Karl Radek, after the umpteenth communist mistake in the Soviet Russia of the nineteen twenties, said to journalist Ernestine Evans that “there must be something to this Marxism, for we’re still alive.” What Radek missed was the fact that the power of the communist bureaucracy had been saved by a strategic retreat to voluntary features with the New Economic Policy, which, for a crucial span of time, let the peasants produce as they pleased.
Communism is always being saved by retreats which deny its own premise. Staying close to home, Leonard Read applies this insight to our own variety of collectivism. His Accent on the Right (Foundation for Economic Education, $2 cloth, $1.25 paper) should be a convincing answer to the many Fabian Radeks among us who attribute the economic strength of the United States to government interventions, which is equivalent to saying that the brake is what makes the automobile move.
To the Fabian Radeks, Leonard Read says, in effect: “There must be something to this voluntarism, for we’re still much more alive than they are in Moscow and Peking.” True, we are always doing violence to the rule that affluence derives from liberty. At one point in his book Mr. Read lists some of the prohibitions on our freedom of choice. We pay farmers for not growing peanuts and cotton. We support socialist governments, in Yugoslavia and elsewhere. We take tax money from the people in order to put a man on the moon. We subsidize below-cost pricing in lots of things, and pay for the subsidies by funny-money shenanigans that inflate the prices of everything else. We “renew” slum areas, driving the poor people out to create new slums on the other side of town. We keep businesses from hiring apprentices and from putting teen-agers to work by our insistence on a minimum wage law. We refuse to let private enterprise deliver first-class mail. We even prevent people from going out of business if they happen to be having trouble with union labor.
First, Identify the Problem
Mr. Read is unflinchingly honest when it comes to recognizing the hobbles on our freedom of choice. But he is not one for maintaining a defeatist posture. “Find the wrong,” he says, “and there’s the right” — meaning, of course, that the identification of sin always suggests its opposite in something better. Despite “profuse expenditure, heavy taxation, absurd commercial restrictions, corrupt tribunals, disastrous wars, seditions, persecutions, conflagrations, inundations” — the quotation is from Lord Macaulay, who wrote in 1839 — we do not seem to be “able to destroy capital so fast as the exertions of private citizens have been able to create it.” Or, as Leonard Read adds, quoting some Brazilian entrepreneurs, “We get things done while the politicians sleep.”
Our inventiveness and ability to specialize have, ever since the time of Adam Smith, always managed to race far ahead of the restraints on willing exchange. Regress has not been able to keep pace with progress. So Leonard Read continues to count his blessings. He is, as Ayn Rand would probably say disapprovingly, something of a mystic. But only to the extent that he sees Creation going on around him as the world changes and mutations occur. Mr. Read likes the free market, in goods, services, the exchange of ideas, ideals, knowledge, wisdom, information, faiths, doctrinal concepts, discoveries, inventions, and intuitions — because it is in harmony with “Creation: Capital C.” Competition, in short, is in the grain of things.
Government-Induced Poverty
Leonard Read doesn’t listen much to politicians, for he considers it a delusion to expect that government can end poverty. Government has nothing to hand out except what it garnishees from taxpayers. Obviously, says Mr. Read, this subtracts from private ownership and is a dead-end road. Savings are drained from those who have, which is not conducive to the capital formation on which production — and even taxation — rests.
The alleviation of poverty, as Mr. Read says, is a by-product of private ownership and the free market. Conversely, it should be stated that poverty is a by-product of government intervention. The migration of the Negro poor who have been pouring into the deserted inner core areas of our cities is a government-created phenomenon. It all began in the nineteen thirties, with the best intentions in the world. The big thinkers of the day decided that too much cotton was being raised. So we had politically decreed acreage reduction, plus subsidies to owners for the land that was taken out of use for the “soil bank” and such. The bigger farmers who got most of the subsidy money poured some of it into fertilizers which enabled them to grow more cotton on less land. And, with the rest of the subsidy money, they went in for the new planting and harvesting equipment that enables them to dispense with the Negro cotton chopper.
No doubt the mechanization of farming would have come anyway. But the process was accelerated by the politicians. And the Negro poor, displaced all at once, have not had the time or the opportunity to make an orderly transition to new ways of life.
Technological Impact
We see something similar happening in California. To get rid of Mexican labor, the government has put hobbles on the so-called braceros who used to cross the border from Sonora, Chihuahua, and Lower California to pick tomatoes. The idea was to make room for Americans as field hands on the California ranches. But the Americans, for one reason or another, failed to come out from the cities to take the jobs. Unable to get their tomatoes picked, the California farmers put in a hurry call to the inventors and the agricultural cross-breeders. Within an amazingly short time the cross-breeders had perfected a tomato plant which bears fruit that ripens all at the same time. And the inventors came up with a machine to pick the fruit of the new plant. Result of the whole process: The poor Mexicans have been deprived of the opportunity to get capital in sufficient amounts to buy land of their own below the border. And the Americans who were expected to take the place of the Mexicans in the fields are still living on relief in the skid rows of Los Angeles, San Francisco, and other West Coast cities.
Mr. Read, who believes in the necessity of mobility, would have a hard time explaining our policy to the Mexican government, which has been surprisingly silent on the subject of the hobbles we have placed on bracero labor. If I were the President of Mexico, I would be hopping mad. Not only do we create poverty by government interventions at home, we also export poverty to our neighbors.
Luckily for Mexico, she can absorb the blow. The reason: The Mexican middle classes have been creating capital faster than the politicians, many of whom still pay lip service to the “revolution,” have been able to drain it away by taxation. The Mexicans might echo Mr. Read’s Brazilian friends: “We get things done while the politicians sleep.”
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History of Intervention
The history of government limitation of price seems to teach one clear lesson: that in attempting to ease the burdens of the people in a time of high prices by artificially setting a limit to them, the people are not relieved but only exchange one set of ills for another which is greater. Among these ills are (1) the withholding of goods from the market, because consumers being in the majority, price fixing is usually in their interest; (2) the dividing of the community into two hostile camps, one only of which considers that the government acts in its interest; (3) the practical difficulties of enforcing such limitation in prices which in the very nature of the case requires the cooperation of both producer and consumer to make it effective….
From an address by MARY G. LACY, Librarian of the Bureau of Agricultural Economics (U. S. Department of Agriculture), delivered before the Agricultural History Society on March 16, 1922.
