All Commentary
Wednesday, May 1, 1996

Against the Stream

When, fifty years ago, this Foundation embarked upon its great design, the most important factor was the battle between the creeds -between Marxism and its various opponents. It divided the world into hostile camps which threatened to engulf mankind in yet another bloody confrontation. While the Soviet Union was export ing communist dogma to all corners of the world, the West under U.S. leadership was barely holding its own. Here the general mood was one of despair about the failure of the old order and the lack of a creed of its own.

A few disillusioned socialists were taking their stand against the ruthless control of the lives of individuals by political tyrannies. Observing the inhuman consequences of political doctrines and ideas, some writers expressed a sense of frustration and horror about the systems that crush and destroy human lives. George Orwell expressed it in his satirical novels, Animal Farm (1946) and Nineteen Eighty-Four (1949), which is a prophetic story describing the dehumanization of man in a mechanistic totalitarian world.

There was a remnant of old-fashioned liberal journalists who questioned the continuous growth of political power and control. John Chamberlain, William Henry Chamberlin, Frank Chodorov, John Davenport, John T. Flynn, Garet Garrett, and Albert J. Nock joined forces with the disillusioned socialists in presenting an intellectual opposition to the general trend. In the academic world, a few eminent scholars such as B. M. Anderson, H. J. Davenport, F. R. Fairchild, F. H. Knight, and W. A. Paton scorned the New Deal which was holding sway in education and communication. They disputed and refuted John Maynard Keynes’ doctrines and theories which offered a new defense for old errors. Lord Keynes and his American disciples elevated deficit spending to a political virtue, popularizing an ancient economic fallacy, inflationism, as an appropriate road to full employment and economic prosperity. Throughout the world Keynesian doctrines were in great vogue with those governments that were not outrightly Marxian.

The critics not only cried out against the inhumanity of a political command system but also reminded their readers of the great heritage of the West, the creed of individual liberty and the private property order. The old order had not failed, they contended, it had been smothered, expunged, and dismantled by political authority. It was not the old order of classical liberalism that had foundered but the new mode of political supremacy in social and economic life. It was the surrender of freedom that provoked the return of autocracy and tyranny.

The Foundation for Economic Education (FEE) set out to reaffirm, expound, and shed fresh light on the philosophy and movement of classical liberalism which stresses not only the dignity of every individual but also the importance of property rights, natural rights, the need for constitutional limitations on government, and, especially, the freedom of every individual from any kind of political restraint. Building on the writings of such men as John Locke, Adam Smith, David Ricardo, Jeremy Bentham, and John Stuart Mill, the writers affiliated with the Foundation offered a complete doctrine of individual freedom.

In 1946, Henry Hazlitt, one of the seven founders of FEE, published a most popular and influential book, Economics In One Lesson, which was to sell more than one million copies in just a few years and which continues to sell briskly. It is probably the best “little book” on the fallacies of popular economic notions and policies ever written.

A year later, Professor Ludwig von Mises, a member of the staff of FEE, published Planned Chaos which challenged the popular dogma that capitalism has lost its usefulness and that all-round regimentation of economic life is both inescapable and highly desirable. In 1949, he presented his magnum opus, Human Action, which, in the words of Rose Wilder Lane, “is unquestionably the most powerful product of the human mind in our time, and I believe that it will change life for the better during the coming centuries as profoundly as Marxism has changed all our lives for the worse in this century.” In 1948, Leonard E. Read, the president of FEE, published Pattern for Revolt, which threw all expediency to the winds and set down without compromise what he would say and do if he were president of the United States or, more specifically, what he would urge a newly elected president to do. Read never ran for political office; he was not even tempted for the sake of popularity to surrender his principles and garble his speeches.

The politicians who managed to be elected subjected the American economy to severe stop-and-go manipulations. Whenever a presidential election approached, the Federal Reserve together with the Treasury would contrive a feverish business boom, stimulating housing construction and consumer purchases through inflation and credit expansion; after each election they temporarily halted their inflationary policies, which brought in their wake a new economic crisis and the beginning of another recession. Three times in the 1950′s the American economy fell into a deep recession. Thereafter, all administrations indulged in the pleasures of deficit spending which not only extended the stop-and-go system but also permitted the spenders to buy votes and elections, and acquire great personal wealth. In time, they were to place a $5 trillion debt on the shoulders of their children and grandchildren.

In politics a man may talk about principle but act on interest. The men and women of FEE never forsook the principles they professed. They kept the faith, proud of their great tradition, and confident of the noble cause they were serving. They lived by George Washington’s motto which they proudly display in the FEE library: “If to please the people, we offer what we ourselves disapprove, how can we afterward defend our work. Let us raise a standard to which the wise and honest can repair. The rest is in the hands of God.”

Hans F. Sennholz

  • Hans F. Sennholz (1922-2007) was Ludwig von Mises' first PhD student in the United States. He taught economics at Grove City College, 1956–1992, having been hired as department chair upon arrival. After he retired, he became president of the Foundation for Economic Education, 1992–1997.