Professor Ebeling holds the Ludwig von Mises Chair in Economics at Hillsdale College.
In a century that has glorified and tried every variation on the collectivist theme, there has been a handful of dedicated and uncompromising scholars who have resisted the socialist tide. They have defended the market economy, individual liberty, and constitutionally restrained limited government. On June 19, 1988, one of these champions of the free society, Professor William H. Hutt, passed away.
In a career that spanned more than six decades, William Hutt unflinchingly defended the competitive market order against the interventionist schemes of the Keynesian economists, argued against the monopolistic practices of trade unionists that harmed the labor-market choices of the individual worker, warned against regulatory policies that retarded competition and bestowed privileges on a few, and forcefully espoused the classical liberal case for free men and free markets as a solution to the tragedy of state-imposed racism in South Africa.
Born in 1899, Professor Hutt served in the Royal Air Force during the First World War. He then attended the London School of Economics, studying with one of England’s greatest liberal economists, Edwin Cannan. After working for the famous English libertarian publisher Sir Ernest Benn in the mid-1920s, Hutt accepted a teaching position at the University of Cape Town in South Africa in 1929. Following his retirement in 1965, he was a visiting professor at several American universities and was Professor Emeritus at the University of Dallas at the time of his death.
For almost three decades following the publication of Keynes’ The General Theory in 1936, most economists accepted the argument that a market economy was inherently unstable, produced waves of high and prolonged unemployment, and could be saved only by active and aggressive government deficit spending and inflation-causing monetary expansion. In several works, The Theory of Idle Resources (1939), Keynesianism—Retrospect and Prospect (1963), A Rehabilitation of Say’s Law (1974), and The Keynesian Episode (1979), Professor Hutt demolished the foundations of Keynesian thinking. He demonstrated that Keynes failed to understand how a system of competitive and flexible wages and prices assured adjustment and coordination of ever-changing supplies and demands, and that budgetary deficits and monetary expansion produced an illusory prosperity that would retard real adjustment and set the stage for the harmful excesses and economic distortions that always come with inflation and reckless government spending.
At the heart of many of the misunderstandings about the market economy, Professor Hutt maintained, was the false belief that a laissez-faire policy was harmful to the individual working man. That belief was challenged and refuted in his books, The Theory of Collective Bargaining (1930; new edition, 1975) and The Strike-Threat System (1973). Hutt proved that the greatest opportunity for the material improvement of the individual worker was on an unhampered labor market, upon which employers bid against each other to hire his services and where no barriers were placed in his way as he sought to improve his condition by seeking out the most attractive employment options. Government-supported trade unions could benefit only that minority of workers lucky enough to remain employed after high union wages had priced other workers out of the labor market and onto the unemployment line. Aggressive union power and threats provided privileges for a few at the expense of others.
Hutt also argued that bad economic theory led to bad economic policy. This was the theme in his two works, Economists and the Public (1936) and Politically Impossible . . . ? (1971). For too long, he insisted, it had not been understood that it was rigid systems of government privilege and favoritism that had maintained conditions of poverty and had led to stark and persistent inequalities of wealth. The market economy was the “great leveler.” Established wealth could disappear under the challenge of new and young competitive rivals. Those who were poor could rise to riches if they could devise ways to better satisfy con sumers. And all the time, capitalist progress expanded the horizon of choice and broadened the base of prosperity for all. Nothing was politically impossible, in the long ran, if sound economic reasoning was not abandoned and if dangerous political compromises were not made along the path of reform and repeal.
An application of his approach to economic theory and policy is given in his masterful study, The Economics of the Colour Bar (1964). He traced the history of apartheid in South Africa to the labor-market restrictions of white trade unions and the government barriers to black Africans competing against white businessmen. And he demonstrated that a solution was possible for South Africa through free trade, open labor markets, and protection of individual rights.
In an era in which the most absurd and barbaric ideas have been heralded as brilliant insights in economics, William H. Hutt neither compromised nor toned down the sharp edges of his arguments. But glory is fleeting, and long after the collectivist heralds are forgotten, William Hutt’s writings and principled stand will be remembered.