In a lecture delivered some years ago, Prof. Brand Blanshard described the world as it was during his student days prior to the First World War. Some of the details, while impressive, were not new to me: the worldwide gold standards, the consequent stability of the currency, the fact that average prices of commodities in the United States had not gone up between 1800 and 1900. But the detail that stuck in my mind was that one could go from almost any country in the world to any other without a passport. If you can travel around the world without a passport, 1 thought, think what all that implies about the condition of the world at that time!
I have no memory of that world save through the ruminations of my elders. My earliest recollections about the economic system were of parents discussing with relatives the follies of FDR and what he was doing to self-reliance, to banking, and to currency; they seemed mystified that the majority of Americans, outside the Dutch community in Iowa where I grew up, did not seem to realize what was happening. They blamed the Depression on the Great War.
I cannot truly say that they understood the issues behind World War II. After Pearl Harbor they were almost relieved that the United States was "in it," because of the plight of our many relatives in Holland under the Nazis. Even then, however, many were suspicious that Pearl Harbor had been engineered by Roosevelt, and they were much more aware of the Soviet threat than those in power in Washington at the time—or at any time since. In spite of all the propaganda to the contrary, they believed that the Soviet government was at least as bad as that of the Nazis. They felt sympathy for the occupied countries (although England, as the traditional maritime rival of Holland and the victor over the Dutch both for New York—Niuew Amsterdam—and for South Africa in the Boer War, was still viewed with suspicion); but it was felt that "we" should not interfere between the Nazis and the Soviets but let them fight one another to a standstill.
THE MENACE TO FREEDOM
I did not really become aware of the issues confronting the world until after World War II. By that time, of course, passports were taken for granted, along with identification cards of every description (Social Security cards, whose number was supposed to be a secret between "you and the government," were already used for many other purposes). The international gold standard had collapsed, and even the gold-exchange standard would soon go. Many people complained about Government "snooping into our business" and "taking our rightful earnings" (income tax and Social Security), but it was, in the late forties and throughout the fifties, a much freer country than it is now—though, like all gradual changes, one was not acutely conscious of the encroaching State from day to day. Not that it was an idyllic period suffused with the spirit of liberty: blacks in the South were cruelly discriminated against, and urban crime was already a major problem.
But by the 1950's, much of the Roosevelt alphabet-soup had disappeared, and there was not yet an Occupational Safety and Health Act or an Environmental Protection Administration. The annual expenditures of the federal government were still only a small fraction of what they are now; most of the national debt was war debt; and one could still put money in the bank with some assurance that it would retain its value for later years when one might need it. Most Americans still believed that the attainment of self-sufficiency was an important moral goal. Welfare was not yet a way of life; there were not 40 million monthly recipients of Social Security and welfare checks, and medicare and food stamps were unknown. Most of the 462 percent increase in the federal bureaucracy between 1930 and 1974 had not yet taken place. In the economic area particularly, the degree of freedom was indeed almost idyllic compared with that of 1978. Enterprising people willing to take risks could still succeed spectacularly without government subsidy and without being done in by an array of federal, state, and local taxes; mountains of government paperwork; and endless detailed regulations.
But the transition from a constitutional republic to an unlimited democracy was well under way. In 1857, the British historian Thomas Macaulay had already warned:
The day will come when [in the United States] a multitude of people will choose the legislature. Is it possible to doubt what sort of a legislature will be chosen? On the one side is a statesman preaching patience, respect for rights, strict observance of public faith. On the other is a demagogue ranting about the tyranny of capitalism and userers and asking why anybody should be permitted to drink champagne and to ride in a carriage while thousands of honest people are in want of necessaries. Which of the candidates is likely to be preferred by a workman?…There will, I fear, be spoliation. This spoliation will increase distress. The distress will produce fresh spoliation. There is nothing to stay you. Your Constitution is all sail and no anchor. When Society has entered on this downward progress, either civilization or liberty must perish. Either some Caesar or Napoleon will seize the reins of government with a strong hand, or your Republic will be as fearfully plundered and laid waste by barbarians in the twentieth century as the Roman Empire in the fifth; with this difference, that the Huns and vandals who ravaged the Roman Empire came from without, and that your Huns and Vandals will have been engendered within your country, by your own institutions. [Macaulay to H.S. Randall of New York, May 23, 1857]
One can wonder what America would be like if, after 1776, it had only gone farther in the direction of individual freedom instead of turning back on itself as if bent on fulfilling Macaulay's predictions.
A FREE COUNTRY
In a free America, you would scarcely be aware at all of the existence of government, unless you violated the rights of others, in which case you would have to answer to the law.
You would be free to act on your own judgment; to have whatever beliefs you wished, true or false, on any subject; to discuss them peaceably, privately or publicly; and to act on them by any means short of interfering with the equal freedom of others to act on their judgments.
Neither news nor entertainment would be censored by government. You would be free to choose your amusements as well as your profession, to gain employment among the alternatives available in a free society, and to start a business if you were willing to take the risk.
As an employer, you would be free to manage your business in whatever peaceable way you chose. If your product satisfied the customers you would make a profit, and if it didn't you would take the loss without the government throwing other people's money in to sustain the enterprise.
As a worker, you could go wherever the wages and conditions of work were best or into a less lucrative but more satisfying line of work, if that were your choice. You could join a union if you wished but would not be compelled to do so. You could quit or go on strike but would not be able to use force to keep others from accepting the job in your place.
The government would have no tie with either management or labor, nor would there be laws favoring the one against the other: there would be no laws on the matter at all, save those protecting contracts into which both parties voluntarily entered.
The price of gas, coal, oil, electricity, telephone service, and so on would not be fixed by government decree—nor, indeed, would the price of anything else—but only by the market. The result would be that mass production would increase as technology developed; the price of almost everything would go down; and even luxury items would become increasingly available to everyone. This state of affairs would be primarily the result of the free (untaxed, unregulated) expansion of technology and of the absence of inflation.
Government, of course, would have no control over the money supply. The medium of exchange would be coins (and bills exchangeable for coins on demand, if one chose to accept them), privately minted and circulated in response to market demand for a store of value and a medium of exchange. The Federal Reserve Bank, of course, would be eliminated, and all banking would be a private activity. With government no longer in charge of the monetary system, inflation would be a thing of the past; and without government powers to levy taxes on some to pay benefits to others, there would, in any case, be little incentive for inflation.
With the abolition of federal housing, rent controls, inflation, and taxes, the cities of America would be livable again; without government interference, it would once again pay landlords to build new low-income housing. The expansion of goods and services would take up most or all of the slack in employment, so that virtually anyone who desired it could be gainfully employed, with a much greater selection of alternatives and opportunities for the improvement of one's economic status than exists today.
This prosperity would be the direct result of a hands-off attitude of government toward the marketplace—perhaps even implemented by a constitutional amendment (which should have been in the Bill of Rights of the original Constitution): "Congress shall pass no law abridging the freedom of production and trade."
With minimum-wage laws abolished, young people would be able to learn a trade through apprenticeship at a lower wage and then, already skilled, graduate to higher and higher income. Manufacturers, freed from bureaucratic regulations and mountains of government-mandated paperwork, would no longer have to pay $2 an hour of their employees' wages into meeting multitudes of minute government requirements, and they could also invest their profits into further capitalization, leading, in turn, to more employment. With the resulting greater efficiency of manufacturing processes, and more production per man-hour of labor, prices would gradually come down.
After abolition of the CAB and ICC and achievement of free competition in transport, airlines would charge a fraction of their present rates. Trains, freed from government restrictions and regulations, would flourish again, and a free enterprise system in bus lines in large cities would give the most business to the most efficient lines—thus restoring the long-lost connection between efficiency of service and profit.
The educational system, too, would no longer be in the hands of the government. To attract students, schools and colleges would compete with one another for quality education and the enhancement of their own professional reputations. No longer would schools turn out graduates unable to read their own diplomas; these and other relics of the educational stone age would soon be forever forgotten. Schools with the best reputations would also be able to attract the best teachers, and because of higher student income would be able to pay them the most, and in this way quality in education would tend to perpetuate itself. Variety and creativity in education, once the dead hand of government had removed itself from the system, would flourish as never before.
Since medical and dental care require the labor of others, these would not be available without cost without the consent of those rendering the service. But in addition to the gradual decrease in price resulting from improved technology, there would be no artificial shortage of the supply of physicians and dentists resulting from compulsory government licensure. And in the absence of an FDA, a person would be free to ingest whatever he chose—whether to provide a cure for cancer or megavitamins for nutrition—without requiring FDA approval of the product.
The sick, elderly, and those not covered by insurance policies would be cared for through private donations—which would flourish once again after government no longer took upon itself the decision of who (through taxation) is and who is not the proper object of one's beneficence. Meanwhile, several factors would operate, from various directions, to reduce drastically the numbers of the poor: the knowledge that if they were not prudent now they would have to take the consequences later or rely on voluntary charity; the cessation of Social Security and other government programs, which would enable many people to provide for their own sickness or old age through private competitive insurance schemes whose payoff would be much greater than with government plans; and, most of all, the general level of prosperity—so great that we who have never seen a free society in operation can scarcely imagine its degree and extent—which would either reduce to a bare minimum the number of unavoidably employed or create more jobs than there are people to fill them.
A FREE WORLD
But a free American would still be insecure in the absence of a free world.
With a free America achieved, the envy of those in unfree countries would be enormous. The effect on the people of those nations would be to exert a brain drain of tremendous proportions, causing the most productive and creative people in those countries to leave for America where their chances of success would be multiplied and their freedom from tyranny assured. On the governments of those nations, it would exert an opposite effect: it would make more of them erect Berlin Walls to keep their most productive people from leaving, and it might also tempt them into military operations against the United States in order to divert attention from their tyranny at home; for once the effects of freedom were known, after a free society in America had become fully operational, the restrictions by these governments on their own people would stand out naked for all the world to see. Some governments might try to neutralize this threat by attacking the United States before the people of the world had become aware of the benefits of liberty that their own governments had denied them.
Their chances of success in such an endeavor, however, would soon diminish. Without infusion of grain and technology from America, the Soviet Union would sink further and further into poverty and famine. Their technology, largely derived from the West, would also deteriorate although the technology already in their hands might be sufficient to give them some chance of success. Their chances would also depend on how successful they had been in making off with the mineral wealth of Africa, and whether they controlled the sea lanes of the Indian Ocean and the Persian Gulf, as well as the oil of Arabia.
With the American government no longer subsidizing the Soviet Union, and without guarantee of reimbursement from the Export-Import Bank, few US firms would care to deal with the Soviet Union. Its economy would falter; even its weaponry would gradually wither on the vine; and Soviet-style socialism would be left to its own unaided resources. As Solzhenitsyn said in Washington in 1975:
It is American trade that allows the Soviet economy to concentrate its resources on armaments and preparations for war. Remove that trade, and the Soviet economy would be obliged to feed and clothe and house the Russian people, something it has never been able to do. Let the socialists among you allow this socialist economy to prove the superiority that its ideology claims. Stop sending them goods. Let them stand on their own feet, and then see what happens.
With every passing year the Soviet threat would diminish, and so would that of every other socialist state. And thus, finally, a free United States would come to exist in a peaceful world. Once the technology of socialist states, unaided, proved insufficient for aggression, there would also be a much greater chance that in time they would no longer be socialist either and that the entire world would be not only peaceful but free. Thus the freedom of the United States would have spread to the rest of the world, not by its shining example alone, but because the entire world would perceive at last that freedom works.
Professor Hospers is a frequent contributor to REASON. He is the author of Libertarianism, as well as several books in philosophy, and is currently at work on a new book on aesthetics.