All Commentary
Sunday, November 1, 1970


Mr. Rukeyser is well known as a business con­sultant, lecturer, and columnist.

In a free society we should never forget that dissent, no matter how irritating, is a symbol of liberty. In a police state a negation of of­ficial policy, if it is expressed, necessarily goes underground.

While freedom includes the right to be wrongheaded, a pru­dent person does not intentionally utilize this privilege. Where there is a free and uninhibited market­place for the interplay of ideas, intellectually mature persons un­dertake as part of self-education to audit affirmative concepts as well as criticisms.

There is a default when older citizens indiscriminately lump a whole generation into a stereotype and conclude that “the young peo­ple are very bright.” Such super­ficial characterizations not only blur the vast differences of opinions on campuses, but also deni­grate the need of Marquis of Queensberry rules in the squared ring of dissent. To criticize only the criminal fringe who burn buildings and records and who kid­nap deans, while tolerating all other activities of youth, is not a sufficient exercise of parental re­sponsibility. Unless there is under­standing in depth, such permis­siveness may have the effect, how­ever unintended, of freezing anach­ronisms and errors.

Fred M. Hechinger, education editor of The New York Times, recently illuminated the point:

Students are capable judges of many flaws in their education and the collegiate environment. But their knowledge about the relationship be­tween the universities and national policies or between intellectual prep­aration and the eventual reform of society and the world is shallow and immature. Their interpretation of the power and the politics that moti­vate… rival forces is as unrealistic as their judgment of the actual… aspirations of many of the people whom they would like to help….

It is highly doubtful that the uni­versities could force political policy decisions on the American people, no matter how hard they might try. It would be tragic if, in their inability to know what they cannot and should not do, the universities were to undermine their capacity to accomplish what they can and ought to do in the service of scholarship and society.

Even before reaching manhood, a child knows when he doesn’t like farina. Likewise, a student is aware of whether a curriculum fulfills his expectations and needs. Youth is a time for idealism and it is healthy to indulge a dream of human betterment. It is no con­demnation of a whole age group to recognize that a freshman has not pursued his studies as far as might be expected of a Ph.D. can­didate. In more primitive times, this condition of youthful jump­ing to conclusions during the un­completed learning process was called being “half-baked.”

Charges of In justice

In the circumstances, it is not enough to turn thumbs down on nihilistic burners. It is also im­portant to pinpoint the illusions and fallacies which confuse quieter and well-meaning dissident groups. To be specific, a major fallacious dogma turns around the emotional feeling that the American system is cursed with injustices. A recent Louis Harris poll, for instance, found that a high percentage of students believe “the real trouble with U.S. society is that it lacks a sense of values—it is conformist and materialistic,” and that “our troubles stem from making compe­tition the basis of our way of life.” These findings represent the at­tempt of dissident students to pin­point the injustices in a system that keeps tabs on individual dif­ferences.

The kindest and least patroniz­ing attitude is fairly to analyze the basis of discontent on the part of sincere dissenters. Those who are devoted to liberty, however, should not be tongue-tied. Aris­totle remarked that, if you know it, you can say it. Don’t fall into a booby trap of ominous silence based on fear of a lack of com­munications and a generation gap. The chasm of age differences can be narrowed when older persons treat youth respectfully, despite differences of opinion. It is too frequently overlooked these days that those in adversary stances look for some guidance from op­ponents as to how far they can go. Capable union leaders prefer to bargain with knowledgeable management personalities and look to business executives to signal the outer limits of demands which can be lived with.

Thus, it is less than patriotic to shrink from entering the lists of intellectual conflict and from point­ing out that progress lies in stressing the harmony of interests of the groups—the very antith­esis of internal class warfare. The idealism behind dissent, even if misdirected, should be reclaimed as a potential national asset. Louis Untermeyer, the poet, articulated the American theme for progress when he wrote: “From sleek con­tentment, keep me free.” Even where there is a demonstrable error made in the heads of prot­estants, there is frequently good in their hearts. Since dissent turns on injustices, real and imagined, it would enrich our natural re­sources in human understanding to think through the attitudes which lead to social dissatisfac­tions. There should be unanimity in wanting to eliminate or reduce man-made injustices. According­ly, the ideas and emotions behind such dissent should be objectively appraised. The beginning of a res­olution of the unrest is to separate the wheat of good ideas from the chaff of illusions.

In the first place, it’s important to recognize that no economic and social system either in operation or in contemplation is perfect. Man’s foibles and inner conflicts condition the real world.

Equality May Not Be Just

Secondly—and far more impor­tant—is the error of equating “in­justice” with “inequality.” It is a fact of life that individuals vary greatly in talents, aptitudes, dili­gence, intelligence, and manual skills. The American system, based on the operation of a free market, rests on recognition of differences. Put in more affirmative terms, a competitive or free enterprise na­tional economy is predicated on discerning and rewarding merit.

The antithesis of inequality is egalitarianism as expressed in the Marxian goal that each should con­tribute according to his ability and each should take according to his need. Marxism has infected many who haven’t marched under the socialist banner. For example, in Fascist Italy under Benito Mussolini, the productivity of the worker was ignored, and married men with children were paid more than bachelors for a week’s work. And non-Marxist “liberals” talk poignantly about the “rich and the poor.”

It seems an easy intellectual and emotional step for young idealists to move from distress of “injus­tice” (inequality) to the Marxian formula of leveling down so that everyone becomes equal, at least in worldly goods. But when the edu­cational process is properly pur­sued, the dreamers of betterment will eventually confront such chal­lenging realities as the meager subsistence living standards in India where socialist ideas are widely held by those in high places, by the dull mediocrity of life in the Soviet Union, and by a comparative languor and back­sliding in Red China while Taiwan (Formosa) has moved dramati­cally forward in farm output and in technological gains in industry. Close and careful study of the real world clearly reveals that, as a means to utopia, Marxism is a hoax.

It is fallacious to confuse in­justice with inequality of talents and aptitudes; more fallacious still is to equate justice with equal­ity of worldly possessions. An in­dividual’s favorable adjustment to competitive life affords him wide discretion as to how he shall use the fruits of his labor. Some, in the spirit of Thorstein Veblen’s “conspicuous consumption,” elect to acquire great mansions, yachts, racing horses, sports cars, and other vehicles of self-indulgence; others choose to be patrons of the arts, to endow learning, and to finance philanthropies. But those who prosper from specialization and trade are under a social ob­ligation to become savers and thus reserve part of their receipts as capital to provide labor-aiding tools of production which increase the output of the worker and en­able him to earn more. In these sophisticated times, this function has been in part delegated to corporations which accumulate un­distributed profits to acquire more capital facilities.

If all individuals were unhap­pily at the subsistence level and corporations were perpetually at the break-even point, the socially important reservoirs of savings would dry up and the people would become poorer to a spectacular de­gree.

Rising Expectations

While these principles were equally true in an earlier period, the issue has come forth with new and added urgency. This is be­cause mass media, especially mov­ies, television, radio, and the rap­idly distributed printed word, have heightened popular awareness of how “the other half” lives. To thus encourage envy and let it run riot is far from a method of building a great society.

Frankly, I am not unhappy that J. Paul Getty has more worldly goods than I, or that Nelson A. Rockefeller’s estates at Tarrytown and in Venezuela outclass my mod­est backyard in New Rochelle.

Neither do I suffer when I con­template that William Shakespeare wrote sonnets and plays of a qual­ity that I can never achieve. I don’t feel badly because Jascha Heifetz on the violin made me ap­pear to be tone deaf. Likewise, I develop no inferiority when I read of the accomplishments in golf of players such as Jack Nicklaus and Lee Trevino, while I remain a duffer.

In a free society, each emotion­ally healthy person should under­take to achieve optimum develop­ment of his own abilities. It is irrelevant to self-advancement whether a neighbor possesses some superior qualities and some re­strictive infirmities.

Vital Differences

I never quarreled with the Cre­ator for developing man in infin­ite variety. In an economic sense, I know that differences are essen­tial for a highly sophisticated cap­italistic society in which special­ized workers give employment to one another by exchanging the products of their day’s labor. If we all had precisely the same bent, the opportunity for give and take at the marketplace would be nil.

Differences are closely linked with the system of incentives. While exploiters of persons of low productivity tend to block prog­ress by telling them they are doomed and are caught hopelessly in a vicious cycle from which there is no escape, the American dream has embraced the concept of a classless society. This used to in­spire young persons raised in non-affluent neighborhoods to believe that it was their mission to be graduated from the slums to raise the living standards of their fam­ilies. This breaking of class lines occurred widely in the annals of the nation, and The Grand Street Boys Association in New York is a monument to the achievements of young ghetto dwellers who be­came illustrious in the arts, in politics, in the professions, and in industry.

And the movement was not en­tirely a one-way street. The fact that competitive processes would also in due course reorient wastrel descendants of wealthy family heads was embodied in the ex­pression, “from riches to shirt sleeves in three generations.”

Undoubtedly, a small elite of dedicated individuals would con­tinue to pursue creative urges even without material rewards; but experience demonstrates that incentives in general add to pro­ductivity. In my numerous debates on university campuses, on TV and radio with the late Norman Thomas, six times socialist candi­date for President, I used to turn against the Marxians their hackneyed plea that human nature can be changed. I would point out that, if a management consultant were called in, he would laugh at heter­odox management personalities who argued that, if the quality of materials and the nature of man were different, they could achieve great things. In the practical world, the executive’s function is to put into harmonious contact machines, raw materials, and man­power, and not to alibi his failure by complaining about the physical and chemical attributes of com­modities and the nature of man. Just as experience shows that bi­tuminous coal burns and generates heat, visible facts show that most men improve their performance when motivated by incentives rather than by the whiplash of a Simon Legree.

No real gains can be built on the foundation of illusions. By way of illustration, it’s fashionable to cast aspersions on the Establish­ment, which is a fantasy. The so-called power structure is forever changing with new ones coming into the fold and others leaving. Competition is forever testing the right of a business enterprise to survive and the only Rx for a long life expectancy is pleasing customers. Even the mighty Ford Company suffered from overstay­ing with its Model T and later with the ill-fated Edsel! Even the promises men live by are subject to change in these dynamic times when the creative mind in science, invention, and engineering is per­petually introducing changes.

The Importance of Incentives

What, if anything, constructive for the future can come out of cur­rent widespread dissatisfaction?

It will be helpful to separate the goodness which cries out for bet­ter living from error in laying down premises. But the process of promoting harmony cannot be achieved in a melting pot in which are mixed in equal proportions the ingredients of truth and fallacy.

The social utility of incentives should be re-examined in depth, especially since Marxian illusions have somehow penetrated the thinking of even avowed nonso­cialists. First, the labor unions with few exceptions lean toward equalitarianism by demanding uni­form pay for hourly workers ir­respective of differences in indi­vidual productivity. On the other hand, experience has shown that piecework and other forms of in­centive pay tend to enlarge the contribution of the worker. The leveling process even runs into the professions. In teacher organiza­tions, including not only the unions but also the professional associa­tions, the proposal of “merit pay” constitutes a red flag. Such violent objection is rationalized on the ground that it is difficult to meas­ure the productivity of a teacher. In business, however, supervisors somehow manage to rate the pro­fessional staff, white collar em­ployees, executives, and others ac­cording to productivity.

A second subtle assault on in­centives is made by social legisla­tion, which subsidizes idleness and forgets that old-age social secur­ity tends to weaken motivation for saving and investment.

“Capitalism the Creator”

One cure for the spreading of these misconceptions on campuses would be periodic re-examination of the fitness of the faculties. As an antidote to Marxian and Key­nesian fallacies, Carl Snyder’s book, Capitalism the Creator, should be used. Written thirty years ago by the one-time econo­mist of the New York Federal Re­serve Bank and former editorial writer of The New York Tribune, the volume would also help to in­spirit today’s distraught parents. Snyder gives first aid for curing the malignant habit of elders who become frightened by talk of “afflu­ence” and become immobilized by their own unwarranted feelings of guilt. Much harm is done by con­ceding to the uninformed that there is something in what they say.

Snyder vigorously defends in­equality, and in positive language ascribes progress to the elite of in­ventive persons and to capitalism. College deans and dons take no­tice! Snyder’s thesis is that “there is one way, and only one way, that any people, in all history, have ever risen from barbarism and poverty to affluence and culture; and that is by that concentrated and highly organized system of production and exchange which we call capitalistic: one way and one way alone. Further, it is solely by the accumulation (and concentra­tion) of this capital, and directly proportional to the amount of this accumulation, that the modern in­dustrial nations have arisen; per­haps the sole way throughout the whole of eight or ten thousand years of economic history.

“No principally agricultural or pastoral nation we know of has ever grown rich, powerful, and civilized. These are the fruits of wealth and enterprise; and these, in turn, of organized industry and trade…. All this represents the aggressive drive of the deepest and strongest of human motiva­tions; the will to live, to gain, to discover, to conquer; and that whenever these begin to wane and weaken, and a nation is given over to visionaries, doctrinaires, and novices in ‘social’ experimentation, its decadence has begun.”

Thus, the late Carl Snyder pro- the acceptance of economic fall aphetically warned against the con­temporary era of intellectual Hip­pies. Since World War II, Sny­der’s appraisal of the role of cap­italism has been further docu­mented by the miraculous forward movement in the free world of West Germany, and in Southeast Asia in the new prosperity of free enterprise Japan, Hong Kong, Singapore, and Taiwan, despite their meager natural resources.

In connection with the procliv­ity of superficial conclusion-jump­ers on the campuses and elsewhere to fly in the face of the demon­strated realities of past history and contemporary affairs, it may not be entirely coincidental thatches is facilitated by smoking pot. Obviously, “man cannot live on bread alone,” but my personal ob­servation of poverty on the streets of Bombay, Delhi, Lima, Bogota, Montevideo, Lusaka, and elsewhere in underdeveloped countries un­derscores the fatuity of decrying the availability of bread as a dis­play of vulgar affluence.

In conclusion, although it may not be chic to applaud the social utility of the creative mind work­ing in science, invention, and en­gineering, its humane contribu­tion toward better living is demon­strably and infinitely greater than can be accomplished through the exploitation of envy.



The Social Character of Capitalism

There is but one means available to improve the material condi­tions of mankind: to accelerate the growth of capital accumulated as against the growth in population. The greater the amount of capital invested per head of the worker, the more and the better goods can be produced and consumed. This is what capitalism, the much abused profit system, has brought about and brings about daily anew. Yet, most present-day governments and politi­cal parties are eager to destroy this system.

LUDWIG VON MISES, The Anti-Capitalistic Mentality