Editorial: Neo-liberal illusion – That collectivism is liberty (10-14-42)

The Pittsburgh Press (October 14, 1942)

Editorial: Neo-liberal illusion – That collectivism is liberty

Ever since human beings lived in caves, hunted in packs and divided up the kill, the progress of civilization has been measured by the people able to leave the pack and care for themselves without the leader doing their thinking for them.

But as matters now stand, the United States is considering the abandonment of individual responsibility and going back to earning its living in packs under what is modernly called the total state. This reactionary trend is only partly due to World War II. It is more due to World War I, the first major foreign war ever undertaken by the United States. That war set up round-the-world groundswells of economic disturbance which, after sweeping through Europe, finally caught up with the United States in 1929, throwing its business machine out of gear, bringing on financial panic, unemployment and, as a result, a horde of economic cure-alls, each one of which marked a step backward toward the old, old situation of the strong state and the weak citizen. Instead of natural forces being allowed to cure the economic body, the patient was loaded with stimulants and sedatives in the form of debt and subsidy, each dose of paternal pap making the people more and more dependent upon federal handouts. While still in this condition, the United States entered World War II, and, of necessity, the private citizens promptly handed over to the state all the economic powers it had not already assumed.

These wartime powers should not, in themselves, alarm the citizens. What should alarm the citizens is the blithe assumption on the part of many academic and bureaucratic reformers that economic control over the individual is now a permanent governmental power.

It may be that the “frontier thinkers” are right and that economic freedom will not be restored to the American citizens. It all depends upon what the majority of voters want – the responsibilities of freedom or the misery-loves-company type of security afforded by the total state.

Changes in national characteristics take place slowly and often imperceptibly. America may have changed. Too many of the 19 million immigrants who have come to our shores since 1900 did not come seeking freedom. They came to share a readymade prosperity. Ignorant of basic American ideals, they are easy prey for demagogues, and no one knows exactly what changes this new blood has made in America.

We do know this much – that the general idea of the collective state has made tremendous strides in America. In July 1942, one of the leading public-opinion polls asked the people whether some form of socialism would be good or bad for the United States. Only 41% of the people thought it would be bad. 25% thought it would be good and 34% had no opinion. In other words, 38% of all who had no opinion favored collectivism. Ten years ago, this would have been incredible. But it is not incredible today.

The war has speeded up this process by automatically setting up the military controls which are identical with those needed to socialize industry. It would be entirely possible to utilize these controls to effect a bloodless revolution. But if the voters can be made to understand the simple mechanics of economic progress and individual advancement, this revolution will not take place.

The human race manufactures most of its own economic problems by the simple method of periodically penalizing or destroying those talented members of society who can solve those problems. The process works in cycles. When no one has anything, the talented, capable individuals are encouraged to exercise their economic genius, to invent, to dream, to initiate new enterprise and to create work for those incapable of creating their own. The result is a rich reward to the talented and a very substantial reward to the semi-talented or untalented individuals clinging to the kite tail of genius. As prosperity replaces poverty, the business genius is a hero.

But since the dawn of history, this hero worship has eventually given place first to envy, then to distrust, finally to hatred and what is coyly referred to as “liquidation.” The less privileged lose patience and kill the goose that laid the golden eggs. After the rattle of the tumbrel has died away and the untalented have gorged themselves on the surplus of their one-time heroes, everyone settles down once again to squalor and poverty, and the cycle starts all over again.

For centuries, technological advancement has made the individual less and less capable of organizing and directing his own work. Hence, someone else must direct it. The only two agencies that can do this are (1) the private enterprisers, using free labor, and (2) the government, using Hitler’s type of labor. We must choose between freedom and state control. Those who say that the people can collectively direct their own industrial efforts are either liars or fools.

It is only in nations that have enjoyed several generations of prosperity that individual economic superiority becomes a social and political crime. This is because, under continuing prosperity, success comes to look so easy that the demagogues can brand it as being unfair.

The unfairness is always based upon an alleged exploitation of the employees and the public by the owners of industry. The workers are allegedly deprived of the fruits of their labor. The public is allegedly overcharged by trusts and monopolies. The cold facts, published by the Roosevelt administration and available to every citizen, show that 85% of all the national income is paid out in wages and salaries, and that capital seldom keeps enough profit to do much better than break even. As a group, the venturesome individuals who have been responsible for our having automobiles, sewing machines, washing machines, electric irons and radios could have made more profit investing their money in government bonds than putting it into their businesses.

The moral of this story is that the general public should not look a gift horse in the mouth. As long as the inventive and management genius of a gifted minority is available to the consumer at such little cost, the consumer is far better off to accept the benefits of the system and let the capitalists continue to risk their money competing with one another for public patronage.

There is no way, in the long run, of rewarding an individual beyond his fair value to society, and the brutal truth is that there always has been, and always will be, a certain proportion of any population unable to contribute enough to society to warrant more than a minimum humane living standard. They cannot be allowed to starve, and the only way to make up the deficit between what they need and what they earn is to take it away from those able to produce more than they need.

And, though it is human nature to help the unfortunate, it is also human nature to restrict charity to bare living standards. If the state persists in subsidizing and pampering the relatively useless citizen at the expense of the useful citizen, one of two things will happen: Either the useful citizen will rise up in his wrath and overthrow the state, he will lose his initiative and sink toward the level of the group which he is being made to support.

This last process is a three-act tragedy. The first act is the one in which the gifted citizen reduces his productive efforts because the fruits thereof are taken from him. The second act is the gradual reduction of national wealth, resulting from the reduction of productive effort. The third and last act sees the available supply of wealth dwindle to where there is no surplus with which to feed the useless citizen. And so we see the very class which was intended to benefit from the enforced charity cut off from its only hope of sustenance, the surplus production of the self-sufficient citizen.

Approaching the same problem from the opposite direction, it is the recognition of inequality and the distribution of unequal rewards that make charity possible. The state that allows genius free play never has much trouble collecting the taxes needed to support the unproductive citizen at a reasonable living standard. The more the surplus – or, if you prefer, the most millionaires a society can produce – the less suffering that society will experience in the lower brackets, because there are greater tax sources through which to support the untalented.

Yet even today this law is being challenged. The age-old fallacy of universal prosperity through economic equality has been given a brand-new title and is currently being paraded up and down the economic stage as “production for use instead of for profit.” Stripped of its theatrical aspects, this fancy figment of socialistic imagination emerges as the old, old principle of state ownership of industry.

One need not be an economist to observe this fallacy. All one needs is common sense. Private enterprise must be efficient because if it isn’t it goes broke. State-owned enterprise, on the other hand, is never efficient, for the simple reason that it doesn’t have to be. If it loses money, the deficit is made up by the taxpayer. If private enterprise loses money, the deficit is made up by the owners. And for that reason, private enterprise either makes money or goes out of business. The only way private enterprise can make money is to serve the public as well as its competitors, or better. State-owned industry, having no competitor, serves the public only as well as its politically appointed management and its politically controlled workers decide that it should.

Yet America must face the very real possibility that its industry will be socialized.

What can the public do to protect itself? It is far from easy. The political and economic issues are so involved, so far beyond the grasp of most of us that the public becomes a milking, confused herd. Is there any one rock of truth to which the common man may cling while the storm rages about him? Is there any one pillar of freedom which is a key to all freedom around which he can concentrate his defenses?

There is such a freedom. Economic freedom. The freedom to develop his productive abilities, sell them to the highest bidder and retain for himself and his family a fair share of the benefits. When this freedom is destroyed, the entire democratic structure goes with it.

Eternal vigilance is the price of liberty. Though no obstruction should be placed in the path of military victory, an alert people should check every political move, every law, and through their chosen representatives should make certain that the martial economic law which we now cheerfully accept does not become the permanent law of the land.


A rather heavy text, but many points that I can recognize from todays US thinking. I will rest it there, as we should not discuss present US policy in this forum