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.
The purpose of economic study is to predict. The reason so many turn to the economist for assistance does not relate to his ability to explain what has happened but to an assumption that he can foretell what will happen.
In general, it is presumed that the individual who can best explain why things interacted as they did in the past will be best able to foresee how things will interact in the future.
In consequence of market demand for a preview of coming events, most economists rely heavily on what is called the empirical method. That is to say they gather relevant data from what has transpired year by year. They take into consideration other factors which appear to bear upon the area in question. The data assembled, the economists now chart a curve into the future, setting down the probabilities relating to tomorrow, next week, month and year.
There is merit in this procedure. While a probability is not a principle, one must have respect for it none the less. It is far better to rely on probabilities than to stare into a vacuum.
It is at this juncture that the Austrian school of economics emerges as the single exception to the general rule of economic forecasting. The Austrian disciplinarians were among the first to remind us that mathematics does not govern the lives and times of man. What has happened in the past does not control the future. While statistical data may very well assist us in understanding what has transpired, it is wholly unreliable when it comes to foretelling future events. Thus, the Austrian economist seeks to discern the principles of human action and to express them, not in mathematical terms, but in terms of fundamental, ultimate givens as to the nature of man, the nature of the world man lives in, and how the two must and do interrelate.
This procedure has tended to obscure the importance of Austrian theory and practice.
How Many Toothpicks?
The public, and most notably that part of the’ public engaged in what we popularly refer to as the "public sector," dislikes being reminded of the laws of reality. Public and politicians alike clamor for information as to how many toothpicks should be manufactured next year as opposed to last year. The Austrian economist shrugs and explains the laws of pricing, supply and demand.
Meanwhile the empirical economist performs his calculations and announces that there will be a demand for 2,729,453,000 toothpicks, according to the laws of probability. With these assurances the makers of toothpicks find great comfort. Somewhere between the probabilities of the forecasters and the ears of the producers there arises an assumption of certainty.
The number in the prediction is, of course, incorrect. However, it is frequently close enough to the truth, so that the error is in the low percentage figures. Year by year this practice of forecasting empirically will come close enough to the bull’s-eye to gain credibility and acceptance. And then, one year, for reasons which did not exist earlier, so far as can be known, a massive change occurs. Either a new and unimagined market for toothpicks arises, or, for unexplained reasons which remain invisible, the public turns away from toothpicks and either uses something else or abandons the habit of picking their teeth.
In years such as these, the empiricists beat a hasty retreat and belatedly explain that random factors unknown to them at the time caused an error. None the less, they will insist, their figures were correctly determined, as, indeed, they were. It’s just that the answer was wrong.
We happen to be passing through such a time right now. Enormous changes are occurring. These changes disclose that many of our forecasting economists have a great deal to be modest for.
I have set down the foregoing, not as censure of the empiricists, but rather to remind those of us who are fundamentally Austrian in orientation that despite weaknesses there is none the less merit in probability. While principles cannot be demonstrated mathematically, this does not mean that we should abandon mathematics. Where uncertainties exist, probabilities are enormously significant, provided we recall that our answers deal with likelihoods rather than absolutes.
In the final analysis all knowledge is based on axioms and an axiom is no more than a straight line statement of evidence which is not susceptible of proof.
While the purpose of economic study is to predict, I am not attempting a forecast in this essay, save only in the most general way. Therefore, I am not engaged in an economic study as such. Rather, I am seeking to examine the nature of man and the nature of the world man lives in so as to comprehend that most fundamental of all relationships, that of individual man to the earth, and the things of the earth. That relationship at the present time is generally called private ownership of property.
The origins of ownership are lost in antiquity. It is doubtful that we will ever know where the concept of private ownership first appeared or who the individuals were first practicing it.
The ignorance to which we must admit, in this case, should not discourage us. We are ignorant of so much that one more blank page in the human record should make us feel right at home.
Since we cannot read about subjects where no written records exist, we have no way of basing our calculations on relevant data. No such data are available. Currently throughout the world, we find differing customs and practices respecting the ownership of property. It appears that reality does not demand any particular practice or belief respecting property. Instead, what appears is that there is a cause-effect relationship emerging from whatever the property customs may be in a given situation. Thus, when certain kinds of beliefs emerge, the cultures which, in general, hold to them appear to improve their standards of living. When the beliefs change, and property customs are altered, standards of living decline. But we have no absolute evidence. Indeed, we are left only with probabilities. Perhaps we can have respect for these probabilities, even though hard evidence is lacking. Let me begin with the nature of man.
Survival in a World of Scarce Resources
Man is a consuming, sensitive, complex organism. As a newly born infant he is among the world’s most helpless creatures. It is immediately apparent that for man to survive, he must obtain sustenance from a source or sources outside himself. Man is not equipped at birth with a power pack to drive him through life. This oversight means that if he is to survive, he must learn to dominate his immediate surroundings to some degree and in his own personal interest, or perish. It is at once evident that whatever he ingests in the way of food or fluids becomes peculiarly his own. Private ownership of property begins at this point.
If Descartes was correct in stating: "I think, therefore I am," each of us is equally correct in saying: "I eat, therefore I own."
It is doubtful that primitive man, in recognizing his dependence upon things outside himself, thought of so sophisticated a concept as most of us now think when we use the word, "own." Rather, it is probable that early man, to the degree that he used his mind for reasoning, translated his craving for food and beverage into little more than justification for action where his abilities made it possible for him to take what he wanted. This is a far cry from what the concept of ownership often includes today.
Thus, early man probably thought in terms of possession rather than in terms of ownership. To possess is to have a property under one’s physical control. In cultures which had not yet evolved beyond the foraging and hunting stages, ownership, as we think of it, may not have appeared at all. In such a culture the question of right and wrong is not raised. There is no question of control of a property during the absence of the possessor. The only logical questions are these: (1) Do I have the ability to get my hands on something I want; and after that, (2) Do I have the ability to keep others from taking it from me as long as I happen to want it?
What kind of human behavior evolved? There are at least two distinct schools of thought emerging respecting man’s basic reaction to the realities he faced. Some argue that man is only a step removed from a killer ape and that his behavior in early days was violent and aggressive against others of his kind. This is entirely possible.
Others argue that man was more reasonable and tractable and imbued with a natural instinct to interrelate harmoniously with members of his own species. This is also entirely possible.
Indeed, it is possible, and even likely, that human beings vacillated between peaceful and violent behavior in earliest times. If so, they are still acting out their basic nature today which, by turns, is both harmonious and hostile.
It seems to me that when an individual member of the genus homo became imbued with fear that others might take away something which he craved, he would then become hostile and violent toward the individual or group that threatened him. At the same time, if he sensed in himself a feeling of confidence in his own ability, vis a vis the ability of others—or, on the other hand, sensed a willingness in others to work in cooperation with him—then he would be tractable and cooperative.
This apparent duality made human conduct unpredictable and, hence, dangerous. It is only when our knowledge of reality can reasonably predict the consequences of our own actions that we have the necessary confidence in ourselves to behave reasonably and at peace with one another. Gradually, and I suspect over long years, generations or even centuries of human experience, the first great economic lesson was driven home.
When a man thinks only of himself and lives in fear of what others might do to him (the fear of loss of one’s possessions) then he will be driven into isolation. When he is isolated the likelihood of his survival is reduced.
The Division of Labor
It turns out that human beings, by their natures, need each other. Not one of us has enough brains, muscles, energy or time to achieve all that must be achieved if we are to stay alive. Even though we may fear each other and distrust one another by reason of our natural nonpredictability, to have a reasonable expectation of survival requires more than one human being can provide. The economic lesson which necessity compelled us to learn is called "division of labor." I use the term here in the broadest possible sense. Not only in respect to sharing chores and in trading with others, but in the dawning realization that no one can do it alone.
Thus, long, long ago, humankind began to live in groups, and the duality in our natures was acted out. We must possess (own) certain things as individuals or perish. But in order to possess ourselves of these things, we need each other. Thus we had to learn to overcome our fear of how others might behave. Indeed, in our own personal self-interest, we found it necessary to become interested in the well-being of others. While we feared others, we also learned to fear not having them around. What was best so others could survive had to be equated with our own survival. Caught between the proverbial "rock and a hard place," we survived as suspicious, distrustful, dissatisfied, avaricious groups. The groups made it. Those who persisted in living in isolated safety did not have descendants.
Whenever we think of possession or ownership, we must also think in terms of the property involved. What is it we wanted to possess? In order to cope with the question of ownership we must sooner or later deal with what it is human beings wish to own.
It is entirely likely that the first items viewed as property, and hence the first objects of our drive to possess, were those items for which we had natural (instinctive) urges.
The very first objects which created the necessity for a division of labor unquestionably were food and water. There are two other drives, however, that are nearly as primary and must have occupied human attention from the earliest of times. They are the drive for territory and the drive to mate. Again we have two schools of thought as to which comes first. Some argue that a territorial imperative takes primacy over sex. Others put it in reverse. I frankly admit that I do not know. Both are in evidence.
What does appear probable, however, is that the drive to mate was acted out by individuals, much as the drive for food and drink. It is also probable that the drive for territory was equally individualized at the beginning, though this would have been less likely of fulfillment. It is far more difficult to control a territory according to one’s own wishes than to control another human being. After all, human beings can glimpse that it is in their own best interest to pair off with a mate of their choosing and to repel a mate not of their choosing.
The land makes no decisions and it does not act in favor of its own highest utility or preference.
I choose to deal with mating first, but such choosing does not endorse any specific chronology.
All of us have mental images of the cave man selecting a bride by belting her over the head with some handy object and dragging her off. I suspect that in early times it was the woman who most frequently made the choice, although I do not mean to gloss over male aggressiveness. What appears likely is that the woman looked over the males available to her and, having chosen, began to make herself as alluring as possible to the male of her choosing. Instead of attacking him physically, she probably sought to awaken in him certain latent yearnings.
It appears that under primitive conditions, man’s sex drive was far less assertive than it presently is in what we often inaccurately call "civilized" times. Men were probably preoccupied with getting food, after which they were exhausted. Beating up an exhausted male isn’t calculated to stimulate affectionate behavior. Not that the woman was incapable of physical conquest over a man. A cave woman could probably have given as good an account of herself in a rough and tumble bout as any man.
Perhaps the woman was guided by an inner sense, an instinct, of the long period of pregnancy and its corresponding reduction in her physical abilities. It is certain that she usually envisioned more than a mere romantic dalliance. She was looking for a mate to sire her child and, in addition, to serve as a provider who would stand by and help her when she could not help herself. So it is likely that the woman thought of "her" man as a possession. He "belonged" to her. And she would seek to influence him to her advantage when she was not capable of knocking him down. I do not seek to discount the probability that primitive women had far less difficulty with child delivery than modern mothers. The travail was intense enough to cause prearranging—planning.
When the infant was born, there was no question any longer. The infant belonged to the mother. If any man doubted it, the mother could hand over the infant to the father with instructions to feed it and keep it quiet. Following a few episodes of this nature it is doubtful that many males proclaimed ownership over very small children, at least in early times. It is equally doubtful that the male let the woman get away with such an assertion without challenge. Feeling a bit as though he had been used, the man probably agreed that she owned the child, but that his ownership was now transferred to her. I suspect a trade-off. The child was hers. But she was his. That evened it up. He would support her, but she had to support the new-born. Women were probably the first of our species to deal successfully with abstract reasoning. With a show of submission and sweetness she was probably far from feeling, the woman smiled her Mona Lisa mystery and accepted the deal. She well understood that if her mate owned and possessed her, the child would benefit. She would continue to possess her mate but would let him think otherwise. Besides, at the moment she probably didn’t want a physical contest.
Thus it appears probable that food, water and women were among the first properties—the first items possessed by males. In process, it appears that the woman possessed the child and with that kind of ownership established, obtained managerial status over the domestic scene including management of her mate. The woman was probably the first of our species to comprehend that guile, indirection and the use of reason are superior and more practical devices than brute force.
The first acquisition of territory probably occurred in conjunction with pregnancy. Like any nesting sparrow, the woman desired a place of safety for the delivery and rearing of her young. So it seems to me that our diverse views as to the primacy of sex as opposed to territory come together and are not opposed.
Man, the hunter, follows the game trails, the flights of birds, the schools of fish swimming in the sea. Man, the forager, follows the seasons, shifting from place to place as leaves and grasses green and fruits bud and ripen.
But man, the father, returns to his mate and inadvertently to his child to see that they are cared for during many weeks, months and even years.
I have no idea how long the idea lay dormant, gestating, as it were, in the minds of hundreds of our kind. But presently there emerged the concept of a hunting, foraging territory which would also contain the place of safety for women and children. With the formation of tribes and tribal territory, the concept of public or collective ownership or possession emerged.
Rules Concerning Possession and Use of Land
Our natures demanded private control of certain assets on a personal level. But since we all wanted territory it must have seemed sensible and logical for the humans in a given area to pool their abilities (again, division of labor) when it came to land. A single male or family unit might be able to defend (possess) a relatively tiny patch of ground. But more than a tiny patch seemed desirable. If the families in a given region would pool their abilities they might defend a much larger and more useful piece of land. Up to this time I have used the terms possession and ownership either jointly or as synonyms. I wish to make it clear, however, that ideas of ownership as we presently use the concept had not yet surfaced. What any individual owned was only that item or those items which he could physically control and defend, personally or as a tribal unit. Possession is based on force.
I have no doubt that the weakness of this practice was apparent for long years before anything occurred to bring about revision. In simple terms it meant the survival of the fittest on a direct, combative basis. Man had not yet learned to produce in any systematic way. While he may have manufactured some rough hand axes made of stone, and possibly a few other hand tools, these were relatively easy to keep on one’s person or near enough at hand so that any potential thief could be driven off at once.
Thus, the lion’s share of the food and water, and even the women, went to the most powerful and aggressive male. And indirectly to the sharpest and most cunning female. It meant that the biggest bully in the territory got first (and even second) pick. The rest of the living humans got what was left, undoubtedly in descending order relating to their strength and cunning.
At last another characteristic of human development became visible. Men began to specialize, either as hunters or foragers, or as makers of tools. It turned out, eventually, that the brute force necessary to win a fight didn’t necessarily single out the most valuable person in the tribe. I have no idea how it actually occurred, but let me hypothecate a situation predicated upon the appearance of an old man, with outstanding ability as a toolmaker. As a hunter he was too slow. As a forager he tired too easily. But as a toolmaker he was unsurpassed. It is entirely conceivable that at the outset, every time he finished an axe, someone grabbed it and he was incapable of preventing that theft. Theft invariably discourages production.
Protecting the Specialist
At the outset, it is likely that the tribal interest in the old man’s tools was sufficient so that they hunted and foraged for him and rushed to his defense whenever he was attacked. He was viewed as a public asset, like the territory they all occupied and defended. However, a major distinction was finally observed. The occasional thieves, who appeared in force to threaten their territory, were outsiders. But the thieves who threatened the old man’s axe production were insiders, members of his own tribe. A different form of protection was needed if the old man’s production was to be made safe.
I have little evidence to support what I am about to say. I follow a hunch. I think the shaman or witch doctor first appeared about this time. This meant the formation of the first religion. The individual who set himself up as the first theologian was also, in all probability, the first psychiatrist. He offered an abstract concept which was far too complex for most of the tribal members to comprehend.
In order to be understood, he elevated his own status among his familiars by claiming that he was in touch with forces and embodiments which he could communicate with, but which were invisible to the average fellow. It was far easier to instruct his peers with the idea of obedience than with the complicated economic reasoning leading to the desirability of leaving the toolmaker unmolested.
It was the wish (he must have explained) of the great invisible deities who inhabited everything and who controlled life and death, that the toolmaker be left unmolested. But it was also the wish of these divinities that the necessity of dropping everything they were doing to rush to the toolmaker’s defense be overcome. Instead (he must have suggested) the deities wanted the old man unharmed and, therefore, if anyone harmed him, the deities would deal with that person in frightful and terrifying ways. Rescuing him constantly from themselves was impractical. Other chores had to be done or they would all die.
What the old man was working on was his, even if the old man wasn’t strong enough to defend it. Therefore, deity would defend the old man’s possessions. Out of this, the concept of right and wrong emerged and, with it, the concept of ownership as opposed to possession. No longer would a person’s ability to act be the single criterion of what he ought to do. Rather, the wishes of divinity provided the criterion. Even though a man had the ability to take away the production of the toolmaker, such an act would not be tolerated. It was wrong. To do right was to act within one’s ability but, in addition, to act in accordance with divine dictates, regardless of ability.
Clearly, the strongest and most ferocious could always take what he wanted. But the tribe was dependent now, not only on the strong but on the skillful. And the skilled artisan must be able to predict peaceful and orderly respect for his abilities or he would become discouraged and would no longer employ his skills.
It is probable that the high level of sensitivity of the olfactory nerve at this remote period aided and abetted the wisdom of the shaman. Any per-son could tell who possessed any object. All one had to do was smell it. The odor of the owner was easily detected. Man has a most distinguishing scent. Thus, if you picked up a tool your first task was to sniff to find out who, in fact, possessed it. Ownership became a matter of odor as opposed to force. Gradually this concept was extended to include all members of the tribe, not merely the old toolmaker.
It must have taken many years, but the idea of owning by prior possession, rather than by might, gradually gained ascendancy among those humans who were most thoughtful and most advanced.
No major culture has ever emerged that was built upon possession and force exclusively. For production to occur, there must be long periods of time in which peaceful non-molestation is the order of the day. Force is a poor tool with which to obtain lasting calm and serenity. Production and trade, the devices which build what we call civilizations, are erected on ideas of ownership rather than ideas of possession. It is in this sense that human society is constructed upon a moral base: a recognition of the difference between right and wrong. There must be an understanding of the sanctity of boundary, and a broad adherence to support of such sanctity, for a culture to endure or advance.