhabitants of Rochdale on the Late Church Rate Contests with some Remarks on an Address by the Vicar of Rochdale (Rochdale: James and Crosskill, 1840), p. iii and pp, 1-24 passim. Bright railed against the maintenance of a system of worship by compulsion and was outraged at what he regarded as fraudulent voting at the Rochdale poll and intimidation of opponents of the rates by calling out troops. Bright's blistering pamphlet indicted church rates in general and the Rochdale poll and rate proposal in particular, and it was republished numerous times. Bright complained that the established church had ten places of worship in Rochdale that had been provided by government funds already, and that the forty-four chapels of Dissenters in the parish had been constructed from private contributions and provided "for the decent maintenance of Divine Worship, without compelling from any, much less such of their neighbors as never enter them." See also William Robertson, Life and Times of the Rt. Hon. John Bright, M.P., 2 vols. (London: Cassell, 1877), vol. 1. pp. 98-110; Read, Cobden and Bright, pp. 90-92; and Robbins, Bright, pp. 25-27. In 1841 Mr. Easthope offered a motion in the House of Commons to abolish church rates and to empower members of the Church of England to rate themselves for pews, seats, and repairs. See Annual Register, 1841, vol. 83, pp. 82-83.

Opposition to tithes and church rates was an expression of something more than an unwillingness to contribute to the operation or upkeep of the Anglican Church; it was a manifestation of a general antipathy to established religion. Several leading spokesmen of the Anti-Corn-Law League opposed establishment on principle; Bright, W. J. Fox, and other Leaguers opposed the Maynooth Grant in 1845 on grounds that it was tantamount to establishment of a second religion in Ireland.John Bright, Speeches on Questions of Public Policy, ed. J. E. T. Rogers (London: Macmillan,  1868), 16 April 1845, p, 296. See Also Trevelyan, Bright, pp. 160-62. Cobden, an Anglican, was far more willing than Bright and other Leaguers to accept the position of the established church in English society. See William Harbutt Dawson, Richard Cobden and Foreign Policy: A Critical Exposition With Special Reference to Our Day and Its Problems (London: Allen and Unwin, 1926), p. 72; Morley, Cobden, pp. 117-22, 486. Bright tended to see privilege, whether religious or political, as part of a single exclusive system maintained by Anglican landed aristocrats and gentry. See Read, Cobden and Bright, pp. 90-91. Ebenezer Elliott, the Corn Law Rhymer, favored disestablishment of the Church of England, too. See Simon Maccoby, English Radicalism (London: Allen and Unwin, 1935), p. 18l. W. J. Fox asserted that the tendency of any church establishment, regardless of form or creed, to impinge upon liberty was

of a most pernicious description, and altogether incompatible with the equality that ought ever to prevail among different classes constituting a community: and ... the existence of a priestly order, is unfavourable to human knowledge, freedom, or happiness, and had always been so; in any nation, at all times, and under all circumstances.Fox, "The Maynooth Grant," in Lectures, vol. 1, p. 336.

Fox believed that a church establishment infringed on political equality and that the privileges of an established religion implied restrictions and exclusion on all those who did not subscribe to it.Fox, ''The Political Influence of a Church Establishment,'' in ibid., pp. 285-99; and ''The Political Influence of a Church Establishment, 2nd Lecture," in ibid., pp. 300-17.

Perhaps the most outspoken opponent of an established church among the Anti-Corn-Law Leaguers was Edward Miall, the editor of The Nonconformist and founder of the Anti-State-Church Association. In his book, The Nonconformist's Sketch-book, Miall called for a complete separation of church and state, which would forbid any public funds from supporting a church, abolish all privileges connected with the profession of an authorized creed, and repeal all laws that empowered civil magistrates to exercise authority in religious matters. Miall described the Church of England as "an engine admirably suited to work out the purposes of the aristocracy'' — which he identified as the throne, monopoly, education, and war.Edward Miall, The Nonconformists 's Sketch-book: A Series of Views of a State-Church and Its Attendant Evils (London: Aylott and Jones, 1845), passim; Arthur Miall, Life of Edward Miall, formerly Member of Parliament for Rochdale and Bradford (London: Macmillan, 1884), pp. 33-123. Miall's book was a collection of articles written for the Nonconformist from 1841 to 1845. The avowed object of Miall's journal was disestablishment of the Church of England. In the book, Miall attacked the argument that government should provide for the religious instruction of its subjects, argued that a state church was contrary to Christianity, and blamed established religion for a wide variety of social evils. See Dictionary of National Biography, vol. 13, pp. 324-26. Consult the anonymous pamphlet, The Church and the League, published by Gadsby, for a similar view.

Members of the Anti-Corn-Law League were not the only ones to associate opposition to the corn laws with opposition to the established church. As early as 1839, the League newspaper reported that the Conservative Journal had charged the ACLL with promoting the cause of popery by advocating repeal of the corn laws. Opponents of the League suggested that repeal of the corn laws would "uproot the Protestant aristocracy, and utterly ruin the farmers of England of whom it may be truly said, they constitute the most thoroughly Protestant portion of the community.""Conservative Journal," ACLC, 10 December 1839. See also '"No Corn Laws' versus 'No Papery,"' ACLC, 5 November 1840, reprinted from The Examiner. The Anti-Corn-Law Circular quoted the Conservative Journal as saying,

The uses to which the Papists would tum the triumphs of "philosophical" Radicalism would not, moreover, terminate with the overthrow of the Protestant Church, and the Protestant aristocracy. No; the establishment of Popery might be expected to follow almost as a matter of course.Ibid.

The opposition of the members of the Anti-Corn-Law League to the privileges of landlordism and the implications of aristocratic misrule led them naturally to criticism of other institutions (in addition to the established church) that many Leaguers associated with the privileges of the landlord class. Such institutions included the universities, the army and navy, and the diplomatic service.

The papers and publications of the Anti-Corn-Law League do not reveal an overwhelming interest in the universities, but such references as there are leave little doubt that the universities were regarded as bastions of protectionism and privilege. Relations between Leaguers and academics got off to an inauspicious start when two League lecturers, Sidney Smith and J. H. Shearman, sent to Cambridge in May of 1839, were attacked by "a gang of unfledged ruffians in gowns and caps.""Proceedings of the Lecturers," ACLC, 28 May 1839. The Leaguers at Cambridge joined in the fracas with considerable enthusiasm, and Shearman brought back torn pieces of caps and gowns to the League headquarters in Manchester as proof to the Council that the ACLL had gotten the best of the fight.Ibid. Four years later, in 1843, The League published a review of V. A. Huber's The English Universities, which while admitting that the intent of the volume was to recommend the character of British universities to Prussia, was nonetheless highly critical of British universities for their antipathy to free trade, their aristocratic privilege and religious exclusion, and the impracticality of their emphasis on classical education."Review," The League, 25 November 1843. The book reviewed was The English Universities, trans. F. W. Newman (Manchester: Sims and Dinham, 1843).

Opponents of the corn laws, particularly Richard Cobden, tended to associate protectionism and aristocratic privilege with the military establishments, including the army, navy, and militia."Unholy Alliance of the War Party and the Bread Taxers," ACLC, 22 October 1840; ''Important Meetings at Warrington Union of Chartists With Other Reformers in Favour of Repeal," ACLC, 3 December 1840. League leaders regarded the interests of the aristocracy in the military establishment as contrary to the interests of the nation. The army and navy, in the view of some Leaguers, were too much a source of place for the younger sons of the nobility, a drain on capital that retarded progress, and a distraction from necessary domestic reform.Cobden to Sturge, 16 October 1852, Cobden Papers, British Museum Add. MSS. 43,653. In this letter Cobden reflected upon the depictions of the militia utilized by the ACLL in the 1840s and argue.cl that the British aristocracy continued to oppose general disarmament because the younger sons of the nobility benefited from place and position in the military establishment. See also same to same, 6 September 1846, Cobden Papers, British Museum Add. MSS. 43,655; and same to same, 14 September 1852, Cobden Papers, British Museum Add. MSS. 43,653. Cobden argued, even before the formation of the Anti-Corn-Law League, that an important "source of government patronage & of patrician power" would be reduced if the willingness of aristocratic government to employ military intervention abroad could somehow be checked.Cobden to Tait, 4 June 1835, Cobden Papers, British Museum, Add. MSS. 43,664. For discussion of Cobden's view that agitation was the key to reducing military misadventure and aristocratic misrule as well as the threat Cobden believed these posed for democracy, see Edward Hughes, "The Development of Cobden's Economic Doctrines and His Methods of Propaganda: Some Unpublished Correspondence,'' Bulletin of the John Rylands Library 22 (1938): 407-8. In England, Ireland, and America and in his later pamphlet, Russia. Cobden argued that aristocratic diplomats were too willing to defend English honor to the exclusion of her real commercial and manufacturing interests, and such opinions were later reflected in League newspapers.Same to same, 14 June 1836, Cobden Papers, British Museum Add. MSS. 43,665. See also Cobden to Place, 11 May 1838, Francis Place Papers, British Museum Add. MSS. 37,949; Cobden, England, Ireland, and America, pp. 3, 35-36; "National Honour," The League, 10 August 1844. The last-named reports on the speech of Thomas Milner Gibson on the subject of self-interest of the aristocracy in foreign intervention and war at a League meeting 7 August 1844. See also Dawson, Cobden Foreign Policy, pp. 7-8, 249-57. W. J. Fox summed up the view of many opponents of the privileges of the aristocracy and their association with the military when he wrote,

War is the aristocratical trade; war is the aristocratical passion; war is the aristocratical convenience for bringing forward the junior members of titled families, instead of providing for them out of the family property.W. J. Fox, ''English Wars: Their Causes, Cost, and Consequences,'' cited in Garnett, Fox, pp. 271-72. See also Trevelyan, Bright, p. 273.

The Anti-Corn-Law Leaguers can be said to have regarded free trade as an issue of fundamental liberty, but they rarely discussed liberty in abstract, theoretical, or philosophical terms. The members of the League were practical men who opposed the privileges of landlordism as aristocratic misrule, and they regarded the corn laws as the clearest example of class legislation and the foundation of a system of aristocratic privilege entirely inappropriate to the spirit of the age. Clearly, opponents of the corn laws believed that freedom of trade was fundamental, both as a natural right and as an economic practicality.See pp. 214-216.

The League regarded free trade as being ordained by both natural and divine law, which superseded the artificial restrictions of selfish aristocratic lawmakers. At one League meeting the corn laws were described as outmoded and contrary to the one principle of nature that would ensure harmony: "Freedom — universal freedom."''Weekly Meeting of the League,'' ABTC, 27 December 1842. The speaker was identified only as Mr. Bayley; it is not clear whether this was Henry, William, or Charles Bayley, all of whom resided in Stalybridge and were members of the League Great Fund General Committee. Reflecting the widest possible application of the principles of laissez faire in an unmistakably male fashion, the League speaker, Mr. Bayley, implied that use of such artificial restrictions as the corn laws impeded the operation of natural law in such a way as to obstruct the divine will, and he suggested that the corn laws were ridiculous as the belief once held by "our ladies" that "their bodies would not grow out to their proportions, unless squeezed in here and enlarged there, (Laughter) just as the Chinese have adopted."Ibid.

The League regarded the corn laws as an instrument of despotic power, and Thomas Milner Gibson argued before an aggregate meeting of the League in 1843 that Leaguers had taken up their struggle not under the pressure of momentary distress of the country,

but on the solemn conviction that the Corn Law is that invasion of our civil rights as free citizens, that whether there be poverty or plenty, we have an equal right to demand their repeal. (Loud Cheers.)"The National Anti-Corn-Law League,'' The League, 28 October 1843; and "Monopoly Viewed in Connexion with Despotism," The League, 25 November 1843.

Gibson told his listeners that the cause of the ACLL was more than the revival of trade; it was the cause of the citizens of England and of liberty itself.Ibid.

Perhaps the clearest statement by a member of the League on the fundamental nature of freedom of industry and trade came from John Bright in a speech before the Liverpool Anti-Monopoly Association during the summer of 1843. Bright asserted that the freedom to exchange the produce of one's labor for that of his fellows anywhere in the world was the most fundamental of rights. Bright argued that

there was no liberty without this liberty, which was simply the liberty to live. The right of voting for members of parliament, the right of electing members of the legislature, the right of electing even the crown, if that were so, — all this liberty was a very small value without the liberty to live by their industry. (Cheers.) Civil liberty was nothing, religious liberty was nothing; the liberty of the press was nothing, for so long as an increasing population was allowed to labour under restrictions on the means of living, all this liberty would be insufficient to give them prosperity. to enable them to advance in the career of improvement, to enable them to become what they were destined to be. ..."Great Free Trade Demonstration in Liverpool Amphitheatre," ABTC, 5 September 1843.

The Anti-Corn-Law Leaguers associated their cause with the cause of liberty. To many opponents of the corn laws, political, religious, and civil liberties were to some extent dependent upon freedom of exchange, or at the very least, they were liberties that could not be fully enjoyed without freedom of industry and exchange."To the Right Honourable The Earl of Harewood, President of the Yorkshire Society," The League, 16 March 1844; "Review," The League, 30 March 1844; and "The Anti-Corn-Law Conference," ABTC, 14 July 1842. For a discussion of the primacy of liberty in all things in the mind of P. A. Taylor, see J. Morrison Davidson, Eminent Radicals In and Out of Parliament (London: Stewart, 1880), pp. 29-38. For a discussion of Cobden's belief in individual liberty, free markets, freedom of opinion, and free exchange, see Francis W. Hirst, Richard Cobden and John Morley (Swindon: Swindon Press, 1941), pp. 36-37. For an assertion of the Christian origins of Joseph Sturge's views on liberty, see Stephen Hobshouse, Joseph Sturge: His Life and Work (London: Dent, 1919), pp. 51-56. See also the interesting contemporary treatise by John Francis Bray, Labour's Wrongs and Labour's Remedy: Or, The Age of Might and the Age of Right (Leeds: David Green, 1839), esp. pp. 12-18. Leaguers opposed monopoly in all its variations, and monopoly was the antithesis of freedom of exchange. The Leaguers' opposition to the corn law monopoly led them to oppose landlordism wherever it was to be found: in the military, the universities, the established church, the traditional relations between landlord and tenant, and the political life of the nation. In the eyes of the members of the Anti-Corn-Law League the battle for the repeal of the corn laws was a fight against aristocratic misrule and class legislation; it was a crusade against the vestiges of feudal privilege which restricted progress, economic well-being, and freedom.

Our goal is to present each thinker's views on immigration by excerpting his or her writings on the subject.

Earlier articles in this series addressed the views of Ludwig von Mises and Murray N. Rothbard. This article discusses the views of Dr. Walter Block.

Professor Block has written several substantial academic and popular articles on the topic of immigration, beginning in the 1980s and extending into the 2010s. Dr. Block is probably the best-known pure "open borders" advocate among Senior Fellows at the Mises Institute; and while his primary arguments are robustly deontological he does not shy away from addressing pragmatic questions raised by critics. And unlike Mises and Rothbard in the main, Block from the outset extends the doctrine of laissez-faire movement of workers and goods from the context of economics into normative libertarian philosophy. 

His 1998 article in the Journal of Libertarian Studies titled "A Libertarian Case for Free Immigration" begins with characteristic Blockean bluntness:

I shall contend that emigration, migration, and immigration all fall under the rubric of “victimless crime.” That is, not a one of these three per se violates the non-aggression axiom. Therefore, at least for the libertarian, no restrictions or prohibitions whatsoever should be placed in the path of these essentially peaceful activities.

Immigration across national boundaries should be analyzed in an identical manner to that migration which takes place within a country. If it is non-invasive for Jones to change his locale from one place in Misesania to another in that country, then it cannot be invasive for him to move from Rothbardania to Misesania. Alternatively, if migration across international borders is somehow illegitimate, this should apply to the domestic variety as well. As long as the immigrant moves to a piece of private property whose owner is willing to take him in (maybe for a fee), there can be nothing untoward about such a transaction. This, along with all other capitalist acts between consenting adults, must be considered valid in the libertarian world. Note that there is no freedom of movement of the person per se. This is always subject to the willingness of property owners in the host nation to accept the immigrant onto their land.

Block continues this approach in making perhaps his best-known argument for free immigration: homesteading of previously unowned land: 

The case is equally clear for allowing immigrants to settle on unowned land. When there is virgin territory, there is no legitimate reason for immigrants (or domestic citizens) to be prevented from bringing it into fruitful production. States Rothbard: “Everyone should have the right to appropriate as his property previously unowned land or other resources.” “Everyone,” presumably, includes immigrants as well as citizens or residents of the home country.

And here Block addresses the "paleo" argument regarding public or common real property and buildings, property ostensibly owned and definitely controlled by government:

Take the case of the bum in the library. What, if anything, should be done about him? If this is a private library, then the plumb-line or pure libertarian would agree fully with his paleo cousin: throw the bum out! More specifically, the law should allow the owner of the library to forcibly evict such a person, if need be, at his own discretion. Cognizance would be taken of the fact that if the proprietor allowed this smelly person to occupy his premises, he would soon be forced into bankruptcy, as normal paying customers would avoid his establishment like the plague.

But what if it is a public library? Here, the paleos and their libertarian colleagues part company. The latter would argue that the public libraries are per se illegitimate. As such, they are akin to an unowned good. Any occupant has as much right to them as any other. If we are in a revolutionary state of war, then the first homesteader may seize control. But if not, as at present, then, given “just war” considerations, any reasonable interference with public property would be legitimate. The paleos or postponement libertarians take a sharply divergent view: one should treat these libraries in as close an approximation as possible to how they would be used in the fully free society. Since, on that happy day, the overwhelmingly likely scenario is that they will be owned by a profit maximizer who will have a “no bums” policy, this is exactly how the public library should be treated right now. Namely, what we should do to the bum in the public library today is exactly what would be done to him by the private owner: kick him out. 

Block alludes to arguments made by Professor Hans-Hermann Hoppe and others that proper ownership (and thus decisions about access) of taxpayer-funded property resides with taxpayers, who presumably would treat "their" property like any private owner. But he does not agree that imperfect present conditions, i.e., government ownership of land and buildings, warrant restrictions on immigration any more than imperfect conditions with respect to welfare or public schools warrant illibertarian approaches:

​There are difficulties with this stance. First, as we have already seen, it is extremely likely that in the fully free society, virtually all immigrants would be taken in by a landowner in the host country. Therefore, if the paleos are to remain consistent with their own position, they should eschew all legislated immigration barriers. Secondly, and even apart from this consideration, the postponement libertarian perspective is vulnerable to rebuttal by reductio ad absurdum. If we should not allow unrestricted immigration until we have achieved the free society, but instead should curtail immigration in an effort to approximate what would take place under a fully libertarian society, let us apply this insight to other realms of controversy.

 Public schooling is a disaster. Certainly, in the present journal, there is no need to document such a claim. That being the case, the libertarian position is clear: get rid of public education, forthwith, even if we have not attained complete liberty in other sectors of society.

The U.S. welfare policy is a disaster. The libertarian position is once again crystal clear: abolish welfare forthwith, no matter what the status of the remainder of the economy. But the paleo or postponement libertarians are once again precluded from embracing so clear, just, and simple a solution. 

Dr. Block is equally adamant on the question of immigrants voting for more government or more welfare, insisting the core issue of voting should be the focus:

The real difficulty here concerns promiscuous voting, not immigrants who might vote “incorrectly.” The problem, even apart from new entrants to our country, is that those who are already citizens now have the “right” to vote on, not whether or not, but how much of other people’s property they can legally steal through the ballot box. This is the real threat to liberty. In a free society, all the wrong-thinking immigrants in the world would be powerless to overturn (what is left of) our free institutions, for there would be no possibility of voting to seize other people’s property. 

Block concludes his paper with a rhetorical flourish about the anti-immigration policies of Left and Right — but note the Blockean proviso regarding property and sponsorship of migrants:

Are libertarians moderates or extremists on the issues of emigration, migration, and immigration? The libertarian position on migration does not constitute a compromise in that it is indubitably an all-or-none proposition: either migration is totally legitimate, in which case there should be no interferences with it whatsoever, or it is a violation of the non-aggression axiom, in which case it should be banned, fully. I have argued in this paper that the former position is the only correct one. But libertarianism constitutes a compromise position on this issue in two other senses. First, immigration is allowed if and only if there are property owners willing to sponsor (presumably for a fee, but not necessarily so) the new entrants, and not otherwise. Second, there are people on both right and left who oppose borders totally open to peaceful settlement (Chavez, Buckley), and libertarians find themselves safely on the other side of this unholy alliance. 

Fast forward to 2011, and Dr. Block continues to advocate "free movement of goods, capital" in another seminal Journal of Libertarian Studies article titled "Hoppe, Kinsella, and Rothbard II on Immigration: A Critique." Here he attempts to rebut certain arguments made by the aforementioned Dr. Hoppe, libertarian legal theorist Stephan Kinsella, and the late Dr. Rothbard — in particular the argument that the free movement of goods and capital requires a different analysis than the free movement of people. In some cases he responds to rebuttals put forth by Hoppe and Kinsella regarding his JLS article quoted at length above. "Rothbard II" as used by Dr. Block refers to Rothbard's later writings, especially the article "Nations by Consent."

Block starts by questioning Rothbard's claim that full privatization of real property would entirely resolve the question of immigration:

It is tempting to think that the private ownership of all streets, (plus every other single solitary square inch of land) would resolve the immigration issue, at least among libertarians. Alas, not even this is so. Worse, there is also the question of whether or not, given circumstances as they presently are with regard to land ownership, the government is justified in interfering with the free movement of people.That is, it cannot be denied that at present, such a salutary state of affairs (complete private ownership of all property) simply does not exist. To wit, there are vast land holdings on the part of the government (streets, parks, forests, etc.), and, further, there are other vast tracts that have need been so much as trod on by a human foot (mainly in Alaska, Nevada, and other western states).

He also dismisses Rothbard's concern, in the wake of the Soviet Union's collapse, that artificial languages and cultures might be imposed by mass and sudden immigration:

There is simply nothing incompatible with libertarianism and destroying “cultures and languages,” provided only that the latter is done without the initiation of violence. And this goes not only for Latvia and Estonia, but for the U.S. as well.   

The point is, there is no such thing as anyone’s “own country.” This is a notion incompatible with libertarianism. What happened to the doctrine of allowing free competition in all matters? Certainly, this should apply to languages and cultures.

He then goes on to quote Hoppe's argument that long-suffering taxpayers in a country, not recent immigrant arrivals, have the highest and most just claim to control government property or "unowned" common areas:

Given Block’s undeniable credentials as a leading contemporary theoretician of libertarianism, it is worthwhile explaining where his argument goes astray and why libertarianism requires no such thing as an open-door policy. Block’s pro-immigration stand is based on an analogy. “Take the case of the bum in the library,” he states.

What, if anything, should be done about him? If this is a private library, ... the law should allow the owner of the library to forcibly evict such a person, if need be, at his own discretion. ... But what if it is a public library? ... As such [libraries] are akin to an unowned good. Any occupant has a much right to them as any other. If we are in a revolutionary state of war, then the first homesteader may seize control. But if not, as at present, then, given “just war” considerations, any reasonable interference with public property would be legitimate. ... One could “stink up” the library with unwashed body odor, or leave litter around in it, or “liberate” some books, but one could not plant land mines on the premises to blow up innocent library users.

The fundamental error in this argument, according to which everyone, foreign immigrants no less than domestic bums, has an equal right to domestic public property, is Block’s claim that public property “is akin to an unowned good.” In fact, there exists a fundamental difference between unowned goods and public property. The latter is de facto owned by the taxpaying members of the domestic public. They have financed this property; hence, they, in accordance with the amount of taxes paid by individual members, must be regarded as its legitimate owners. Neither the bum, who has presumably paid no taxes, nor any foreigner, who has most definitely not paid any domestic taxes, can thus be assumed to have any rights regarding public property whatsoever. 

Block responds with reference to Rothbard, and an expansion of the "unowned" public library example into the idea of homesteading vast tracts of open land: 

First, the position I took is not really all that remarkable. Indeed, this was roughly Murray Rothbard’s position for many years. Second, while Hoppe is undoubtedly correct in mentioning that I do indeed rely on the bum in the library analogy, this by no means exhausts my arguments. Let me briefly mention a few of them before returning to the analogy, as none of these others have been so far addressed by Hoppe. To wit: what about the vast open spaces in the Rocky Mountains and Alaska that no one has ever settled. What aspect of libertarianism could an immigrant possibly violate if he somehow catapulted himself to any of this terrain and began subsistence farming? Or, trading with other such immigrants, among themselves. Or, trading with the rest of us, on a totally voluntary basis? 

 What rights would pre-existing inhabitants, say Robinson Crusoe, have to bar newcomers in such a scenario? Block answers:

The analogy is a pretty airtight one. Crusoe, and extant Americans, were here first. Friday, and the would-be immigrant who Hoppe wants to bar from this country, are attempting to come here second. If Crusoe (present occupants) bars Friday (would-be immigrants are not allowed to settle in unused dessert and mountainous regions of the U.S.), then he is in Rothbard’s analysis, claiming more than homesteading would justifiably entitle him to. Crusoe is the illegitimate aggressor against Friday. No less is true of the present occupants of the U.S.; by adopting the Hoppe analysis, they are preventing entirely innocent people from going about their lawful business of homesteading empty territory.

Now, Hoppe could reply that the only reason these mountainous and dessert areas are not presently occupied is due to the fact that the U.S. government forbids its citizens to do so, and/or illegitimately occupies these lands itself through its agencies such as the Bureau of Land Management. There are two responses to any such defense. One, Hoppe must then acknowledge that the courageous immigrants, and not the docile citizens, had the ability to ignore these unjust governmental institutions. Two, land, happily, is a superfluous factor of production, compared to labor. Thus, at any given time, there will be sub-marginal land, precisely the territory that looks so attractive to the hypothetical immigrants we are now considering. But, with the advent of these people, the margin shifts. Terrain that was previously sub-marginal, before their arrival, becomes supra-marginal with their arrival. This means that before these new people came on the scene, there is a reason in addition to governmental proscriptions why the mountains of Wyoming and the tundra of Alaska was not homesteaded and settled; it was previously sub-marginal, even though it is no longer so under our assumptions.

And what about the children of current inhabitants, who burst on the scene much like immigrants? Should we worry about their propensity to grow up and consume welfare or engage in criminal activity?

What about immigrants from the “country” of Storkovia? That is, how does the Hoppe theory handle newborns? My claim here is that anything this author can say about an immigrant I can say concerning a brand new baby, with a lag of some 18 years, perhaps. If the one will commit crimes, so will the other, in a decade or so. Ditto for welfare. And it is the same for being allowed onto the roads of the nation. If illegal immigrants should not be allowed onto the highways, why should it be licit for a citizen of, say, Texas, to enter a road in Louisiana? Hoppe might reply that parents are responsible for their children in a way that does not apply to employers of immigrants. But this only gets him so far. Remember that time lag! After 15–18 years or so, parents are no longer liable for the evil doings of their children. Given the analogy, there is no justification for treating employers any differently. Hoppe says that anyone, such as an employer who invites an immigrant to this country must obligate himself to financially support them. But this is erroneous, since it would be unjustified to impose any such obligation on parents, for their newborn children. 

And Block disagrees that taxpayers, in Hoppe's view the rightful owners of government property, should be accorded more say in the control of such property than immigrants:

Let us return, for a moment to an illegal immigrant seizing a bit of Yellowstone Park, which Hoppe and I agree has been stolen from the taxpayers of America. This act, in splendid isolation from everything else, must necessarily be justified. It is a necessary precondition to returning it to its rightful owners. But Hoppe would object. What reason does he offer? That I confuse de facto and de jure? That since this land is in justice really owned by the long suffering taxpayers, it is illegitimate for anyone else, a third party, to even so much as touch it? This will not do.

To return to the illegal immigrant who is now perched on a part of Yellowstone Park and refuses to give it back to a taxpayer, the rightful owner. In like manner we may say of him that he really should return this property to its proper owner. However, we may also say that of the two options, one the status quo where the evil state retains this property, and the other where the robber is relieved of his illicit gains, the latter is certainly a better second best scenario. Thus, illegal immigration, Hoppe to the contrary notwithstanding, is justified on libertarian grounds not only for unowned property, but also for that stolen from the taxpayers of the country.

My response is that I do not at all claim that property such as government roads or libraries is “unowned.” Rather, I claim these holdings were stolen. I agree that the state now possesses them; I argue, only, that this is unjustified. And, yes, I insist, the same libertarian analysis can be applied, in this context, to virgin and stolen land. Why? This is because for the libertarian, at least as I construe him, stolen land is de jure virgin land, ready for the next homesteader to seize it (on the assumption that the rightful original owner cannot be located, or he acquiesces in the state’s seizure, or that, arguendo, we can ignore this rightful owner.)

Dr. Block also responds to arguments made by Kinsella regarding the complexity of free immigration in a situation where government owns and controls so much land and infrastructure. Quoting Kinsella:

Coming back to immigration, let’s take the case of the federal government as owner-caretaker of an extensive network of public roads and other facilities. If the feds adopted a rule that only citizens and certain invited outsiders are permitted to use these resources, this would in effect radically restrict immigration. Even if private property owners were not prohibited from inviting whomever they wish onto their own property, the guest would have a hard time getting there, or leaving, without using, say, the public roads. So merely prohibiting non-citizens from using public  property would be one means of establishing de facto immigration restrictions. It need not literally prohibit private property owners from having illegal immigrants on their property. It need only prevent them from using the roads or ports — which it owns.  

Given this reality, what sort of rules for access and use should libertarians support? Quoting Kinsella:

It seems to me establishing rules as to how public roads are to be used is not inherently unlibertarian. Even libertarians who say the state has no right to make any rules at all regarding property it possesses — even speed limits etc. — really advocate the following rule: allow anyone to use it, and/or return it to the people. This is a way of using a piece of property. But most libertarians don’t seem to have a principled opposition to the very idea of rule-setting itself. 

What rules, then, are defendable? It's an impossible question to answer, according to Block:

Kinsella is saying, if I may paraphrase him, that government is our caretaker. As such, it must perforce set up reasonable rules. The state should act as if it were a (perhaps bumbling) private owner. In this way the people from whom the money to finance the swimming pool was stolen may at least get some services in return. But this is a fatally conservative outlook. The radical alternative is that the “rules” of the pool should be fashioned so as to eliminate these enterprises from governmental control. For example, everyone, anyone, should be “allowed” to walk off with the water in the pool, even the very bricks of which it is composed. 

And Block goes further in opposing the "caretaker" or rightful owner argument:

It seems to me decidedly unlibertarian to advocate these sorts of “reasonable” rules. A more libertarian stance would be to welcome actual chaos on all property statists steal from victims. The likelihood is that pure bedlam and pandemonium on all such terrain would deter the thieves from their evil deeds.

All I can say is that majority vote is no litmus test of libertarianism. Most Americans also favor minimum wage laws, taxes, government, affirmative action, yet no one would assert that these policies are therefore libertarian. I certainly support Kinsella’s contention that “99% of my fellow taxpayers would … prefer some immigration restrictions.” This might well enhance restitution, as he contends, but, as I have argued, restitution is a far less important libertarian concern than stopping the violence that lead to the need for the restitution in the first place.

Ultimately, Dr. Walter Block is a vociferous and prolific defender of the stateless society — and thus brooks no restrictionist immigration arguments regarding state-owned property, voting, or the welfare state. His open borders position, however, is built on an unstinting foundation of private property rights, Lockean homesteading, and the full privatization of everything government does or owns.

Read more of his immigration perspectives here, here, and here.

[Next: Hans-Hermann Hoppe]

Read the original article.

A boycott is an attempt to persuade other people to have nothing to do with some particular person or firm — either socially or in agreeing not to purchase the firm's product. Morally a boycott may be used for absurd, reprehensible, laudatory, or neutral goals. It may be used, for example, to attempt to persuade people not to buy non-union grapes or not to buy union grapes. From our point of view, the important thing about the boycott is that it is purely voluntary, an act of attempted persuasion, and therefore that it is a perfectly legal and licit instrument of action.

Again, as in the case of libel, a boycott may well diminish a firm's customers and therefore cut into its property values; but such an act is still a perfectly legitimate exercise of free speech and property rights. Whether we wish any particular boycott well or ill depends on our moral values and on our attitudes toward the concrete goal or activity. But a boycott is legitimate per se. If we feel a given boycott to be morally reprehensible, then it is within the rights of those who feel this way to organize a counter-boycott to persuade the consumers otherwise, or to boycott the boycotters. All this is part of the process of dissemination of information and opinion within the framework of the rights of private property.

Furthermore, "secondary" boycotts are also legitimate, despite their outlawry under our current labor laws. In a secondary boycott, labor unions try to persuade consumers not to buy from firms who deal with non-union (primary boycotted) firms. Again, in a free society, it should be their right to try such persuasion, just as it is the right of their opponents to counter with an opposing boycott. In the same way it is the right of the League of Decency to try to organize a boycott of pornographic motion pictures, just as it would be the right of opposing forces to organize a boycott of those who give in to the league's boycott.

Of particular interest here is that the boycott is a device which can be used by people who wish to take action against those who engage in activities which we consider licit but which they consider immoral. Thus, while non-union firms, pornography, libel, or whatever would be legal in a free society, so would it be the right of those who find such activities morally repugnant to organize boycotts against those who perform such activities. Any action would be legal in the libertarian society, provided that it does not invade property rights (whether of self-ownership or of material objects), and this would include boycotts against such activities, or counter-boycotts against the boycotters. The point is that coercion is not the only action that can be taken against what some consider to be immoral persons or activities; there are also such voluntary and persuasive actions as the boycott.

Whether picketing as a form of advertising a boycott would be legitimate in a free society is a far more complex question. Obviously, mass picketing that blocked entrance or egress from a building would be criminal and invasive of the rights of property — as would be sit-ins and sit-down strikes that forcibly occupied the property of others. Also invasive would be the type of picketing in which demonstrators threatened people who crossed the picket line — a clear case of intimidation by threat of violence.

But even "peaceful picketing" is a complex question, for once again the use of government streets is involved. And, as in the case of assembly or street demonstrations generally, the government cannot make a non-arbitrary decision between the rights of taxpayers to use government streets to demonstrate their cause, and the right of the building owner and of traffic to use the streets as well. Again, it is impossible for government to decide in such a way as to eliminate conflict and to uphold rights in a clear-cut manner. If, on the other hand, the street in front of the picketed building were owned by private owners, then these owners would have the absolute right to decide on whether picketers could use their street in any way that the owners saw fit.See Murray N. Rothbard, For a New Liberty, rev. ed. (New York: Macmillan, 1978), pp. 96–97.

Similarly, such employer devices as the blacklist — a form of boycott — would be legal in the free society. Before the Norris-LaGuardia Act of 1931, it was legal for employers to fire union organizers among their employees, and to circulate blacklists of such persons to other employers. Also legal would be the "yellow-dog contract," another device before the Norris-LaGuardia Act. In such a contract, the employee and the employer agree that, should the former join a union, the employer can fire him forthwith.

Niall Ferguson has impeccable credentials as a member of the “Establishment” (a word that comes, he tells us, from the historian A.J.P. Taylor). He has taught history at Oxford, Cambridge, Harvard, and NYU and is also a consultant to a global hedge fund. As one might expect, he is not a libertarian. Nevertheless, he has often challenged conventional opinion in a way libertarians will find congenial. In The Pity of War, for example, he argued that the British ought to have stayed out of World War I, despite the prevailing orthodoxy that the Crusade against Kaiser Bill was a “good thing.” In The Square and the Tower, he continues and expands his challenge to prevailing leftist dogmas.

Ferguson finds a unifying theme that he applies to a great many historical episodes: a conflict between hierarchies and networks. Hierarchies are “vertically structured organizations characterized by centralized and top-down command, control and communication.” Networks, by contrast, are informal channels of communication among individuals. Ferguson complicates matters by contending that “far from being the opposite of a network, a hierarchy is a special kind of network,” one in which one “always adds nodes downwards, but never connect nodes laterally.”

This means that people at the same level in a hierarchy communicate only with those above or below them, not those at the same level. (Is this always true?) Ferguson often complicates matters unduly, and his learned references to Euler’s solution to the Königsberg Bridge Problem and his many mathematical diagrams and reports of research on networks in various fields do not contribute to his accounts of historical events. His scholarly range is impressive, though he unaccountably fails to cite Harrison White, one of the most influential sociologists writing on networks.

The real contrast that the book illuminates is not between top-down organizations and other networks: it is rather the clash between state coercion and people’s free activities. The book moves from prehistoric times to the present, and always the malign effects of the state are unmistakable. Ferguson cites the great historian Sir Ronald Syme, who in “his classic study The Roman Revolution ... argued that the Republic had ... been run by a Roman aristocracy whose feuds had allowed Italy to descend into civil war. ... It was by building his followers into a ‘Caesarian party’ that Augustus was able gradually to concentrate power in his own hands while nominally restoring the Republic. ‘In certain respects,’ wrote Syme, ‘his Principate was a syndicate.’”

Ferguson has become an even more resolute revisionist about World War I than in his earlier book. “Russia appeared intent on exploiting the Bosnian crisis with a view to the permanent weakening, if not the dismemberment, of Austria-Hungary. ... If any individual deserves to be blamed for the systemic failure that occurred [after the assassination of Archduke Franz Ferdinand], it was the British Foreign Secretary, Sir Edward Grey. Britain was supposed to be the balancing power in a crisis such as this.” Blundering and rash actions by those at the top of the hierarchies of the European Great Powers led to catastrophe.

The success of the Bolshevik Revolution, Ferguson holds, stems in large part from a state-sponsored conspiracy. “Yet the one German plot that worked proved to be so successful that it very nearly revolutionized the whole world. This was the plot to send the Bolshevik leader Vladimir Ilyich Lenin, then living in Switzerland, back to Russia, in the wake of the February 1917 Revolution that overthrew Tsar Nicholas II. ... The German government supplied Lenin not only with a railway ticket from Zurich to Petrograd ... but also with lavish funds to unseat the new provisional government.”

In his account of the rise of Nazism, Ferguson shows how worship of a political movement can lead to disaster. “To many observers, it seemed like a religious awakening. ... The Nazis developed a self-conscious liturgy, with 9 November (the date of the 1918 Revolution and the failed 1923 Beer Hall putsch) as a Day of Mourning, complete with fires, wreaths, altars, blood-stained relics and even a Nazis book of martyrs.” Ferguson has here rightly drawn from Eric Voegelin, who is incorrectly called a Catholic.

Ferguson ardently admires Henry Kissinger, but even those of us who do not share his favorable view of this Machiavellian intriguer will gain much from Ferguson’s extensive research on how Kissinger propelled himself to the summit of power. Ferguson puts his account of networks to good use: “The hypothesis must be that Kissinger’s influence and reputation were products not only of his influence and industriousness, but also of his preternatural connectedness. ... The network was the precondition for his ‘chain reaction’ diplomacy. ... That was what justified the claim that ‘Kissinger [probably] had more impact than any other person in the world.’”

Opponents of the free market sometimes argue that the internet came about through the expansion of a program sponsored by the Defense Department. Ferguson does not agree. After describing the governmentally sponsored Advanced Research Projects Network (ARPANET), he says, “It therefore mattered greatly that what became the internet was not designed that way, but rather arose more or less spontaneously and organically, with academics and private sector computer engineers rather than military planners taking the lead.” Both here and in his earlier book The Ascent of Money, Ferguson ignores the Austrian theory of the business cycle, but he has no illusions about the role of the Federal Reserve System in provoking the financial crisis of 2008: “The Federal Reserve allowed monetary policy to be too loose between 2002 and 2004. ... [Even after the Lehman bankruptcy.] Incredibly, however, staff economists at the Federal Reserve saw no reason to anticipate a recession.”

Ferguson mordantly criticizes the role of the state in the modern economy. “The federal government has degenerated into what has been called an ‘administrative’ or ‘managerial’ state, hierarchical and bureaucratic in its mode of operation, dedicated to generating ever more complicated regulation that had precisely the opposite effect of that intended. ... The administrative state has found an easy solution to the problem of increasing the number of public ‘goods’ without making commensurate increases in taxation, and that is to finance current government consumption through borrowing. ... Yet all these expedients of the administrative state impose burdens on the private sector that ultimately reduce the rate of growth and job creation. ... In short, the administrative state represents the last iteration of political hierarchy: a system that spews out rules, generates complexity, and undermines both prosperity and stability.”

Given his powerful case against the state, it is disappointing that Ferguson ends by calling for stronger state hierarchies. These are needed, he thinks, to combat future cyber warfare and Islamic jihad. This is not the first time that an author has failed to draw the correct lessons from his own book, and readers of The Square and the Tower would be well-advised to benefit from the author’s insights into the evils of the state while they ignore his conclusion.

The turmoil of the English Civil War in the 1640s and 1650s generated political and institutional upheaval, and stimulated radical thinking about politics. Since the Civil War was fought over religion and politics, much of the new thinking was grounded in, or inspired by, religious principles and visions. Thus, as we shall see further in the chapter on the roots of Marxism, millennial communist sects popped up again, for the first time since the Anabaptist frenzy of the early 16th century in Germany and Holland. Particularly prominent in the frenzy of the Civil War Left were the Diggers, the Ranters, and the Fifth Monarchists.There was a direct filtration of ideas from Thomas Müntzer and the communist Anabaptists into England. One of Müntzer's collaborators, Henry Niclaes, survived the smashing of Anabaptism to found familism, a pantheistic creed claiming that man is God, and calling for the establishment of the kingdom of (man) God on Earth, as the only place such a kingdom could ever exist. Familist ideas were carried to England by a disciple of Niclaes, Christopher Vittels, a Dutch joiner, and familism spread in England during the late 16th century. A center of familism in early 17th-century England was in Grindleton, in Yorkshire. There, in the decade after 1615, "the Grindletonians" were led by Grindleton's Anglican curate, the Rev. Roger Brearly. Part of the attraction of familism was its antinomianism, the view that truly godly persons, such as themselves, could never commit a sin, by definition, and therefore antinomians usually flaunted behavior generally considered sinful in order to demonstrate to one and all their godly and "sin-free" status.

At the opposite pole of new thought generated by the Civil War was the prominence, in the midst of the forces of the mainstream republican Left, of the world's first self-consciously libertarian mass movement — the Levellers. In a series of notable debates within the Republican Army — notably between the Cromwellians and the Levellers — the Levellers, led by John Lilburne, Richard Overton, and William Walwyn, worked out a remarkably consistent libertarian doctrine, upholding the rights of "self-ownership," private property, religious freedom for the individual, and minimal governmental interference in society. The rights of each individual to his person and property, furthermore, were "natural" — that is, they were derived from the nature of man and the universe, and therefore were not dependent on, nor could they be abrogated by, government. And while the economy was scarcely a primary focus of the Levellers, their adherence to a free-market economy was a simple derivation from their stress on liberty and the rights of private property.

For a while it seemed that the Levellers would triumph in the Civil War, but Cromwell decided to resolve the army debates by the use of force, and he established his coercive dictatorship and radical Puritan theocracy by placing the Leveller leadership in jail. The victory of Cromwell and his Puritans over the Levellers proved fateful for the course of English history. For it meant that "republicanism," in the eyes of the English, would be forever associated with the bloody rule of Cromwell's saints, the reign of religious fanaticism, and the sacking of the great English cathedrals. Hence the death of Cromwell led swiftly to the restoration of the Stuarts, and the permanent discrediting of the republican cause. It is likely, on the contrary, that a Leveller rule of freedom, religious toleration, and minimal government might have proved roughly acceptable to the English people, and might have ensured a far more libertarian English polity than actually evolved after the Restoration and the Whig Settlement.The Levellers have acquired a left-wing coloration because of their label, and because they have been admired by Marxist historians, enthusiastic about their radicalism, and as the most consistent figures in the "bourgeois revolution" of the 17th and later centuries. The Levellers, however, were in no sense egalitarians, except in the laissez-faire libertarian sense that they were opposed to special privileges granted by the state. On the Levellers, see especially Don M. Wolfe (ed.), Leveller Manifestoes of the Puritan Revolution (1944, New York: Humanities Press, 1967), including the editor's lengthy introduction; and the latest collection of Leveller tracts in A.L. Morton (ed.), Freedom in Arms: A Selection of Leveller Writings (London: Lawrence & Wishart, 1975). Also see the classic H.N. Brailsford, The Levellers and the English Revolution (Stanford, Calif.: Stanford University Press, 1961). One of the best brief summaries of Leveller doctrine is in C.B. Macpherson, The Political Theory of Possessive Individualism: Hobbes to Locke (Oxford: Clarendon Press, 1962), pp. 137–59.

Historiographical discussion of the great libertarian political theorist John Locke (1632–1704), who emerged to prominence after the Civil War, and particularly in the 1680s, has been mired in a welter of conflicting interpretations. Was Locke a radically individualistic political thinker or a conservative Protestant Scholastic? An individualist or a majoritarian? A pure philosopher or a revolutionary intriguer? A radical harbinger of modernity or one who harked back to the medieval or to classical virtue?

Most of these interpretations are, oddly enough, not really contradictory. By this point, we should realize that the Scholastics may have dominated medieval and postmedieval traditions, but that despite this fact they were pioneers and elaborators of the natural-law and natural-rights traditions. The pitting of "tradition" versus "modernity" is largely an artificial antithesis. "Moderns" like Locke or perhaps even Hobbes may have been individualists and "right-thinkers," but they were also steeped in Scholasticism and natural law. Locke may have been and indeed was an ardent Protestant, but he was also a Protestant Scholastic, heavily influenced by the founder of Protestant Scholasticism, the Dutchman Hugo Grotius, who in turn was heavily influenced by the late Spanish Catholic Scholastics. As we have already seen, such great late 16th-century Spanish Jesuit Scholastics as Suarez and Mariana were contractual natural-rights thinkers, with Mariana being positively "pre-Lockean" in his insistence on the right of the people to resume the rights of sovereignty they had previously delegated to the king. While Locke developed libertarian natural rights thought more fully than his predecessors, it was still squarely embedded in the Scholastic natural-law tradition.Much mischief has been wrought by the interpretation of Leo Strauss and his followers that Locke was a natural rights-er who (following Hobbes) broke with the wise ancient tradition of natural law. Actually, Locke the natural rights-er developed the Scholastic natural-law tradition, and was the opposite of Hobbes's right-wing Grotian apologia for state absolutism. On Hobbes, Locke, and the Tew circle, see Richard Tuck, Natural Rights: Their Origin and Development (Cambridge: Cambridge University Press, 1979). Leo Strauss's interpretation is in his Natural Right and History (Chicago: University of Chicago Press, 1953). For a critique of Strauss, and insistence that Locke was not a Hobbesian but in the natural-law tradition, see Raghuveer Singh, "John Locke and the Theory of Natural Law," Political Studies 9 (June 1961), pp. 105–18.

Neither are John Pocock and his followers convincing in trying to posit an artificial distinction and clash between the libertarian concerns of Locke or his later followers on the one hand, and devotion to "classical virtue" on the other. In this view 18th-century Lockean libertarians from Cato to Jefferson become magically transmuted from radical individualists and free-marketeers into nostalgic reactionaries harking back to ancient or Renaissance "classical virtue." Followers of such virtue somehow become old-fashioned communitarians rather than modern individualists. And yet, why can't libertarians and opposers of government intervention also oppose government "corruption" and extravagance? Indeed, the two generally go together. As soon as we realize that, generally, and certainly until Bentham, devotees of liberty, property, and free markets have generally been moralists as well as adherents of a free-market economy, the Pocockian antitheses begin to fall apart. To 17th- and 18th-century libertarians, indeed to libertarians in most times and places, attacks on government intervention and on government moral corruption go happily hand in hand.The locus classicus of the Pocockian thesis is J.G.A. Pocock, The Machiavellian Movement (Princeton, N.J.: Princeton University Press, 1975). In addition to the contrasting works of Isaac Kramnick and Joyce Appleby, see in particular the scintillating refutation of Pocock's central example, the alleged "classical virtue" emphasis of the radically Lockean Cato's LettersCato's Letters: John Locke and the Republican Paradigm," History of Political Thought 11 (1990), pp. 273–94.

There are still anomalies in John Locke's career and thought, but they can be cleared up by the explicit discussion and implications of the impressive work by Richard Ashcraft.Richard Ashcraft, Revolutionary Politics and Locke's Two Treatises on Government (Princeton, N.J.: Princeton University Press, 1986). Essentially Ashcraft demonstrates that Locke's career can be divided into two parts. Locke's father, a country lawyer and son of minor Puritan country gentry, fought in Cromwell's army and was able to use the political pull of his mentor Colonel Alexander Popham, MP, to get John into the prominent Westminster School. At Westminster, and then at Christ Church, Oxford, Locke obtained a BA and then an MA in 1658, then became a lecturer at the college in Greek and rhetoric in 1662, and became a medical student and then a physician in order to stay at Oxford without having to take holy orders.

Despite or perhaps because of Locke's Puritan background and patronage, he clearly came under the influence of the Baconian scientists at Oxford, notably including Robert Boyle, and hence he tended to adopt the "scientific," empiricist, low-key absolutist viewpoint of his friends and mentors. While at Oxford, Locke and his colleagues enthusiastically welcomed the restoration of Charles II, and indeed the king himself ordered the university to keep Locke as a medical student without having to take holy orders. While at Oxford, Locke adopted the empiricist methodology and sensate philosophy of the Baconians, leading to his later Essay Concerning Human Understanding. Moreover, in 1661 Locke, this later champion of religious toleration, wrote two tracts denouncing religious tolerance, and favoring the absolute state enforcing religious orthodoxy. In 1668, Locke was elected to the Royal Society, joining his fellow Baconian scientists.

Something happened to John Locke in the year 1666, however, when he became a physician and in the following year when he became personal secretary, advisor, writer, theoretician, and close friend of the great Lord Ashley (Anthony Ashley Cooper), who in 1672 was named the first Earl of Shaftesbury. It was due to Shaftesbury that Locke, from then on, was to plunge into political and economic philosophy, and into public service as well as revolutionary intrigue. Locke adopted from Shaftesbury the entire classical-liberal Whig outlook, and it was Shaftesbury who converted Locke into a firm and lifelong champion of religious toleration and into a libertarian exponent of self-ownership, property rights, and a free-market economy. It was Shaftesbury who made Locke into a libertarian and who stimulated the development of Locke's libertarian system.

John Locke, in short, quickly became a Shaftesburyite, and thereby a classical liberal and libertarian. All his life and even after Shaftesbury's death in 1683, Locke only had words of adulation for his friend and mentor. Locke's epitaph for Shaftesbury declared that the latter was "a vigorous and indefatigable champion of civil and ecclesiastical liberty." The editor of the definitive edition of Locke's Two Treatises of Government justly writes that "without Shaftesbury, Locke would not have been Locke at all." This truth has been hidden all too often by historians who have had an absurdly monastic horror of how political theory and philosophy often develop — in the heat of political and ideological battle. Instead, many felt they had to hide this relationship in order to construct an idealized image of Locke the pure and detached philosopher, separate from the grubby and mundane political concerns of the real world.Ibid., pp. 75–82, 370–71.

Professor Ashcraft also shows how Locke and Shaftesbury began to build up, even consciously, a neo-Leveller movement, elaborating doctrines very similar to those of the Levellers. Locke's entire structure of thought in his Two Treatises of Government, written in 1681–1682 as a schema for justifying the forthcoming Whig revolution against the Stuarts, was an elaboration and creative development of Leveller doctrine — the beginnings in self-ownership or self-propriety, the deduced right to property and free exchange, the justification of government as a device to protect such rights, and the right of overturning a government that violates, or becomes destructive of, those ends. One of the former Leveller leaders, Major John Wildman, was even close to the Locke-Shaftesbury set during the 1680s.

The deep affinity between Locke and Scholastic thought has been obscured by the undeniable fact that, to Locke, Shaftesbury, and the Whigs, the real enemy of civil and religious liberty, the great advocate of monarchical absolutism, during the late 17th century and into the 18th century, was the Catholic Church. For by the mid 17th century, Catholicism, or "popery," was identified not with the natural rights and the checks on royal despotism as of yore, but with the absolutism of Louis XIV of France, the leading absolutist state in Europe, and earlier with absolutist Spain. For the Reformation, after a century, had succeeded in taking the wraps off monarchical tyranny in the Catholic as well as Protestant countries. Ever since the turn of the 17th century, indeed, the Catholic Church in France, Jansenist and royalist in spirit, had been more a creature of royal absolutism than a check on its excesses. In fact, by the 17th century, the case could be made that the most prosperous country in Europe which was also the freest — in economics, in civil liberties, in a decentralized polity, and in abstinence from imperial adventures — was Protestant Holland.A more detailed analysis of 17th-century Dutch politics would show, however, that the free-market, decentralized, propeace party was the republicans or Arminians, followers of the Protestant theologian Jacobus Arminius, who was theologically closer to Catholics in believing in free will for salvation. On the other hand, the "Calvinist" party in Holland favored the Orange monarchy, statism, controlled markets, and a warlike foreign policy.

Thus it was easy for the English Whigs and classical liberals to identify the absolutism, the arbitrary taxes, the controls, and the incessant wars of the Stuarts with the Catholicism towards which the Stuarts were not so secretly moving, as well as with the specter of Louis XIV, toward whom the Stuarts were moving as well. As a result, the English and American colonial tradition, even the libertarian tradition, became imbued with a fanatical anti-Catholicism; the idea of including evil Catholics in the rubric of religious toleration was rarely entertained.

One common confusion about Locke's systematic theory of property needs to be cleared up — Locke's theory of labor. Locke grounded his theory of natural property rights in each individual's right of self-ownership, of a "propriety" in his own person. What then establishes anyone's original right of material, or landed or natural resource property, apart from his own person? In Locke's brilliant and very sensible theory, property is brought out of the commons, or out of nonproperty, into one's private ownership in the same way that a man brings unused property into use — that is, by "mixing his self-owned labor," his personal energy, with a previously unused and unowned natural resource, thereby bringing that resource into productive use and hence into his private property.

Private property of a material resource is established by first use. These two axioms — self-ownership of each person, and the first use, or "homesteading," of natural resources — establishes the "naturalness," the morality, and the property rights underlying the entire free-market economy. For if a man justly owns material property he has settled in and worked on, he has the deduced right to exchange those property titles for the property someone else has settled in and worked on with his labor. For if someone owns property, he has a right to exchange it for someone else's property, or to give that property away to a willing recipient. This chain of deduction establishes the right of free exchange and free contract, and the right of bequest, and hence the entire property-rights structure of the market economy.

Many historians, especially Marxists, have taken glee in claiming that John Locke is thereby the founder of the Marxian "labor theory of value" (which Marx in turn acquired from Smith and especially Ricardo). But Locke's is a labor theory of property — that is, a theory of how material property justly comes into ownership by means of labor exertion or "mixing." This theory has absolutely nothing to do with what determines the value or price of goods or services on the market, and therefore has nothing to do with the later "labor theory of value."

This article is excerpted from An Austrian Perspective on the History of Economic Thought, vol. 1, Economic Thought Before Adam Smith. 

It is not an exaggeration to say that trade is the keystone of modern civilization. For as Murray Rothbard wrote: "The market economy is one vast latticework throughout the world, in which each individual, each region, each country, produces what he or it is best at, most relatively efficient in, and exchanges that product for the goods and services of others. Without the division of labor and the trade based upon that division, the entire world would starve. Coerced restraints on trade -- such as protectionism -- cripple, hobble, and destroy trade, the source of life and prosperity."Murray Rothbard, "Protectionism and the Destruction of Prosperity,"

Human beings cannot truly be free unless there is a high degree of economic freedom -- the freedom to collaborate and coordinate plans with other people from literally all around the world. That is the point of Leonard Read's famous article, "I Pencil," which describes how to produce an item as mundane as an ordinary pencil requires the cooperation and collaboration of thousands of people from all around the world, all of whom possess very specific knowledge (of "time and place," as Mises called it) that allows them to assist in the production and marketing of pencils. The same is true, of course, for virtually everything else that is produced.

Without economic freedom -- the freedom to earn a living for oneself and one's family -- people are destined to become mere wards of the state. Thus, every attempt by the state to interfere with trade is an attempt to deny us our freedom, to impoverish us, and to turn us into modern-day serfs.

Mises believed that trade or exchange is "the fundamental social relation" which "weaves the bond which unites men into society."Ludwig von Mises, Human Action: A Treatise on Economics, Scholar's Edition, (Auburn, Ala: Mises Institute, 1998), p. 195. Man "serves in order to be served" in any trade relationship in the free market.Ibid. Mises also distinguished between two types of social cooperation: cooperation by virtue of private contract and coordination, and cooperation by virtue of command and subordination or "hegemony."Ibid., p. 196. The former type of coordination is symmetrical and mutually advantageous, whereas the latter is asymmetrical -- there is a commander and a commandee, and the commandees are mere pawns in the actions of the commanders. When people become the mere pawns of their rulers they cannot be said to be free. This, of course, is the kind of "cooperation" that exists at the hands of the state.

Western civilization -- like other advanced civilizations -- is the result of "achievements of men who have cooperated according to the pattern of contractual coordination."Ibid., p. 198. The contractual state is guided by such concepts as natural rights to life, liberty, and property and government under the rule of law. In contrast, the "hegemonic society" is a society that does not respect natural rights or the rule of law. All that matters are the rules, directives, and regulations issued by dictators, whether they are called "kings" or "congressmen." These directives may change daily, and the wards of the state must obey. As Mises wrote: "The wards have one freedom only: to obey without asking questions."Ibid., p. 199

Trade involves the exchange of property titles. Restrictions on free trade are therefore an attack on private property itself and not "merely" a matter of "trade policy." This is why such great classical liberals as Frederic Bastiat spent many years of their lives defending free trade. Bastiat, as much as anyone, understood that once one acquiesced in protectionism, then no one's property will be safe from myriad other governmental acts of theft. To Bastiat, protectionism and communism were essentially the same philosophy.

It has long been recognized by classical liberals that free trade was the most important means of diminishing the likelihood of war. And nothing is more destructive of human freedom than war. War always leads to a permanent enlargement of the state -- and a reduction in human freedom -- regardless of who wins. On the eve of the French Revolution many philosophers believed that democracy would put an end to war, for wars were thought to be fought merely to aggrandize and enrich the rulers of Europe. The substitution of representative government for royal despotism was supposed to end warfare once and for all, for the people are not concerned about territorial acquisition through conquest. The French quickly proved this theory wrong, however, for under the leadership of Napoleon they "adopted the most ruthless methods of boundless expansion and annexation . . . ."(7)

Thus, it is not democracy that is a safeguard against war but, as the British (classical) Liberals were to recognize, it is free trade. To Richard Cobden and John Bright, the leaders of the British Manchester School, free trade -- both domestically and internationally -- was a necessary prerequisite for the preservation of peace. For in a world of trade and social cooperation, there are no incentives for war and conquest. It is government interference with free trade that is the source of international conflict. Indeed, naval blockades that restrict trade are the ultimate act of war, and have been for centuries. Throughout history, restrictions on trade have proven to be impoverishing and have instigated acts of war motivated by territorial acquisition and plunder as alternatives to peaceful exchange as the means of enhancing living standards.

It is no mere coincidence that the 1999 meeting of the World Trade Organization -- a cabal of bureaucrats, politicians, and lobbyists which favors government-controlled trade -- was marked by a week-long riot, protests, and violence. Whenever trade is politicized the result is inevitably conflict that quite often leads, eventually, to military aggression.

Mises summarized the relationship between free trade and peace most eloquently when he noted:

What distinguishes man from animals is the insight into the advantages that can be derived from cooperation under the division of labor. Man curbs his innate instinct of aggression in order to cooperate with other human beings. The more he wants to improve his material well-being, the more he must expand the system of the division of labor. Concomitantly he must more and more restrict the sphere in which he resorts to military action. ...Such is the laissez-faire philosophy of Manchester.Ibid., p. 827.

As Frederic Bastiat often said, if goods can't cross borders, armies will. This is a quintessentially American philosophy in that it was the position assumed by George Washington, Thomas Jefferson, and Thomas Paine, among others. A foreign policy based on commerce," wrote Paine in Common Sense, would secure for America "the peace and friendship" of the Continent and allow her to "shake hands with the world -- and trade in any market."Thomas Paine, Common Sense, p. 20, in Philip S. Foner, Complete Writings of Thomas Paine (New York: 1954). Paine -- the philosopher of the American Revolution -- believed that free trade would "temper the human mind," help people to "know and understand each other," and have a "civilizing effect" on everyone involved in it.Ibid. Trade was seen as "a pacific system, operating to unite mankind be rendering nations, as well as individuals, useful to each other. . . . War can never be in the interest of a trading nation."Ibid.

George Washington obviously agreed. "Harmony, liberal intercourse with all Nations, are recommended by policy, humanity and interest," he stated in his September 19, 1796 Farewell Address.W.B. Allen, editor, George Washington: A Collection (Indianapolis: LibertyClassics, 1988), p. 525. Our commercial policy "should hold an equal and impartial and; neither seeking nor granting exclusive favours or preferences; consulting the natural course of things; deversifying by gentle means the streams of Commerce, but forcing nothing . . ."Ibid.

The period of world history from the middle of the fifteenth to the middle of the eighteenth centuries was an era of growth in world trade and invention and of institutions suited to trade. Technological innovations in shipping, such as the three-masted sail, brought the merchants of Europe to the far reaches of America and Asia. This vast expansion of trade greatly facilitated the worldwide division of labor, greater specialization, and the benefits of comparative advantage.Nathan Rosenberg and L.E. Birdzell, Jr., How the West Grew Rich (New York: BasicBooks, 1986), pp. 71-112.

But whenever human freedom advances, as it did with the growth of trade, state power is threatened. So states did all they could then, as now, to restrict trade. It is the system of trade restrictions and other governmental interferences with the free market, known as mercantilism, that Adam Smith railed against in The Wealth of Nations. As Rothbard has written:

Mercantilism, which reached its height in the Europe of the seventeenth and eighteenth centuries, was a system of statism which employed economic fallacy to build up a structure of imperial state power, as well as special subsidy and monopolistic privilege to individuals or groups favored by the state. Thus, mercantilism held that exports should be encouraged by the government and imports discouraged.Murray Rothbard, "Mercantilism: A Lesson for Our Times?" in his book, The Logic of Action II (Cheltanham, UK: Edward Elgar, 1997), p. 43,

Classical liberals waged an ideological war against mercantilism during the eighteenth and nineteenth centuries, and scored some major victories for freedom. The French "physiocrats," led by Dr. Francois Quesnay, a physician who got interested in economic topics (at a time when "physicians" bled their patients with leeches and "surgery" meant the amputation of limbs). The physiocrats were quite influential from the 1750s to the 1770s and were among the first laissez faire thinkers who contemptuously denigrated mercantilist propaganda and called for complete freedom of domestic and international trade. Their position was based on sound economics as well as Lockean notions of natural rights. Quesnay wrote that "Every man has a natural right to the free exercize of his faculties provided he does not employ them to the injury of himself or others."Cited in Henry Higgs, The Physiocrats (New York: Langland Press, 1952), p. 45.

When he became Finance Minister of France in 1774, Anne Robert Jacques Turgot, a precursor of the Austrian School, decreed freedom of import and export of grain as his first official act.

At around the same time, Adam Smith was defending trade on moral as well as economic grounds by enunciating his doctrine of how free trade was part of the system of "natural justice." One of the ways he did this was to defend smugglers and the act of smuggling as a means of evading mercantilist restrictions on trade. The smuggler, explained Smith, was engaged in "productive labor" that served his fellow man (i.e., consumers), whereas if he is caught by the government and prosecuted, his capital is "absorbed either in the revenue of the state or in that of the revenue-officer," which is an "unproductive" use "to the diminution of the general capital of the society. . . "Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Oxford University Press, 1976), p. 898.

Despite powerful arguments in favor of free trade offered by Quesnay, Smith, David Ricardo, and others, England (and other countries of Europe) suffered from protectionist trade policies for the first half of the nineteenth century. But this situation was turned around due to the heroic and brilliant efforts of what came to be known as the "Manchester School," led by two British businessmen, John Bright and Richard Cobden. Thanks to Bright and Cobden Great Britain achieved complete free trade by 1850.

The British public was plundered by the mercantilist "corn laws" which placed strict import quotas on the importation of food. The laws benefited political supporters of the government who were engaged in farming at the expense of much higher food prices, which was especially harmful to the poor. Bright and Cobden formed the Anti-Corn Law League in 1839 and turned it into a well-oiled political machine with mass support, distributing literally millions of leaflets, holding conferences and gatherings all around the country, delivering hundreds of speeches, and publishing their own newspaper, The League.Nick Elliott, "John Bright: Voice of Victorian Liberalism," in Burton W. Folsom, Jr., editor, The Industrial Revolution and Free Trade (Irvington, NY: Foundation for Economic Education, 1996), p. 28.

The Irish potato famine of 1845 created great pressures for repeal of the Corn Laws, which was finally achieved on June 25, 1846. The elimination of all other import duties followed, and a 70-year period of British free trade began. Richard Cobden was also influential in pushing through the Anglo-French treaty of 1860, which lowered French tariffs and helped put that country on the road to freer trade.

From his home in Mugron, France, Frederic Bastiat single handedly created a free-trade movement in his own country that eventually spread throughout Europe. Bastiat was a gentleman farmer who had inherited the family estate. He was a voracious reader, and spent many years educating himself in classical liberalism and in just about any other field that he could attain information about. After some twenty years of intense intellectual preparation, articles and books began to pour out of Bastiat (in the 1840s). His book, Economic Sophisms, is to this day arguably the best defense of free trade ever published. His second book, Economic Harmonies, quickly followed, while Bastiat published magazine and newspapers all over France. His work was so popular and influential that it was immediately translated into English, Spanish, Italian, and German.

Due to Bastiat's enormous influence free-trade associations, modeled after one he had created in France and similar to the one created by his friend, Richard Cobden, in England, began to sprout in Belgium, Italy, Sweden, Prussia, and Germany.

To Bastiat, collectivism in all its forms was immoral as well as economically destructive.

Collectivism constituted "legal plunder," and to argue against the (natural) right to private property would be similar to arguing that theft and slavery were "moral." The protection of private property is the only legitimate function of government, Bastiat wrote, which is why trade restrictions -- and all other mercantilist schemes -- should be condemned. Free trade "is a question of right, of justice, of pubic order, of property. Because privilege, under whatever form it is manifested, implies the denial or the scorn of property rights." And "the right to property, once weakened in one form, would soon be attacked in a thousand different forms."Frederic Bastiat, Selected Essays on Political Economy, George B. de Huszar, ed. (Irvington, NY: Foundation for Economic Education, 1995), p. 111.

There is no clearer example of how trade restrictions are the enemy of freedom than the American Revolution. In the seventeenth century all European states practiced the policy of mercantilism. England imposed a series of Trade and Navigation Acts on its colonies in America and elsewhere, which embodied three principles: 1) All trade between England and her colonies must be conducted by English (or English-built) vessels owned and manned by English subjects; 2) All European imports into the colonies must "first be laid on the shores of England" before being sent to the colonies so that extra tariffs could be placed on them; and 3) Certain products from the colonies must be exported to England and England only.

In addition, the colonists were prohibited from trading with Asia because of the East India Company's state-chartered monopoly. There were import duties placed on all colonial imports into England.

After the Seven Years War (known in America as the French-Indian War), England's massive land holdings (Canada, India, North America to the Mississippi, most of the West Indies) became very expensive to administer and police. Consequently, the Trade and Navigation Acts were made even more oppressive, which imposed severe hardships on the American colonists and helped lead to revolution.Samuel Eliot Morison, Henry Steele Commager, and William Leuchtenburg, The Growth of the American Republic (New York: Oxford University Press, 1980), pp. 112-125.

After the American Revolution trade restrictions nearly caused the New England states -- which suffered disproportionately from the restrictions -- to secede from the Union. In 1807 Thomas Jefferson was president and England was once again at war with France. England declared that it would "secure her seamen wherever found," which included U.S. ships. After a British warship captured the USS Chesapeake off Hampton Roads, Virginia, Jefferson imposed a trade embargo that made all international commerce illegal. After Jefferson left office his successor, James Madison, imposed an "Enforcement Act" which allowed war-on-drugs style seizure of goods suspected to be destined for export.

This radicalized the New England secessionists, who had been plotting to secede ever since Jefferson was elected, issued a public declaration reminding the nation that "the U.S. Constitution was a Treaty of Alliance and Confederation" and that the central government was no more than an association of the states. Consequently, "whenever its [i.e., the Constitution's] provisions were violated, or its original principles departed from by a majority of the states or their people, it is no longer and effective instrument, but that any state is at liberty by the spirit of that contract to withdraw itself from the union."James Banner, To the Hartford Convention: The Federalists and the Origins of Party Politics in Massachusetts, 1789-1815 (New York: Alfred A. Knopf, 1970), p. 301.

The Massachusetts legislature formally condemned the embargo, demanded its repeal by Congress, and declared that it was "not legally binding." In other words, the Massachusetts legislature "nullified" the law. Madison was forced to end the embargo in March of 1809.

There has always been a collection of men in America who wanted to bring the British mercantilist system here precisely because it was so destructive of freedom. That is, they figured to be the "commanders" of the system and its chief beneficiaries. As John Taylor of Caroline observed, these men "included Hamilton and the Federalists and later, the politicians of the Era of Good Feelings in the 1820s who eventually became Whigs."John Taylor, Tyranny Unmasked (Indianapolis: Liberty Fund, 1992), p. xvi. These men "sought to bring the British system to America, along with its national debt, political corruption, and Court party . . ."Ibid.

Taylor, a noted Anti-Federalist, was a lifelong critic of mercantilism and laid out his criticisms in his 1822 book, Tyranny Unmasked. Like Bastiat, Taylor saw protectionism as an assault on private property that was diametrically opposed to the freedom the American revolutionaries had fought and died for. The tyranny that Taylor sought to "unmask" was the collection of fables and lies that had been devised by mercantilists to promote their system of plunder. If one looks at England's mercantilist policies, Taylor wrote, "No equal mode of enriching the party of government, and impoverishing the party of people, has ever been discovered."Ibid., p. 11. He wrote of the "indissoluble conexions" between both "the freedom of industry and national prosperity" and also "between national distress and protecting duties, bounties, exclusive privileges, and heavy taxation."Ibid., p. 19. The former produces national happiness, whereas the latter produces national misery, according to Taylor. In pointing out the folly of economic autarky Taylor asked:

Will Alabama want nothing but cotton, should that State select this species of labour for its staple? Can she eat, drink, and ride her cotton? Can she manufacture it into tools, cheese, fish, rum, wine, sugar, and tea? ...Is not Georgia a market for manufacturers, and Rhode-Island a market for cotton, in consequence of the division of labor?Ibid., p. 24.

Many of Taylor's arguments were adopted and expanded upon by the great South Carolinian statesman John C. Calhoun during the struggle over the 1828 "Tariff of Abominations," which a South Carolina political convention voted to nullify. The confrontation between South Carolina, which was very heavily import dependent, as was most of the South, and the federal government over the Tariff of Abominations almost led to the state's secession some thirty years prior to the War for Southern Independence. The federal government backed down and reduced the tariff rate in 1833.

The Northern manufacturers who wanted to impose British-style mercantilism on the U.S. did not give up, however; they formed the American Whig party, which advocated three mercantilist schemes: protectionism, corporate welfare for themselves, and a central bank to pay for it all. From 1832 until 1861 the Whigs, led by Henry Clay and, later, by Abraham Lincoln, fought mightily in the political arena to bring seventeenth-century mercantilism to America.Michael F. Holt, The Rise and Fall of the American Whig Party (New York: Oxford University Press, 19990

The Whig party died in 1852, but the Whigs simply began calling themselves Republicans. The tariff was the centerpiece of the Republican party platform of 1860, as it had been when the same collection of Northern economic interests called itself "Whigs" for the previous thirty years.

By 1857 the level of tariffs had been reduced to the lowest level since 1815, according to Frank Taussig in his classic Tariff History of the United States.Frank Taussig, A Tariff History of the United States (New York: Putnam, 1931), p. 157. But when the Republicans controlled the White House and the Southern Democrats left the Congress the Republicans did what, as former Whigs, they had been itching to do for decades: go on a protectionist frenzy. In his First Inaugural Address Lincoln stated that he had no intention to disturb slavery in the Southern states and, even if he did, there would be no constitutional basis for doing so. But when it came to the tariff, he promised a military invasion if tariff revenues were not collected. Unlike Andrew Jackson, he would not back down to the South Carolinian tariff nullifiers.

By 1862 the average tariff rate had crept up to 47.06 percent, the highest level ever, even higher than the 1828 Tariff of Abominations. These high rates lasted for decades after the war.

In the nineteenth century newspapers were formally associated with one political party or another, and many of the Republican party newspapers in 1860 were openly calling for a military invasion of Southern ports to keep the South from adopting free trade, which was written into the Confederate Constitution of 1861. On March 12, 1861, for example, the New York Post advocated that the U.S. Navy "abolish all ports of entry" in the South.Howard Perkins, Northern Editorials on Secession (Gloucester, MA: Peter Smith, 1964)p. 600. On April 2, 1861 the Newark (NJ) Daily Advertiser warned ominously that Southerners had "apparently taken to their bosoms the liberal and popular doctrine of free trade" and that free trade "must operate to the serious disadvantage of the North" as "commerce will be largely diverted to Southern cities." The "chief instigator" of "the present troubles," South Carolina, has all along been "preparing the way for the adoption of free trade" and must be stopped by "the closing of the ports" by military force.Ibid., p. 602.

As mentioned above, by 1860 England itself had moved to complete free trade; France sharply reduced her tariff rates in that very year; and Bastiat's free-trade movement was spreading throughout Europe. Only the Northern United States was clinging steadfastly to seventeenth-century mercantilism.

After the war the Northern manufacturing interests who financed and controlled the Republican party (i.e., the old Whigs) were firmly in control and they "ushered in a long period of high tariffs. With the tariff of 1897, protection reached an average level of 57 percent."Wilson Brown and Jan Hogendorn, International Economics (New York: Addison-Wesley, 1994), p. 188. This political plunder continued for about fifty years after the war, at which time international competition forced tariff rates down moderately. By 1913 the average tariff rate in the U.S. had declined to 29 percent.

But the same clique of Northern manufacturers was begging for "protection" and persisted until they got it when Herbert Hoover signed the Smoot-Hawley tariff of 1929, which increased the average tariff rate on over 800 items back up to 59.1 percent.Ibid. p. 192. The Smoot-Hawley tariff spawned an international trade war that resulted in about a 50 percent reduction in total exports from the United States between 1929 and 1932.Ibid., p. 193. Poverty and misery was the inevitable result. Even worse, the government responded to these problems of its own creation with a massive increase in government intervention, which only produced even more poverty and misery and deprived Americans of more and more of their freedoms.

Since the seventeenth century all the great classical liberals have defended free trade and opposed trade restrictions. Trade restrictions are an attack on the institution of private property, interfere with the international division of labor that is the source of our prosperity, and are nothing less than an act of theft. As Murray Rothbard remarked:

"The impetus for protectionism comes not from preposterous theories, but from the quest for coerced special privilege and restraint of trade at the expense of efficient competitors and consumers. In the host of special interests using the political process to repress and loot the rest of us, the protectionists are among the most venerable. It is high time that we get them, once and for all, off our backs, and treat them with the righteous indignation they so richly deserve."Rothbard, "Protectionism."

The views of the great philosopher Aristotle are particularly important because the entire structure of his thought had an enormous and even dominant influence on the economic and social thought of the high and late Middle Ages, which considered itself Aristotelian.

Although Aristotle, in the Greek tradition, scorned moneymaking and was scarcely a partisan of laissez-faire, he set forth a trenchant argument in favor of private property. Perhaps influenced by the private-property arguments of Democritus, Aristotle delivered a cogent attack on the communism of the ruling class called for by Plato. He denounced Plato's goal of the perfect unity of the state through communism by pointing out that such extreme unity runs against the diversity of mankind, and against the reciprocal advantage that everyone reaps through market exchange. Aristotle then delivered a point-by-point contrast of private as against communal property. First, private property is more highly productive and will therefore lead to progress. Goods owned in common by a large number of people will receive little attention, since people will mainly consult their own self-interest and will neglect all duty they can fob off on to others. In contrast, people will devote the greatest interest and care to their own property.

Second, one of Plato's arguments for communal property is that it is conducive to social peace, since no one will be envious of, or try to grab the property of, another. Aristotle retorted that communal property would lead to continuing and intense conflict, since each will complain that he has worked harder and obtained less than others who have done little and taken more from the common store. Furthermore, not all crimes or revolutions, declared Aristotle, are powered by economic motives. As Aristotle trenchantly put it, "men do not become tyrants in order that they may not suffer cold."

Third, private property is clearly implanted in man's nature: His love of self, of money, and of property, are tied together in a natural love of exclusive ownership. Fourth, Aristotle, a great observer of past and present, pointed out that private property had existed always and everywhere. To impose communal property on society would be to disregard the record of human experience, and to leap into the new and untried. Abolishing private property would probably create more problems than it would solve.

Finally, Aristotle wove together his economic and moral theories by providing the brilliant insight that only private property furnishes people with the opportunity to act morally, e.g. to practice the virtues of benevolence and philanthropy. The compulsion of communal property would destroy that opportunity.

While Aristotle was critical of money-making, he still opposed any limitation — such as Plato had advocated — on an individual's accumulation of private property. Instead, education should teach people voluntarily to curb their rampant desires and thus lead them to limit their own accumulations of wealth.

Despite his cogent defense of private property and opposition to coerced limits on wealth, the aristocrat Aristotle was fully as scornful of labor and trade as his predecessors. Unfortunately, Aristotle stored up trouble for later centuries by coining a fallacious, proto-Galbraithian distinction between "natural' needs, which should be satisfied, and "unnatural' wants, which are limitless and should be abandoned. There is no plausible argument to show why, as Aristotle believes, the desires filled by subsistence labor or barter are "natural', whereas those satisfied by far more productive money exchanges are artificial, "unnatural' and therefore reprehensible. Exchanges for monetary gain are simply denounced as immoral and "unnatural', specifically such activities as retail trade, commerce, transportation and the hiring of labor Aristotle had a particular animus toward retail trade, which of course directly serves the consumer, and which he would have liked to eliminate completely.

Aristotle is scarcely consistent in his economic lucubrations. For although monetary exchange is condemned as immoral and unnatural, he also praises such a network of exchanges as holding the city together through mutual and reciprocal give-and-take.

The confusion in Aristotle's thought between the analytic and the "moral' is also shown in his discussion of money. On the one hand, he sees that the growth of money greatly facilitated production and exchange. He sees also that money, the medium of exchange, represents general demand, and "holds all goods together." Also money eliminates the grave problem of "double coincidence of wants', where each trader will have to desire the other man's goods directly. Now each person can sell goods for money. Furthermore, money serves as a store of values to be used for purchases in the future.

Aristotle, however, created great trouble for the future by morally condemning the lending of money at interest as "unnatural." Since money cannot be used directly, and is employed only to facilitate exchanges, it is "barren' and cannot itself increase wealth. Therefore the charging of interest, which Aristotle incorrectly thought to imply a direct productivity of money, was strongly condemned as contrary to nature.

Aristotle would have done better to avoid such hasty moral condemnation and to try to figure out why interest is, in fact, universally paid. Might there not be something "natural', after all, about a rate of interest? And if he had discovered the economic reason for the charging — and the paying — of interest, perhaps Aristotle would have understood why such charges are moral and not unnatural.

Aristotle, like Plato, was hostile to economic growth and favored a static society, all of which fits with his opposition to money-making and the accumulation of wealth. The insight of old Hesiod into the economic problem as the allocation of scarce means for the satisfying of alternative wants was virtually ignored by both Plato and Aristotle, who instead counseled the virtue of scaling down one's desires to fit whatever means were available.

This article is excerpted from "It All Began, As Usual, with the Greeks" in Economic Thought Before Adam Smith. An MP3 audio file of this article, read by Jeff Riggenbach, is available for download.

This collaboration between Block (free-market economist) and Nelson (free-market engineer) offers a little bit of anarcho-free-market-everything with which to engage the interested reader. Block, as always, brings his combative spirit and formidable reasoning abilities. He is ready to take on all comers including, at one point in the book, his own co-author! Nelson’s interesting case-studies highlight particularly well what happens when property rights and market forces are suppressed — whether on land or on water.

The book is a fusion of two complementary tomes, a circumstance that can often make for choppy reading. At times, it is hard going. But the pilgrim who perseveres will in time be rewarded with many interesting insights, as well as a glimmer of what a consistent free-market water-rights regime would (or should) look like.

The first half of the book is a theoretical section of sorts, laying down the case for free-market economics in a property-rights context. This is followed by several interesting case studies that reinforce the theoretical discussion at the tract’s beginning. A marvelous list of provocative topics is covered (albeit briefly for most of the topics). These mostly pertain to water-rights issues, but often the range broadens and discussion strays into more generalized property issues (e.g. the shameful treatment of Cliven Bundy [re. p. 40]). Here also is where the authors re-state their free-market roots, adding a second crucial concept: the problem of “government failure” which waxes in importance as the case studies are reached. These authors are not bamboozled by the sight of bureaucrats bringing gifts to the private sector, and they also understand about free lunches.

Chapter One sets the tone with a ringing call to “Privatize oceans and all other bodies of water!” A primary purpose of the chapter is to suggest that, in a free-market system, it is almost always possible to find successful policy solutions in/on water (and elsewhere) without resorting to the use of government force (e.g., ch. 9). One simply needs to be creative and have an honest desire to try to solve problems sans government. To get the discussion rolling, the authors spar with an imaginary skeptic about the book’s message.

For additional emphasis, the authors throw in a generic argument for free markets, originating from Aristotelian thought and also based also on the idea that young children from a very early age recognize property rights. The authors see private ownership as natural and appropriate to humankind. Accordingly, they say, the socialists who claim “property is theft” are literally, exactly, and morally wrong. In such a way are the decks cleared for thinking about the morality of markets without entering an extended debate with the inevitable socialist critics.

The authors are very optimistic — likely too much so — with their claim that privatization of the Earth’s waters will necessarily bring about, in effect, a new Golden Age on Earth (your reviewer’s term, not the authors’). Sure, we will do better in developing our watery resources if we apply hefty doses of capitalism to the problem (e.g., pp. 3–4; and pp. 22–25). But these thoughts seem to this reviewer to be largely beside the point. Having to work in water or on water — as opposed to dry land — is a significant “tax” on productive watery activities. We are land creatures, not “Aquamen.” In general, it is considerably more expensive for us to conduct production operations in watery environments (whether it is in a murky swamp, or on the sea-bottom, hundreds of feet down). The authors do not take too seriously this important factor. I would say that they understate the problem. Instead, they assume rather breezily that there is no such “tax” on watery productive activities. Down a few pages, the authors seem to recognize this issue. However, it still seems to this reviewer that the authors understate the difficulty of what they are proposing. This reviewer, therefore, is skeptical.

Chapter 2 asks the reverse of the question in Chapter 1: Why privatize anything? The authors first “school” us readers a bit more regarding free-market arguments to make sure we are prepared for the discussions to come. The morality of free markets, with its non-coercive principle, is seen as superior to coercion (on land or on water). Free-market institutions have dominated collectivist ones whenever and wherever the two systems have competed. Everywhere we look, better-managed resources are to be found where private-property models are allowed to take root. These are sentiments that many a free-market social scientist can endorse with gusto.

As for the land, so for the waters: Ethically, privatization is everywhere peaceful, ethical, and according to the authors, the best system to resolve disputes. Even better, productivity will be higher if there is private-water ownership.

Chapter 5 takes on these issues of privatization, homesteading, and abandonment. Rules are suggested for watery abandonment of derelict (abandoned) properties; plus other interesting suggestions. Surprisingly, the chapter is not “pragmatic,” but philosophical as it seeks ways to solve the various problems discussed in Chapter 5’s material.

Chapter 6 works through several mundane problems involving the existing law governing the seas: Admiralty Law, Law of Salvage, and also of interest: a brief discussion of free-market salvage rules that might work well. It might have better, perhaps, to combine the discussion of the Law of the Sea into a single chapter.

This chapter lays out a part of the authors’ theory of private property. Water rights, as well as their opposite — the harmful existing law governing much of the seas. The Lockean theory will be familiar to most free-market readers of this book; the Law of the Sea, perhaps less so. Chapter 6 also covers abandonment of homesteaded property.

Chapter 7 is where the authors begin to unfold the core of their case for the privatization of those waters currently “in government hands.” The fundamental argument is the homesteading one. Property rights are (or should be) established by a homesteader who substantially mixes his labor with available natural resources (thus claiming the right to control those resources). In a proper society, the authors suggest, water rights would not be established by a global centralized bureaucracy (or, alternatively, a local one). Instead, such rights would be earned mainly by the sweat of the brow. There is both a practical and moral aspect to this argument (as the authors argue above).

In Chapter 7, the authors bring interesting hints and suggestions that ought to help bring more free-market thought into the mainstream. For example (extrapolating from the authors [see p. 56]), specialists might envision designed GPS-enabled buoys that might be used to track especially-high value fish (such as BluefinTuna and Swordfish. Meanwhile, underwater electric fences might keep those fish safely penned up.

In this Brave New World of water-entrepreneurship, the authors seem to suggest that maintaining effective control over a three-dimensional “water plot” might be relatively easy — if the legal framework were there to support it, and if society saw the virtues of such an approach. The next steps would be effective education and advocation in favor of such a legal framework. The authors’ vision extends to fully operational underwater electric fish pens. Gated underwater plots of large size would be maintained to hold them. Such hopeful speculations make for interesting reading!

Next, the authors set down before us crucial questions that they seem to accept as representative of the large numbers of many similar questions that would need to be resolved if a fully-self contained water rights regime were to come to pass. These are watery property-rights-related questions that need to be answered successfully, in the context of water rights, in order for a successful rules-based consistent market society is to grow and take root.

Many of these “watery rights” questions have been solved on land. They are to be thought of as difficult questions, not yet resolved, but which are crucial in solving any attempt to make a consistent property-rights-based system on the waters (or on land). Now the challenge would be to extend the reasoning on land so that “land law” can be can be appropriated to this more aggressive application.

Some reasonable answers to these kinds of questions are provided by the authors. Other questions are posed in a way that makes manifest the difficult challenge inherent in asking these questions. The results of these “thought-experiments” are sometimes quite provocative (e.g, discussion of the possibility of ownership/control of different depths of waters). It begins to look like some of these questions are quite interesting, likely answerable, and, even more, worth answering.

Turning to other matters: problems, such as the “water cycle,” (i.e., water evaporating into clouds and later dropping as precipitation at random spots, thus making assignment of property rights to water extremely difficult) are discussed at some length in Chapter 7. The problem, as the authors see it, is that this poses difficulty for those trying to tag every “piece” of water as being “mine” or “yours” causing problems for market forces. Also, there is considerable discussion of the concept of defining oceanic ownership and how it could be defined, and unfortunately not much in the way of solutions.

Chapter 8 is a rather long chapter focusing mainly on property issues of rivers. It addresses an interesting case (p. 76–77) where an owner’s access to his property is blocked from all sides by adjacent property owners (e.g., he has ownership in midstream but he lacks a legal access point to his “plot”). To make things a bit more challenging, let us assume that his not-so-friendly neighbors are unwilling to negotiate an access point. What, then, would then ensue? Our authors, armed with confidence in market forces, would expect creative solutions by the “players” in the “game” in finding an appropriate access point.

Other issues discussed are property rights in a situation where the course of a river is altered — how would a successful compromise ensue? Strategies for protection from floods in many cases could include something as simple as placing structures on stilts (as in the U.S. Gulf Coast). This long but informative chapter finishes up with discussion of free-market fishing rights and the consequences of erosion.

Chapter 9 covers free-market lakes and related topics. It is interesting chiefly because it concerns actual private ownership of lakes and happily, the discussion here seems less speculative and more concrete. We have, after all, numerous examples of successful management of small lakes.

As a lake community develops, it is particularly interesting in this chapter to see how the authors, starting with a small virgin lake with little commerce and with only-sketched-out property rights, takes the reader forward to a situation where well-defined, sophisticated property rights regimes. Other topics in this chapter include a discussion of fishing rights in rivers and the divvying up costs of erosion between interested injured parties; and the relatively rare case of changes of river course and how it might be managed.

Chapter 10 addresses the control and care of aquifers that often involve damage by one party to another where one party pulls out enough water to negatively and significantly affect a second party’s aquifers. This is another “tragedy of the commons” scenario, sporting technical problems with a public good tilt. In a free market situation, first arriving parties should have priority.

Chapter 11 sketches out the mainstream perspective on ocean management, the so-called “CITES” approach based on the Convention on International Trade of Endangered Species of Wild Fauna and Flora. The authors strongly rebut, citing cases where on land where such models have far worsened conditions of flora and fauna living under these policies. They also present free-market alternatives. Overall, this is an engaging chapter.

Chapter 12 discusses the history of piracy. The authors are cautiously optimistic that the market and private property can solve the problem.

Chapter 13 presents six quite interesting case studies. Case A: This discusses water rights in the lower portion of the Florida peninsula. The authors argue that one of the primary complications stem from poorly-laid-out-private-property water rights. Case B covers efforts in flood protection going back to the 1880s. The authors emphasize the hidden subsidies in such a policy and a libertarian alternative. Case C analyzes a severely damaging 2014 chemical spill on the Elk River. The authors question whether or not regulatory relief would really be likely to prevent another such a disaster. Why should it? In contrast, in a fixed free-market property rights regime, the party responsible would be strictly accountable to all injured parties. Regulation would be unnecessary. Case D concerns California’s Central Valley Aquifer. The authors argue that the problem is too little capitalism, not too much. The authors point out that property rights are a muddle in the aquifer area, creating severe “tragedy of the commons effects.” Case E: Canada, with tremendous water reserves, refuses to treat their water supplies as an economic good. Water in Canada is not privately owned. The authors explore this strange feature of the “Canadian Mind,” which has a very strong aversion to the sale of water to parched areas elsewhere. Case F concerns Somalia, Yemen, and the Gulf of Aden, and how the introduction of strong property rights in the Gulf of Aden would substantially reduce piracy and other problems in this fairly “wild” area.

Other interesting features of the book are: delightfully thorough references, a written debate between the authors (an unusual twist), a critique of a number of several other popular free-market books featuring a focus on water rights, which the authors see as straying too far from the free-market vision that the authors emphasize; and last but not least, a very pretty cover.

Michael R. Montgomery (michael.montgomery@umit.maine.edu) is Associate Professor of Economics at the University of Maine.

Dr. Joe Salerno recently addressed these questions in a comprehensive article entitled Mises on Nationalism, the Right of Self-Determination, and the Problem of Immigration. It's a very important piece, and one that every liberty-minded person should read.

In this studio interview, Jeff and Joe discuss Mises's writings on these perennially-timely topics.

Economic competition, in particular, is the process by which men, individually and in groups, are given the opportunity to earn their living by producing desirable things and performing useful services, and by selling them for what others will pay. More and better goods, lower prices made possible by the steady march of science and technological invention, material progress constantly shared by the masses of the people — these are the ideal social purposes of competition.

In the main, Anglo-Saxon institutions, as they developed through the centuries out of feudalism, not only permitted but more and more encouraged free competition in the choice of occupations, in the exchange of goods and services, and in the management of private business. This general trend continued till near the end of the nineteenth century. However, social price policies always have been and still are a mixture of competition and other features more or less monopolistic and restrictive of free market relations. Let us consider first the competitive aspect.

In order that economic competition may be effective, three essential conditions must be united in some degree at certain times and places: (1) ability, (2) choice, and (3) freedom.

Ability on the part of a seller to compete means the capacity to perform the service, or to produce or procure the goods that are to be sold. On the part of a buyer it means the possession of sufficient purchasing power. One who cannot play a musical instrument cannot effectively compete for a place in an orchestra, nor can a blacksmith effectively compete for a watchmaker's job. An enterpriser's ability depends on his possessing proper personal and technical qualifications — physical strength, intelligence, education, practice, experience, prestige, character — the necessary material equipment of various kinds, and sufficient financial means.

Combined with ability must be choice, or willingness to do, in order that there shall be effective competition. Many a man is better able to do a certain kind of work than are those whom he employs to do it for him, but he prefers to do something else — or nothing. Many a merchant could perform the duties of janitor, bookkeeper, sales clerk, or delivery man as well as or better than his employees do, but he can hire them for less than his services are worth for managing the business. If one who has the ability to compete chooses not to do so, it shows that his alternative valuation (the opportunity cost considered in the last chapter) of his own services and capital is greater in some other occupation. The explanation of this situation in the special case of international trade is known as the doctrine of comparative advantage.

Ability and choice to compete are the two essential economic conditions to competition, but in order that competition may be effective another condition is necessary which is primarily political, in character — freedom to compete.

In human society the individual is free to act only within more or less definite limits set by his fellow men. Individual action is restricted partly by formal law and partly by numerous other subtle influences of custom, caste, status, tradition, training, beliefs, superstition, religion, and individual and class interests. In most savage tribes certain kinds of goods and some offices and occupations are tabu or forbidden to all but privileged members of the tribe. Rules and institutions are maintained and enforced by public opinion with penalties of social disapproval; the extreme is social and economic ostracism, banishment, and sometimes death for the offender. As was the case in many ancient highly-developed societies, so in India today many occupations are the hereditary monopolies of certain castes. Even now in some advanced countries of Europe the conception of social status is such that a talented individual can only with great difficulty rise above the station in life to which he was born.

Even in our society, limitations of a similar sort are temporarily and deliberately created by some groups for their own purposes. These groups foster prejudices and hatreds against competing persons and groups of workers or of employers, and coerce them by epithets, social ostracism, picketing, and boycotts. Driven further by passion as the mob spirit grows, as, for example, during strikes by laborers, various groups frequently embroil the whole community and disturb all civic relations by threats and by violence to property and to persons. The modern "racketeers" in American cities, sometimes disguised as leaders of organized labor, sometimes merely criminal gangsters, have levied tribute on all honest citizens. In degrees varying from the least to the greatest, such conditions restrict the economic freedom of men to compete. Those who act in this way create a sort of State within the State, usurp and for a time exercise the normal political powers of government, justifying their conduct on the ground of necessity. It is plain, however, that under these conditions free and therefore effective competition is impossible.

The basic function of government is to prevent competition by brute force, and in this connection it should be remembered that economic competition is only one of many species of competition between men. Organized government places restrictions upon competition in many legal and orderly ways: by the common law, by statute laws, by executive agencies of enforcement, and by courts which interpret the statutory and common law.

Governmental action in relation to competition is of two distinct types. The first merely determines the scope, methods, and kinds of competition that the community desires, leaving prices to be adjusted by competition. The second directly fixes or manipulates prices, instead of leaving the forces of legalized competition to operate.

The extent to which economic competition is regulated by government is rarely recognized. We hear much loose talk about laissez faire as a policy of keeping hands off competition; but no government has ever followed such a policy to its extreme. Governments are constantly seeking to limit economic competition to honest and peaceful efforts in producing and selling goods. The whole body of business law regulating contracts; much of the criminal law punishing crimes against persons, and preventing fraud, embezzlement and gambling; and all laws punishing crimes against property are designed to eliminate certain sorts of competition deemed to be uneconomic and to retain only those peaceful activities which are deemed to be economically beneficial to the community.

Of recent years the term "fair competition" has been increasingly used to designate the economic competition that is limited to actions in accord with prevailing standards of integrity and legality. Fair competition is the only kind that society desires because it is the only kind that confines rivalry in business to acts which tend toward greater production and service. Bribing a competitor's employees to betray his business secrets, hiring ruffians to dynamite a competitor's factory, and a thousand other such reprehensible or downright criminal acts, are not fair economic competition. Criminal injury of competitors and unfair competition are not economic competition, as is often assumed; rather they make it impossible. The purpose and nature of such behavior is usually monopolistic, that is, it prevents capable and willing competitors from competing. These have been among the most telling methods by which the present monopolistic organization of industry has been brought about.

Fair competition has been too narrowly understood as applying to the behavior of competitors toward each other, rather than toward the buying public. Such a view of competition, however, stresses the means or the methods of economic activity rather than its main purpose — the furthering of the public welfare. There is some tendency for the courts to broaden the meaning of fair competition, and it is to be hoped that they will do so. In the discussion of the N.R.A. in the years 1933–1935, the term "unfair competition" was often curiously twisted to mean any competition that tended to lower prices against the will of the dominant monopolistic interests.

The root meaning of monopoly is unified selling, and the term is applied to a person or group of persons acting in unison in the sale of all the units of an important class of goods offered in a market. Such a single seller could withhold a part of the supply and thus greatly enhance price. But such a complete, or absolute, monopoly is an extremely rare condition. The far more frequent case is partial, or limited, monopoly. The limitation may be in respect to the proportion of the whole supply under a single control. Or it may be in respect to place, time, kinds, and qualities of goods, urgency of desires, and the possibility of meeting these desires by the substitution of other goods. The theory of monopoly has to explain how monopolistic power, however limited, may operate to raise prices above the level that would result from effective competition.

A single seller controlling a small portion of the total stock of goods in a free market could often for a brief time cause the price of his goods to rise by refusing to sell. But only his competitors would profit by this, while the withholder forfeits his usual profit on the unsold goods and the unused capacity of his enterprise. However, one seller or a unified group of sellers may control such a large fraction of all the goods of a certain kind produced in a single market, that he or they will gain more by raising prices than will be lost through limiting production. If by the use of any of the devices of collusive, criminal, and unfair competition sellers are able to force others to limit their production, the total monopolistic gain may be much greater than otherwise would be the case. In some instances monopoly is inclusive. This is the case when there are agreements and common action to restrict sales. In other instances monopoly is exclusive in that it compels others to restrict their sales partially or completely.

Monopoly may be defined as follows: It is unified control by sellers over such a proportion of the whole supply of certain goods or classes of goods in a market that a net gain may result by withholding or excluding from sale some goods that would be offered for sale if ownership were not unified. A similar unification on the side of demanders, a comparatively rare occurrence, is often called buyers' monopoly.For this type of monopoly the name of monopsony has been suggested as being in accord with the meaning of the Greek roots.

When the conditions determining sellers' valuations were considered in the preceding chapter, it was seen that all sellers competitive as well as monopolistic, charge what the traffic will bear. The true contrast between competitive and monopolistic valuations is that where competition is effective, the traffic usually will not bear so much as under monopolistic conditions. It is misleading to say that the contrast lies in the fact that monopoly prices are fixed or determined solely by demand, whereas competitive prices are fixed by the equilibrium of demand and supply. The essential contrast is this: In the case of exercised monopoly power, the supply is restricted by common action below what would result from independent competitive action. When monopolistic sellers find that they can get more by restricting supply, they raise their reserve valuations accordingly. Monopoly price is determined by the equilibrium of demand and supply. But while demand is competitively unrestricted, supply is artificially restricted.

Monopolistic sellers may effect the restriction in several ways. They may by collusion reduce their own sales, or they may use either rewards or punishments to induce competitors to reduce their sales in whole or in part, or they may persuade some public authority to limit or exclude possible competitors. In all these ways and by numberless devices, supply is more or less manipulated in many industries today, according to favoring conditions.

A distinction may be made between crude and net monopoly prices. Crude monopoly price is that which yields the maximum receipts (units sold times unit price) rather than, necessarily, the greatest net gain. The aim is to obtain the maximum receipts when goods are either costless (as might be the case with some agents of production) or are perishable, as are some foods in the markets on Saturday night or before a holiday, or where for temporary gain some part of the existing stocks of goods is destroyed without regard to first costs or to replacement valuations.

Suppose that at various prices the supply of and demand for certain goods correspond with the latent valuations as set forth in the following table:

At the true competitive market price of $5, there will be 50 units sold and the receipts will be $250. If, however, all the sellers unite and restrict production to 45 units, price will rise to $6 and receipts to $270, which is the maximum possible, Further restriction of supply to 35 units would raise unit price to $7 but receipts would fall to $245. This is shown in Figure XVII.

Elasticity of demand means the extent to which changes in price initiated by active changes of supply are followed by passive inverse changes in demand. This is usually expressed as a ratio of the rate per cent of the demand change to the rate of price change, the two rates having opposite signs, plus or minus. For example, if the price falls 10 per cent and as a result the demand rises 10 per cent, the rate of elasticity of demand at that point is unity. But if a fall of price from 10 to 9 (10 per cent) is followed by a rise of demand only from 100 units to 105 (5 per cent), the rate of elasticity is .50.

Elasticity of supply is similar in nature to elasticity in demand but varies directly with price changes, supply rising passively as prices rise and falling as prices fall.See Chap. XVIII on passive and active changes in latent valuations.

Drawn on the same scale, a graph of more elastic demand (or supply) is more nearly horizontal, and one of less elastic demand (or supply) is more nearly vertical.

Consider a situation, as in Table VIII, in which the latent demand at higher prices is somewhat less elastic than in Table VII, for example:

Under these conditions, if the monopolistic group has 50 units on hand which will sell for only $5 if all are offered, it will pay them to destroy 20 units, if that is necessary to make sure that the remainder may be sold at $10 per unit. This sort of waste and destruction of goods has often been practiced, as for example, when East Indian spices were sunk in European ports— a case made famous by Adam Smith — and when certain foodstuffs were occasionally dumped into the waters of New York harbor.

The foregoing examples involve the assumption (1) that the monopolist controls the whole supply; (2) that the monopoly price is uniform to all buyers without discrimination, and (3) that actual costs and alternative valuations are disregarded. Let us consider how a difference in each of these conditions might influence the result.

If a considerable fraction of the supply remains outside of the monopolistic agreement, the control of price is more difficult. If competitors (in Table VIII) supply 10 units at the competitive price, and the monopoly group supplies 40 and then cuts down its supply by 10 units, the monopoly group would be selling 30 units, and its competitors 10 at a price of $7. Its receipts at the competitive price would be $200 (40 X 5); at the $7 price they would be $210. There is therefore a gain of $10 for the monopoly if it restricts production and obtains the $7 price. But if the monopoly restricts its output by 20 units to raise the price to $10, it would then sell only 20 units, and its receipts would be only $200.

Tendency of monopoly to overreach. — Theory and abundant practical experience unite to show that under such conditions the other competitors would be likely to increase their outputs, while new forces would be set into operation by the higher prices, causing substitution of goods, stimulation of new competitors near and far, and the discovery of new methods. In all cases of limited monopoly the long-time gains of restrictions are certain to be smaller than they appear in the short-time view, and large immediate gains sometimes turn ultimately into large losses.

The history of monopoly is full of evidence that it usually overreaches itself in the exercise of newly acquired powers over prices. Notable recent examples are the British policy of restricting rubber production by which the price of rubber was driven up to about $1.50 a pound, to fall later to 5 cents a pound; the copper monopoly which drove copper up to 24 cents a pound, to see the price collapse to 5 cents, the lowest in all history; and the efforts since 1933 to fix American cotton prices, which have stimulated competition in cotton growing in many parts of the world where it threatens to continue even at prices lower than those at present, with disastrous results to our Southern farmers.

But this is not to say that the problem of monopoly always solves itself, or that monopoly power is always temporary, or that it usually is unprofitable to the monopolists, or that no one is injured by its exercise, or that the public may safely follow a policy of laissez faire toward the monopoly problem.

In practice, uniform monopoly price is unusual and theory makes it clear why this must be so. Except when demand is highly inelastic, the gain from uniform monopoly prices is likely to be limited. It has been observed that with rare exceptions monopoly power is not complete but is partial and limited. The most general limitation of monopoly power is the newly aroused competition which it has to meet at each successive higher level of prices. To meet such competition by a uniform lowering of its price would compel the monopoly to give up some of the monopolistic gains derived from those buyers that are already fully within its power. But if monopoly can find a way to classify the buyers, even roughly, and make those in each class pay a price approximating their reserve valuations, it can gain much more than it can from a uniform price.

Price discrimination is nonuniform treatment of customers by making a difference in the price of goods without a corresponding difference in quality, service, or conditions in the terms of sale. When the monopoly discriminates against such buyers as are within its power by charging them higher prices while it sells at lower prices where competition must be met, it succeeds in accomplishing the proverbially impossible — "it eats its cake and has it too."

The price discriminations practiced by a monopoly are often at certain geographical points or market area boundaries. Or again they are found in certain grades and kinds of goods and services. Or they may be seen in the methods of making sales to certain persons. The monopoly may undercut certain competitors' prices while continuing to charge its other customers monopolistic prices. So discrimination takes manifold forms, but it always means nonuniformity in the prices exacted from buyers by the sellers.

Monopoly gains from discrimination. — In Table IX total receipts at a uniform price of $7 would be only $245; but they may be increased to $330 by discriminating prices down to the normal competitive price of $5, as follows:

Table IX

          Price       Units Salable at Various Discriminatory Prices           Receipts

            $7                                     35                                                            $245             6                                      10 additional                                             60 additional             5                                        5 additional                                             25 additional                                                     __________                                         ____________Total                                              50                                                           $330

In a similar manner the effect of further discrimination by creating a higher price class would be as follows:

Table X

          Price       Units Salable at Various Discriminatory Prices            Receipts

           $10                                      30                                                            $300               7                                      10 additional                                             70 additional               6                                        5 additional                                             30 additional               5                                        5 additional                                             25 additional                                                     __________                                         ____________Total                                                50                                                           $425

Discrimination in prices, while it wears the guise of competition, is, in fact, the most potent instrument of monopoly. A strong combination or monopolistic association, when discriminating by lowering prices, need not stop at a truly competitive price level which yields a normal profit. It can and often does go lower, even accepting a loss, for the purpose of warning, disciplining, forcing into the monopolistic group, or driving into bankruptcy any smaller competitor who is interfering with the price plans of the monopoly. This is cutthroat competition in the proper sense of that often misused term. It is much more agreeable and profitable to a monopoly if competitors can be made to restrict their production than for the monopolists, by cutthroat means, to do it themselves. In that way, a monopoly gets all the gain and the would-be competitors bear the losses along with the consumers.

The practice of cutthroat competition is much easier for a financially powerful corporation than it is for a smaller competitor. It is particularly easy for a large combination owning a number of plants in various geographical areas and turning out a large variety of products. It can cut prices on some products by the use of "fighting brands," and in some localities by the use of "fighting mills," while continuing to charge higher prices and to earn ample profits from its other products and plants. On the other hand, it is financially impossible for a comparatively small independent enterprise with a single plant, no matter how efficient it may be technically or how able to meet fair competition, to compete against its large competitors by the use of cutthroat prices. It can only cut its own throat in that way.

Without a clear understanding of discriminatory prices there is no hope: for effective public control of monopoly.

Cases of crude monopoly price are comparatively rare. Much more frequently the aim of a going concern is to get the maximum price over the costs of replacement — the greatest net monopoly price. In the continuous production and sale of goods, costs have to be considered — that is, the alternative valuations of indirect agents. Normal competitive prices of goods contain an element of profit both on fixed and variable costs necessary to attract and to keep enterprisers in the business. The normal competitive price contains no additional profit above this: costs and prices are, or tend to be, just equal. Assume the competitive price to be $5 (as in Table VIII; the fixed costs (including a fair profit) to be $150; and the variable costs (also including a fair profit) to be $100 (receipts $250, costs $250). Under these conditions costs, prices, and normal profits would be in equilibrium, as shown in Figure XIX.

Now if the monopoly reduces its production from 50 to 30 units, fixed costs would be unchanged at $150; variable costs would be $60 (3/5 of $100); and total costs (including normal competitive profit) would be $210. As the receipts are $300, there is a pure monopoly profit of $90 over and above the normal profit which investment would give under competitive conditions. These figures are illustrative of the fact that a monopolistic increase of competitive prices increases the profits of monopoly in greater proportion than it does the total receipts. This is shown in Figure XX.

Expressed generally net monopoly price: is that price which maximizes the remainder left after subtracting from the total receipts the costs of production. The many complexities in the calculation of costs according to whether they are constant, increasing, or decreasing per unit, or total, go beyond the scope of our treatment.

The innumerable and varied monopolistic controls over prices in modern business may be broadly classified as public and private. Public monopoly is that which is legalized, including direct public ownership and operation of enterprises. Monopoly power is also exercised by private persons, organizations, and industries acting under authority of patents, copyrights, charters, and statutes which confer special or exclusive privileges on them.

The professed public motive in all these legalized forms of monopoly is to advance the general welfare, but frequently they are determined by the private and class interests of "pressure groups" acting upon legislators and executive or judicial officials. Organized groups of citizens are constantly seeking the authorization and grant of monopolistic powers for themselves with the plea that this is the best way to help the public. The "bootstrap doctrine" of economic welfare became known as mercantilism from its wide exercise by governments on behalf of the merchant class in the seventeenth century. It has been followed in the United States through extensive grants and subsidies to railroads, water carriers, and other industries, and in tariffs to favored groups of manufacturers, farmers, and owners of natural resources such as coal, iron, lumber, oil, copper. In these and many other ways, the power of taxation exercised by local, state, and Federal authorities has been diverted from its primary purpose of raising public revenues to promote the general welfare, to that of making gifts to private citizens, on the apparent assumption that somehow these gifts will filter through their pockets back to the taxpayers, magnified by some magic power in the process.

A peculiar case of monopoly by public action is presented by so-called protective tariffs on imports, more accurately called restrictive tariffs. The purpose of such protective tariffs is not to raise revenue for the government but to restrict imports and thereby to raise the prices which domestic producers may receive from domestic users. Inasmuch as domestic producers are thus relieved practically or wholly from the competition of foreign products with their own, this is a monopolistic measure. This is true even though domestic producers are not thereby authorized to unite in monopolistic selling but are expected to compete actively with each other. If they do so compete, they may reduce the rate of profits in their industries to the general level of other industries. Nevertheless prices almost certainly will remain higher than they would be with free importation (with the possible exception of bona fide infant industries). The higher domestic prices due to restrictive tariffs are in many cases reflected back to the natural resources involved in the manufacture of the product. These natural resources would often be much less valuable if imports were free. Tariffs are thus the source of large private fortunes. Though it is extreme to say that "the tariff is the mother of trusts," it can hardly be doubted that the exclusion of foreign goods facilitates the formation of domestic monopolistic agreements. Moreover, domestic monopolistic industries such as oil, lumber, copper, and cement have been able to exert a peculiarly strong pressure to procure higher tariffs on their products.

The enterprises known as public utilities present a special problem of monopoly. The chief enterprises of this type have appeared somewhat in this historical order: ferries, toll turnpikes and bridges in private hands, water- and gasworks, railroads, streetcar lines and interurban trolleys, electric power and light, and telegraph and telephone companies. A public utility, as the name indicates, is an industry which, with the progress of society, is deemed necessary to the public welfare. But so are many other industries that have developed in the last century and a half. In contrast with industries supplying such products as textiles, iron and steel, cement, gasoline, or automobiles, the really distinctive character of a public utility lies in technical conditions which call for the extension of physical lines of rails, pipes, poles, wires, and other apparatus into the particular locality, and usually into each home or factory, to be served. It is impossible for this to be done unless these industries are granted (by charter or franchise) special legal privileges not accorded to citizens generally. These usually include the right to occupy, cross, excavate, and use the public highways for their rails, pipes, conduits, wires, and other equipment, and the power to exercise the right of eminent domain. By this right a public utility can compel others to sell their property at an appraised valuation, even against their will. Hence such enterprises are quasi-public, for they enjoy not merely the ordinary rights of private business but become in some respects public agencies exercising public rights.

Experience soon showed that it was physically impossible and financially wasteful to multiply the physical equipment of rails, pipes, wires, poles, and so on, in each locality so that the buyers of services could choose and shift back and forth among competing bidders. Under these conditions local monopolies were inevitable, however limited they might be on the geographical margins and by substitution of goods such as candles and kerosene for gas or electricity. The term "natural monopolies," often used loosely, may with some reason be rightly applied to such industries. The public did not, as is sometimes assumed, purposely create them as monopolies. But it soon discovered that they inevitably had be­come monopolies. Therefore the public undertook by regulation to keep their prices down to what prices supposedly would be if competition were possible. The purpose of regulating such industries is not to create monopoly, but to remove the clement of extortion. Public utility rates, as fixed by commissions, are attempted copies, or estimates, of competitive rates. Thus far, however, they have been pretty crude imitations of the real thing.

Many of the monopolistic forces in our present economy are not derived from, or sanctioned by, public authority, as are those described in the preceding sections. The commodities and services sold by most commercial and industrial enterprises, unlike those of public utilities, can be distributed to every part of the land by the aid of common carriers. Thus they may come into continual competition in many localities and in many ways with the commodities of other enterprises. Buyers may shift at any moment from one seller to another, under the inducement of lower prices. As long as production and distribution were much decentralized and shared by large numbers of small enterprises (a condition continuing substantially until after 1865 in this country), competition and uniform prices to buyers at each mill or market were the general rule. But since that time there has been a steady trend toward larger production in single plants, and greater centralization of industries at certain localities. In the process many neighborhood factories have disappeared.

Much more important in facilitating monopoly has been the concentration of ownership of factories and stores in the same industry, sometimes in the same locality, sometimes widely distributed geographically. This great unification of ownership en­sures complete unification of price policies of formerly competing companies, and often gives a dominating position in matters of price policy over the remaining so-called independents. In many great industries such as steel, other metals, cement, machinery and implements, the principal kinds of building materials, and in many tariff-protected industries, some one great corporation or friendly group of smaller corporations has become known as the market leader. In industries where concentration had not proceeded so far, trade associations have been organized in great numbers since 1912 ostensibly to deal with unfair competitive practices between independent enterprises but chiefly to make possible collusive agreement on more or less monopolistic prices and practices. Under these conditions monopolistic influences have penetrated into nearly every corner of the price system.

The foregoing brief discussion of monopoly theory suggests the devices by which prices can be monopolistically controlled and also the methods by which such practices could be prevented and corrected. A growing body of evidence indicates that the capitalistic system, whose basic assumption is free markets and a free price system, cannot continue to work with an ever-widening range of prices fixed by monopolies.

Whenever monopoly by agreement is possible in periods of normal business, it becomes effective in boom times. When all producers are well booked up with orders, and buyers' reserve valuations are unusually high, it is easier than at any other time to get competitors to agree to restrict production in order to raise prices. But it is more difficult to maintain such price agreements when business falls off and factories are running below capacity. Then the enterprisers that are in greatest need of orders are tempted to break away and reduce prices, and this precipitates fierce retaliation by the dominant corporation or group in the industry. In any industry, but especially in one that has been pegging its prices at a high level, price reductions serve to stimulate orders to increase production, and to give employment to more workers, and thus somewhat to alleviate the depression.

In recent decades, spontaneous, competitive lowering of prices in depression periods has not occurred promptly nor in many in­dustries. This tends to throw the price system further out of equilibrium. Competitive industries reduce their prices, while in­dustries that are monopolistically organized peg their prices. The whole burden of readjustment in getting production, employment, and exchange started again is thrown upon those industries and occupations in which prices and wages are already most deflated. In the world depression beginning in 1929, this contrast between rigid and flexible prices (or sticky and fluid prices) has been more noticeable than ever before. Rigid, or inflexible, prices are pretty closely correlated with monopoly, partly because of the increasing number of prices fixed on static principles by public authority (as public utility commission rates), and partly by the multiplying controls of private monopoly of various kinds over wages and commodity prices. There is much reason to believe that this rigidity tends first to induce depressions, and then to prolong and to increase their severity by keeping excess capacity unused and by aggravating unemployment. If only a few industries peg their prices, in defiance of the ordinary competitive motives to reduce prices when there is unused capacity and unemployed labor, they may gain at the expense of the rest of the community, which behaves differently. But as price fixing during a depression becomes more and more the general practice, even the monopolists lose more in the end than they gain. The remedy for monopoly is not more monopoly but the policy of competition impartially applied.

Apologists for monopoly, while not denying the growing practice of artificial price rigidity in many industries regardless of changes in demand, have lately sought to justify it as the necessary result of overhead costs because of the heavy investment of capital in durable plants. They say that the prices of the products must provide a fair return on invested capital, including any interest on bonded debt (an actual cost); also a return on stockholders' actual investment at the rate the management expected to get; and finally a return at the same rate on watered stock issued as promoters' profits in forming combinations and reorganizations. These together constitute a heavy burden of so-called overhead costs, which, it is said, the industries are justified in shifting to the public in the form of higher prices, regardless of the general collapse of business conditions. This argument assumes the validity of the erroneous theory that cost prices of indirect agents cause and determine product prices, instead of the reverse.

Those who argue that rigid prices are the normal and justifiable result of overhead costs admit that overhead costs did not so dominate industry in the past. But they maintain that this was because such costs are essentially a new feature in modern industry. In fact, however, overhead costs are at least as old as the practice of expressing the capital value of the investment in durable agents such as machines, buildings, and lands. Every farmer has a large burden of overhead costs, yet the products of agricultural industry (except for recent public measures) are usually sold under competitive conditions at flexible prices.

It is monopoly power, not overhead costs, which make it possible today for some industries to maintain their prices at monopolistic levels regardless of changes in competitive conditions. Industries without monopoly power (such as most kinds of agriculture) have to forget overhead costs, and they continue to produce and sell at any price they can get that covers their actual out-of-pocket outlays. A price system of rigid, or monopoly, prices is not truly a system, for it is out of balance and cannot easily recover. It is the function of market price changes to restore demand and supply to equilibrium, and only a competitive price system can do this.

This chapter carries the study of the price system further into the region of reality where free exchange between individuals in accordance with their own valuations is so often and in manifold ways restricted and controlled either by some public authority or by private monopoly.

The true nature of fair competition in business must be carefully studied to determine what limitations must be placed upon it to ensure the general welfare. Monopoly is essentially unified action by sellers to restrict production artificially and thereby to cause buyers to bid up prices above the competitive norm. Discrimination by monopolistic sellers, that is, charging different classes of buyers nonuniform prices, enables monopoly still further to evade marginal competition and to increase prices and profits above the competitive level.

Grave questions of public policy are involved in the artificial control of prices by public ownership and by special public favors to private industries in various ways, as by means of restrictive tariffs to some, and by special franchises to other industries known as public utilities. Another outstanding present problem is industrial monopoly, which is not legally authorized but is definitely outlawed, yet which in defiance: of law has been steadily growing in power. The influence of monopoly in making prices more rigid, especially in periods of business depression, throws a disproportionate burden upon those other classes of citizens who are competing in their occupations. Monopoly even threatens to undermine the existing system of free industry and private property.

The student should, at this point, try to get a clear and consistent picture of the price system as a whole, by retracing the line of thought running from first to last through these four chapters. The starting point in the explanation of prices is in the differing choice and valuations of individuals. Exchange of goods, beginning in the simplest forms of barter and developing into a complex system of markets and agencies of trade, widens the range of individual choice and increases the wealth of the community. Market prices are mutually related through many ties. Monopoly gains involve the injury of others. A free price system is the essential condition of economic freedom. A true theory of price under actual conditions of mingled competition and monopoly is a necessary prerequisite to the shaping of sound, social price policies.

Berle, Adolph A., Jr. and Means, Gardiner C. The Modern Cor­poration and Private Property. The Macmillan Co. New York. 1933. Reissue, Pp. xiii, 396.

Chamberlin, Edward H. The Theory of Monopolistic Competition. Harvard University Press. Cambridge, Mass. 1933. Pp. x, 213.Fetter, Frank A. The Masquerade of Monopoly. Harcourt, Brace and Co. New York. 1931. Pp. xii, 464.

——. "Big Business and the Nation." Facing the Facts. (James G. Smith, ed.) G.P. Putnam's Sons. New York. 1932. Pp. xvi, 372. See especially Chap. VII.

Keezer, Dexter M. and May, Stacey. The Public Control of Business. Harper and Brothers Publishers. New York. 1930. Pp. xi, 267. A clear view of the real nature of industrial monopoly.

Laidler, Harry W. Concentration of Control in American Industry. Thomas Y. Crowell and Co. New York. 1031. Pp. xvi, 501. The facts regarding concentration.

Means, Gardiner C. "Growth in the Relative Importance of the Large Corporation in American Economic Life." The American Economic Review. March 1931. Vol. XXI. Pp. 10–42. Factual account.

Mund, Vernon A. "Prices Under Competition and Monopoly: Some Concrete Examples." The Quarterly Journal of Economics. February, 1934. Vol. 48. Pp. 288–303.

Viner, Jacob. "Objective Tests of Competition Applied to the Cement Industry." The Journal of Political Economy. February, 1925. Vol. 33. Pp. 107–111.

Wormser, I.M. Frankenstein, Incorporated. McGraw-Hill Book Co., Inc. New York. 1931. Pp. ix, 242. A lawyer's analysis of ominous corporate abuses.

1. What general social price policy is assumed in our political and legal institutions?

2. What is competition? Co-operation? For effective competition what three essential conditions are necessary? Explain.

3. What two types of action in relation to competition may the government take?

4. Give some examples of unfair competition. Can you suggest ways to eliminate such acts or practices?

5. What is the root meaning and definition of the word "monopoly"? Distinguish between absolute and limited monopoly; between in­clusive and exclusive monopoly.

6. What is the essential difference in the determination of monopoly price as compared with the determination of competitive price? Explain.

7. Explain the way in which monopoly may be used to obtain higher prices from purchasers.

8. What is the nature of crude monopoly price? Under what conditions would a monopolist charge this type of price?

9. What is meant by discrimination in prices? Do monopolists usually practice discrimination? Why or why not?

10. Define cutthroat competition. Why, and by whom, is it usually practiced?

11. How would you characterize net monopoly price? Under what conditions does a monopolist aim at this type of price?

12. Give examples of public (Iegalized) monopolies. Are public monopolies in the United States more prevalent than private monopolies?

13. Why does private monopoly always involve a restriction of supply? What are other economic results of private monopoly?

14. How does monopoly tend toward rigidity of prices?

That’s the bad news. But, there are also trends at work right now that are bigger than any single election cycle, and while the candidates this year provided little reason for optimism, the voters themselves may be growing skeptical of just how much the government can solve all their problems.

Nevertheless, one of the most important things we can do is really explain and understand how markets, and not government intervention, are our best hope for an orderly and prosperous society.

As Ludwig von Mises and Frédéric Bastiat point out, economic policy, for good or bad, is ultimately determined by public opinion. That can give us cause for pessimism or optimism, because although a widespread misunderstanding of how markets work translates into bad policies, public opinion can, and often does, change. Until a half-century ago, arguments such as, “We need more housing, therefore government should provide housing,” or “We need more affordable housing. Therefore government should put price controls on housing,” were common. Today, few people seriously make such claims. When even the median voter in Massachusetts can understand the problems with and vote to eliminate rent control, there is hope about the spread of economic ideas.

Still, arguments such as “We need to reduce fraud. Therefore government needs more regulations” or “Risk is a problem. Therefore government should assume and manage risk” are much more accepted than they should be.

Although faith in government is still widely held, it may be passing its apex and declining. Surveys have found that in the late 1960s about 75 percent of Americans said they trusted “the government in Washington all or most of the time,” whereas today the number is only 20 percent. A 2013 survey by Gallup found that a “record high in the U.S. say big government is the greatest threat” to the country, and Pew in 2013 reported that a “majority views government as a threat to personal rights.” People are also abandoning faith in politicians, and today only 9 percent have a favorable view of Congress. 

But, these doubts about government intervention do not necessarily translate into support for voluntary markets.

Part of the reason that the public have skepticism toward markets is they have little understanding of how markets work. Nor do they understand how markets can work to provide order and governance in everyday life.

Among many voters, there is a fear that without governments to intervene, society cannot be structured and orderly.

This has never been the case, and in my book Private Governance: Creating Order in Economic and Social Life, I look at how governance can be achieved without what we normally call “government.”

Private governance is created wherever private institutions create order and enforce rules when governments are either unable or unwilling to do so. Time and time again, markets can be found to work even when government is not underpinning them. The standard belief that government is necessary to enforce contracts or allocate goods — to name two examples — is belied by numerous examples throughout history.

Private governance can be found, of course, in the rules imposed by any private club. But private governance is also employed to govern complex institutions, as it was first used by the founders of the London and New York stock exchanges. Similar institutions and rule-making are used today to govern electronic commerce.

In fact, once we begin to contrast the voluntary marketplace with government institutions, we find that the rules of the market are much more orderly, stable, and potentially enduring than rules from a monolithic bureaucracy.

Moreover, although progressives worry about corporate power, market-based rules and private governance allow for more choice and are markedly more liberal than government impositions and regulations.

Allowing people to voluntarily opt into, or out of, different systems, markets, and communities lets people find the rules that benefit them. In The Constitution of Liberty, Friedrich Hayek explains why this is so. “There is an advantage in obedience to such rules not being coerced,” Hayek begins,

not only because coercion as such is bad, but because it is, in fact, often desirable that rules should be observed only in most instances. ... It is this flexibility of voluntary rules which in the field of morals makes gradual evolution and spontaneous growth possible, which allows further experience to lead to modifications and improvements.

Hayek goes on to note that non-coercive governance — such as that found in the marketplace — is more likely to allow for the sort of change that leads to economic progress:

Such an evolution is only possible with rules which are neither coercive nor deliberately imposed. ... Unlike any deliberately imposed coercive rules, which can be changed only discontinuously and for all at the same time, rules of this kind allow for gradual and experimental change. The existence of individuals and groups simultaneously observing partially different rules provides the opportunity for the selection of the more effective ones.

Widely desirable structures of private governance will become profitable and encourage others to mimic them without any need for coercive “harmonization.” In other cases, variety across different markets is a good thing. Just as it does not make sense for the corner store to comply with the listing requirements of the New York Stock Exchange or recreational sailors to comply with the rules of the America’s Cup, a market for private governance allows people to select from different structures that make sense for them. In contrast to government institutions that apply rigid rules universally, the market allows people to opt into different rule-enforcing clubs and institutions in different areas of their lives in various ways they like.

Politics, of course, represents very much the opposite of the flexibility and variety found in private governance. We just spent most of the year hearing from politicians about all the things they were going to do to force markets to behave themselves. But, in spite of what the politicians tell us, the fact remains that order in markets is as attributable to government as much as good literature is attributable to the Government Printing Office.

Peter Klein is the Mises Institute's Carl Menger Research Fellow.

Are the arguments for the free movement of goods necessarily applicable to immigrants? Are libertarians overly dismissive of culture arguments, narrow-mindedly seeing individuals as bound to each other only by market exchange? And is the modern version of open borders just a big-government construct?

Author Edwin G. Dolan is a leading environmental economist and academic. This 40th anniversary edition includes the full original text along with a new introduction and extensive commentaries on each chapter by the author. The commentaries explore aspects of environmental issues that have changed over time, for example, the arrival on centre stage of climate change, something that merited only a few words in the 1971 edition. They also discuss things that have not changed: for example, the tendency of government to play the role of villain at least as often as that of hero when it comes to protecting environmental values. As the author repeatedly emphasizes, it is as important today as in the past to apply the TANSTAAFL principle: the polluter must pay.

Like so many people, he said, “I really don't understand economics and always have been confused by it.”

To which I surprised him with, “Of course you understand economics; it is the thought process you use every day to deal with three things: scarcity, property, and relationships.”

His eyes got big and he said, “Whoa! Say that again.”

“OK,” I said, “Everything in human life is organized around how we make decisions about three things: scarcity, property, and relationships.

“First let’s talk about scarcity which you’ve known about all of your life — you notice when something is missing or about to be missing; it is how you decide when it’s time go to the grocery store, do your laundry or whether you should drive your car faster so not to be late for an appointment.

“Every human being is an expert in the decision process of scarcity. It is something we all naturally do whenever we act and choose — which, by the way, we are doing all the time, every day, all day long.”

I smiled, “I could go on and on. You want more?”

“Sure,” he smiled back.

“All humans make action and choice decisions that automatically weigh the following factors. Knowledge: what do we know? Risk and uncertainty: what is our estimate of the risk we can foresee? What do we not know? Time and priority: when do I want or need this? And, how important is this to me right now in relation to other options? Value: what am I willing to give up to have this thing right now?

“This is the personal way you understand economics; it’s the decision process that every human being goes through every time they act and choose, even if it is only for me, alone.

“But there is another important way you already understand economics, which is how we interact with others. That is why I mentioned property and relationships because here is where the decision process I outlined above takes into account other people.

“Economics is also about how we decide how we will think about — and therefore organize — our property and our relationships.”

After a long pause my new friend then said, “Wait a minute. You haven’t talked about money. Even I know that economics is the study of money.”

To which I said, “The study of money and monetary exchange is the most applied use of economic theory. And this is to be expected.

“Why? Because of property.

“You probably already know that money is a medium of exchange. But what are we exchanging? We are exchanging property, your property for my property.

“It is most valuable to think that there are two conversations happening during every monetary — or property — exchange.

“The first conversation is the one I am having with myself; when I give $3 for this fancy cup of coffee I am saying, “I value that coffee more than the $3 in my pocket.”

“The second conversation is the one the café owner is having with himself. He is saying, “I value your $3 more than the coffee I have for sale.”

“Money is the handiest form of property so I don’t have to try to exchange a fish or a chicken for a cup of coffee, for example.”

I continued, “the real use of economics is in the conversation of how we organize ourselves in groups. Do we peacefully respect each other’s property? Do we peacefully cooperate with a shared sense of peaceful-values or is it that fearful-values are forced on us by some Single Dictator, as in a single person, or a Group Dictator, which is otherwise called democracy, by the way.”

At this point my new friend was squirming and said, “So, really economics is based on politics.”

I said, “Actually, it’s the other way around. If you like, I can send to you a great little essay written in 1850 that clarifies this. The writer’s name is Bastiat and he explains that economic architectures precede political architectures.

“In other words, if you look at politics as simply an argument of how we should organize ourselves, then it becomes obvious that it really boils down to how we know, or don’t know, what property is and how we should deal with it as we relate to each other in life and living.

“This is what I was referring to when I said that economics is also about relationships. The connection between economics and politics is how we organize our relationships and whether our ‘shared values’ assume we can have (and want to have) a society based more on peaceful cooperation — or not.”

As all conversations go, it became apparent that it was time to wrap this up, so I said, “Well, there you go. I have been studying this for a long time. If you would like to learn more I can direct you to learn about these things in a step-by-step way.”

To my surprise, he said, “No, let’s continue. This is very interesting. But one thing bothers me. Are you also saying that humans don’t need rules and laws and that our so-called ‘self interests’ are enough to keep us humans interacting in a more peaceful way? The news is too full of the horrors of humanity to swallow that one.”

I replied, “Well, it is true that the media is mostly reporting bad news. And there are definitely places and times throughout the world where the balance was and is greater violence of man against man.

“But it is also true that this exists against a backdrop of a pretty darn peaceful world overall. On any average day, you are more likely to end the day peacefully in bed than being the victim of some violent or unfortunate occurrence.

“There are many, many examples of shared peaceful values that we — the world over — rely on in our daily life, that show this to be true. My favorite is the freeway. Here we move along at speeds that easily can kill us and yet we all — mostly and most of the time — peacefully cooperate.

“But let’s talk next time about whether we need to organize ourselves around an assumption that the only way people will peacefully cooperate is via some agency being given the exclusive use of force or whether there are other ways that we can both have rules, laws, and remedies and — at the same time — a higher order of peace, prosperity, and freedom.

“Because there is a way.”

Of course, the true battle of the day is greater than ISIS or any other single organization.

As Mises wrote in Human Action, “To defeat the aggressors is not enough to make peace durable. The main thing is to discard the ideology that generates war.”

As long as the ideology of statism, militarism, and interventionism maintain its hold on the world, civilization will suffer from its consequences. The desire for power and control will eclipse concern for human life. Only those guided by an ideology of peace and prosperity can offer hope for the world.

On Mises Weekends, Louis Rouanet joins Jeff Deist to discuss the fallout from Paris. Rouanet, a former Mises Fellow who studies in the French capital, talks about how his country’s government has reacted to the attack and the willingness of his countrymen to trade liberty for the theater of security.

And in case you missed any of them, here are this week’s featured Mises Daily articles and some of our most popular articles at Mises Wire:

Whether we’re talking about illegal immigration from Mexico and Central America, or birthright citizenship, or the migrants coming from the Middle East and Africa, the subject of immigration has been in the news and widely discussed for months now. It is an issue fraught with potentially perilous consequences, so it is especially important for libertarians to understand it correctly.

This Mises Circle, which is devoted to a consideration of where we ought to go from here, seems like an opportune moment to take up this momentous question.

I should note at the outset that in searching for the correct answer to this vexing problem I do not seek to claim originality. To the contrary, I draw much of what follows from two of the people whose work is indispensable to a proper understanding of the free society: Murray N. Rothbard and Hans-Hermann Hoppe.

Some libertarians have assumed that the correct libertarian position on immigration must be “open borders,” or the completely unrestricted movement of people. Superficially, this appears correct: surely we believe in letting people go wherever they like!

But hold on a minute. Think about “freedom of speech,” another principle people associate with libertarians. Do we really believe in freedom of speech as an abstract principle? That would mean I have the right to yell all during a movie, or the right to disrupt a Church service, or the right to enter your home and shout obscenities at you.

What we believe in are private property rights. No one has “freedom of speech” on my property, since I set the rules, and in the last resort I can expel someone. He can say whatever he likes on his own property, and on the property of anyone who cares to listen to him, but not on mine.

The same principle holds for freedom of movement. Libertarians do not believe in any such principle in the abstract. I do not have the right to wander into your house, or into your gated community, or into Disneyworld, or onto your private beach, or onto Jay-Z’s private island. As with “freedom of speech,” private property is the relevant factor here. I can move onto any property I myself own or whose owner wishes to have me. I cannot simply go wherever I like.

Now if all the parcels of land in the whole world were privately owned, the solution to the so-called immigration problem would be evident. In fact, it might be more accurate to say that there would be no immigration problem in the first place. Everyone moving somewhere new would have to have the consent of the owner of that place.

When the state and its so-called public property enter the picture, though, things become murky, and it takes extra effort to uncover the proper libertarian position. I’d like to try to do that today.

Shortly before his death, Murray Rothbard published an article called “Nations by Consent: Decomposing the Nation State.” He had begun rethinking the assumption that libertarianism committed us to open borders.

He noted, for instance, the large number of ethnic Russians whom Stalin settled in Estonia. This was not done so that Baltic people could enjoy the fruits of diversity. It never is. It was done in an attempt to destroy an existing culture, and in the process to make a people more docile and less likely to cause problems for the Soviet empire.

Murray wondered: does libertarianism require me to support this, much less to celebrate it? Or might there be more to the immigration question after all?

And here Murray posed the problem just as I have: in a fully private-property society, people would have to be invited onto whatever property they traveled through or settled on.

In the current situation, on the other hand, immigrants have access to public roads, public transportation, public buildings, and so on. Combine this with the state’s other curtailments of private property rights, and the result is artificial demographic shifts that would not occur in a free market. Property owners are forced to associate and do business with individuals they might otherwise avoid.

“Commercial property owners such as stores, hotels, and restaurants are no longer free to exclude or restrict access as they see fit,” writes Hans. “Employers can no longer hire or fire who they wish. In the housing market, landlords are no longer free to exclude unwanted tenants. Furthermore, restrictive covenants are compelled to accept members and actions in violation of their very own rules and regulations.”

Hans continues:

It is rather unfashionable to express concern for the rights of property owners, but whether the principle is popular or not, a transaction between two people should not occur unless both of those people want it to. This is the very core of libertarian principle.

In order to make sense of all this and reach the appropriate libertarian conclusion, we have to look more closely at what public property really is and who, if anyone, can be said to be its true owner. Hans has devoted some of his own work to precisely this question. There are two positions we must reject: that public property is owned by the government, or that public property is unowned, and is therefore comparable to land in the state of nature, before individual property titles to particular parcels of land have been established.

Certainly we cannot say public property is owned by the government, since government may not legitimately own anything. Government acquires its property by force, usually via the intermediary of taxation. A libertarian cannot accept that kind of property acquisition as morally legitimate, since it involves the initiation of force (the extraction of tax dollars) on innocent people. Hence government’s pretended property titles are illegitimate.

But neither can we say that public property is unowned. Property in the possession of a thief is not unowned, even if at the moment it does not happen to be held by the rightful owner. The same goes for so-called public property. It was purchased and developed by means of money seized from the taxpayers. They are the true owners.

(This, incidentally, was the correct way to approach de-socialization in the former communist regimes of eastern Europe. All those industries were the property of the people who had been looted to build them, and those people should have received shares in proportion to their contribution, to the extent it could have been determined.)

In an anarcho-capitalist world, with all property privately owned, “immigration” would be up to each individual property owner to decide. Right now, on the other hand, immigration decisions are made by a central authority, with the wishes of property owners completely disregarded. The correct way to proceed, therefore, is to decentralize decision-making on immigration to the lowest possible level, so that we approach ever more closely the proper libertarian position, in which individual property owners consent to the various movements of peoples.

Ralph Raico, our great libertarian historian, once wrote:

Switzerland is in fact an interesting example. Before the European Union got involved, the immigration policy of Switzerland approached the kind of system we are describing here. In Switzerland, localities decided on immigration, and immigrants or their employers had to pay to admit a prospective migrant. In this way, residents could better ensure that their communities would be populated by people who would add value and who would not stick them with the bill for a laundry list of “benefits.”

Obviously, in a pure open borders system, the Western welfare states would simply be overrun by foreigners seeking tax dollars. As libertarians, we should of course celebrate the demise of the welfare state. But to expect a sudden devotion to laissez faire to be the likely outcome of a collapse in the welfare state is to indulge in naïveté of an especially preposterous kind.

Can we conclude that an immigrant should be considered “invited” by the mere fact that he has been hired by an employer? No, says Hans, because the employer does not assume the full cost associated with his new employee. The employer partially externalizes the costs of that employee on the taxpaying public:

These migrations, in short, are not market outcomes. They would not occur on a free market. What we are witnessing are examples of subsidized movement. Libertarians defending these mass migrations as if they were market phenomena are only helping to discredit and undermine the true free market.

Moreover, as Hans points out, the “free immigration” position is not analogous to free trade, as some libertarians have erroneously claimed. In the case of goods being traded from one place to another, there is always and necessarily a willing recipient. The same is not true for “free immigration.”

To be sure, it is fashionable in the US to laugh at words of caution about mass immigration. Why, people made predictions about previous waves of immigration, we’re told, and we all know those didn’t come true. Now for one thing, those waves were all followed by swift and substantial immigration reductions, during which time society adapted to these pre-welfare state population movements. There is virtually no prospect of any such reductions today. For another, it is a fallacy to claim that because some people incorrectly predicted a particular outcome at a particular time, therefore that outcome is impossible, and anyone issuing words of caution about it is a contemptible fool.

The fact is, politically enforced multiculturalism has an exceptionally poor track record. The twentieth century affords failure after predictable failure. Whether it’s Czechoslovakia, Yugoslavia, the Soviet Union, or Pakistan and Bangladesh, or Malaysia and Singapore, or the countless places with ethnic and religious divides that have not yet been resolved to this day, the evidence suggests something rather different from the tale of universal brotherhood that is such a staple of leftist folklore.

No doubt some of the new arrivals will be perfectly decent people, despite the US government’s lack of interest in encouraging immigration among the skilled and capable. But some will not. The three great crime waves in US history – which began in 1850, 1900, and 1960 — coincided with periods of mass immigration.

Crime isn’t the only reason people may legitimately wish to resist mass immigration. If four million Americans showed up in Singapore, that country’s culture and society would be changed forever. And no, it is not true that libertarianism would in that case require the people of Singapore to shrug their shoulders and say it was nice having our society while it lasted but all good things must come to an end. No one in Singapore would want that outcome, and in a free society, they would actively prevent it.

In other words, it’s bad enough we have to be looted, spied on, and kicked around by the state. Should we also have to pay for the privilege of cultural destructionism, an outcome the vast majority of the state’s taxpaying subjects do not want and would actively prevent if they lived in a free society and were allowed to do so?

The very cultures that the incoming migrants are said to enrich us with could not have developed had they been constantly bombarded with waves of immigration by peoples of radically different cultures. So the multicultural argument doesn’t even make sense.

It is impossible to believe that the US or Europe will be a freer place after several more decades of uninterrupted mass immigration. Given the immigration patterns that the US and EU governments encourage, the long-term result will be to make the constituencies for continued government growth so large as to be practically unstoppable. Open-borders libertarians active at that time will scratch their heads and claim not to understand why their promotion of free markets is having so little success. Everybody else will know the answer.

Dr. Thomas DiLorenzo joined Jeff Deist this week to discuss what is happening on American campuses today. DiLorenzo shares his experiences from behind enemy lines in leftist academia. Are Americans waking up to the decaying state of modern universities?

In case you missed any of them, here are this week’s featured Mises Daily articles and some of our most popular articles at Mises Wire:

This laudable and welcome stance comes from a Pope who has, out of a concern for the poor, famously made several misguided statements that are quite critical of capitalism. Combined, these two positions, while seemingly unrelated, represent a profound contradiction in the Pope’s thinking.

In reality, the only socio-economic arrangement that guarantees the rights of all people to exercise their religious beliefs freely is free market capitalism, which emphasizes the rights of people to own and use property as they wish and to contract freely with others on any mutually agreeable terms.

It is a system that is based strictly on voluntary cooperation and that de-legitimizes the use of force and fraud. (As an aside, I personally think that, for this reason, it is the system most consistent with Christianity.) Under such institutional arrangements, there would be no need for specific legal or constitutional protections for religious liberty. These liberties are inherent in the system itself.

Consider, for example, the contraception mandate that is being challenged by the Little Sisters of the Poor. This directly conflicts with one of the most basic rights under capitalism: the right to trade and make contracts freely with others.

Under laissez-faire, or as some are calling it, “unfettered” capitalism, what is covered by any health insurance policy purchased by the Little Sisters of the Poor would be a private matter among the Little Sisters, their insurance company, and possibly any employees who would also be covered under the plan.

If the health insurance plan that was being offered by the insurance company was unacceptable to the Little Sisters, for whatever reason, they would be free to walk away from it or negotiate different coverage with the insurance company. And if the health insurance offered by the Little Sisters to any of their employees were an unacceptable part of their compensation package, they too would be free to walk away and find employment elsewhere or forgo the employer-provided insurance and purchase a separate plan of their own choosing. This might occur as part of an exchange with the Little Sisters, their employers, for a higher wage. All of this would happen without a need for any specific discussion about religious liberty. The Little Sister’s religious freedom and their freedom to make mutually agreeable contracts are one in the same.

Beyond this the right to worship as one chooses would be pretty hollow without the right to own or contract for the rental of physical property. The right to worship implies the right of a religious organization to have physical space to assemble and to worship in that space as they see fit. Without this fundamental property right, which is only guaranteed without question under capitalism, the right to worship freely as one chooses is tentative at best and nonexistent at worst.

The right to deny religious liberties stems from the power of government to deny the right to use property freely. When the USSR wanted to shut down the Catholic Church in Ukraine it confiscated its property, i.e., the churches. The Soviets understood quite well that the right to freely worship was the right to freely own.

This does not end with religious liberties. Indeed, property rights and free exchange are at the heart of one’s ability to exercise civil liberties more generally. The right to freedom of speech and press and the rights to freely assemble, protest, boycott, etc., are all automatically guaranteed under capitalism.

This is because capitalism guarantees our right to disagree with one another, which is really what is being protected when all of these liberties are recognized. In this regard it would be useful for Pope Francis to pay attention to the words of a rather famous atheist, Ayn Rand, who noted that:

The right to agree with others is not a problem in any society; it is the right to disagree that is crucial. It is the institution of private property that protects and implements the right to disagree.

Holy Father, religious liberty is nothing more than the right to disagree.

The first thing that needs to be noted is that the left is winning the culture war. Even though more people identify as “conservative” than “liberal” in the United States, more people now identify as “liberal” than in the past by a substantial margin. Attitudes toward gay marriage shifted extremely quickly toward the left while support for legal abortion stayed mostly steady. And obviously the media, academia, and Hollywood are far to the left as a study by the non-partisan political analytics firm Crowdpac found (and as anyone who watches anything other than Fox News can tell after about five minutes).

Now, some of this is certainly good, such as the shifting views on marijuana legalization. Some is troubling, such as the growing popularity of socialism.

Regardless though, the left, having ascended to cultural dominance, is no longer in need of free speech. After all, no one ever got in trouble for agreeing with the conventional wisdom. As Noam Chomsky said, “Even Goebbels was in favor of free speech he liked.”

On the other hand, the right is behind the eight ball in the culture wars and thereby supports the concept of free speech because they need it lest their very opinions be outlawed. In an economic sense, this could be called the “diminishing marginal utility of free speech.”

The law of diminishing marginal utility states that while keeping consumption of other products constant, there is decline in marginal utility that a person derives from consuming an additional unit of that product. In this case, the product is free speech. New leftists may have proposed unfettered free speech back in the early 1960s, but that was just because the right was the one in power culturally at the time. Free speech had a high utility to the left at the time and low utility to the right.

Now the situation has reversed. The right is at the disadvantage so it appeals to free speech. The left is ahead and no longer needs free speech, so it has discarded it.

If that statement sounds hyperbolic, just think of all of the campus speech codes and the ever expanding list of mostly trivial microagressions that can be taken for “hate speech.”  Here is just a small sampling of examples to illustrate how absurd this has become:

Indeed, the list goes on endlessly, and is perhaps best summed up by the almost unconscionable lack of self-awareness required by University of Manchester feminists who recently censored the anti-feminist columnist Milo Yiannopoulos from participating in a debate on — you guessed it — censorship.

Of course much of this is just social pressure or the decisions of private institutions, which is permissible (albeit not condoned) under a libertarian framework. But much of it does involve outright government force, or the longing to use it. For example, Adam Weinstein wants to literally “Arrest Climate-Change Deniers.”

Indeed, while many believe that the youth of today are the most politically tolerant in history, they are actually the least. As April Kelly-Woessner notes, “political tolerance is generally defined as the willingness to extend civil liberties and basic democratic rights to members of unpopular groups.” Which groups are unpopular, is not the question being asked.

So, for example, someone who believes that a man should be able to marry his pet goat is not necessarily politically tolerant. What would make him tolerant in this sense is whether he is willing to recognize the rights (particularly regarding speech) of those who disagree with him and his marital proclivities.

In this respect, political tolerance has declined substantially. For the first time since it was measured, the political tolerance of young people has fallen below that of their parents and as Kelly-Woessner again notes, “… is correlated with a ‘social justice’ orientation,” at least for those under forty.

Indeed, the inability to tolerate political views that run counter to one’s own, particularly on the left, has become so ridiculous to be comical. Just take, for example, Judith Shulevtiz’s description of the “safe space” set up at Brown University because of a debate between the feminist Jessica Valentia and Wendy McElroy where McElroy was likely to criticize the term “rape culture.”

The safe space … was intended to give people who might find comments “troubling” or “triggering,” a place to recuperate. The room was equipped with cookies, coloring books, bubbles, Play-Doh, calming music, pillows, blankets and a video of frolicking puppies, as well as students and staff members trained to deal with trauma.

Well, at least they actually let the debate happen.

But the left has not always had a monopoly on anti-free speech thought and legislation. Nor does the right seem to be opposed to it when it can push such things through today. Helen Thomas was fired from the White House Press Corps for saying “The Jews should get the Hell out of Palestine.” Shirley Sherrod was fired for allegedly anti-white statements, a Kansas woman was fired for a fifty-word Facebook post that was considered anti-American-soldier, and the right went into a fervor over Jeremy Wright’s “chickens coming home to roost” comment.

Whereas liberals want to ban words such as “slut” and, at least in Sheryl Sandberg’s case, “bossy” too, conservatives used to all but ban those “seven words you couldn’t say.”

When the right had more cultural authority, alleged communists were being dragged in front of the House Committee on Un-American Activities, Civil Rights activists were harassed, and the Motion Picture Production Code banned Hollywood directors from showing things such as miscegenation.

But that was then and this is now. As the pendulum of cultural prominence swung from one side to the other, the left and right swapped their support for free speech.

Nevertheless, I don’t want to draw a false equivalence here and say the right would be just as bad as the left if they were winning the culture wars. Much of the ideology on the left, at least the far left, is derived from the likes of Herbert Marcuse and other cultural Marxists who explicitly wanted to limit the free speech of “oppressor classes.”

Discerning what exactly free speech is can sometimes be challenging, as in cases of libel, slander, and direct threats. But these are really not the issues at heart here. The vast majority of speech being “regulated” today is simply that of an unpopular opinion. Yes, many ideas are bad. And they should be refuted. Moreover, resorting to the use of political force to silence adversaries is a sign of the weakness of one’s own position. But, in using force to silence others, anti-speech crusaders are making another argument. They’re arguing that political force can and should be used to silence people we don’t like. What idea could be worse than that?

Mises was born in pre-World War I Austria-Hungary and raised in Vienna. As a young man Ludwig surely had a healthy interest in fun and games, but he was also a conscientious student. At seven, he was already reading newspapers and collecting extra newspaper editions. His early interest was in history. But when he read Carl Menger’s Principles of Economics (1871) and encountered the subjective, marginal utility theory of value, he realized that economics was not history but a science of reason and logic. As Mises wrote later, reading Menger made him an economist.

While still at the Gymnasium, the equivalent of high school, young Ludwig adopted a motto from Virgil, “Do not yield to the bad, but always oppose it with courage.” Menger’s explanation that subjective values guide the actions of individuals enabled Mises to recognize that the “good,” for which he would strive “with courage,” was whatever promoted freedom from individuals to seek their subjective values. And anything that prevented individuals from pursing their personal subjectively-chosen goals was the “bad” to which he would refuse to yield. Thus an understanding of subjective value theory made Mises an advocate of individual freedom.

With the realization that everyone’s actions were always guided by his or her subjective values, permitted Mises to explain all economic phenomena as the results of what people do in the attempt, as Mises put, to “relieve some felt uneasiness.” Prices, wages, the division of labor, barter, media of exchange, trade, interest rates, even markets themselves, evolve as countless individuals, act, adapt, and readapt as he or she thinks best given the circumstances, each hoping to attain his or her various personal goals. Thus the economic phenomena we assume as “given and on which we base our actions are the unintended consequences of countless purposive actions of individuals.

I once asked Mises what original idea he had contributed. His reply: “Everything I have written and said I learned from someone else.” True, no doubt. But the genius of Mises, like that of an inventor or entrepreneur, rests on creating something new and original by further developing something already known. By adding something to earlier theories, he made at least three major contributions. First, he developed economics as a logical science and integrated it with all other knowledge. Second, he pointed out that a socialist society, without private property owners competing with one another, would not be able to discover where, when, and how best to use property in production. And third, by reasoning from Knut Wicksell’s theory that a “natural interest rate” prevails on the market among would-be borrowers and lenders, Mises explained the trade cycle as due to interest rates forced down artificially, distorting the “natural interest rate,” disturbing the loan market and causing widespread business ups and downs.

By recognizing that all individuals, everywhere and always, act on the basis of their subjective values Mises explained not only economic phenomena but also how individuals adapt and adjust when non-market forces disturb and distort market phenomena. Thus, Mises built on subjective value theory and added to knowledge. This was Mises’s genius!

The Los Angeles Times, in the socio-economic basket case known as California, dismissed the idea outright in an unsigned editorial, declaring the idea to be an affront against unfairly maligned federal supremacy. The Denver Post, meanwhile, offered last month a more evenhanded assessment, suggesting that the cost to the state of maintaining public lands — in the form of fire-fighting, forestry, and more — is too high to be worth it.

Federal control of lands within states has long been a source of contention between states and the federal government.

Prior to the adoption of the 1787 Constitution, there were few provisions in law that allowed for direct federal control of lands within states. The new constitution, however, was a coup for centralizers who wished to assert more direct federal control over lands in the west. The Louisiana Purchase further strengthened control over western lands by placing huge swaths of land under federal control.

Throughout most of the nineteenth-century, though, it was accepted that virtually all of this land should eventually be handed over to states and to settlers. In the second half of the century, this was mostly done through various homestead acts and by large land grants to the railroads.

The far west and Rocky Mountain west offered new problems, however, because those lands did not lend themselves to homesteading in the way imagined by the Congress. Much of the west is too dry to allow for workable homesteads on the small plots allowed under federal law at the time. Thus, the only way such lands could be profitable was if much larger amounts of land were allowed to single owners.

Politically, however, this did not work either, since the Progressive movement opposed ownership of large plots by corporate mining operations, or by other owners who did not fit the romanticized image of the self-sufficient homesteader. Over time, the federal government took over these lands permanently, refusing ownership to states which were portrayed by Progressives as being in the pockets of corporate interests.

In more recent times, this has led to conflicts in which local economic interest conflicts with federal plans for lands, and in which federal control of lands has actively hurt local economies. For example, to please environmentalists, the federal government continues to close off roads in federal lands that have long been used by local residents for a variety of purposes. Moreover, the federal government collects taxes and fees on lands that state governments would rather tax themselves.

But the most memorable recent examples probably occurred in 2013 when the federal government shut down national parks and other federal lands frequented by tourists. The federal government dispatched federal agents armed with assault rifles who forcibly ejected visitors from the allegedly “public lands.” Meanwhile, nearby towns that rely on tourists for the local economy were powerless to open the parks themselves. State officials, who are far more sensitive to local economic needs than members of Congress or the White House, were also powerless to do anything.

Eventually, after much political pressure was applied, the federal government kindly allowed states to pay millions to the federal government to open the parks again.

But, at that point, the political damage had been done. Many states realized that if they were going to have to pay the federal government to access their own lands, there may be a problem with the arrangement.

And finally, when dealing with the federal government, it’s important to remember that only immense political and corporate interests generally have much chance of influencing federal policy. Because of the cost of doing business with the feds in Washington (it’d be much higher than the cost of influencing state or local governments), federal lands are primarily a battleground between large, well-funded environmental groups and huge corporate organizations. Small companies, landowners, or conservation groups have little-to-no hope of influencing how lands are controlled or owned.

Even those who are sympathetic to the decentralization of federal lands have long questioned whether or not states would want to assume the cost of managing them. Even if states took over federal lands, in most western states, there is little danger of those lands being privatized. Coloradans, for example, like their “public” forests just fine, and would be in no rush to hand them over to the Ted Turners of the world. This means that the states (i.e., the taxpayers) would have to pay for intervention in forest fires, road maintenance, erosion control, and other expenses associated with managing public lands.

Those who think the transfer would be too costly cite a study of Utah’s public lands which claims that a transfer of federal lands to the Utah government would cost the state’s economy $280 million annually, plus $150 million in federal salaries.

Now, it should be remembered that studies like these are pretty sketchy. They take all of the federal monies spent on jobs related to federal lands and then declare that all that money would disappear if the federal government were removed from the equation. They do not consider that, if states were allowed to control these lands, they might manage them better, increase fee income, allow greater levels of economic growth, and avoid local economic disasters like the federally-mandated closing of parks.

But the biggest hole in this analysis is the fact that all of these states ignore the tax revenues that states like Utah and Colorado pay to the federal government. Federal taxes collected in Utah in fiscal year 2012, for example, totaled $15.6 billion. At the same time, according to several sources, Utah is a net taxpayer state, which means its citizens pay more in federal taxes than the state received back in federal spending. In Utah’s case, the federal government spends 66 cents for every dollar in federal taxes collected from the state. Thus, we could conclude that the IRS collects $5.6 billion more in taxes than the state receives back. And this happens year after year.

That allegedly “lost” $280 million doesn’t look quite so big compared to the $5.6 billion extracted from the state by the feds every year. Were that money allowed to remain in Utah, there is no question as to the ability of the state to manage public lands.

Similarly, in Colorado, which is also a net taxpayer state, the IRS collected $41.2 billion in tax revenues. But, the federal spending in the state totals only 64 cents for every federal tax dollar spent. This means that, every year, Coloradans pay about $15 billion more in taxes than is spent by the feds within Colorado.

One Colorado official has claimed that, without federal spending, one major forest fire would “obliterate” the state budget. That’s a pretty vague term, but given that Colorado only collects $12 billion in state taxes compared to the federal take of $41 billion, the biggest potential drain on Colorado productivity isn’t exactly wildfires.

From a legal perspective, of course, it’s useless to discuss any of this. Ever since the rejection of the Articles of Confederation, and the adoption of the new Constitution, it is quite clear in federal law that the federal government can directly tax citizens without any regard whatsoever for state and local governments, or apportionment among the states. Apportionment, which was a halfway measure that attempted to even out tax burdens among states, was essentially eviscerated shortly after the Constitution was adopted when early Supreme Court decisions declared that apportionment didn’t apply if it was an inconvenience to federal tax collectors. The Sixteenth Amendment, while not creating the phenomenon of direct taxation, merely strengthened the federal government’s hand considerably.

So, today, the states themselves are financial bystanders when it comes to federal spending and the ability of states to control taxes, spending, and resources within their own borders. The perpetual drain on state wealth in net taxpayer states is routinely ignored. The federal government can now extract $15 billion more — net — than it spends in a state, and then claim it is making a fabulously generous gift to the state when it does spend a fraction of what it has already taken. Utah and Colorado may get lucky and be able to somehow take control of federal lands. But, lessened federal spending in the state won’t translate into a lower tax bill for anyone.

Meanwhile, so-called progressives in the Church, not normally so deferential to authority, triumphantly proclaim that matters of economics have been definitively settled and that the faithful ought to shut up and obey.

The antidote to all this, released just this year, is the tenth anniversary edition of Tom Woods’s book The Church and the Market: A Catholic Defense of the Free Economy, which won first prize in the books division of the Templeton Enterprise Awards shortly after its release a decade ago.

Tom’s thesis and its rapid spread have put Church liberals almost hysterically on the defensive — be sure to read Tom’s entertaining and relentless takedown of a left-wing Catholic conference warning the faithful of the terrible dangers of libertarianism — and has blasted open a discussion that progressives have been so eager to insist is closed. Before I explain what makes this book especially original, unique, and valuable, let me note that what it contains is of the greatest interest and importance no matter what, if any, religious convictions the reader may hold. It is the perfect book to read between Henry Hazlitt’s Economics in One Lesson on the one hand and advanced Austrian treatises like Mises’s Human Action and Rothbard’s Man, Economy and State, on the other.

Tom begins by explaining praxeology, the Austrian method of economics, and shows how Austrians derive the concept of costs, value scales, supply and demand schedules, and the law of diminishing marginal utility, all from the simple proposition that human beings act, and that they use scarce means to substitute a more preferable for a less preferable state of affairs. If you’ve ever wondered exactly how Austrians employ the “action axiom” to arrive at robust economic conclusions, you’ll understand after reading this chapter.

The rest of the book covers a vast array of topics, the misunderstanding of which has led to gross moral confusion: labor unions, wage rates, the “just price,” banking, money, inflation, business cycles, interest, monopoly, foreign aid, the welfare state, distributism, and a great deal more. The tenth anniversary edition contains a new introduction and an extra chapter. That extra chapter amounts to an overall defense of the book’s thesis, and takes the form of a systematic reply to a critic you almost feel sorry for.

In other words, the book makes an extremely vigorous and persuasive case for Austrian economics as a science and the market economy as an economic system. I guarantee you will be better able to defend both after reading it, and that you’ll enjoy every page of Tom’s unrelenting presentation.

When the book came out, it caused instant controversy. Catholic leftists and even some traditionalists denounced it. But Tom had plenty of supporters, among them Fr. Martin Rhonheimer of the Pontifical University of the Holy Cross in Rome; Crisis magazine; Fordham University’s James Lothian (writing in Homiletic and Pastoral Review); Sam Bostaph, chairman of the department of economics at the (conservative Catholic) University of Dallas; and even a scholar who had a hand in drafting a previous papal encyclical.

The key thesis of the book that caused controversy among Catholics, the majority of whom never read the book and caricatured its argument, was as follows. A Catholic looks to the Church on matters of faith and morals. The technical details of particular academic disciplines, on the other hand, lie beyond the Church’s competence.

For example, whether a particular medicine works or has side effects of varying degrees of intensity is a matter for physicians and medical researchers to say. If this medicine can be produced only by tearing the hearts out of living human beings, the Church may of course say that the use of the medicine is morally unacceptable.

The Church may say that church architecture ought to draw the mind toward the contemplation of God, and be built in such a way as to stand the test of time. But churchmen would be going beyond their competence to describe the technical methods that are most suitable for this purpose.

Likewise, it is all well and good to say that the welfare of the family, the building block of society, is of great importance. It is quite another to take sides regarding the precise, technical means of securing that welfare, as if the edifice of economic reasoning of the past 200 years did not exist. Demands for a “living wage” would of course be destructive to the family.

Tom’s uncomprehending critics pounced. How dare Woods insist that the Church may not speak on economic matters! But Tom was not saying that at all, as we’ve already seen. There’s no reason Church authorities cannot make general statements about moral issues that happen to intersect with economics. What Tom did say — quite correctly, of course — was that the qualitative propositions of economic science, being facts of reality, lie conceptually beyond moral critique.

In other words, if wage rates rise in a particular way, no amount of moral exhortation can make them rise another way. If the constraints of a finite world mean we can enjoy A only at the expense of B, no amount of pious mockery of the market system can eliminate this brute fact. We don’t condemn Avogadro’s number, or set down moral exhortations to change it.

Some of the traditional Catholics who now object to Pope Francis’s encyclical Laudato Si were first in line to condemn The Church and the Market for its alleged dissent from other papal encyclicals. But the grounds on which these Catholics object to Laudato Si are in good measure the ones on which Tom pointed out difficulties with earlier documents. If we begin with faulty presuppositions drawn from misunderstandings of secular disciplines, any subsequent moral reasoning based on them is sure to be equally distorted. Quadragesimo Anno (1931) of Pius XI could look at the Great Depression and blame it on greed, and even the otherwise conservative Benedict XVI responded to more recent economic problems with what Tom has called “platitudinous warnings about materialism and greed.” As Tom wonders in the book, why is there no room in all this moral reckoning for even one mention of the moral problems of central banking?

Developed thoroughly in The Church and the Market, Tom applied this analysis to Pope Paul VI’s Populorum Progressio (1967), which highlighted poor living conditions in the developing world. He jumped from a perfectly natural desire to improve those conditions to the wild non sequitur that state-led development aid programs, funded by the West, were the solution. He further expressed his belief in the Singer-Prebisch thesis, that a secular decline in the terms of trade — e.g., that the prices of commodities, which Third World countries tended to produce, were moving downward, while manufactured goods, produced by more advanced countries, saw their prices on the rise — meant that a liberalization of international trade couldn’t solve the developing world’s problems.

At the time, economist Peter Bauer was warning in vain against development-aid programs. First, he said, they are unnecessary: if poverty were really a vicious circle, every country would still be in the Stone Age. When the right cultural attitudes and political and economic conditions are in place, funding for domestic projects will freely flow from abroad. Second, these programs would lead to bloodshed, as antagonistic groups clawed at each other for a share of the grant money. Such violence did indeed occur in about a dozen countries. Third, these programs subsidize evil, by allowing vicious government thugs to continue their destructive predations without having to face their full economic consequences.

All of these predictions by Bauer came true as spectacularly as one could ask for. Even the New York Times, international agencies, and the Clinton administration were at last forced, albeit reluctantly, to admit that the programs had been a grotesque failure. But who, they pleaded — as if Peter Bauer had never existed — could have known?

Even the empirical grounding of Paul VI’s case crumbled in the face of closer examination. Subsequent research found that there had been no secular decline in the terms of trade after all, so the major basis on which Paul VI proceeded to base his moral judgments was simply incorrect — a perfect illustration of Tom’s warning about the fate of moral judgments with which potentially faulty empirical claims or scientific understanding are intertwined.

Tom notes that this embarrassment could have been avoided easily enough, had Paul VI enunciated general principles, as opposed to trying to pinpoint precise technical solutions on a matter on which he personally possessed no expertise, and to which the authority Catholics ascribe to the pope did not extend.

Tom first explored this topic all the way back in 2002, in a paper for the Mises Institute. When the feedback was enthusiastic, he decided to write a whole book on the subject. We invited him to deliver our Lou Church Lecture in Religion and Economics in 2004, and his book was published the following year.

Now Tom has written a dozen books, to be sure, ranging from The Politically Incorrect Guide to American History, which spent a dozen weeks on the New York Times bestseller list and sent both the neocons and the establishment into a frenzy — Tom’s book was the subject of a signed editorial on the New York Times editorial page — and Meltdown, Tom’s 2009 bestseller, featuring a foreword by Ron Paul, that diagnosed the financial crisis from an Austrian, free-market perspective.

But in terms of his most lasting contributions to Austrian or libertarian thought, The Church and the Market is Tom’s masterpiece. It has forever changed the nature of the discussion of Catholic social teaching, and it ranks among the most compelling and effective short presentations of the ideas of Austrian economics I have encountered. Treat yourself to a copy of this vigorous polemic.

However, stakeholder theory has made major inroads into firms’ fiduciary obligations to owners in recent decades. In consequence, shareholders have been increasingly demoted from owners with decision rights over their own assets to just one of many groups, all of whose desires must be incorporated into management decisions. That makes it worth revisiting the stakeholder approach to corporate management, as its growing influence increasingly insulates it from serious consideration.

One of the great benefits of clearly defined property rights is that they specify who parties must reach agreement with — everyone whose legitimate property rights would otherwise be violated. The consent of other parties, who have no authority to say “no” to others’ arrangements, because that extends beyond the reach of their property rights, need not be acquired. The result is far lower transactions costs. That enables far more mutually beneficial specialization and exchange, and the massive increases in production and wealth that results.

One consequence of the clear definition of corporations as acting in the interests of those whose resources formed them — stockholders — is that it vastly increases their ability to raise large sums to benefit from economies of scale and scope. It also increases the liquidity of investments, decreasing the risks to owners involved, by making exchanging ownership claims far less costly. In contrast, if stakeholder theory was generally applied to corporations, it is hard to imagine efficiently conducting almost any large-scale or complex production process, involving vast numbers of contractual arrangements, as massive transactions costs would overwhelm the potential gains.

Former GE head Jack Welch once criticized the shareholder interest model of the firm as “the dumbest idea in the world.” He asserted that employees, customers, and product quality deserved priority over shareholders. But it is not a choice between employees, customers, and product quality versus advancing shareholders’ interests.

But attention to employees, customers, and quality in an unhampered market (as opposed to crony capitalism, from which GE benefited immensely), is the means to advancing shareholder interests. Share prices reflect gains from better utilizing and motivating employees’ skills and abilities, from better developing and serving customers, and from product improvements that users value more than they cost. All those stakeholders’ interests, derived from their property rights and the requirement of voluntary, mutually beneficial cooperation, are aligned with those of profit-seeking shareholders.

In other words, other valid stakeholders’ interests are reflected by shareholders’ interests, not trampled by them. Workers have to voluntarily agree to their terms of employment. So firms will consider everything that workers or potential workers care enough about to offer the potential for a beneficial alteration in the terms of employment. But no party is ever allowed to escape the constraint of the need for others’ voluntary cooperation.

Suppliers and venders are considered in a similar way. Any alteration that costs a firm less than it saves suppliers could receive mutual agreement. Consumer interests are also clearly taken into account, as they are the ultimate “enablers” of what is profitable and survivable, versus what is unprofitable and unsurvivable. Explicit, enforceable contracts spell out the terms some agree to. Powerful reputation and reliability mechanisms also put up what amounts to a bond to ensure reliability — the present values of future profits from ongoing “good” behavior, put at risk by poor present performance.

As a further example, consider how professional sports teams consider fans. Those teams are certainly interested in making higher profits. So they care about those who go or might go to games, and all the things that might swing their decisions. They care about those who buy or might buy team hats, jerseys, etc., in a similar way, as well as those who might or might not listen on radio or watch on television (through ad revenues, subscription services, or broadcast right sales, etc.). They even care about those who do none of those things, but talk about the team around their water coolers at work, which can influence others’ revenue-generating behavior. Such fans need no direct power over team decisions in order to have their desires reflected in those decisions.

As we have seen, many stakeholders’ interests are consistent with advancing shareholders’ interests, including workers, suppliers, customers, and even fans, are all incorporated in shareholders’ interests because they must be induced to cooperate on mutually agreed terms. If this was all stakeholder claims represented, stockholders would not object to stakeholder claims. But they often object strongly. What does that tell us? Those claims require imposing someone else’s decisions in place of owners’ decisions in an involuntary manner, which requires coercion against them. The coercion involved is also revealed by falling market capitalizations when campaigns for new “social responsibility” requirements target them. Further, even though “benefit corporations” can now be formed to advance specified stakeholder interests as well as stockholder interests, they have remained relatively uncommon, due to the difficulty of finding investors who agree both on their desires to advance the same stakeholder interests and the trade-offs they are willing to make between those ends and profits. That would not be the case if the stakeholder approach was generally superior in the eyes of those whose rights are involved.

The coercion necessary to impose stakeholder obligations in violation of stockholders’ property rights, in turn, explains why stakeholders turn to government actions or threats to advance their claims. It is also why stakeholder claims play greater roles in more heavily regulated industries. Stakeholders’ ability to exercise political clout over government decisions can then more effectively be used to extort firms (e.g., banking, where permission to open new branches or make other transactions can be subject to “community” support or opposition).

Stakeholder claims beyond those enabled by pre-existing property rights can often be best understood as ex post (after the fact) theft or piracy. They wait until something valuable has been created by others’ voluntary relationships, then try to deal themselves into leverage or power over subsequent choices, even when they had no appreciable role in causing its creation or growth. That makes their role as “benefactors,” because it is funded with other people’s resources, all benefit and no cost for them — self-defined social nobility for free. It is reminiscent of where people live in neighborhoods that “grew” in place of earlier citrus groves, but who then blockade others’ rights to do exactly the same thing with their land, in the name of protecting the community.

It is important to note that stakeholder attempts to leverage new power are also asymmetrical. Those non-shareholders who claim they should be given a say in firm decisions do not propose granting outside stakeholders rights to similar influence over their actions.

If “community groups” are to be enabled to dictate firms’ choices because they are stakeholders, shouldn’t firms have similar powers over community decisions, because they are substantial stakeholders in the community? If a firm’s current workers should have decision-making power over it because of their stake in its policies, shouldn’t a firm have similar decision making power over those workers? After all, just as workers have a stake in not having their pay cut, the firm that employs them (and its customers) has a stake in workers’ pay not being jacked up.

The history of political power also shows that it is most commonly utilized to support the already politically powerful. A good illustration is plant-closing legislation, which represented the politically powerful interests of local workers who are outcompeted by others who are not politically influential, but would offer consumers better terms. Similarly, anti-takeover laws were widely enacted to protect rather than prevent inefficient management teams, by insulating them from the threat of losing their jobs due to takeovers whose profitability lay in increasing efficiency and benefits to customers.

Another important problem of stakeholder theory is that it wipes out clear criteria — profitability — to evaluate managers, instead substituting ambiguous and often mutually inconsistent criteria, with no way of determining agreed-upon trade-offs. While this will serve stockholders poorly, it will often serve the interests of managers who would thereby see their constraints eased. That is a major reason why many managers support the stakeholder approach. It not only allows them to survive inefficiency and poor management, diametrically opposed to what stockholders hired them to do, but also gives them the ability to be seen as business statesmen and philanthropists in the process.

Shareholder control of corporations follows from private property rights and the requirement that delegated agents perform their contractual commitments. In other words, it derives from self-ownership and liberty in economic arrangements. Firms, as agents for shareholders, have to live up to their voluntarily agreed contractual obligations to customers, suppliers, employees, and owners. As a result, they all benefit from those arrangements. Beyond that, a firm’s sole obligation to others is, in Walter Block’s words, “the one we all have to each other: to refrain from threatening or engaging in initiatory violence against them and their rightfully owned property.”

That is why Block described stakeholder claims as “the entering wedge of yet another attack on private property rights.” Given the immense wealth enabled by that arrangement, the costs of undermining it on behalf of self-determined stakeholders are similarly immense. And the process of determining who will qualify as a stakeholder and how large each stake shall be will entail the arbitrary and coercive substitution of politics over voluntary exchange.

The present situation is: (1) buying, selling, owning, and using guns without serial numbers is legal, even supposed “assault” rifles; (2) both FedEx and UPS have voluntarily refused to ship the digital mill, because of the threat of government action in the future; and (3) in the past, the federal government has held FedEx and UPS responsible for the legality of the goods they ship. By contrast, the USPS is not responsible for the legality of goods it ships (senders are), and has to get a search warrant to inspect customer packages.

Despite the possible threat of future state interference, the decision by FedEx and UPS is a voluntary one, not commanded legislatively from Washington. Both companies simply made a voluntary choice not to be involved in a controversial matter — and thus they discriminated against certain potential customers by refusing their business.

The term “discriminate” carries some heavy baggage, so let’s unpack it.

First, this author — like virtually everyone in modern western society — is opposed to racial discrimination in the forms most people imagine upon first reading or hearing the term. I would not patronize a business with a “No Blacks,” “No Immigrants,” or “No Jews” sign out front, for example, and I would discourage others from patronizing it as well.

It is worth mentioning, though, that some obvious forms of racial discrimination are considered morally acceptable in certain situations. For example, the casting director for the movie Selma never considered using a white actor to play the role of Martin Luther King, Jr. Movie producers have an ideal physical type and look in mind even when casting fictional characters, like Katniss Everdeen in The Hunger Games movies (a role that never would have been filled by an Asian man).

Casting directors and movie producers discriminate based on race, ethnicity, sex, body type, and facial type because it serves the story or character in question. There is no collective uproar against this sort of discrimination because it’s not based on an emotional or hateful prejudice against a group of people, but on common sense and an eye for moviegoers’ (similarly innocent) preferences. We don’t hate racial discrimination categorically — we hate the racially prejudiced mindset behind some instances of discrimination. The intent of the discriminating party matters.

Discrimination in general is the same way. We can’t deny the right of firms and consumers to discriminate, but we can take issue with their reasons why.

Which brings us back to FedEx and UPS. If I am pro-gun and don’t want the state interfering with the growing 3D printing industry, I might prefer that FedEx and UPS tell the government to stick it. Ship the machines for your customers and then fight a legal battle for the right to do so when the time comes!

But you and I won’t bear the risks or the costs of such a fight. Only FedEx and UPS can decide whether they should risk both public pressure (from anti-gun forces) and legal action by choosing to ship 3D printing mills, or any other controversial items. The decision not to do so is their prerogative, not ours.

Discrimination, in the form of choices, is a daily part of every market encounter. And it’s not only a matter of what customers accept, but at what price: FedEx and UPS charge more for heavier packages or faster delivery.

Discrimination, in this sense, is a critical element of all market activity. It allows goods and services to be consumed by those who are most willing to pay for them. This in turn enables labor and capital to be used in the most productive and valuable ways.

Liberty means freedom to discriminate. This statement makes many people on both the Left and Right angry. Yet the right of FedEx and UPS to refuse shipping of controversial material is the same right as a racist store owner’s right to put up a “No Blacks” sign, or a baker’s right not to sell wedding cakes to same-sex couples, or Starbucks’ right to forbid the open carry of handguns in its stores. It is the same right exercised by the fashion magazine editor who hires only beautiful models.

What can be done, then, about the racists, sexists, and other sorts of intolerant people in our society? Are they to be given carte blanche to act upon their prejudices? The answer should make you smile: we can discriminate against them! We can shun and boycott the racist restaurant owner, just as we can shun and boycott FedEx and UPS for caving to the Feds when it comes to shipping 3D mills. The market is not a test of right and wrong, but it can reveal consumer and business preferences for the types of discrimination that are acceptable vs. reprehensible.

While we may boycott a business with a “No Blacks” sign out front, we clearly shouldn’t hold a gun to the owner’s head and say, “Allow blacks in your store or else!” And if we lack the authority to do such a thing, we cannot delegate such authority to someone else — even if they sit in the legislature or wear a badge. We should limit violent responses to violent acts only. Nonviolence is the only proper response to nonviolent acts of discrimination, no matter how ugly and morally wrong such acts are.

Rather than abandon the electorally valuable false premise that such disproportionate burdens are justified, however, the political left rallies to its cause. They try to rescue it by asserting that other taxes are regressive, so that taxes aren’t really so clearly unjustifiable as income tax burdens reveal. The featured players in that drama are state and local sales and excise taxes and Social Security taxes. Unfortunately, those taxes are also misrepresented to defend “fair share” misrepresentations.

Columnist Michael Hiltzik illustrated the state and local gambit in a tax-day column echoing charges that their sales and excise taxes “disproportionately hammer lower-income taxpayers,” with that alleged regressivity offsetting income tax unfairness.

That claim arises because those with lower current measured incomes spend a larger proportion of them on those taxes. However, as Edgar Browning has noted, “relative to lifetime income, there is very little difference in the percentage of income consumed among income classes.” As a result, apparent regressivity using current incomes is shown instead as “roughly proportional” to income in the more-appropriate lifetime context. Low current-income families also often consume a multiple of their income, largely financed with government transfer payments excluded from income measures. That further exaggerates the share of their incomes going to such taxes.

The Social Security angle was illustrated in a Washington Post story a few days earlier. It argued that since Social Security taxes only apply to earned incomes up to $118,500, “the more money you make, the less your effective Social Security tax rate is, making this tax about as regressive as they come.” However, Social Security treats lower income workers far better than higher income workers.

Rather than being regressive, Social Security taxes are proportional to earned income up to the tax cap. So, for the vast majority of Americans who fall in that range, taxes rise apace with income. Beyond the cap, earnings are not subject to the tax. So for those earners, their average tax rates fall with further income. Only for them can one claim that despite paying more in total Social Security taxes, they pay a smaller percentage.

When one incorporates the fact that a great deal of income for low income households is government transfers that are not counted as official income nor subject to Social Security taxes, the picture changes. Years ago, the Congressional Budget Office (CBO) found that incorporating such unmeasured income actually made Social Security taxes progressive for all but the top 20 percent of earners.

Even more important, Social Security’s supposed regressivity reflects only its taxes. But they generate retirement benefits, and evaluation must incorporate both. Doing so reveals Social Security as progressive.

For example, for a single earner retiring at sixty-five in 1993, Social Security replaced 59 percent of taxed income for low earners, 44 percent for average wage earners, but only 25 percent for an earner at the Social Security tax cutoff. Higher income earners received far smaller return on their contributions than average earners, and less than half that of lower earners. Taxation of benefits for higher income retirees now increases this difference. In terms of lifetime net benefits, in 1992 dollars, a single low earner retiring in 2000 would net $27,983 from the system, an average earner, $14,833, but a high income earner would lose $23,129.

Both approaches show Social Security does not benefit higher earners at the expense of lower earners. It actually redistributes income the other way.

Allegations that higher income earners don’t pay their “fair share” of taxes are a mainstay misrepresentation of the political left. And when facts such as income tax burdens get in the way, they double down with a defense that misrepresents state and local taxes and Social Security, as well. Unfortunately, that illustrates how important taking other peoples’ money is to their agenda and how unimportant the truth is in advancing it.

This audio Mises Daily is narrated by Robert Hale.

Taking a fresh look at Michel Chevalier’s major work, Les Brevets d’invention (1878), we find it to be not only a well-written and powerful book, but also has remained impressively relevant. The arguments advanced by Chevalier anticipate the current arguments of the present opponents of intellectual property.

Michel Chevalier argues that patents cannot be justified if they are contrary to freedom, even if beneficial to technological change. For him “From the moment we can make effective the patent only through inquisitorial expedients, violence, and subversion of liberty of labor, it is proof that we must renounce patents.” Chevalier rejects utilitarianism as a sufficient method to justify or refute the patent system. Chevalier’s opposition to patents, however, is not just based on moral arguments but shows the disastrous effects of this system for both foreign trade and the economy in general.

According to Chevalier, patents are of the same nature as privileges and monopolies which were prevalent during the Ancien Régime. They are also comparable in their effects to protectionist policies:

In absolute terms, patents diminish the productive power of nations that recognize them: evident proposition for those who believe that freedom, free competition, is the great lever of industrial progress.

Chevalier goes on to note the conservative and anti-innovation nature of monopolies and gives many examples of monopolies during the Ancien Régime. According to him, the innovators during the Ancien Régime weren’t rewarded, not because of the absence of patents, but because of the corporation guild system which was destroying competition and freedom to entry into markets. Thus, the innovators were constantly sued by guilds and consumers rarely benefited from their inventions. This argument is still relevant today. Indeed, companies protected from competition and government-owned corporations are often less innovative and more subject to conservative measures. Sectors typically run by government such as schools experience very little technological progress. On the other hand, the competitive process of the market gives incentives for the actors to differentiate from the other producers. As Pascal Salin stated, the company which makes the highest profits on a free market is the company which is the best positioned to “invent the future.” The essential virtue of competition is that it encourages producers to innovate in order to better serve the needs of consumers.

As one of his more striking examples, Chevalier examines the case of aniline — a dye and major innovation in the chemical industry — and shows how monopoly, resulting from patents, leads to hampered innovation. His interpretation of the problems caused by patents in the chemical industry at the time is consistent with more recent studies done by Boldrin and Levine in Against Intellectual Monopoly, now the seminal work on the topic.

Chevalier understood that innovation is, above all, a process and that giving privileges to the innovator will destroy this process, leading to less and not more inventions. He wrote:

Every industrial discovery is the product of the general ferment of ideas, the result of an internal work which was accomplished with the support of a large number of successive or simultaneous collaborators in society, often for centuries.

This argument regarding the cumulative nature of innovation is still the most powerful argument against intellectual monopoly today and has also been the theme of several recent studies.See Alberto Galasso et Mark Schankerman, “Patents and Cumulative Innovation: Causal Evidence from the Courts”, NBER working paper, 21 June 2014 ; and also, Alessandro Nuvolari, "Collective Invention during the British Industrial Revolution: The Case of the Cornish Pumping Engine," Cambridge Journal of Economics 28, No. 3 (2004). Similar to Chevalier, Hayek saw innovation as a process and stated that “it is not obvious that such forced scarcity [intellectual property] is the most effective way to stimulate the human creative process.”

In an 1862 debate in the Académe des Sciences Morales et Politiques, Chevalier gave the example of Louis Daguerre, one of the inventors of photography, who didn’t seek a patent for his system of photography. According to Chevalier, the absence of a patent led to necessary improvements of the daguerreotype and fostered its widespread use. His conclusion is the following:

The spirit of man proceeds only by successive trials and repeated attempts. Discoveries do not arrive with a single bound to the degree of perfection or completion, which is reserved for them; there must be renewed, persevering efforts, cut by breaks that allow, so to speak, to breath. … If it is true that the invention must pass through the hands of twenty people before reaching its final state, it follows that the exclusive privilege granted to the first patented, and to each of his followers, prevents this practical result rather than facilitate it.

Already during the nineteenth century, legal instability and uncertainty challenged the actual efficiency of the patent system and the economists were very much aware of this problem. Chevalier warned that the patent system would lead to legal uncertainty for the companies and would lead the industry back to a guild system where no entrepreneur would dare to enter a market for fear of being sued by patent holders. Chevalier was ahead of his time by denouncing what can be considered the ancestors of today’s patent trolls.

Chevalier concluded his 1862 article by stating: “I think I have said enough to show that the patent legislation has been an eccentricity of the legislator.” He went further in 1863 and added that “[a]ll friends of industrial and social progress must work together to rescue the industry of obstacles, obsolete remains of the past. Patents must disappear first.”Quoted in Eugène Pouillet, "Traité théorique et pratique des brevets d’invention et de la contrefaçon," 1909, pp. x–xi.

Most people recognize the absurdity of trying to regulate romantic relationships. What many don’t realize is that this absurdity stems not from the nature of these relationships, but from the nature of state intervention. For the same reasons that regulating dating would be counter-productive, regulating many consumer choices is unwise.

When it comes to dating, we see a wide range of tastes and desires. Some people love dating intellectuals. Others pursue athletes. Some women prefer wealthy, established men; others are attracted to those who pursue physical danger.

Many people talk about what might be termed “objective attractiveness” — someone’s physical score between 1 and 10 that everyone can agree on. The truth is that such objective valuations are fictitious. The woman who John thinks absolutely gorgeous may be viewed by another person with indifference.

“There’s no accounting for taste” isn’t just something one can say to shrug off his buddy’s dating someone he finds unattractive. It’s an explanation of our individuality. In dating, there are millions of unique tastes and subjective valuations. This range of valuations makes regulation inherently unjust, because the perceived value of another person as a romantic partner cannot be quantified.

But the same may be said of most any government regulation. What government agent should have the authority to say that a certain job pays “too little” or is “too dangerous” to be legal? Such decisions must be left up to the people applying for those jobs, who are more familiar with their own situations than a bureaucrat in Washington could ever be. If Cathy badly needs work experience, that job that pays $5 per hour may be perfect for her, even though it would be a poor fit for someone else who is looking to pay his mortgage.

Defenders of government regulation like to imagine a government that applies the law equally to every person, but such a system has never existed. It never can exist owing partly to the subjective values of those in power and partly to the system of lobbying and bribery that gets them there.

Governments in the United States, for example, have a long history of legal discrimination in romance. Many states banned interracial marriage, for example, until the Supreme Court case Loving v Virginia ruled such laws unconstitutional. As late as 2003, fourteen states had outlawed homosexuality. Moreover, government regulation of divorce has been extensive.

These private relationships have been regulated to reflect the policy goals and values of influential interest groups. At the same time, this discrimination in romance is mirrored in how governments discriminate in favor of their cronies in business.

Companies like Solyndra, for example, with strong government connections, received subsidies that their competitors don’t. On the other hand, new enterprises that compete with incumbent industry players frequently find themselves facing extra regulations, as governments seek to protect established corporations that the disruptors might otherwise outcompete. Uber, for instance, faces regulatory hurdles in many states at the hands of taxicab-sympathetic government agents. In industry, just as in the history of romance, it is in the nature of government to discriminate.

Many opponents of the free market accuse advocates of promising a utopia — just let the market work, and life will be perfect! Of course, this is a straw man fallacy; serious liberty advocates don’t promise perfection.

Just like every other instance of freedom, the dating “market” isn’t perfect. Many people have had bad relationships. Heartbreak is something most people go through. Not everyone finds someone to marry who makes his or her life brighter.

But this flawed free market is nonetheless much better than it would be with more government intervention. Imagine a government agency whose purpose was to “fix” dating. They might require licenses to date, similar to the licenses required to work in many professions. Just as governments have been known in the past to ban divorce for unapproved reasons, they could move on to banning breakups for new “unjust” reasons, such as a partner’s race.

Such an agency would make dating worse in two major ways. First, it would result in a loss of liberty and privacy, for instance, as government agents could inspect couples on dates to make sure that each has the proper license. Second, it would create unintended consequences. For instance, requiring individuals to acquire costly licenses to date might mean that poorer people, or those without the time to go through a long certification process, would be denied the right to fraternize with members of the opposite sex.

Many people regard things such as “dating licenses” to be absurd, but why are they any more or less absurd than a license to cut someone’s hair?

When considering regulating a market, the question to ask is not whether free markets are perfect (they’re not), but whether government intervention would do more harm than good. Dating is the freest market in the United States today, and as a result, it is a model both for what liberty produces and for why government intervention is so rarely a good thing.

From this year until 2017, the US will hold the chair of the Arctic Council (AC) — an international forum founded in 1996, comprised of member states Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the US.The purpose of the AC is to

“provide a means for cooperation, coordination, and interaction among the Arctic States … [and] Arctic Indigenous communities … [for addressing] issues of sustainable development and environmental protection …”

It will be interesting to see, given recent antagonisms between the US and Russia, how aggressively the AC chair will be wielded and for what purposes. The US government has been receiving criticism for not expressing greater interest in the Arctic — Hillary Clinton in 2011 was the first US secretary of state to attend an AC meeting — but everyone knows a flip-flop is in order the moment Washington perceives a political gain to be had.

Meanwhile, the Russian Federation has been ramping up their propaganda machine with President Vladimir Putin being photographed in a submarine in the Baltic Sea, coinciding with announcing the reopening of old USSR Arctic military bases. During their Arktika 2007 expedition, they executed a PR stunt and planted a Russian flag on the sea bed of the North Pole in order to show symbolically that it’s theirs.

To complicate matters, Denmark petitioned the United Nations last year, calling dibs on 900,000 sq km — an area twenty times the size of Denmark itself! Canada too has been in the propaganda fray since their prime minister declared that Santa Claus is a Canadian citizen.

In fact, every member of the AC is clamoring for ownership of the Arctic, and even some non-member observers are taking a shot.

These claims are based on the United Nations 1982 Law of the Sea Treaty, which set new guidelines for delineating borders on the high seas, with particular relevance to the natural resources beneath. The treaty established the notion of an Exclusive Economic Zone (EEZ), areas over which a state is granted sole rights for exploring, mining, etc. EEZs extend 200 nautical miles off a nation’s coast.

The treaty also formally established the notion of continental-shelf-rights, which allow states whose “borders” extend via continental shelves beyond their EEZ, to claim this distance as well (note: this legalistic definition differs drastically from the geological one). Thus these conflicts are the result of overlapping EEZs. However, if a state can show that this disputed area adjoins their coastal baseline, then they may be able to overrule another state’s EEZ.

Despite former US President Harry Truman being the first to invoke the notion of continental-shelf-rights, the US still hasn’t ratified the Law of the Sea Treaty. It’s the only AC state government, and one of the only governments in the world, that has yet to do so.

With such widely conflicting, even outlandish claims, a rational system of property rights is required to settle the debate. After all, why should any of these states — which themselves have little to no presence in much of the Arctic — have more of a right to the Arctic frontier than private explorers, industrialists, or natives?

A systematic theory of human-property rights was laid out by Murray Rothbard, in his 1982 classic, The Ethics of Liberty. The ideas set forth in this seminal book shed insight into the Arctic conflict, and really all property disputes that one may encounter.

Rothbard begins by asserting the truth of self-ownership, the idea that everyone has a property right in their own person, and thus a natural right to liberty, by virtue of each individual’s ownership over his own physical, bodily faculties. This control cannot be severed for as long as the person is alive, and the ownership of each person over him or herself is thus inalienable.

Rothbard then proceeds to show how property rights in land or in physical goods follow logically from property rights in one’s own body. The seventeenth-century Enlightenment philosopher John Locke is usually seen as the first to defend this principle of homesteading, which states that by “mixing one’s labor with the soil” — by using and transforming an unowned resource — the object in question becomes the just property of this person, the first user.

These ideas are echoed constantly in colloquial speech, with common phrases like “finders keepers” or “first come, first served.”

Of course everyone owns his or her own body, and common sense suggests that the first person to settle an uninhabited piece of land is the rightful owner of it. Moreover, as Rothbard argues, to deny these ideas is to argue that some people should be allowed to control others (slavery) or that it’s okay to divvy up someone else’s belongings for oneself and one’s friends (robbery).

So then who, if anyone, has homesteaded the Arctic and who are the would-be-usurpers? Except for the areas where there are inhabitants, only a tiny region of the Arctic Ocean and its continental shelf regions have been developed or settled. So, the legal claims being made by various states in the Arctic are not based on any economic realities or any real-world homesteading. That is, many states claim control of the region, but almost nowhere is this being done at the request of true owners. Without this key economic step — according to Rothbard — it is impossible to make a legitimate and moral claim to the Arctic.

The ethics of liberty provides a map for assessing all of these claims to Arctic territory, but we find little regard for sound ideas of ownership in the region.

How does the homesteading model compare to governmental claims to the Arctic? Well, the state of Denmark isn’t using the 900,000 sq km of Arctic Ocean, or the unexplored, untapped land below it, so surely they have no right to it. The same goes for Russia, Finland, Sweden, or the US. None of them have any reasonable claim to any of it beyond a few tiny areas.

Complicating the matter is the fact that in many coastal areas, there are already indigenous people living in the Arctic, who are using this territory, and who do have claims to it that ought to be respected — without a state proclaiming sovereign-ownership over them.

There have been numerous instances of indigenous peoples, such as the Sami, being forced to pay taxes to multiple governments, despite their declarations of independence. Then there was the High Arctic Relocation of the 1950s (a “solution” to the so-called “Eskimo-problem”), where the Canadian government forcibly relocated Inuit families to the high Arctic in order to use them as “human flagpoles” on disputed territory.

Unfortunately, history shows that governments are almost always more concerned, not with respecting property rights, but with finding fresh people and territory to control by the use of military force: in their eyes, might trumps right.

So whereas the natural law as explained by Rothbard provides a rational basis for peacefully and justly solving all types of property disputes, the governments’ raison d’état for Arctic expansionism is merely that he who holds the biggest guns deserves the loot.

Oppression of Arctic natives, unrecognized rights of explorers and industrialists, even armed conflict between Arctic states — these are the only alternatives to the ethics of liberty; and so long as Rothbard’s arguments are ignored, these are the inevitable outcomes to be expected. This is the twenty-first century after all, so perhaps it’s time to try something new, instead of the worn out, irrational political justifications of the past.

“I’m a very strong supporter of the Ex-Im Bank, because it is a tool for us to be competitive in order to support our businesses exporting,” said Hillary Clinton. “[F]ailure to reauthorize Ex-Im would amount to unilateral disarmament and cost tens of thousands of American jobs,” commented Harry Reid. It would seem that Democrats are eager to claim the mantle traditionally applied to Republicans of “The Party of Business.” But there is a difference between being pro-business and being pro-markets.

In his book, Reassessing the Presidency: The Rise of the Executive State and the Decline of Freedom, libertarian attorney and historian John V. Denson observes, “Many businessmen and bankers believe in private enterprise but do not believe in free enterprise” (emphasis in the original).

It’s an important distinction to make. Free enterprise is the laissez-faire, free-market ideal, with the peaceful interactions between individuals being wholly unregulated by government. Under free enterprise, anyone can trade with anyone else on mutually agreeable terms. Since all interactions are voluntary, all traders necessarily benefit, and both wealth and welfare are free to increase without the imposition of artificial limits.

Private enterprise, in contrast, means merely that business and the means of production are held in private hands, although the government may make any number of demands on how these individuals go about their business. The fascist governments of Europe in the past century maintained a system of private enterprise, while simultaneously exercising near complete control over business operations. Similarly, the Roosevelt economy during World War II was marked by extensive private enterprise serving at the pleasure of government.

This is not to say that private enterprise is bad — it isn’t — but merely that it is insufficient for economic liberty, and prone to be corrupted by the political process. At first glance, one would think that business owners would favor free enterprise. After all, who wants to be pushed around by the government? But in fact, we see just the opposite. James Buchanan, founder of the Public Choice school of economics, was famous for exposing the incentives for private companies to attempt to manipulate government into playing favorites in the marketplace. A free enterprise system benefits everyone who is willing to be productive. Government controls on business, on the other hand, benefit the few at the expense of the many, which means the few who benefit have every incentive to lobby for, and support such a system. Thus, we see everywhere lip service being paid to free enterprise, but an actual promotion of private, unfree enterprise.

The U.S. Ex-Im Bank is a perfect example of this. Founded as part of FDR’s New Deal eighty years ago, the Bank has been providing taxpayer-backed loans to private companies. We are told by supposedly pro-business politicians that the program is needed to stimulate exports, even though competition unhindered by corporate cronyism has always proved a superior economic stimulant. Especially egregious is the fact that most of the money the Bank hands out goes to huge corporations that certainly do not need the government’s help to export their goods.

While defenders of the Bank like to claim most of the Bank’s activity is devoted to helping small business, in fact, 97 percent of the Bank’s loan guarantees go to just ten corporations, with the top two being Boeing and General Electric — hardly mom and pop enterprises that need handouts to keep running. While these companies are not owned by the government, the fact that they are private entities does not justify this kind of interventionism, which stifles competition and creates perverse incentives.

If it is reauthorized, the Ex-Im Bank is estimated to cost taxpayers $2 billion over the next decade. It wastes millions on self-promotion and PR, and, due to specific mandates handed down from the Obama administration, it disproportionately rewards political interests, such as the green energy boondoggle known as Solyndra and foreign companies mired in corruption like Abengoa. It would be hard to imagine a less free market approach toward supporting business. Meanwhile, government guarantees of loans to companies that could not secure them on the open market ensures that the money will be poorly invested, serving special interests rather than sound economics.

This sort of protectionism is perhaps the most seductive and insidious example of the lure of private enterprise at the expense of free enterprise. Despite being thoroughly debunked as effective or wise by virtually all credible economists, protectionist policies have been among the most entrenched and difficult to dismantle. The Ex-Im Bank remains a drop in the bucket compared to other protectionist policies, such as the mammoth farm subsidies Congress cheerfully votes for every few years. But even this relatively small program has proven remarkably hard to kill. Part of the reason for this is that Republicans and Democrats alike can vote for protectionist measures while simultaneously claiming to be “pro-business.” The distinction between supporting business freedom and supporting business directly through government action is rarely made.

Private enterprise is a subset of free enterprise; All free enterprise is private, but not all private enterprise is free. The failure to bear this distinction in mind is what leads to public support of indefensible programs like the Ex-Im Bank. The support of private enterprise at the expense of free markets results merely in corporatism, where business becomes an extension of government instead of the agents of competition and choice.