Freedom Follows the Free Market


Dr. Russell is a member of the staff of the Foundation for Economic Education and Di­rector of the FEE School of Political Economy. This article is one of a series now being of­fered on LP records (33 1/3 r.p.m.) further de­scribed on page 1 of this issue of THE FREEMAN.

Many of my conservative and libertarian friends are of the strong conviction that we are in danger of losing our freedom to the Russian communists. I do not agree with them, even though I am fully aware of the interna­tional communist plot and of the fact that there are many Russian agents in our country. I am con­vinced that the primary threat to freedom in the United States is not Russian communism but dem­ocratic socialism and the erosion of our free market economy—an erosion that has been increasingly accepted, supported, and encour­aged by the overwhelming ma­jority of the American people for the past 35 years.

The Russian communists and their American agents have had almost nothing to do with this trend. We, the people ourselves, must bear the full responsibility. Thus, those of us who value free­dom would be well advised to use our money and energy to fight the immediate and increasing danger of democratic socialism at home instead of the potential danger of totalitarian socialism from abroad.

Before we can do that, however, we must first understand how freedom in general can be lost even when various specific free­doms are increasing—as is the case in the United States today. For example, you can now write and publish at your own expense anything you wish, and (subject to our reasonable libel laws) the police will protect your freedom to do so. You can speak and wor­ship as you please. And you are free to vote for any person or pro­posal that appeals to you.

It is clear to me that freedom is at its high point in the United States today in almost all areas of human activity except one—the free market economy, the volun­tary exchange of our goods and services. In that area, freedom has been declining steadily in our country for the past three dec­ades. It is still declining. And it is my firm conviction that therein lies the primary threat to human freedom.

Economic Freedom the Key

My thesis is that the free mar­ket economy is the key to all free­doms. In fact, the market and free­dom are really synonymous terms. If the market is totally free, each person has complete freedom of speech, press, and religion. But if the market is totally controlled, there is no freedom in those or any other areas.

That statement is a truism. It cannot be otherwise. For example, let us apply that idea to three na­tions wherein the economies are currently almost totally controlled—Russia, Spain, and Cuba. There is no freedom of action of any kind in any of those nations to­day. While certain actions by the people do have the appearance of freedom of choice, we must re­member that those actions are permitted by the governments, and can be rescinded arbitrarily tomorrow. In those unfortunate countries, no person can write what he pleases and send it through the mails without police interference. Nor can persons worship there as they please, or speak, or establish an opposition newspaper or political party. The situation cannot be otherwise when the economy is totally con­trolled.

But imagine, if you will, what would be the inevitable results if the government could exercise no control of any description over any peaceful economic activity—in short, imagine a market econ­omy in those nations.

Publishers and editors could then be either for controls over the economy or against them. If the market were free, and the editors were in favor of keeping it that way, obviously the govern­ment would not interfere with the newspapers’ support of what ex­isted and had the support of gov­ernment. Further, any editor fa­voring a controlled economy would be free to say so—if the market were free. The people in general would doubtless denounce the authors of such proposals but, in a market economy where the presses are privately owned and are not controlled by government, there is nothing more they could do about it. Nor would the gov­ernment do anything about it or, for that matter, even want to. Again this is a truism—and it is always difficult to try to explain and prove the obvious. I can only say again that the press cannot possibly avoid being free in a free market.

Controlled News

Now reverse the situation and imagine that the government owns and operates all the news­papers, or completely controls them; imagine that the market economy has been totally abol­ished. Obviously, there cannot be a free press under that arrange­ment. It isn’t a case of wanting or not wanting it; the situation presents a physical and intellec­tual impossibility for a free press.

If the government owns the newspapers, obviously it cannot question its own actions, or advo­cate the reverse of what it is do­ing; otherwise, the government wouldn’t be doing it in the first place. If the government leaves the presses under nominal private ownership but exercises complete control, the same situation neces­sarily prevails. Since the officials of government must necessarily make the decisions in a controlled economy, obviously they cannot deliberately make mutually con­tradictory decisions. They cannot use compulsions in practice and then question the compulsions inprint. Such a procedure would be illogical and unthinkable non­sense. Again, it is a truism that there can be no freedom of any description in a totally controlled economy, and there must neces­sarily be complete freedom in a market economy.

As another example, try to im­agine the existence of freedom of religion in a controlled economy. From the comfort of your arm­chair, you can easily deduce the reception in Russia and Spain to­day that must necessarily be ac­corded to the advocates of the re­ligious tenets of, for example, the Latter Day Saints (Mormons). For the most part, those people preach personal responsibility for one’s own economic welfare, the private ownership of property, the free market economy, and the re­sponsibility of individuals and of the church (not the government) voluntarily to feed the hungry and clothe the naked.

That religious philosophy can­not possibly be permitted unre­strained expression in any nation with a completely controlled econ­omy. If it were permitted to flour­ish, that subversive idea could easily lead to the overthrow of government. The public utterance of the free market philosophy could no more be tolerated as a religion than as an editorial policy in a totally controlled economy.

Nor is it possible even to imagine a religion that in no way takes any interest in the use, ownership, and exchange of property. Thus, there can be no positive and ac­tive freedom of any kind (includ­ing religion) when the market economy is destroyed.

The same reasoning holds true for speech, vote, and family life, as well as for every other peaceful human activity. Freedom follows the market. All the history I have yet been able to read bears wit­ness to that truism. And I can find no other answer in logic.

Meaningless Legalities

Nor can any constitution or bill of rights permanently stop the in­evitable verdict. No legalities con­cerning freedom of press, speech, and religion have ever been able to stand permanently against the realities of an economy completely controlled by government. Obvi­ously, the judicial branch of gov­ernment cannot long be permitted to pursue a course in direct oppo­sition to the legislative and ad­ministrative branches of govern­ment, even in the unlikely event it wanted to. In one way or another, there must necessarily be at least a rough balance of agreement among all branches of govern­ment; otherwise, there could be no government.

We should remember that the Soviet Constitution clearly guar­antees freedom of press and speech, as do the constitutions of other nations where the market economy has been abolished. In that situation, however, constitu­tional guarantees are without meaning. It cannot be otherwise. For no totalitarian government can offer its presses and audi­toriums to persons who are in total disagreement with govern­ment policies.

The evidence in support of this thesis is clear for the totally con­trolled and the totally free econ­omy. But what about the so-called welfare state or mixed economy, such as that of the United States? Do I have valid grounds for stat­ing that freedom is in peril in our own country? Well, let’s examine the situation.

"People" Controls

First, we should never forget that the only thing governments can control is people. For example, governments never control prices, just people. A can of beans doesn’t care what its price is. But people care—the people who grow the beans, can the beans, sell the beans, and consume the beans. And that’s all that price controls can ever mean—people control. It is another of those truisms that most of us never see, or choose to ignore. The phrase, "price control," generally brings a picture of government action to help peo­ple. But when we give the process its correct descriptive title, "peo­ple control," quite another picture comes to mind. For obviously, when the government controls people, it necessarily deprives them of their freedom.

So there we have it again. Price controls are automatically destruc­tive of the market economy where people buy and sell on mutually acceptable terms. And when this process is abolished, people auto­matically lose their freedom—to whatever extent the prices are controlled. It cannot be otherwise.

With the possible exception of thinking without acting, all free­doms of all descriptions are finally based on the market economy. Government controls over people almost always involve compulsions and prohibitions against their ownership, use, and exchange of goods and services. Control of the press, speech, and religion neces­sarily follows the controlled mar­ket, because, in one way or an­other, all of them also directly concern the use of property. If the presses, auditoriums, and church buildings are owned or controlled by government, it is childish to im­agine that there can be any free­dom of press, speech, and religion. And only an underdeveloped mind could imagine that the presses, auditoriums, and church buildings could be free in the traditional sense when the rest of the econ­omy is controlled.

The Case Against Price Supports

Just as the government cannot control prices, so also is it absurd to imagine that the government can support prices. Without ex­ception, the only thing that gov­ernment can ever do is to control people—to prevent them from do­ing what they wish to do, or to compel them to do what they do not wish to do. Thus, it follows that the government’s price sup­port program for agricultural products necessarily deprives farmers (and others) of their freedom.

Here is a harsh and little un­derstood fact: Because of price supports, freedom of agriculture in the United States no longer ex­ists. That is, you can no longer grow what you wish to grow on your own land.

I once made that statement to a group of fine people in Illinois. A farmer in the audience became so annoyed with me that he stood up and interrupted my speech. He de­nounced me roundly. He defended the farmers as the backbone of American freedom. And he dramat­ically announced that he could grow any amount of anything he pleased on his land—except wheat, which happened to be the price-supported product of most con­cern to him.

I couldn’t possibly have planned a more convincing affirmation of my thesis that freedom follows the market, that the government can never support a price but only can control people, that the traditional American freedom of a person to be his own master on his own land is now a thing of the past in the United States. And I said so to that audience.

The incensed farmer then shouted at me, "But we, the peo­ple, voted for it! Don’t you believe in democracy?"

Thus he offered dramatic sup­port of my position that the com­munists haven’t done this to us, but that we have done it to our­selves. We have used our hard-won franchise as the means to destroy the market economy and thus to vote away our freedom. I explained to my audience that, in my opinion, such a procedure makes it all the worse; that if some tyrant had done this to us, we would eagerly draw straws to determine which of us would have the privilege of shooting him down; that when we democrati­cally vote away our freedoms, they are gone just as surely as if they had been taken from us by conquest.

If you have any doubt that freedom of agriculture is now a thing of the past in the United States, try this experiment: On any land that will grow tobacco, plant a half-acre of it without asking the permission of govern­ment. If you do so and persist in your naive belief that a man can grow what he pleases on his own land in this "land of the free," you will be fined and jailed for your antisocial action. Again, freedom follows the market.

They Were Called "Extremists"

A few persons were aware of this direct relationship between the market and freedom when the government first moved into the area of agriculture to help the hard-pressed farmers, and those few protested vigorously. But they were called "extremists," were forced to conform, and were soon forgotten by the vast ma­jority of us who have "never had it so good." But this undeniable truism remains: It is never prices and things but only people who are controlled, and supported, and subsidized, and maximized, and minimized by government. We American people don’t even have the excuse of Esau—hunger—for selling our birthright of freedom for the pottage of government pa­ternalism. Apparently, our pri­mary reason for doing it is merely sheer greed for more and more.

And so it is with tariffs, sub­sidies, and all other government interferences with freedom of ex­change. In every case, peaceful per­sons are deprived of their free­dom to exchange their goods and services on mutually agreeable terms. In every case we are de­prived of a bit more of our free­dom.

To Join or Not To Join

All of us also have lost our hard-won freedom to join or not join organizations of our own choice. Currently, some 17 million Americans must belong to labor unions, whether the individual member likes it or not. Our gov­ernment also has made it legal for union leaders to tax us for their alleged services, whether or not we want them. That is, union dues are deducted (like taxes) from our pay checks before we get them.

The fact that you, yourself, may not now belong to a union is purely academic and perhaps merely temporary; the essential principle of no freedom of choice in the matter has now been firmly established and written into the law of the land. It is legally en­forced by strikes, threats, and bloodshed against those who are still naive enough to imagine that employers and employees in the United States are still free and responsible persons. Perhaps you will better understand the fearful danger we are in when you con­template the implications of this fact: Compulsory unionism is broadcast to the world by our State Department’s "Voice of America" as the very essence of freedom itself.

Let it be recorded that the card-carrying members of the communist party did not, and could not, do this to us, even though they surely wanted to. It was done primarily by our best people—our ministers, our teach­ers, our editors, our businessmen, and our most honest legislators. And it was inspired by the best of all reasons—that is, the human de­sire to help one’s fellow man.

Those good people forgot, how­ever, that the only thing any gov­ernment can ever do, even in its proper function of preserving the peace, is to control people—to com­pel them to do what they do not wish to do, and to prevent them from doing what they want to do. That procedure is, of course, the proper way to stop murderers and thieves and frauds; for clearly, the police powers of government should be used to prevent those antisocial people from imposing their wishes upon others by vio­lence and misrepresentation. But when the same powers are used against peaceful persons in their peaceful activities, freedom is al­ways and undeniably infringed.

For example, every American has lost his freedom to save or to spend his earnings as he pleases. Our government compels all of us to "save" a portion of our wages and salaries—that is, the govern­ment deducts a portion and prom­ises to give it back at some later date. This compulsory scheme is called Social Security, and it is generally cited as the essence of true freedom for the people. Per­haps as many as 95 per cent of the American people are now in favor of this loss of personal choice (freedom) and would cat­egorically oppose any suggestion to return to a situation in which each person is responsible for his own welfare in a market economy.’

And so it goes—through hun­dreds and thousands of govern­ment prohibitions and compul­sions in the peaceful economic af­fairs of men. Without exception, every one of them is a direct loss of freedom of choice and respon­sibility.

"It Can’t Happen Here"

Again, the only control that any government can exercise is people control. Any attempt by govern­ment to control things must necessarily involve the control of peo­ple, and that is undeniably a loss of freedom.

Most of the editors in the Unit­ed States scoff at my fears. "We will always preserve freedom of the press," they say, as they ad­vocate additional government com­pulsions and prohibitions in the market, including postal subsidies to themselves.

In their sermons, most of our ministers promise us that "our hard-won freedom to worship as we please will never be lost." At the same time, they suggest that the police powers should be used to perform still another charitable service that was once the direct responsibility and pride of our churches.

And invariably, as the legisla­tor demands still another interfer­ence in the market place, he thunders this familiar theme: "The people will never lose their right to vote as they please."

And true enough, as I have al­ready stated, those four precious freedoms of press, speech, fran­chise, and religion appear to be stronger than ever in the United States today, even though free­dom itself is in great danger. That seeming contradiction is ex­plained by this fact: We still op­erate within the framework of a market economy. It still survives in spite of the increasing attacks upon it. In spite of the fact that government now taxes and spends more than one-third of the com­bined incomes of all persons, the market processes of competition, pricing, profit and loss still gen­erally prevail. In spite of the fact that government controls over the economic affairs of all of us are steadily increasing, the long-es­tablished order of the market still prevails to a large extent.

Must History Repeat Itself?

But somewhere along the line, our essentially free economy must drift into an essentially controlled economy, if the present trend con­tinues. That will be the end of hu­man freedom in the United States, and probably in the world. All other freedoms—press, speech, franchise, religion—must neces­sarily disappear with the loss of the free economy. For the fact re­mains: In a totally controlled econ­omy, it is not the economy but the people who are totally controlled.

The empirical proof of that tru­ism is so obvious that one can only be astounded that so few of us see it. Examine anywhere at any time the degree of freedom that has ex­isted in highly controlled econo­mies versus less controlled econo­mies over a significant period of time. Always the answer is the same: Where the economy is freest, there also is the highestdegree of freedom of press, speech, and religion.

Even a comparison of slave economies will bear witness to the validity of this thesis. For ex­ample, it is true that slavery was still practiced during the Golden Age of ancient Athens. But that evil institution was preserved in an otherwise generally free econ­omy wherein even many of the slaves themselves could earn wages, own property, and buy their freedom. In that city-state, the economy was far less con­trolled than were the economies in the neighboring states which also endorsed the practice of slavery. "The essential characteristic of landed [and other] property was that it was private and individual. The restrictions placed in some cities and at various times on the full exercise of the right of own­ership did not alter this essential character. "2 Thus the citizens of Athens were far more free than their neighbors to develop a soci­ety that was rich in both culture and material progress. And it is my contention that the decline and fall of that culture and economy were largely foretold when the free citizens themselves forgot their original philosophy of a strictly limited government and began to vote for more controls over the peaceful activities of the people.

And the fact that, in the United States today, it is we ourselves who are voting to restrict and to destroy the market economy is en­tirely outside of the issue here being discussed. Freedom stands or falls with the market, regard­less of the mechanism used to maintain or to destroy it.

Mr. Khrushchev has stated that Russian communism will bury us. That threat is arrant nonsense, and I suspect that Mr. Khrushchev knows it. But he also made another statement that is far more signifi­cant. He promised that our grand­children will live under socialism. That could easily come true—not because of Russian rockets but, as Mr. Khrushchev also predicted, be­cause we American people will eventually choose socialism over the market economy.

I am an optimist, however, and I predict that Mr. Khrushchev’s prediction will not come true. For most fortunately for us and our grandchildren, this final fact re­mains: We are the direct heirs of the long tradition of Anglo-Ameri­can common law and the vital idea that every individual has rights above and beyond the majority de­cisions of the group. That princi­ple will die hard among a people who have lived with it (and died for it) for so many hundreds of years.

Fortunately, our economy is still more free than controlled, and thus we still have the precious freedoms of press, speech, reli­gion, and franchise. There is still time to use them to advocate and to vote for a return to a complete­ly free market economy. Admit­tedly, it will be a difficult process at this late date, but we can do it if enough of us understand it and want it.

The fundamental and vital choice is "people control" or the market economy. We cannot have it both ways. The decision rests with you, as it should.


‘ See "The Social Security Program" by Paul L. Poirot, The Freeman, No­vember 1962.

2 Jules Francois Toutain, The Eco­nomic Life of the Ancient World (New York: Barnes & Noble, Inc., 1951), p. 109.


January 1963

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November 2014

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