For the past 100 years, central planners have used the language and methods of science to explain and justify their attempts to fine-tune most of the world’s advanced economies. Pointing to the successes of researchers in the hard sciences, they have led people to believe that a little inflation here or a lot of regulation there can actually fine-tune an economy-the same way a mechanic can adjust the points, set the timing, and put new spark plugs in a classic car engine.

Using the veneer of scientific language, government officials explain how in five years a deficit will be reduced, or how so many shoes or tanks will be produced, or how so much health care will be made available. Like some ancient soothsayer, the official economist looks for good omens in the economic data and tells the ruler or rulers what they want to hear. When the projected results don’t materialize in democratic countries, we are told it was merely because the central planners weren’t skilled enough. Just find enough Rhodes scholars, create a Brain Trust, and all will be well.

There’s only one problem with this kind of thinking: the very nature of the universe makes all central planning impossible.

Man’s inability to control the economy is nowhere more graphically illustrated than in our helplessness before the weather, All of life depends on agriculture, and successful harvests depend on "good" weather. No economist can predict prolonged years of cold weather, such as Europe experienced in the Middle Ages when the Baltic Sea froze over, destroying the seaborne trade of the Hanseatic League. The Japanese have kept meticulous records for over 1,000 years of when the cherry trees blossomed, but no one can predict when they will bloom next year, or if they will be killed by a late frost. No one could have predicted the destructiveness caused by the Great Blizzard of 1888, or the ravages of Hurricane Andrew (which cost over $20 billion, and destroyed some insurance companies in the process). And no amount of emergency planning by any level of government was able to hold back the Mississippi in 1993.

When forecasters do successfully predict a change in the weather, it’s almost always by accident. The Old Farmer’s Almanac got its lasting claim to fame back in 1815, when editor Robert B. Thomas was so sick in bed that, he told his assistant to "leave him alone" and "just write anything for July 13th." The assistant did just that and for that day wrote "Rain, hail, and snow." Thomas and Co. couldn’t have known it, but about that same time Mt. Tambora in Indonesia was erupting, spewing millions of tons of sulfur dioxide into the stratosphere, which circled the globe, deflecting the sun’s light and heat, causing the infamous "Year With out a Summer." Farmers wore their greatcoats in the fields, only to shake their heads in disbelief at the meager harvest. And yes, on July 13, it really did rain, hail, and snow in the Eastern United States.

The cool summer of 1992—when vast acres of Midwestern cornfields were declared federal disaster areas—was also caused by a volcanic eruption, this time from Mt. Pinatubo in the Philippines. When Pinatubo erupted, 25 million tons of sulfur dioxide were blasted into the atmosphere. The effect on America’s summer economy that year was devastating. Utilities, previously thought recession-proof, saw their sales of kilowatts plunge as people and businesses used less power for air-conditioners. Sales of patio, pool, and sports equipment plummeted, and people sipped fewer soft drinks.

One government economist said that the floods in the Midwest in 1993 would have "no overall negative effect" on the economy. That, of course, is absurd: people’s lives were changed forever, personal plans and fortunes were dashed, and the agricultural heartland of America was crippled.

Quantum Changes

Not only is the economy subject to the weather, but also to what might be called "quantum changes" in history. Our world has always been-and is now-subject to major changes that make tomorrow quite different from yesterday. Sometimes such quantum changes are the result of an invention. Most historians agree, for example, that those of us who live in the West might all be speaking Arabic today had it not been for the invention of the stirrup. At Tours, Charles Martel’s Frankish cavalry had stirrups, while the Moors did not. As a result, the Western European forces were victorious. Other times quantum changes are brought about by a mutant virus, to which a certain population has developed no immunities. In modern times, quantum changes may come from the actions of a lone entrepreneur or group of investors. Fiber optics would still be in the research and development stage had not an upstart little company, MCI—financed by junk bonds that were marketed by the much-maligned Michael Milken-taken on AT&T. IBM would till stand astride the business world like a colossus had it not been for the ideas of kids like Steven Jobs and Bill Gates. Thousands of jobs were lost at IBM, and the company’s equity was cut in half. Meanwhile, millions of people have been empowered by the ever-expanding capabilities of the affordable personal computer.

Today, the world economy is being driven not so much by raw materials, but by creative minds and the software and computer chips they produce. George Gilder has written extensively of this quantum technology both in Forbes and in his 1989 book, Microcosm. "Quantum technology devalues what the State is good at controlling: material resources, geographic ties, physical wealth," Gilder writes. "Quantum technology exalts the one domain the State can finally never reach or ever raid: mind. Thus the move from the industrial era to the quantum era takes the world from a technology of control to the dictionary of freedom…. We live in an epoch when desertbound Israel can use computerized farming to supply 80% of the cut flowers in some European markets and compete in selling avocados in Florida; when barren Japan can claim to be number one in economic growth; and when tiny islands like Singapore and Hong Kong can far outproduce Argentina or Indonesia."

No one knows what the next major quantum changes will be in our world, least of all government officials. For political reasons, the State always overcommits itself to older, existing technologies and large companies who find it difficult to change and retool for the future. That is one of the great weaknesses of national industrial policy. Moreover, when the State crowds out all entrepreneurs, it leaves itself as the only institution effectively planning for the future. If it plans for seven fat years but gets seven lean ones instead, the entire society suffers. That is why the old Soviet Union had "bad weather" for 70 years.

In a free society, however, thousands of entrepreneurs and millions of consumers make their own individual plans for the future. Some are cautious and save their cash; others are courageous risk-takers and expand their businesses and services. Those who correctly gauge future conditions will be successful; those who fail will have to go to work for others.

The unpredictability of the weather and the possibility of quantum changes make it impossible for the State to control our economy or predict future needs. For most of this century, the state capitalists of the Communist world almost always guessed wrong, and were then bailed out by those entrepreneurs in the West who correctly anticipated future conditions.

But there’s one more factor that is perhaps the most complex of all. In his seminars at New York University and in Human Action, Ludwig von Mises demonstrated that an economy’s performance is based on the decisions of millions of people, not just in one place but all over the world. These millions of people make economic decisions, based on their own wants, needs, hopes, prejudices, and world-views. Sometimes they act in groups, often they act alone. In America, we put diamonds on a woman’s hand; in India, they sew them into their clothing as their currency of last resort and pass them down through their families. In the West, experts have pronounced the death sentence on gold, time and again, for nearly a century. Yet in the Far East, economic growth is creating a demand for gold unlike anything seen for a generation. Individual Chinese want gold for the security and prestige it brings, thus driving world gold prices higher.

Many talented people, like Mother Teresa, willingly choose fields in which they not only know they will not get rich, but may very well live in poverty and disease. Some people-we call them martyrs-give up not only their wealth but their lives for an idea or belief.

Mises waited ten years before he finally asked his sweetheart, Margit, to marry him. Both he and Margit believed that his economic works and his struggle to destroy socialism were so important that they postponed their marriage until her children were on their own. Fortunately they did finally marry and Margit became a partner in his work.

Through much of his work, Mises argued that a central authority could never successfully direct human action on a wide scale. In fact, Mises pointed out, government intervention almost always results in the exact opposite of what policymakers are trying to achieve. A recent case illustrates Mises’ point. When, toward the end of the Bush administration, the Federal Reserve lowered interest rates to try to stimulate the economy, people who depended on interest for income (now 15 percent of the American population, and growing) lost much of their purchasing power. Here’s another case: In the 1960s, the United States embarked on a program called the "Great Society" to wipe out poverty. Today, millions of Americans linger in poverty because those welfare programs encouraged the breakup of the family economic unit.

For centuries, philosophers and poets have written about the unpredictability of life. Modern liberals might say that that is precisely why we need central planning—to give us security from the slings and arrows of outrageous fortune, as Shakespeare put it. But as history has shown, the only guarantee the State can provide is one of shared misery and poverty. If society is poor, it cannot generate enough wealth to take care of the elderly. When medical care is scarce, there’s no security against the simplest of diseases. It was modern capitalism that gave us penicillin, the polio vaccine, the concept of retirement, and so many other blessings that most people take for granted.

When British political philosopher Michael Oakeshott died in 1990, the world lost one of its greatest defenders of liberty. Not that Oakeshott ever stood near the Berlin Wall and asked for it to be tom down; nor had he published a systematic critique of the failures of socialism. Rather, Oakeshott’s contribution lay in carrying on a continuing conversation on the origins, opportunities, and future prospects of human freedom. In doing so, he offered some important insights that other writers missed or ignored.

Fortunately, a transcript of much of that conversation is now available from Liberty Fund. When Rationalism in Politics was first published in 1962, it was a major event, promoting Oakeshott to the forefront of contemporary political philosophers. This new edition adds six essays, five previously published, and the never-before published “Political Discourse,” each of which is consistent with the themes of the original book.

Along with Hobbes (Oakeshott was an expert on the author of Leviathan) Oakeshott agreed that life was short, but not necessarily nasty and brutish. What made life worth living were the possibilities offered by our ability to choose. But because life is short, it is impossible for any individual or group to usher in an ideally “free” society. Instead, much of life has to be spent in learning a culture’s existing patterns of behavior and traditions, then making wise decisions based on these traditions. Traditions that enhance individual lib-erty-trial by jury, voluntary associations, religious freedom, and so forth—should be encouraged, while those that inhibit the human spirit should be discarded.

Men and women are free to choose, but they will not always make the right decisions, Oakeshott says, and will consequently hold back the progress of human freedom. That there are those who fail is one of the mysteries of the human condition; there is no single formula for solving this defect.

According to Oakeshott, the best we can do—the only thing we can do—is follow those “intimations” that lead to a better world. Oakeshott frequently employs the word “intimation” because he wants to avoid the idea that there is a logical, rational direction in which we can go. Timothy Fuller, who wrote the foreword, says that “Oakeshott the man wouldn’t be so much concerned with where you planned to go as how you proposed to travel.” Karl Marx had a seemingly rational, detailed plan on how to order society. Over 100 years later, many Russian, East European, and Chinese citizens know by hard experience the consequences of such rationalism in politics.

But Oakeshott doesn’t stop at criticizing Marxism; he turns his critical mind to all rational plans to remake society in man’s image—the modern Towers of Babel. Whether it’s a Great Society or a New Deal, rationalism in politics always runs roughshod over the existing practices, associations, and political traditions that men have developed to make life easier: “The Rationalist has rejected in advance the only external inspiration capable of correcting his error; he does not merely neglect the kind of knowledge which would save him, he begins by destroying it. First he turns out the light and then complains that he cannot see, . . . In short, the Rationalist is essentially ineducable; and he could be educated out of his Rationalism only by an inspiration which he regards as the great enemy of mankind. All the Rationalist can do when left to himself is to replace one rationalist project in which he has failed by another in which he hopes to succeed. Indeed, this is what contemporary politics are fast degenerating into: the political habit and tradition, which, not long ago, was the common possession of even extreme/ opponents in English politics, has been replaced by merely a common rationalist disposition of mind.”

To the practical American way of thinking, Oakeshott’s armchair philosophy may seem too simplistic. We want a plan of action, a set of marching orders. We want to do something, even if it’s wrong. But as Oakeshott points out, every time social engineers have tried to solve problems through “rational politics,” they have only created new ones that are worse. By contrast, most of the liberties we enjoy were developed during a long historical process, totally outside the offices of the world’s central governments. New freedoms that we experience as part of the computer and information age are coming not from rational political planning, but from private sector initiatives and voluntary associations.

Oakeshott’s laissez-fake philosophy may work in societies with long traditions of individual liberty, such as the United States and Great Britain. But what about societies with no recent memory of freedom? We are already seeing how difficult it is for the Eastern European countries to free up their economies and people. What Oakeshott might suggest is that freedom in these countries cannot develop overnight, but only through many years in which existing institutions—the “black market,” religious groups, the family, voluntary associations—are cultivated and allowed to take over spheres of life once dominated by government.

Years ago, Oakeshott predicted the breakup of the Soviet empire, as he felt the human spirit could only be suppressed for so long. (Unlike many economic historians, Oakeshott finds the origins of modern freedom in the works of the artists and artisans of the Renaissance.) But he was also concerned that the nations which cast off Communism might replace one form of rational politics for another, and that the West might unwittingly aid in such folly. This book can help us avoid that temptation. 

When our sixth child was born a few months ago, we were distressed to hear that she might have a problem with her hips. Visions of a baby in braces raced through our minds. Trying to be the strong husband, I said to my wife, “Don’t worry, we’ll get the best for Priscilla.”

Our pediatrician advised us to have ultrasound testing to see if Priscilla’s legs were joining properly with the hip sockets. He sent us to a hospital especially for children—the Alfred I. dupont Institute in Wilmington, Delaware. I didn’t know it at the time, but I was in for a lesson in economics that I’ll never forget.

The hospital is on the former estate of American inventor, businessman, and philanthropist Alfred dupont, whose money founded the Institute. A remarkable man from a remarkable family, he inherited a substantial fortune and built it into an even larger sum. Like most duPonts, he worked his way up from the bottom, learning the family business in the powder mills along the Brandywine River. In his later years, he decided to move south and spent his time rebuilding Florida’s economy after the boom and bust real estate deals of the 1920s. His holdings eventually included forests, banks, railroads, and real estate. His rule: invest only for long-term growth. In fact, duPont didn’t expect to reap rewards from his investments during his lifetime.

When he died in 1935, he left an estate of some $70 million. Nearly half—$30 million—was consumed in state and Federal inheritance taxes. After leaving a few million to his wife and children, the remainder endowed the Nemours Foundation, which was charged with opening a hospital devoted to children. For nearly 60 years, the foundation has been benefiting children, operating with funds earned from profitable investments in America’s free enterprise system. The hospital, which has never turned a child away, represents the best in free enterprise and philanthropy.

DuPont’s grounds and mansion are beautiful, but it was the hospital that astonished me. It is a cross between Disney World and a high-tech research center. The receptionist told us that it was especially designed to be non- threatening to children. The interior of each wing is decorated in a different color—bright red, green, yellow, or blue.

We carried little Priscilla past playroom after playroom and finally reached the ultrasound room. With its soft lighting and colorful aquarium, the room was far from institutional. On the wall were posters of Pinocchio, Snow White, Bambi—cartoon creations from the studio of American artist-entrepreneur Wait Disney. Suspended from the ceiling were more cartoon characters, originally marketed to make a profit for their creators, but who have since delighted—and sometimes comforted—a generation of Americans. Here, also, were doctors and nurses who really cared. Little Priscilla was too young to be impressed by all this, but it sure eased my mind!

The ultrasound imaging took only a few minutes. As we waited for the results and the specialist’s opinion, I picked up some literature and began reading more about this wonderful hospital.

At dupont a pre-operative visit helps young surgical patients feel at home and overcome their fears about the procedures they will undergo. They meet “Mr. Teddy Bear,” another patient (whose intravenous tube is connected to a bottle of “Hospital 7-Up”), receive a “real” surgical mask, and may take a ride in the red wagon that will transport them to the operating room. As a result, patients are happier, calmer, and easier to help—and so are the parents, who take these things harder than the children do.

On surgery day, the family remains together in a cheerfully decorated room. The patient may play, read, or watch TV until—with a favorite toy or blanket in hand—he is taken to surgery. After surgery, the child is immediately reunited with his parents. More important, the adults are often relieved to find that every anesthesiologist is also certified in pediatrics.

Searching for Tomorrow’s Cures

The Nemours Foundation is funding a number of research projects that will benefit the next generation of children. The Institute already is a leader in Lyme disease detection and treatment. Institute scientists also are searching for the causes of muscular dystrophy. So far, researchers have discovered that the chemical compound hemin, when injected into laboratory animals, dramatically increases muscle strength and significantly reduces the invasion of connective tissue cells seen in the disease. Human tests will follow.

The Institute also is adapting computer technology to assist disabled children. Portable robotic arms are being developed that can be placed at a work station or on the side of a wheelchair. These arms then will be programmed to perform specific functions.

Computer devices also are being developed to aid children with speech and hearing impairments. Projects include a telephone system for the deaf that uses video sign language and a speech synthesizer that reflects the age and personality of the user.

The Institute’s ultimate goal is to “prolong and improve the lives of children everywhere.” But the Institute can’t do that without the benefits of a free society. A free society generates the wealth needed to fund continued treatment and research, and provides the climate needed for innovation, discovery, and experimentation_

Today, Alfred duPont’s Nemours Foundation continues to invest in profit-seeking enterprises, with the proceeds supporting the hospital’s programs. Interest, profits, capital accumulation—things so disparaged by Marx and his followers—are what make the duPont Institute possible. Destroy the profit motive and you throw the baby out with the bath water. Destroy the businesses in which the Nemours Foundation invests and you destroy the Institute. The more business is regulated, the fewer dividends are available to maintain and expand the hospital.

After about a half hour, two doctors came in and gave us their analysis of the ultrasound: Priscilla was okay. There would be no need for a cast, a brace, or any treatment whatsoever. Her hip sockets were fine.

As we were leaving, I asked a hospital administrator if there were any hospitals like this outside the Western world.

“None,” she said.

“Have you ever had visitors from Eastern Europe or the Soviet Union?” I asked.

“Yes, as a matter of fact we had some visitors from Russia just a few weeks ago. When they saw what we had here, they wept.”

These visitors knew that they could never have such a hospital until their country is free. No amount of central planning, Western subsidies, socialized medicine, or national health insurance could create a dupont Institute. Only the continuing vitality of a free society, where people can innovate, create, invest, and serve others as they choose, makes such an institution possible.

Not long ago, I had the opportunity of hosting Marcos, a representative of “Free Angola,” at my school. His message on the Angolan people’s 15-year struggle to bring the Marxist, Cuban-backed government of Angola to the negotiating table was so well received that ours was probably the only high school parking lot in the country with student cars sporting “Free Angola” bumper stickers.

After his speech, I took him out to lunch. Our conversation ranged from politics to family to African and American cuisine. The longer we talked, the more i was struck by the similarities between us. We were the same age, knew many of the same people, shared many of the same ideas. The missionary school where he was educated was much like the school where I serve as headmaster, both seeking to teach the best in the Western tradition to their students.

We found that we both believed very strongly in the private property order. A recent paper on what Marcos’ organization proposes for Angola sounds like something I could have written: “Private initiative must be encouraged for the success of any free society. The individual must have the freedom to choose his own destiny . . . . When the state begins to wield control over the economy, the consequence is often rationing of essential products with little or no freedom of choice for the consumer . . . . The state should not try to substitute or compete with private businesses . . . . Every individual should have the right to buy, sell, or freely exchange his assets.”

Marcos then shared with me his hopes for the future in such a society: “When my country is free, I hope to open a travel agency and show people from all over the world my beautiful country.”

“When my country is free.” I’ve never forgotten those words, for no matter how much Marcos and I had in common, I was free, and he was not. And that made all the difference in the world.

As a child growing up in a free country, I had my choice of jobs—picking blueberries, pumping gas, washing cars, working in the family business. Marcos, on the other hand, had to live at a subsistence level. Without the opportunities created by a free market economy, coupled by the disruption of civil war, there was little Marcos could do to lift himself up by his own sandal-straps. When I reached college age, there were nearly 4,000 col leges in America from which to choose. Marcos had no choice: his education was cut short by the war.

I literally married the girl next door, in a church three blocks from land my great-grandfather farmed. Marcos married a fellow Angolan far from home, in Portugal, both virtual exiles from their country. His parents have never met his wife. Whereas I can see my parents every day, Marcos hasn’t seen his family in over 10 years—when the battle lines were drawn, they were on the wrong side. As Marcos told me, “My own mother wouldn’t recognize me.”

Most Americans can pursue any line of business they want, and invest in markets all over the world. Marcos, however, must work for the liberation of his country before he can even think about making his first kwanza, the basic unit of currency in Angola. In a word, Marcos’ life is on hold until his country is free.

“When my country is free.” How many other millions of people—both today and in the past—have whispered these same words? How many Chinese, East Europeans, Russians, and Angolans like Marcos have harbored these same thoughts? Sadly, we’ll never know how many Thomas Edisons, Jonas Salks, Marie Curies, or Florence Nightingales—people whose discoveries and services have enriched mankind—have been oppressed by coercive governments. We’ll never know how much Eastern Europe—with its traditions of music, literature, and industry—could have contributed to the world from 1945 to 1990. The long dark night of Communism saw to that. And we’ll never know how many Angolans were kept from developing their country into an advanced nation with quality medical care, modern agriculture, and business enterprises.

The world is indeed a much poorer place because people cannot vacation in Angola, study Angolan wildlife, wear Angolan diamonds, drink Angolan coffee, or eat Angolan fish. (Once a staple for even the poorest Angolans, fish is now a luxury.) In turn, the foreign exchange generated from such products would raise the standard of living of all Angolans and give them opportunities they never dreamed of.

Today, events are unfolding in Angola that may make Marcos’ dream a reality. In accordance with a peace treaty signed in Lisbon last spring, the warring factions in Angola are putting down their arms and getting ready to compete in this former Portuguese colony’s first free elections, to be held in 1992. It is a rare opportunity in a nation that once exported 30 percent of all Africa’s slaves.

For those of us who believe in freedom, now is no time to forget about Angola. Although Angolans are optimistic about the future, there are many pitfalls along the way, and the situation could quickly deteriorate. If Angola is to become a free society, free marketeers like Marcos will need moral, educational, and investment support from friends in the West.

For over 100 years, the name Hong Kong has been synonymous with free enterprise. Today, the label “Made in Hong Kong” can be found just about anywhere, from clothing stores in Manhattan to grit shops in London, as the raw materials of the world are turned into finished products in Hong Kong’s busy shops. To millions of tourists, Hong Kong beckons as one of the world’s most alluring bargain counters. Here Swiss watches—at less than Swiss prices—compete with duty-free Japanese cameras and stereo equipment, and silks from Thailand glow beside bolts of Italian cloth and Harris tweed. As a result, little Hong Kong enjoys one of the highest standards of living in all Asia, second only to Japan and perhaps Singapore.

In 1987, Hong Kong—with 14 times as many people per square mile as Japan—had a per capita income of $8,260. Just a few miles away, across the Sham Chun River—in Communist China—people of the same racial stock, living in the same subtropical climate on shores washed by the same South China Sea, were able to produce a per capita income of only $300. (Incredibly, even some of that paltry sum was fueled by Hong Kong’s economy, which both invests in and purchases from the mainland.)

What is it that has turned what a skeptical Lord Palmerston, in the 19th century, called “a barren rock” into such an economic powerhouse? What is it that has made this tiny Crown Colony (now a dependency) of the British Empire into one of the “Asian dragons” feared by protectionists in the world’s largest nations?

The answer, pure and simple, is free market economics and limited government. Throughout most of its history, Hong Kong has had no tariffs or other restraints on international trade. It has had virtually no government direction of economic activity, no minimum wage laws, no fixing of prices, and no capital gains taxes. Despite some government intervention—in building public housing for refugees from Communist China- the British officials who govern Hong Kong have confined their role to that of umpire. They enforce the rules of the game, but do not help one side or another gain an economic advantage. As a result of these laissez-faire policies, Hong Kong has flourished.

The story of how Hong Kong came to be the “emporium of the East” is a fascinating tale of how limited government and free markets have combined to elevate one corner of China far above all the rest. In that history also lie insights for other nations whose greater resources have remained untapped because of socialistic eco nomic policies. Now, when the world is on the verge of losing this modern exemplar of free markets and limited government—its sovereignty is scheduled to be transferred to Communist China in 1997—it is important to understand the forces that made Hong Kong what it is today. For unless right action is taken—action consistent with its history of limited government and free enter-prise—Hong Kong’s free-wheeling, highly creative society will be no more.

Throughout most of Chinese history, the island of Hong Kong and the nearby shore was the site of several small fishing villages that maintained a livelihood by fishing and cultivating the scanty soil. Hong Kong’s greatest asset—in fact, its only natural asset—was its magnificent, almost landlocked harbor, which served as a haven from the dreaded tai-phoos (“big wind”—the origin of the English word typhoon) of the South China Sea. For many years, it was used almost exclusively by pirates. (The name Hong Kong, in Cantonese, means “fragrant harbor.”) Thus, for nearly 2,000 years, the only substantial form of wealth in Hong Kong was that stolen and brought there by pirates.

The British in Hong Kong

When the British discovered Hong Kong in the 1800s—her merchant-explorers seeking to obtain Chinese tea- -they immediately recognized its value and set up trading posts there to be near Canton. Unfortunately, friction soon developed between the British and Chinese, resulting in the Opium War of 1839—42. Negotiations to prevent the war were hindered by the fact that all Europeans were considered barbarians by Chinese officials, with whom direct communication was forbidden, and by the continued smuggling of opium into China by British merchants. As a result of the Treaty of Nanking, which ended the fighting, Britain received Hong Kong Island “in perpetuity” so that her merchants might have “a port whereat they may careen and refit their ships.” (A subsequent treaty in 1860 gave Kowloon Peninsula to Britain while in 1898 China leased the New Territories to Britain for 99 years.)

News of the end of “hostilities” (war was never declared) was greeted with much satisfaction in England, where the ideas of free trade and non-intervention were gaining popularity. There was less rejoicing, however, at the news that the British negotiator, Sir Henry Pottinger, had exceeded his instructions and obtained Hong Kong. (The British government said it would have been satisfied with a treaty guaranteeing the security of its merchants.) Ironically, the ascendancy of the disciples of Adam Smith in England made the government hesitant to assume any more colonial responsibilities.

Yet it was precisely because free-trade ideas were on the rise that Hong Kong, from the very beginning, was set on its course as a model of free enterprise: Hong Kong would be accepted into the Empire not as a “Gibraltar of the East,” as some military strategists wanted, but as an emporium of trade between East and West—a free port. The flee-traders viewed the British Empire not as a military empire held together by the force of arms, but as a commercial empire held together by millions of mutually beneficial relationships. These were the kinds of libertarian attitudes that helped make the period from 1815 to 1914 one of the most peaceful centuries in the history of the world.

In the early years, Hong Kong was viewed as little more than an arid rock. Lord Palmerston, the foreign minister, called it “a barren rock with nary a house upon it,” while Prince Albert is supposed to have laughed when he heard that the mighty British Empire had obtained little Hong Kong. And when provoked to strong language, fashionable London ladies cried, “Go to Hong Kong!”

In defense of his actions, Pottinger wrote: “. . . the retention of Hong Kong is the only single point in which I intentionally exceeded my modified instructions, but every single hour I have passed in this superb country [China] has convinced me of the necessity and desirability of our possessing such a settlement as an emporium for our trade and a place from which Her Majesty’s subjects in China may be alike protected and controlled.”

Hong Kong probably would have remained undeveloped, and Sir Henry would have been discredited, had it not been for its status as a free port, where virtually no duties or tariffs would be collected. Not having tariffs would provide several key advantages that would guarantee prosperity.

First, inefficient industries would be quickly eliminated, since Hong Kong entrepreneurs would be able to respond to the true vicissitudes of the market; no buggy whip factory would outlive its usefulness shielded by a “protective” tariff.

Second, the market would direct the people of Hong Kong to do what they do best. For example, although Hong Kong has one of the world’s best harbors, it has little farmland. No matter how high Hong Kong might place tariffs on foodstuffs to “protect” and encourage its own farms, it would never be able to become self-sufficient in agriculture (even though today its capitalist farmers harvest eight crops per year). Instead, Hong Kong would do better importing food—at the lowest cost possible—and servicing ships in its excellent harbor to pay for it. This is indeed what happened.

Third, free trade would allow the people of Hong Kong to buy commodities and raw materials as cheaply as possible. The money saved by not paying a tariff, duty, or tax could be used to buy additional products and materials and thus realize a higher standard of living than otherwise would be possible. Instead of sending the fruits of their labor to Great Britain in the form of customs duties, Hong Kong consumers and businessmen would be able to spend and invest this “saved” money as they saw fit. French economist Frederic Bastiat went so far as to refer to such “savings” as a gift: “When a product—coal, iron, wheat, or textiles—comes to us from abroad, and when we can acquire it for less labor than if we produced it ourselves, the difference is a gratuitous gift that is conferred upon us.”^[4] Hong Kong, with few natural resources, would depend on tariff-free “gifts” for its livelihood.

Finally, since resources could be obtained more cheaply, production could be enhanced, thus satisfying consumers, further improving quality and lowering costs, and creating more jobs.

An Oasis of Freedom

From the very outset, the British sought to remain true to their intention of setting up Hong Kong as an oasis of freedom—and not just for businessmen. Captain Charles Eliot, the military governor of Hong Kong, issued a proclamation that guaranteed protection for all the people and assured them that they were “further secured in the free exercise of their religious rights, ceremonies, and social customs.” The colony was charged with operating a limited and frugal government: the principle was stated that the British government “expects that the local revenue will be adequate to defray . . . all the . . . expenses of the government of Hong Kong,” and that there should be “a strict observance of an enlightened frugality in every branch . . . of the local government.”

Having no tariff income, Hong Kong’s government was financed by the sale or lease of land. As far as the opium trade was concerned, the British government set forth the following policy: “The British opium smuggler must receive no protection or support, and all officials must hold aloof from so discreditable a traffic.” The first ordinance passed in Hong Kong forbade all forms of slavery. This made conditions in Hong Kong consistent with the rest of the Empire, which had abolished slavery throughout its realms in the early 1800s.

Soon Victorian voluntarism began to meet the needs of the people of Hong Kong. Churches and places of worship were among the first buildings to be constructed. The London Missionary Society, under the leadership of Dr. James Legge, built the Union Chapel in 1845. American Protestant missionaries were particularly active. The first church was built by the American Baptists, followed soon after by the Catholic Church of the Immaculate Conception. The Moslems erected a mosque, while the Chinese began building their own temples. In 1849, the Anglican Church was completed, and an Anglican bishopric was established completely through private endowment. Societies of all kinds were set up. A Chinese branch of the Royal Asiatic Society, an amateur dramatic club, St. Paul’s College, the Hong Kong Chamber of Commerce, and private schools for both Chinese and British were created by voluntary effort.

Although Hong Kong was a place for individualism, the flip side of individualism is not a wanton disregard for the needs of others, but the principle of voluntarism. Such voluntary and philanthropic efforts were consistent with the policies of English free-traders, who thought that each colony should be able to fend for itself and create its own services.

Those who decry Western values—including the classical liberal political and economic tradition that developed in the West—should take note of the British treatment of the thousands of Chinese who flocked to live under the British flag. Tossed to and fro by the whims of despotic mandarins, quarreling war lords, and the corrupt Manchu Dynasty, the Chinese found both opportunity and near equality with the British in Hong Kong. The appointment of Chinese to responsible positions was agreed to as early as 1855. In 1857, Chinese were allowed to qualify as lawyers. In 1858, Chinese were permitted to serve as jurymen, allowed to register their ships under the British flag (if they held land in Hong Kong), and wills drawn up in accordance with Chinese usage were considered valid in court. The British also extended equal treatment to the boat people, or Tanka. For centuries, Chinese law forbade them to settle ashore, marry landowners, or take government examinations. Such discrimination ended under British rule and the Chinese population grew from 20,338 in 1848 to 121,825 in 1865.

Despite all the advantages the British gave to the Chinese, it was no one-way street. In 1894, Lord Ripon wrote to Governor Sir William Robinson: “. . . under the protection of the British Government, Hong Kong has become a Chinese rather than a British community . . . and Chinese settlement . . . has been one main element in its prosperity.”

Throughout the 19th century, Hong Kong’s business pursuits were centered around shipping and trade. In 1881, over 3200 ships entered Hong Kong. That same year over 24,000 Chinese junks also passed through the harbor. To service these ships, there were 400 ship chandler shops, 20 rope factories, 93 boat works, two cannon foundries, and one dry dock. To handle all the transactions that went along with these services, many banks were founded or established in Hong Kong, including the Oriental Bank; the Mercantile Bank of India, Australia, and China; the Hong Kong and Shanghai Bank; and the United Service Bank.

Into the 20th Century

In the 20th century, a new phase of Hong Kong history began: over the next 80 years Hong Kong would become a refuge for millions of Chinese fleeing persecution, instability, and violence, a home to millions of people, an industrial dynamo, as well as the site of a great airport built on land reclaimed from the sea.

The influx of refugees came in six major waves in the 20th century. The first wave came in 1911, as a result of the revolutions that overthrew the Manchu Dynasty and established the Republic of China. The second wave came in 1937, after Japan invaded China. During World War II, Hong Kong was captured by Japan. Cut off from world markets, the island languished. More than one million Chinese left Hong Kong and returned to mainland China. Since both were ruled by the heavy hand of Japanese militarism, there was little advantage to staying in Hong Kong. The third wave began in 1949 when the Communists took over China.

A fourth wave of immigration occurred in 1962, when widespread starvation—the result of Communist China’s socialist land-use policies—forced thousands of Chinese to emigrate. In one 25-day period in 1962, Communist Chinese border guards allowed 70,000 Chinese to walk to freedom in Hong Kong. The Cultural Revolution in the late 1960s sent another human wave into Hong Kong, while the 1970s saw over 100,000 Vietnamese boat people find refuge there. Fourteen thousand were given permanent resident status, while 100,000 were permitted to work in Hong Kong pending transfer to permanent homes abroad.

In the years after World War II, Hong Kong took advantage of the human capital from Communist China, and began producing goods that appeared in markets all over the world. With few raw materials, no local sources of power such as coal and oil, and shortages of land and water, Hong Kong developed one of the fastest growing economies in the world.

From 1,050 separate industries, employing 64,000 people in 1947, the figure rose to 17,239 industries employing 589305 in 1970. Most of the factories were still family concerns, using their own “capital”—including family members’ hard work—to produce quality goods at low prices. By 1970 the textile industry employed 30 percent of the work force and produced 40 percent of total exports. Plastics accounted for 12 percent of exports; electronics, 10 percent. Highly developed countries, such as Great Britain and America, be gan “protecting” themselves by asking Hong Kong to impose “voluntary” quotas on many of its exports. By this time, Hong Kong’s trade volume had passed that of much larger countries, such as New Zealand.

In the early 1980s, realizing that socialism had failed to produce a healthy economy, the People’s Republic of China established four Special Economic Zones where its people could learn the world’s economic ways. All the zones were set up in southeast China, and for good reason: to be near Hong Kong. Since that time, investment capital, visitors, and Hong Kong know-how have crossed the border to quicken the pace of Chinese economic development. Shenzhen, the largest and most successful of the economic zones, is located directly across the border. In 1983, of some 1,600 government-approved contracts, about 50 percent were with Hong Kong firms. Short of space, Hong Kong entrepreneurs were using land in China for everything from country clubs to cemeteries.

Today, little Hong Kong—which fuels its own vibrant economy as well as much of China’s—has more than 150 banks, four stock exchanges, and is the world’s third largest financial center. It is the third largest diamond and gold trading center, the largest manufacturer of toys, and the second largest maker of watches. It has an infant mortality rate lower than that of either Britain or the United States, and one of the highest protein- consumption rates in the world. In the early 1980s, during a worldwide recession, Hong Kong had a maximum 5.2 percent unemployment rate when Britain’s was more than twice as high. Over 2 million tourists visit annually, to shop in this oasis of freedom where East meets West. Chinese author Han Su Yin described Hong Kong as “the deep roaring bustling eternal market . . . where life and love and souls and blood and all things made and grown under the sun are bought and sold and smuggled and squandered.” Fueled by free trade, Hong Kong’s growth rate from 1975 to 1987 was 11.8 percent, while Communist China’s was only 4.3 percent.

A recent Fodor’s tourist guide book to Hong Kong and Macau has this to say about “Doing Business”: “Hong Kong is one of those rare places on earth that plays the free-trade game according to the classical rule . . . . A national of any country may do business or set up business (so long as it is legal) . . . . The rules of business in Hong Kong are few. Whether you are a visiting businessperson or a potential entrepreneur, you will not go far wrong if you remember this: You are in a ‘free country.’ If you succeed, you can take all the credit; if you fail, you must take all the blame. The authorities give some help (but no subsidies, tax reliefs, or featherbeds); what is more important, they don’t hinder you . . . . There is no capital gains tax . . . income arisen from abroad goes tax free . . . . The Hong Kong salaries tax return is one simple sheet . . . . There is no income tax withholding . . . . The government’s intervention in business affairs in minimal.” Milton Friedman has called Hong Kong “the modern exemplar of free markets and limited government.”

No Utopia

Hong Kong is no utopia: never has been, never will be. A nexus between East and West, it has always been a center of opium trade—first legal, now illegal. It is one of the most crowded places on earth, and hence, there is little tolerance for new refugees. There are great disparities between rich and poor. Yet there appears to be little discontent about the division of wealth because of the opportunity for advancement. Yesterday’s shanty dweller lives in a resettlement block today, tomorrow—if he works hard—he may live in upscale Repulse Bay.

Unfortunately, Hong Kong’s days are numbered. In 1984, Britain signed a Joint Declaration with Communist China, turning over sovereignty of the New Territories (over 90 percent of the colony) to China in 1997. China guaranteed that the capitalist system would last for at least 50 years and that democratic institutions would be preserved. Their slogan for the union: “one country, two systems.”

Hong Kong has not reacted well to the negotiations or the settlement. From 1981 to 1983, stock-market prices fell 50 percent. The budget for 1983-84 incurred a deficit, something unheard of in Hong Kong, which believes in surpluses. Billions of dollars flowed out of Hong Kong, so much that neighbors like the Philippines, Thai land, and Malaysia set up programs to attract its panic money.

Hong Kongians had hoped that Britain would give them British citizenship or the “right of abode” on British soil if they had to flee the Communists. So far, the British haven’t acted. Unlike people in “dependencies” belonging to other countries, those in British dependencies don’t automatically have British citizenship. As a result, even before the massacres in Tiananmen Square, a mass exodus began. In 1986, 19,000 residents left; in 1987, 30,000; in 1988, 45,000.

The exodus is carrying away some of the city’s most productive citizens—professionals and mid-die managers. Seventy-five percent of all pharmacists are planning to emigrate before China takes over in 1997; shortages among police, fire, and judicial officers are already growing serious. After 1984, many people began leaving Hong Kong for a time to live in countries like Canada, the U.S., and Australia in order to qualify for a foreign passport. Then they can return to Hong Kong safe in the knowledge that if things go bad, they have a refuge.

The massacre in Tiananmen Square and the deception that followed have only confirmed Hong Kong’s fears. Polls taken immediately after the Beijing massacre indicate that most Hong Kongians don’t want to leave—Hong Kong is their home. Yet to stay would place them under the same coercive government from which they and their parents fled. “The majority of people in Hong Kong feel helpless,” says Jonathan Chao, director of the Chinese Church Research Center there. One prominent lawyer went so far as to say, on Hong Kong television, that “For England to give 5.5 million people to Communist China is like giving 6 million Jews to the Nazis.” As this is being written, delegations from Hong Kong are appealing to Great Britain for the right to emigrate and live there.

Supporting the idea that all Hong Kongians should be given British citizenship, Frank Citing, writing in The Wall Street Journal, explains:

“No other democracy denies a dependent people the right to self-determination or forces them to live under a Communist government.

“No other democracy issues passports that do not entitle their holders to enter the country that issued the passports.

“When British Gibraltar and the Falklands were threatened with takeover by another country, Britain offered the people protection by giving them full-citizenship rights.

“Hong Kong is the only exception. The British are now preparing to hand over its 5.5 million people to a Communist government. The decent thing for Britain to do is to restore the citizenship rights of the people in Hong Kong. It is the only way remaining to salvage Hong Kong and restore British honor.”

As Ching points out, even if the British acknowledge that the land was on a lease, the people are not. As such, they should be given full citizenship rights—much as the U.S. has extended rights to Puerto Ricans, and Holland has given full rights to her dependents in the Netherlands Antilles and Aruba. British citizenship would be something the Communist Chinese couldn’t take away, if and when they dismantle Hong Kong’s free market system. It might even insure that China wouldn’t tamper with Hong Kong’s market.

In the light of Tiananmen Square, the British should use every means to renegotiate the joint accords, telling the Chinese that what happened this summer was not acceptable. The Tiananmen Square massacre—set against the backdrop of China’s historic political instability and isolationism—makes it inconceivable that Communist China would allow Hong Kong to continue its Western contacts—including Western newspapers with their stock market reports, its aviation and shipping treaties, its checkbook accounts (which are not permitted in Communist China) and myriads of other capitalistic institutions.

China’s Communist regime is trapped in a catch-22 situation: the only thing that can save its economy—a free market such as exists in Hong Kong—is the very thing that will reduce the regime’s totalitarian powers by giving power to entrepreneurs and consumers. So far, whenever Communist leaders have had to choose between a better economy or keeping power concentrated in their hands, they have always chosen the latter. To allow Hong Kong to continue “business as usual” after 1997 would guarantee a heavy flow of ideas on liberty, and that, as the world saw last summer, the present Chinese government cannot tolerate. It was apparently Deng Xiaoping who ordered the army to fire on the students, the same man who signed the Hong Kong accord with Margaret Thatcher.

Ironically, Communist China would be the chief beneficiary of continued British sovereignty over Hong Kong. Hong Kong accounts for at least 35 percent of China’s annual foreign exchange earnings. China also benefits from Hong Kong’s financial services, port facilities, and skills in marketing Chinese products. All this will most likely change when Hong Kong passes into Chinese hands. China threatens to kill the goose that lays the golden egg.

Britain needs to act quickly. To lose Hong Kong as an outpost of freedom in 1997, with its 5.5 million people, would be tragic indeed.

The year 1989 marks the 200th anniversary of the French Revolution. To celebrate, the French government is throwing its biggest party in at least 100 years, to last all year. In the United States, an American Committee on the French Revolution has been set up to coordinate programs on this side of the Atlantic, emphasizing the theme, “France and America: Partners in Liberty.”

But were the French and American Revolutions really similar? On the surface, there were parallels. Yet over the past two centuries, many observers have likened the American Revolution to the bloodless Glorious Revolution of 1688, while the French Revolution has been considered the forerunner of the many modern violent revolutions that have ended in totalitarianism. As the Russian naturalist, author, and soldier Prince Petr Kropotkin put it, “What we learn from the study of the Great [French] Revolution is that it was the source of all the present communist, anarchist, and socialist conceptions.”^[1]

It is because the French Revolution ended so violently that many Frenchmen are troubled about celebrating its 200th anniversary. French author Leon Daudet has written: “Commemorate the French Revolution? That’s like celebrating the day you got scarlet fever.” An Anti-89 Movement has even begun to sell mementos reminding today’s Frenchmen of the excesses of the Revolution, including Royalist black armbands and calendars that mock the sacred dates of the French Revolution.

The French should indeed be uneasy about their Revolution, for whereas the American Revolution brought forth a relatively free economy and limited government, the French Revolution brought forth first anarchy, then dictatorship.

Eighteenth-century France was the largest and most populous country in western Europe. Blessed with rich soil, natural resources, and a long and varied coastline, France was Europe’s greatest power and the dominant culture on the continent. Unfortunately, like all the other countries of 18th-century Europe, France was saddled with the economic philosophy of mer-cantilism. By discouraging free trade with other countries, mercantilism kept the economies of the European nation-states in the doldrums, and their people in poverty.

Nevertheless, in 1774, King Louis XVI made a decision that could have prevented the French Revolution by breathing new life into the French economy: he appointed Physiocrat Robert Turgot as Controller General of Fi nance. The Physiocrats were a small band of followers of the French physician Francois Quesnay, whose economic prescriptions included reduced taxes, less regulation, the elimination of government-granted monopolies and internal tolls and tariffs—ideas that found their rallying cry in the famous slogan, “laissez-faire, laissez-passer.”

The Physiocrats exerted a profound influence on Adam Smith, who had spent time in France in the 1760s and whose classic The Wealth of Nations embodied the Physiocratic attack on mercantilism and argued that nations get rich by practicing free trade.^[2] Of Smith, Turgot, and the Physiocrats, the great French statesman and author Frederic Bastiat (18011850) wrote: “The basis of their whole economic system may be truly said to lie in the principle of self-interest . . . . The only function of government according to this doctrine is to protect life, liberty, and property.”^[3]

Embracing the principle of free trade not just as a temporary expedient, but as a philosophy, Turgot got the king to sign an edict in January 1776 that abolished the monopolies and special privileges of the guilds, corporations, and trading companies. He also abolished the forced labor of the peasants on the roads, the hated corvée. He then dedicated himself to breaking down the internal tariffs within France. By limiting government expense, he was able to cut the budget by 60 million livres and reduce the interest on the national debt from 8.7 million livres to 3 million livres.

Had TUrgot been allowed to pursue his policies of free trade and less government intervention, France might very well have become Europe’s first “common market” and avoided violent revolution. A rising tide would have lifted all ships. Unfortunately for France and the cause of freedom, resistance from the Court and special interests proved too powerful, and Turgot was removed from office in 1776. “The dismissal of this great man,” wrote Voltaire, “crushes me . . . . Since that fatal day, I have not followed anything . . . and am waiting patiently for someone to cut our throats."^[4] Turgot’s successors, following a mercantilist policy of government intervention, only made the French economy worse. In a desperate move to find money in the face of an uproar across the country and to re-establish harmony, Louis XVI agreed to convene the Estates-General for May 1789. Meanwhile, the king’s new finance minister, Jacques Necker, a Swiss financial expert, delayed the effects of mercan-tilism by importing large amounts of grain.

On May 5, the Estates-General convened at Versailles. By June 17, the Third Estate had proclaimed itself the National Assembly. Three days later, the delegates took the famous Tennis Court Oath, vowing not to disband until France had a new constitution.

But the real French Revolution began not at Versailles but on the streets of Paris. On July 14, a Parisian mob attacked the old fortress known as the Bastille, liberating, as one pundit put it, “two fools, four forgers and a debaucher” The Bastille was no longer being used as a political prison, and Louis XVI had even made plans to destroy it. That made little difference to the mob, who were actually looking for weapons.

Promising the guards safe conduct if they surrendered, the leaders of the mob broke their word and hacked them to death. It would be the first of many broken promises. Soon the heads, torsos, and hands of the Bastille’s former guardians were bobbing along the street on pikes. “In all,” as historian Otto Scott put it, “a glorious victory of unarmed citizens over the forces of tyranny, or so the newspapers and history later said."^[5] The French Revolution had begun.

Despite the bloodshed at the Bastille and the riots in Paris, there was some clear-headed thinking. Mirabeau wanted to keep the Crown but restrain it. “We need a government like England’s,” he said.^[6] But the French not only hated things English, they even began to despise their own cultural heritage—the good as well as the bad. On October 5, the Assembly adopted the Declaration of the Rights of Man and the Citizen—a good document all right, but only if it were followed.

Twenty-eight days later, the Assembly showed they had no intention of doing so: all church property in France was confiscated by the government. It was the wrong way to go about creating a free society. Certainly the Church was responsible for some abuses, but seeking to build a free society by undermining property rights is like cutting down trees to grow a forest. Such confiscation only sets a precedent for further violation of property rights, which in turn violates individual rights—the very rights of man and the citizen the new government was so loudly proclaiming. By confiscating church property—no matter how justified—France’s Revolutionary leaders showed that they weren’t interested in a true free society, only in one created in the image of their own philosophers. As Bastiat later pointed out, they were among the modern world’s first social engineers.

Soon France began to descend into an abyss in which it would remain for the next 25 years. In towns where royalist mayors were still popular, bands of men invaded town halls and killed city magistrates. Thousands of people sold their homes and fled the country, taking with them precious skills and human capital. Francois Babeuf, the first modern communist, created a Society of Equals dedicated to the abolition of private property and the destruction of all those who held property. The king’s guards were eventually captured and killed. The Marquis de Sade, from whom we get the term sadism, was released from prison. The Paris Commune took over control of Paris.

Fiat Money Inflation

The actions of the government were even more radical than those of the people at large. In order to meet the continuing economic crisis, the Assembly resorted to paper money—the infamous assignats, backed ostensibly by the confiscated church property. Although most of the delegates were aware of the dangers of paper money, it was thought that if the government issued only a small amount—and that backed up by the confiscated property—the assignats would not create the kind of economic disaster that had accompanied the use of paper money in the past.

But as had happened again and again through history, the government proved unable to discipline itself. As Andrew Dickson White put it in his Fiat Money Inflation in France: “New issues of paper were then clam-ored for as more drams are demanded by a drunkard. New issues only increased the evil; capitalists were all the more reluctant to embark their money on such a sea of doubt. Workmen of all sorts were more and more thrown out of employment. Issue after issue of currency came; but no relief resulted save a momentary stimulus which aggravated the disease.”^[7]

Writing from England in 1790, long before the French inflation had done its worst, Edmund Burke saw the danger of fiat currency. According to Burke, issuing assignats was the government’s pat answer to any problem: “Is there a debt which presses them? Issue assig-nats. Are compensations to be made or a maintenance decreed to those whom they have robbed of their free-hold in their office, or expelled from their profession? Assignats. Is a fleet to be fitted out? Assignats . . . . Are the old assignats depreciated at market? What is the remedy? Issue new assignats.” The leaders of France, said Burke, were like quack doctors who urged the same remedy for every illness.

Burke saw in the French Revolution not a decrease in the power of the state, but an increase in it: “The establishment of a system of liberty would of course be supposed to give it [France's currency] new strength; and so it would actually have done if a system of liberty had been established.” As for the confiscation of property—first that of the Catholic Church then that of anyone accused of being an enemy of the Revolution—Burke said: “Never did a state, in any case, enrich itself by the confiscation of the citizens.”^[8]

But the issuing of assignats was only the beginning. In the spring of 1792, the first Committee of Public Safety was established, charged with judging and punishing traitors. Soon the streets of Paris began to run with blood, as thousands of people were killed by the guillotine. The following fall, the French government announced that it was prepared to help subject peoples everywhere win their freedom. Thus, instead of peacefully exporting French products and French ideas on liberty, the French began exporting war and revolution . . . hence the saying, “When France sneezes, the whole world catches cold.”

As more soldiers were needed to “liberate” the rest of Europe, France instituted history’s first universal levy—the ultimate in state control over the lives of its citizens. Meanwhile, for opposing the Revolution, most of the city of Lyons was destroyed. And Lafayette, who at first had embraced the Revolution, was arrested as a traitor.

Stifling Controls

Soon a progressive income tax was passed, prices on grain were fixed, and the death penalty was meted out to those who refused to sell at the government’s prices. Every citizen was required to carry an identity card issued by his local commune, called, in an Orwellian twist of language, Certificates of Good Citizenship. Every house had to post an outside listing of its legal occupants; the Revolutionary Communes had committees that watched everyone in the neighborhood; and special passes were needed to travel from one city to another. The jails were soon filled with more people than they had been under Louis XVI. Eventually, there flooded forth such a torrent of laws that virtually every citizen was technically guilty of crimes against the state. The desire for absolute equality resulted in everyone’s being addressed as “citizen,” much as the modern-day Communist is referred to as “comrade.”

Education was centralized and bureaucratized. The old traditions, dialects, and local allegiances that helped prevent centralization—and thus tyranny—were swept away as the Assembly placed a mathematical grid of departments, cantons, and municipalities on an unsuspecting France. Each department was to be run exactly as its neighbor. Since “differences” were aristocratic, plans were made to erase individual cultures, dialects, and customs. In order to accomplish this, teachers—paid by the state—began to teach a uniform language. Curriculum was controlled totally by the central government. Summing up this program, Saint-Just said, “Children belong to the State,” and advocated taking boys from their families at the age of five.^[9]

So much of modern statism with all of its horror and disregard for individualism began with the French Revolution. The “purge,” the “commune,” the color red as a symbol of statism, even the political terms Left, Right, and Center came to us from this period. The only thing that ended the carnage—inside France, at least—was “a man on horseback,” Napoleon Bonaparte. The French Revolution had brought forth first anarchy, then statism, and finally, dictatorship. Had it not been for the indomitable spirit of the average Frenchman and France’s position as the largest country in Western Europe, France might never have recovered.

Now contrast all of this with the American Revolution—more correctly called the War for Independence. The American Revolution was different because, as Irving Kristol has pointed out, it was “a mild and relatively bloodless revolution. A war was fought to be sure, and soldiers died in that war. But . . . there was none of the butchery which we have come to accept as a natural concomitant of revolutionary warfare . . . . There was no ‘revolutionary justice’; there was no reign of terror; there were no bloodthirsty proclamations by the Continental Congress.”^[10]

A “Conservative Revolution”

The American Revolution was essentially a “conservative” movement, fought to conserve the freedoms America had painstakingly developed since the 1620s during the period of British “salutary neglect”—in reality, a period of laissez-faire government as far as the colonies were concerned. Samuel Eliot Mori-son has pointed out: “[T]he American Revolution was not fought to obtain freedom, but to preserve the liberties that Americans already had as colonials. Independence was no conscious goal, secretly nurtured in cellar or jungle by bearded conspirators, but a reluctant last resort, to preserve ‘life, liberty, and the pursuit of happiness.’”^[11]

A sense of restraint pervaded this whole period. In the Boston Tea Party, no one was hurt and no property was damaged save for the tea. One patriot even returned the next day to replace a lock on a sea chest that had been accidentally broken.^[12] This was not the work of anarchists who wanted to destroy everything in their way, but of Englishmen who simply wanted a redress of grievances.

After the Boston Massacre, when the British soldiers who had fired upon the crowd were brought to trial, they were defended by American lawyers James Otis and John Adams. In any other “revolution,” these men would have been calling for the deaths of the offending soldiers. Instead, they were defending them in court.

When the war finally began, it took over a year for the colonists to declare their independence. During that year, officers in the Continental Army still drank to “God save the King.” When independence was finally declared, it was more out of desperation than careful planning, as the colonists sought help from foreign nations, particularly the French. In the end, it was the French monarchy—not the Revolutionists, as they had not yet come to power—that helped America win its independence.

Through the seven years of the American war, there were no mass executions, no “reigns of terror,” no rivers of blood flowing in the streets of America’s cities. When a Congressman suggested to George Washington that he raid the countryside around Valley Forge to feed his starving troops, he flatly refused, saying that such an action would put him on the same level as the invaders.

Most revolutions consume those who start them; in France, Marat, Robespierre, and Danton all met violent deaths. But when Washington was offered a virtual dictatorship by some of his officers at Newburgh, New York, he resisted his natural impulse to take command and urged them to support the republican legislative process. Professor Andrew C. McLaughlin has pointed out: “To teach our youth and persuade ourselves that the heroes of the controversy were only those taking part in tea-parties and various acts of violence is to inculcate the belief that liberty and justice rest in the main upon lawless force. And yet as a matter of plain fact, the self- restraint of the colonists is the striking theme; and their success in actually establishing institutions under which we still live was a remarkable achievement. No one telling the truth about the Revolution will attempt to conceal the fact that there was disorder . . . . [yet] we find it marked on the whole by constructive political capacity.”^[13]

No Assault on Freedom of Religion

In America, unlike France, where religious dissenters were put to death, there was no wholesale assault on freedom of religion. At the Constitutional Convention in 1787, there were devout Congregationalists, Episco palians, Dutch Reformed, Lutherans, Quakers, Presbyterians, Methodists, and Roman Catholics. Deist Ben Franklin asked for prayer during the Convention, while several months later George Washington spoke at a synagogue. During the Revolution, many members of the Continental Congress attended sermons preached by Presbyterian John Witherspoon, and while Thomas Jefferson worked to separate church and state in Virginia, he personally raised money to help pay the salaries of Anglican ministers who would lose their tax-sup-ported paychecks. In matters of religion, the leaders of America’s Revolution agreed to disagree.

Finally, unlike the French Revolution, the American Revolution brought forth what would become one of the world’s freest societies. There were, of course, difficulties. During the “critical period” of American history, from 1783 to 1787, the 13 states acted as 13 separate nations, each levying import duties as it pleased. As far as New York was concerned, tariffs could be placed on New Jersey cider, produced across the river, as easily as on West Indian rum. The war had been won, but daily battles in the marketplace were being lost.

The U.S. Constitution changed all that by forbidding states to levy tariffs against one another. The result was, as John Chamberlain put it in his history of American business, “the greatest ‘common market’ in history.”^[14] The Constitution also sought to protect property rights, including rights to ideas (patents and copyrights) and beliefs (the First Amendment). For Madison, this was indeed the sole purpose of civil government. In 1792 he wrote: “Government is instituted to protect property of every sort . . . . This being the end of government, that alone is a just government which impartially secures to every man whatever is his own.”^[15] Alexander Hamilton, the first Secretary of the Treasury, helped restore faith in the public credit with his economic program. It was at his urging that the U.S. dollar was defined in terms of hard money—silver and gold. (At the Constitutional Convention, the delegates were so opposed to flat paper money that Luther Martin of Maryland complained that they were “filled with paper money dread.”)

Hamilton’s centralizing tendencies would have been inappropriate at any other time in American history; but in the 1790s, his program helped 13 nations combine to form one United States. Had succeeding Treasury Secretaries continued Hamilton’s course of strengthening the federal government, at the expense of the states, America’s economic expansion would have been stillborn.

Fortunately, when Jefferson came to power, he brought with him the Swiss financier and economist Albert Gallatin, who served Jefferson for two terms and Madison for one, Unlike his fellow countryman Necker, whose mercan-tilist policies only hastened the coming of the French Revolution, Gallatin was committed to limited government and free market economic policies. Setting the tone for his Administration, Jefferson said in his first inaugural address: “Still one thing more, fellow citizens—a wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned.”

For the next eight years, Jefferson and Gallatin worked to reduce the nation’s debt as well as its taxes. The national debt was cut from $83 million to $57 million, and the number of Federal employees was reduced. Despite the restrictions on trade caused by Napoleon’s Berlinand Milan decrees, and the British blockade of Europe, American businessmen continued to develop connections around the world. By the end of Jefferson’s first term, he was able to ask, “What farmer, what mechanic, what laborer ever sees a tax gatherer in the United States?”^[16] By 1810, America was well on its way to becoming the world’s greatest economic power. France, meanwhile, still languished under the heavy hand of Napoleon.

In his Report to the House of Representatives that same year, Gallatin summed up the reasons for America’s prosperity: “No cause . . . has perhaps more promoted in every respect the general prosperity of the United States than the absence of those systems of internal restrictions and monopoly which continue to disfigure the state of society in other countries. No law exists here directly or indirectly confining man to a particular occupation or place, or excluding any citizen from any branch he may at any time think proper to pursue. Industry is in every respect perfectly free and unfettered; every species of trade, commerce, art, profession, and manufacture being equally opened to all without requiring any previous regular apprenticeship, admission, or license.”^[17] The American Revolution was followed by 200 years of economic growth under the same government. By contrast, the French Revolution was followed by political instability, including three revolutions, a directorate, a Reign of Terror, a dictatorship, a restoration of the Bourbon Monarchy, another monarchy, and five republics. Today, socialism has a greater hold in France than it does in America—although America is not far behind. Even though they were close in time, it was the French Revolution that set the pattern for the Russian Revolution and other modern revolutions, not the American.

Bastiat’s Opinion

Frederic Bastiat clearly saw the difference between the two. The French Revolution, he argued, was based on the idea of Rousseau that society is contrary to nature, and therefore must be radically changed. Because, according to Rousseau, the “social contract” had been violated early in man’s history, it allowed all parties to that contract to return to a state of “natural liberty.” In essence, what Rousseau was saying was, “Sweep aside all the restraints of property and society, destroy the existing system. Then you will be free, free to lose yourself in the collective good of mankind, under my care.”^[18]

The social architects who emerged out of the Chaos of the French Revolution included Robespierre and Napoleon. In his analysis of Robespierre, Bastiat said: “Note that when Robespierre demands a dictatorship, it is . . . to make his own moral principles prevail by means of terror . . . . Oh, you wretches! . . . You want to reform everything! Reform yourselves first! This will be enough of a task for you."^[19]

In Bastiat’s opinion, the French Revolution failed because it repudiated the very principles upon which a free society is based: self-government, property rights, free markets, and limited civil government. The American Revolution, however, brought forth the world’s freest society: “Look at the United States,” wrote Bastiat. “There is no country in the world where the law confines itself more rigorously to its proper role, which is to guarantee everyone’s liberty and property. Accordingly, there is no country in which the social order seems to rest on a more stable foundation . . . . This is how they understand freedom and democracy in the United States. There each citizen is vigilant with a jealous care to remain his own master. It is by virtue of such freedom that the poor hope to emerge from poverty, and that the rich hope to preserve their wealth. And, in fact, as we see, in a very short time this system has brought the Americans to a degree of enterprise, security, wealth, and equality of which the annals of the human race offer no other example . . . . [In America] each person can in full confidence dedicate his capital and his labor to production. He does not have to fear that his plans and calculations will be upset from one instant to another by the legislature."^[20]

Bastiat did see two inconsistencies in the American Republic: slavery (“a violation of the rights of a person”) and tariffs (“a violation of the right to property”). According to Bastiat, these were the two issues that would divide America if they were not dealt with speedily.

What was the answer for America as well as France? “Be responsible for ourselves,” said Bastiat. “Look to the State for nothing beyond law and order. Count on it for no wealth, no enlightenment. No more holding it responsible for our faults, our negligence, our improvidence. Count only on ourselves for our subsistence, our physical, intellectual, and moral progress!”^[21]

On the 200th anniversary of the French Revolution, Frenchmen and Americans can truly become partners in liberty by working toward the principles advocated by Bastiat, America’s Founding Fathers, and others: limited government, private property, free markets, and free men.

“Political activity alone cannot make a man free. Back of the ballot, he must have property, industry, skill, economy, intelligence, and character.”

These words were spoken by a man raised in slavery. Yet in this man’s philosophy lies the key to freedom. His name: Booker T. Washington.

Born in 1856 in Franklin County, Virginia, Booker Taliaferro Washington spent his earliest years as a slave. Of his father he knew nothing. “I do not even know his name,” wrote Washington in his Autobiography. “Whoever he was, I never heard of his taking the least interest in me or providing in any way for my rearing.” Yet he harbored no grudges. “He was simply another unfortunate victim,” wrote Washington, “of the institution which the Nation unhappily had engrafted upon it at that time.”^[1]

When emancipation came, it was like a plunge into cold water: refreshing but sobering. Washington sensed the implications of freedom even as a small boy. In his Autobiography he wrote: “The wild rejoicing on the part of the emancipated coloured people lasted but for a brief period, for I noticed that by the time they returned to their cabins there was a change in their feelings. The great responsibility of being free, of having charge of themselves and their children, seemed to take possession of them. It was very much like suddenly turning a youth of ten or twelve years out into the world to provide for himself. In a few hours the great question with which the Anglo-Saxon race had been grappling for centuries had been thrown upon these people to be solved.”^[2] Washington early on recognized that freedom means responsibility as well as privilege.

Soon after emancipation, Washington and his family moved to Malden, West Virginia, where his stepfather worked in a salt furnace. Put to work beside his father, young Washington seemed destined for a life of drudgery. Yet he persuaded his parents to let him attend school before and after work. Following a regimen that would have killed someone with less determination, Washington seemed to run on adrenaline around the clock.

Washington soon outgrew the school at Malden. Heating of the Hampton Institute in Virginia, where blacks could work their way through school, he set out at the age of sixteen with only a few dollars in his pocket. When he arrived, the teacher told him to sweep the room. Characteristically, he swept it three times and dusted it four. As he later said: “I had the feeling that in a large measure my future depended upon the impression I made upon the teacher in the cleaning of that room.”^[3] In at least one aspect, it was a more accurate assessment than any Scholastic Aptitude Test or Graduate Record Examination: it revealed character. After the teacher inspected the room, she told Washington: “I guess you will do to enter this institution.”

While at Hampton, Washington came into contact with a truly great man, Samuel T. Armstrong. Armstrong, a Northern general, dedicated himself to rebuilding the South through education when the war was over. Of him Washington wrote: “One might have removed from Hampton all the buildings, classrooms, teachers, and industries, and given the men and women there the opportunity of coming into daily contact with General Arm strong, and that alone would have been a liberal education. The older I grow, the more I am convinced that there is no education which one can get from books and costly apparatus that is equal to that which can be gotten from contact with great men and women. Instead of studying books so constantly, how I wish that our schools and colleges might learn to study men and things.”^[4] To pay his board, Washington worked as a janitor and a waiter. To fit himself for a trade, he studied masonry. So greatly did he impress the administration and trustees of Hampton that after graduation he was appointed as an instructor.

Meanwhile, at Tuskegee, Alabama, George Campbell, a white merchant, conceived the idea of a training school for blacks. When he wrote to Hampton for a suggestion for a principal, Booker T. Washington was recommended. Accepting the position, Washington arrived in Tuskegee only to find an old, worn-out field. The school itself was little more than a distant vision in Campbell’s mind. But Washington caught that vision, and set to work laying the groundwork for what would become one of the nation’s most unique schools.

Washington set up shop in a small church, sallying forth into the surrounding counties to look for prospective students. Eventually 30 students enrolled in Washington’s Tuskegee Normal and Industrial Institute. Appropriately, the first term began on July 4, 1881. It was symbolic, for at Tuskegee poor blacks would get a chance to learn skills that would make them truly free—skills that would make them valuable members of the American economy. At Tuskegee, not only did every student study Western culture, every student had to work with his hands. “The individual who can do something that the world wants done will, in the end, make his way regardless of his race.”^[5]

During Tuskegee’s formative years, Washington confronted deep-seated prejudice and misconceptions from both blacks and whites. Many whites felt that an educated Negro wouldn’t work, while many blacks protested against making manual labor a part of the Institute program. Washington attacked these views by teaching that there is as much dignity in tilling a field as in writing a poem.

Private philanthropy made it possible for Washington to accept every student who came, regardless of whether he could pay. White citizens of Tuskegee made donations, as did poor blacks who lived in the area. As Washington’s fame spread, and Tuskegee’s along with it, some of the money from America’s great captains of industry found its way to Tuskegee. Railroad magnate Collis P. Huntington gave over $50,000, while Andrew Carnegie donated enough to build a library, and later, a $600,000 gift. In making the latter gift, Carnegie wrote of Washington, “To me he seems one of the foremost of living men because his work is unique.”^[6]

The school was an unqualified success. As a pioneer of vocational education, Tuskegee paved the way for similar institutions for both blacks and whites. In 1908, Washington pointed out that “it was the Negro schools in large measure that pointed the way to the value of this kind of education.”^[7] At each commencement, visitors were pleased and amazed to see the graduates go through their paces. “I have never seen a commencement like Tus-kegee’s before,” wrote Mary Church Terrell. “On the stage before our eyes students actually performed the work they had learned to do in school. They showed us how to build houses, how to paint them, how to estimate the cost of the necessary material and so on down the line.”^[8]

Soon other talented blacks began to gather around Booker T. Washington, including George Washington Carver. Calling his laboratory at Tuskegee “God’s Little Workshop,” Carver reduced the South’s dependence on cotton, which depleted the soil, by finding over 300 uses for peanuts. Largely financed by the private sector, Carver’s research gave a great boost to American agriculture.

Nonpolitical Solutions to the Problems of the South

In every area of life, Washington sought nonpolitical solutions to the problems of blacks and the South. Thus, instead of more Federal troops and more bureaucracy, Washington advocated private initiative, in his Autobiography he wrote: