Start at the Beginning

Mr. LeFevre founded and for years presided over the Freedom School In Colorado and has lectured and written extensively in behalf of freedom and the market. His latest book, just off the press, Raising Children for Fun and Profit, Is comprised of the Freedom School home study course of the same name. The book is available at $10.00, from P. K. Slocum, 7333 Corey Street, Downey, California 90242.

Were I called upon today to teach a course in basic economics, I would begin at the beginning. It is my observation that this procedure is rarely followed these days.

It has been my lot for a number of years to deal with management trainees for several companies, including one large corporation. Most of these trainees have come from some of our finest colleges and universities. Perhaps as many as twenty per cent have studied advanced economics, and a few hold degrees in the discipline. Probably as many as fifty per cent have received advanced degrees in one or another field. These young men and women are far above average. All are talented, a few gifted, and here and there an undoubted genius.

I work with eight hundred to a thousand people of this caliber every year. Perhaps one in a thousand can relate the myriad bits of data learned in school to the realities of human existence in this world.

Most arrive for my seminars with two economic assumptions of direful foreboding: (1) The large corporations represent a constant danger and must be controlled by the government; (2) Without antitrust laws, the Environmental Protection

Agency and other bureaucratic interventions, private businessmen, large and small, would walk roughshod over the entire population of this country. The reason? Free enterprise leads inevitably to monopoly.

These seminar attendees did not invent these anxieties. They learned them at the feet of their professors, many of them professors in economics.

It Is Futile to Argue

I have learned from experience that any attempt to dispute these conclusions by direct debate is largely futile. As the early rhymesters had it, "a man convinced against his will, is of the same opinion, still."

However, if I can go to the beginning to point out the realities undergirding all economic theory, then I have a chance of showing that an entirely different set of conclusions is warranted.

What then are these realities which should be seen at the beginning?

Or, even before that question is asked, what is the purpose of the study of economics?

Most of us are acquainted, perhaps by the process of a kind of social-intellectual osmosis, with the classical definition: economics is the study of the production, distribution and consumption of scarce resources. (Note: Currently the last. two words are frequently replaced by the words "goods and services" and the concept of scarcity is omitted.)

While that definition is adequate, it lacks impact and immediacy. I would like to add to it a statement I must credit to Clark and Rimanoczy who pointed out nearly two score years ago that economics is the study of "How we live." That phrase brings it home and puts it on one’s lap.

To understand economics is to understand how we take hold of the various resources of this world and put them together in such a way that we can stay alive. More. We do not, in economics, study merely the necessaries to retain the human heart beat. We want to survive, true. But we all want to live with some degree of personal satisfaction. To survive without any personal satisfactions would be to sustain a living death. Any prisoner in any jail receives the assurance that those who restrain him will do all in their power to keep him alive. That is not enough. We want to be alive as human beings, not as caged animals.

It follows that everyone, who wishes to stay alive as a human being, should understand at least the basics of economic lore. Those who have no such interest should wisely stop reading at this juncture.

Were I to teach economics, I would try to make these points clear. What is the first reality we should recognize as soon as we have isolated our area of inquiry?

1. Man is a profit-seeking creature. I will not endeavor to prove that point at this time; rather, I state it categorically. However, I will embellish it enough to remove a common misunderstanding. The word profit is so affiliated with bookkeeping procedures that I can anticipate an assumption here. Some will be certain I have said that everyone wants to profit in terms of dollars. This is decidedly not so.

Many are not interested in dollars, as such. Whatever interest he might have in dollars, every human being seeks to obtain more of whatever it is he values. Conversely, he seeks to prevent the loss of anything he values.

I am using the term profit in a philosophic or even in a psychological sense. So I will introduce another term and use it in place of the word profit.

Every human being seeks plus factors. His plus factors may be dollars. But they might also be friendship, love, good health, a comfortable bed, a good meal, a rare book, a work of art, a day of leisure, a job, a good bridge game, or anything else his heart, body or mind desires. In this sense, man is a profit-seeker.

He seeks to satisfy his desires whatever they may be.

2. Man lives in a world of limited (scarce) resources. Let me provide an illustration. Man is a land-using creature. His habitat is land, not air and not water. He uses air and water, but land is where he lives. Our planet has a limited supply of land. Approximately thirty per cent of the earth’s surface is above water and not all of that readily habitable. The total population of the world, whatever it may be at any given moment, must use the resources of this world’s land to survive and satisfy human needs and wants.

3.    Not only is our world one of limited resources, the resources we do have are unevenly distributed. No two pieces of land are equal in terms of utilization. Some plots of land have multiple utility. Some are near water or receive rainfall. Some are not and do not. Some land contains minerals, oil, metals and various chemicals. Some is apparently barren in terms of our present knowledge and technology. In an attempt to be "fair," a division of the land so that each person would have an equal amount of acreage would be about as unfair as anything that could be imagined. The person receiving a few acres in the middle of the Gobi desert has a high probability of dying of thirst. The person receiving a few acres in the middle of Beverly Hills might do very well indeed.

4. The same diversity of distribution we find in land resources is found with human resources. Human beings are unevenly distributed about the globe. In a few places we will find millions of people living within a few square miles. Elsewhere we have zero population. Thus the distribution of human beings ranges from impacted, to dense, to settled, to sparse, to zip.

The same disequilibrium of human abilities is evident. Some persons can perform in a superior fashion at almost any endeavor or enterprise. Some have very meager competency. Most of us occupy the undistinguished center, capable or even superior at some tasks, bumblers or worse at others. And there are a few, always, who cannot manage.

Were I to attempt a teaching of economics, I would try to make the foregoing points clear. Much more could be said in every instance, of course.

There are a few more preliminaries.

5.  All resources, capable of being owned, are property. Property is that item, real, personal or abstract, that can be identified as a thing in itself and is capable of being controlled by one or more humans under certain conditions. To survive and to survive with any hope of comfort and satisfaction it is necessary that each human being dominate his own environment in his own interest to some degree.

This is not only true of man, it is true of any living organism. Life, as we understand it, is only possible when a given entity is able to obtain what it needs from its surroundings. Nature has denied us the evidence of perpetual motion. Man is not born with a built-in power pack which makes him indifferent and independent of his surroundings. Even the sun is cooling.

6. Man is totally dependent upon property. He cannot survive without it. But property makes no decisions. All decisions over property are made by human beings who are capable of controlling that property under certain conditions. Nothing happens in the market automatically. If something is to be produced, someone must make a decision to produce it. If something is to be distributed, someone must make a decision to distribute it. If something is to be consumed, someone must make a decision to consume it. In the absence of man, nature takes over and property obeys natural laws. When man is present, he learns natural law and, with that knowledge, exercises dominion over both natural and man-made properties.

7. Who is the proper decision maker over any given piece of property? A single choice is available. Either the person owning the property will make decisions over that property. Or a person not owning the property will make the decisions. Who else is there?

There are billions of pieces of property in the world. Each piece of property is owned by an individual or a group, or it is unowned. There are also billions of people in the world. If we decide that a nonowner should make the decisions over a property an individual owns, what incentive would there be for anyone to own anything? Further, which nonowner (when there are billions of nonowners in respect to each item owned) is to be given the authority over a property he doesn’t own?

If we assume that all the nonowners should vote on each decision to be made, we reach the imponderability of numbers as well as the imponderability of information availability among those who are to vote. Indeed, we enter the theater of the absurd. Clearly, to reach decisions, either the owner or a selected group of nonowners must decide. The argument most often advanced in support of this latter practice is that private owners of property are profit-seekers and might make decisions that would injure others. Where is the evidence that nonowners are not profit-seekers? If I were called upon to make a decision over my neighbor’s property, would I not be inclined to make a decision that would serve my ends, rather than my neighbor’s?

While it is certainly true that the owner of a given item of property may lack in wisdom, it is equally true that a nonowner may also lack in wisdom.

But there is one thing to be said in favor of decision making by owners. To become an owner, certain thrift, forbearance and concern have already been expressed, either by the owner in person, or by those others who bestowed the property upon him and thus expect him to make decisions.

The only thing that can be said in favor of having nonowners make decisions over property they do not own is that they are there. But the owner is there, too.

8. Something needs to be said about decisions. Any decision is a finality. We cannot have it both ways. You cannot have your cake and eat it, too.

Are we to have homes only because others decide? Are we to wear clothing only when others make that decision? Are we to eat only when others reach that conclusion? If you decide affirmatively in these last questions, then you have decided that man should be kept like an animal in a cage. And who decides which cage? Some other human being with no more wit nor wisdom than any other.

9. Finally, there is the question of right and wrong. I am not speaking of "good" or "bad." Good or bad are words derived from our respective value judgments. Right and wrong relate to appropriateness in terms of reality.

Without attempting a complete argument, because of space limitations, may I merely state categorically that there is only one way any human being can physically inflict an injury and hence impose a "wrong" on any other human being. He presumes to act as the authority over another person or that other person’s property against that person’s wishes. This is contrary to the basic nature of man as a profit-seeker. As a profit-seeker, each of us seeks to make decisions over his own person and property, and must do so to stay alive and to achieve any measure of satisfaction. I am not speaking of children, nor of any other incomplete or incompetent mentality. I speak of man qua man. As a human being I am capable of either right or wrong behavior. That is to say, I can confine my decision-making to myself and my own resources in all categories. If I so limit my decision-making, it follows that I cannot commit a wrong against another. Since I do not presume to be an authority over anyone except myself, nor over any property except my own, my relationship with all others is peaceful and permits them to be free. Further, I am free, for the only person limiting my behavior is myself. And freedom means self-control.

When I am not content with this and presume to make decisions over other persons and other persons’ property, and do so against their wills, then I am violating their basic natures as profit-seekers and am imposing wrongs upon them.

Were I to undertake the teaching of economics, I would begin with these beginnings. It is only when these ultimate givens are fully grasped and appreciated that we can enter the halls of the arcane mysteries provided by higher mathematics, calculus and statistical forecasting of probabilities. The economics professors may now take over. If they do so at this juncture, it is unlikely that they will presume the danger of the large corporation or the inevitability of monopoly, given a free market in a context of private ownership of property.

Further Reading

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