As if on cue, in May the Washington Post published an article headlined “Across America, War Means Jobs.” Although it acknowledged that the matter wasn’t quite so simple, the article nevertheless quoted a great many people who asserted that war was a boon for the economy. “If it wasn’t for [Defense Department] contracting,” said Brian Smith of Columbia Sewing Company, “we would not be here, and 200 people would be out of a job.” Roanoke Mayor Betty Slay Ziglar was thrilled: “These people have grown up sewing in textile plants, and there are so few now. They were desperate to have jobs, and it’s going to expand again. I’m so grateful.” “The economy is always helped by war,” appliance salesman Gary Gayer told the Post. “That’s just a fact.”

It is clear enough that war stimulates certain sectors of the economy. But it is logically and economically unjustified to equate that stimulus with prosperity for the American people as a whole. Ludwig von Mises summed up the correct position when he observed, “War prosperity is like the prosperity that an earthquake or a plague brings.”

Frédéric Bastiat exposed the “broken window” fallacy in the mid-nineteenth century. A shop window broken by a man’s “incorrigible son” is said to benefit the economy, since the company that fixes the window enjoys a “stimulus,” which in turn is passed along to those with whom the window company does business. What this analysis overlooks is that the man with the broken window would have spent his money on other things if he had not needed to buy new glass. The “stimulus” that would have been bestowed on, say, the picture-frame store, where he could have spent his money, now never occurs because he had to replace his window. Had the window not been broken, the shopkeeper would have had a window and a frame. Now he has only a window.

The repair of the window is what is seen, and focusing on it leads poor logicians to conclude that the breakage was actually a boon. The lack of a picture frame is not seen, but is no less a consequence of the unfortunate incident.

The same kind of analysis can be fruitfully applied to war. The jobs created for the production of weapons and other military equipment, as well as the jobs in the armed forces, are paid for by taxing the private economy. Thus financing wartime activities diminishes private incomes—that is, the ability of Americans to buy the goods they need. And because people and capital goods are now producing war-related items and services, fewer are available to produce goods for consumer needs. In short, Americans have less money with which to buy fewer goods. How can this be anything other than economic retrogression?

There are countless other deleterious effects as well. In extreme cases, government rations certain crucial goods to ensure adequate supplies for the military. No definition of prosperity includes restricting the civilian population’s ability to acquire goods. But even when outright rationing is not undertaken, government purchases nevertheless distort the economy. For example, large purchases of steel will lead to price increases, making it more difficult for private businesses that use steel to meet their competition in a global market. If the higher prices attract new steel producers, this new production comes at the cost of abandoning other industries, thus further skewing the economy in favor of the government’s preferences over those of the consumer.

Some will object that military equipment is fundamentally different from other goods the government might buy, since it is necessary to protect the population against foreign enemies. But even if we assume this to be true, it is still the case that war itself does not create prosperity. Buried in the Post article was the amazing statistic that in real terms the cost of the Iraq war will surpass the American share of World War I. To put it mildly, that is a substantial drain on the private economy.

World War II and American Prosperity

Part of the reason that the prosperity-through-war myth persists is that most people have been taught that World War II lifted the United States out of the Great Depression and ushered in a period of unprecedented affluence. But the myth is no more valid for that conflict than for any other.

Historians make much of the substantial production and employment statistics compiled during World War II and triumphantly point to its great economic “stimulus.” But most of this increase was due to the construction of armaments and military equipment, and payments to military personnel. This production was not geared toward producing things that ordinary people needed. From a purely economic point of view, the war made consumers worse off by diverting capital and other resources away from civilian production and toward the production of goods that no consumer would wish to purchase. Between 1943 and 1945, some two-fifths of the people who could work—including members of the armed forces, civilian employees of the armed forces, people who worked in the military-supply industries, and the unemployed—were not producing consumer goods or capital goods geared toward the production of consumer goods. That was not all, of course: the tax money from the remaining three-fifths went to fund military production and activities. All of this amounted to a dramatic loss of material wealth.*

Unemployment did virtually disappear. But it did so primarily because 11 million people were added to the armed forces, mostly by conscription. As Robert Higgs explains, “During the war the government pulled the equivalent of 22 percent of the prewar labor force into the armed forces. Voilà, the unemployment rate dropped to a very low level. No one needs a macroeconomic model to understand this event.”

In the unhampered market, jobs are never in short supply. Since human wants are unlimited, more labor is always needed to produce more goods. The sick economy of the New Deal, however, could address the unemployment problem only by conscripting over a fifth of the labor force into the military.

Meanwhile, the average work week in manufacturing increased by seven hours between 1940 and 1944, and by a full 50 percent in bituminous coal mining. And because of the demands of wartime, people found it more difficult, and sometimes even impossible, to acquire the goods they needed. No one could buy a new car, house, or major appliance, since the government had forbidden their production entirely. A great many other goods were either unavailable or difficult to obtain, from chocolate bars and sugar to meat, gasoline, and rubber tires.

As economist George Reisman writes in Capitalism, “People believed they were prosperous in World War II because they were piling up large amounts of unspendable income—in the form of paper money and government bonds. They confused this accumulation of paper assets with real wealth. Incredibly, most economic statisticians and historians make the same error when they measure the standard of living of World War II by the largely unspendable ‘national income’ of the period.”

Common sense is right after all: death and destruction do not lead to prosperity. That should be obvious. But as George Orwell once said, “We have now sunk to a depth at which restatement of the obvious is the first duty of intelligent men.”

In certain disaffected pockets of the political left and right, more and more voices can be heard on behalf of an economic and social system known as distributism. According to the celebrated Catholic writers G. K. Chesterton and Hilaire Belloc, who popularized the idea in the early twentieth century, that social system is best in which “productive property” is widely dispersed rather than concentrated. They contend that the market order undermines community life and introduces an intolerable level of insecurity and anxiety into the economic life of the ordinary person. They would, therefore, limit business competition and implement a system of punitive taxation against firms that had attained what these writers considered excessive economic concentration.

I do not for a moment doubt the good will and pure intentions of those who support distributism, and indeed I count some of them among my friends. My own view is that if someone wishes to live in relative self-sufficiency and to retreat, to a degree, from the division of labor, that is his decision. What I wish to do here is to suggest that the purported advantages of distributism, as well as the alleged iniquities of the market, have both been greatly exaggerated.

Let us consider Belloc’s fundamental claim for distributism. As he sees it, distributism brings freedom:

A family possessed of the means of production—the simplest form of which is the possession of land and of the implements and capital for working the land—cannot be controlled by others. Of course, various producers specialize, and through exchange one with the other they become more or less interdependent, but still, each one can live “on his own”: each one can stand out, if necessary, from pressure exercised against him by another. He can say: “If you will not take my surplus as against your surplus I shall be the poorer; but at least I can live.”¹

For Belloc, then, the great advantage of distributism is that it gives the household a significant measure of independence. A new introduction to his Essay on the Restoration of Property describes his view of “economic freedom” as something that “comes from the possession of sufficient productive property, such that a man need not depend upon his employer for a wage, but has rather to depend upon himself and his land, craft, tools, and trade for his sustenance.”² Belloc acknowledges in passing that of course anyone selling to others is in some way dependent on those others, thereby conceding that risk and uncertainty are unavoidable aspects of life rather than unique to a system of economic freedom. If the price and quality of his goods do not remain sufficiently competitive, he is surely bound to lose business. However, Belloc points out, the family can nevertheless live on its own, even if buyers refuse to purchase its surplus goods. They can live on what they themselves produce. At heart, then, Belloc’s promise of security amounts to the distributist family’s ability in the last resort to retreat altogether from the division of labor and live in a condition of self-sufficiency.

Yet the advantages of the division of labor are so clear that relatively few people have found Belloc’s proposal attractive enough to have actually attempted to adopt it. Practically anyone in the United States today who possesses the requisite knowledge and modest capital can acquire farmland and chase after the kind of self-sufficiency Belloc advocated. Producing their own necessities and in possession of the means of production, so to speak, such a family would be utterly independent of employers or anyone else. They would probably also enjoy a standard of living so depressed and intolerable as to throw the rationality of the entire enterprise into question. This certain outcome probably accounts for why the overwhelming majority of people choose to take their chances within the division of labor, balancing the risks from which this earthly life is never entirely secure against the unparalleled wealth and comfort they can enjoy by not retreating into semi-autarky.

Even granting the distributist premise that smaller businesses have been swallowed up by larger firms, that it is always preferable for a man to operate his own business rather than to work for another is by no means obvious. It may well be that a man is better able to care for his family precisely if he does not own his own business or work the backbreaking schedule of running his own farm, partially because he is not ruined if the enterprise for which he works should have to close, and partially because he doubtless enjoys more leisure time that he can spend with his family than if he had the cares and responsibilities of his own business. Surely, therefore, we are dealing here with a matter for individual circumstances rather than crude generalization.

Deprived of Property

The way distributists portray the situation, the wage earners of today are where they are as a result of forces beyond their control; an ineluctable process of wealth concentration brought about by capitalism has deprived them of the possibility of owning “productive property” and avoiding the dependency that the wage relation implies. But the fact is, many people clearly prefer to be wage earners rather than business owners. Belloc and his followers are free to insult such people by calling them “wage slaves”—the distributists’ favorite slur—but they have made an entirely rational choice. And it is a choice. As Fr. James Sadowsky observes,

The fact is that in the nineteenth century, when workers had far less disposable income than their counterparts today, a remarkable number of them became capitalists. It is all too often the unwillingness to restrict consumption, a grasshopper attitude, that prevents workers like me from becoming capitalists. In our day we see especially among immigrants from Asia what is, for us, an amazing willingness to defer present consumption. We find these people living initially in conditions that we should judge to be absolutely impossible. Yet before we know it, they are operating successful businesses.³

As for the alleged insecurity with which workers must live, those who work for wages in fact enjoy a kind of security that is simply not acknowledged at all by distributists—namely, that the worker receives his pay whether or not the goods toward whose production he contributes ever sell. It may be many months or years before they make it to market at all. During all that time, instead of suffering the anxieties and uncertainties of the independent craftsman or shop owner, the worker consistently earns his wage. He need not wait until—if ever—his product is actually sold in order to reap his benefit.

While Karl Marx claimed that any differential between capitalist profit and wages paid to labor constituted “surplus value” and exploitation, the Austrian economist Eugen von Böhm-Bawerk attributed such differentials to the time factor involved: rather than having to wait, say, the full year that must ordinarily elapse before the product on which he has worked is sold, the laborer can be paid immediately. Since present goods are preferred, other things equal, to future goods, the capitalist is entitled to his profit since he compensates his workers in the present for the production of goods that will be sold only in the future. The worker, on the other hand, prefers a lesser amount in the present to the greater amount he could have received in the future had he been willing to wait that long. He is clearly benefited by the wage relation.⁴

To be sure, the worker does labor under the very real uncertainty that he may lose his job. But this is inevitable due to technological improvements, changing tastes, new methods of production, and the like. The advent of the automobile meant that carriage manufacturers would have to shift into some other line of production. The introduction of fax machines and electronic mail must have cut into the business of couriers and package delivery. The net result of these changes is greater abundance and a higher standard of living, as fewer resources are now necessary to accomplish our ends, thereby freeing up resources for the production of goods that prior to these technological advances we could not have enjoyed.

What would the distributists have us do about these benign phenomena? Shall we establish a board of economic commissars to dictate which improvements will be permitted and which not? No one has a property right in a job. Put another way, no one has a right to demand that society continue to compensate him for performing a task people no longer require, whether he is a laborer or a shop owner. An economy based on the division of labor does not tolerate such a self-centered, anti-social attitude. Instead, it encourages us to satisfy the needs of our fellows.

Life Is Always Uncertain

Moreover, it is profoundly misleading to suggest that the “uncertainty” of the modern worker is a uniquely reprehensible aspect of modern society rather than an inevitable aspect of life that has been with us since the beginning of time. Were peasants in pre-industrial France—who were, it should be recalled, among the freest, most independent peasantry in Europe—free of “hand-to-mouth uncertainty”? (Try telling that to a fourteenth-century mother who has just lost her fourth child before his first birthday, lives one bad harvest away from starvation, and resides in nearly intolerable squalor.) As late as the eighteenth century, all travelers commented on the appalling conditions of the French peasantry and the shockingly dilapidated state of rural housing. The same held true for many who sought employment in a trade. A Norman parish priest described the situation in 1774:

Day laborers, workmen, journeymen and all those whose occupation does not provide for much more than food and clothing are the ones who make beggars. As young men they work, and when by their work they have got themselves decent clothing and something to pay their wedding costs, they marry, raise a first child, have much trouble in raising two, and if a third comes along their work is no longer enough for food, and the expense. At such a time they do not hesitate to take up the beggar’s staff and take to the road.⁵

Taking up the beggar’s staff and taking to the road: that is what was left to them. To say, therefore, that the free market led to the destruction of some previously existing, harmonious community life is simply to defy historical testimony. How could “community” exist when people were starving and forced to take to the road for sustenance? In what way is the alleged “independence” of farmers and craftsmen in evidence here? These appalling conditions applied at times to as much as one third of the French population—some eight million people.⁶

Nevertheless, Belloc claims that “the twin evils of Insecurity and Insufficiency” are inevitably associated with capitalism. “The main body of citizens, the Proletariat, are not sufficiently clothed, housed and fed, and even their insufficient supply is unstable. They live in a perpetual anxiety.”⁷ This was not even true at the height of the Industrial Revolution, let alone in the early twentieth century when Belloc was writing.⁸ Practically everyone acknowledges that the free market has created a greater abundance of necessities than previous ages could have dreamed possible. Imagine what the thirteenth-century peasant, the exemplar cited by so many distributists, would have thought of a society in which life expectancy was not 35 but 75, where everyone in society enjoyed dozens of changes of clean clothes, inexpensive food, shelter with amenities like heating and air conditioning—the list could go on a long, long time. The only way one could claim that capitalism actually brought about a retrogression of the physical well-being of the poorest would be if he were entirely ignorant of the conditions of the past.

More to Life

Faced with this point, distributists frequently shift to the rhetorically effective argument that there is more to life than material possessions, and that economic relations should be such that man is enabled to enjoy and cultivate higher tastes and virtues. This is a straw man, of course, since hardly anyone arguing in favor of the market suggests that material possessions are ends in themselves or bring the highest kind of fulfillment. Furthermore, it is precisely the wealth that the market creates and the leisure it makes possible that make the enjoyment of higher things practicable in the first place. A man living at the level of bare subsistence is not likely to be able to cultivate an interest in opera, or Renaissance painting, or nineteenth-century literature.

Indeed, the objection of materialism only reveals the incoherence of the anti-market position, which began as an argument that the market systematically exploited and impoverished the laborer. When the overwhelming weight of the evidence shows this opinion to be ludicrously at odds with reality, the accusation shifts ground. With the superiority of economic freedom all but impossible to deny, and the amazing abundance which we owe to such a social order no longer a matter of serious dispute, we are now told that even to think in such terms reveals an excessive attachment to the things of this world.

The net result of all of the obstacles to prosperity inherent in distributism must be a far poorer society. Now Belloc and his followers are free to argue that impoverishment is a small price to pay for economic independence. But they have no right to accuse anyone of moral perversity for remaining unconvinced. Yes, there is “insecurity” in a free society, in that no one has a right to demand that his fellow men continue to pay him for performing a task they have indicated they no longer require. This is a feature of any economic system—unless we guarantee every business owner a share of the market regardless of his abilities, courtesy toward the customer, and responsiveness to the needs of society. At the same time, the “insecurity” of the free society is more than compensated for by the unique security enjoyed by members of such a society vis-à-vis members of a distributist society, in the form of fantastic, unheard-of levels of wealth, the benefits of the division of labor, and the large-scale social cooperation it makes possible. An eleventh-century serf enjoyed a great deal of job security, but few envy him his position.

Every one of the agricultural revolutions through which the Western world has passed since the ninth century has involved the introduction of new farming implements, methods, or fertilizers whose net result has been that fewer people are needed to produce the same amount of output. Naturally, these advances meant the displacement of some people, as the economy adjusted to new circumstances. Would Belloc have permitted any of these agricultural revolutions to occur? After all, they led to a great deal of what Belloc calls insecurity. But they also made possible the sheer survival of far more people, now that food could be more readily produced. The same is true of any innovation that increases the productivity of agricultural labor: it makes possible a considerable increase in population. Can this consideration be weighed against Belloc’s desire for stability? We are not told.

Moreover, it is not clear what precisely is so “secure” about deliberately spurning the material benefits of the division of labor, which are not inconsiderable, in favor of the kind of self-sufficiency that Belloc describes. As Belloc and other distributists have said, the self-sufficient man, while certainly benefiting from specialization and exchange with others, can if necessary rely on himself alone for the things he needs. That is certainly true, but that would make Robinson Crusoe one of the most secure men who ever lived, since he was in no danger (until Friday came along, that is) of being lured into the temptations of the division of labor and thereby finding himself in a state of interdependence with his fellows.

The man who relinquishes so many of the benefits of the division of labor, moreover, invites a level of insecurity with which the so-called “wage slave” of capitalism need never be confronted. What does Belloc’s isolated farmer do during a drought? By the time normal channels of trade are hastily reopened, it may be too late. What consolation will such a family be afforded by reassuring themselves at such a time that at least they are not “wage slaves”? Who in the present United States suffers from such fears?

Belloc would use state policy to keep large manufacturers in check. But in the marketplace a crucial check already exists against a wealthy manufacturer: he will be able to maintain his wealth only to the extent that he makes prudent investments and continues to satisfy the needs of his fellow man. This is what Ludwig von Mises meant when he said that ownership of the means of production “is not a privilege, but a social liability”:

Capitalists and landowners are compelled to employ their property for the best possible satisfaction of the consumers. If they are slow and inept in the performance of their duties, they are penalized by losses. If they do not learn the lesson and do not reform their conduct of affairs, they lose their wealth. No investment is safe forever. He who does not use his property in serving the consumers in the most efficient way is doomed to failure. There is no room left for people who would like to enjoy their fortunes in idleness and thoughtlessness. The proprietor must aim to invest his funds in such a way that principal and yield are at least not impaired.⁹

What more salutary check against arbitrariness could exist than that? The state, on the other hand, which Belloc proposes to use to establish and maintain his own system, is insulated from the consequences of arbitrariness, since it never has to pass any such market test. In fact, the worse a government agency performs, the higher its budget tends to be the following year. This is one reason so many of us are loath to entrust our well-being to such an institution.

Let us count our blessings. Thanks to industrial society, few of us live in fear of dying of the countless diseases since tamed by medical science. We enjoy sanitary conditions, personal comforts, and opportunities that the greatest kings of Europe could scarcely have imagined. Half of our children do not die by age five. People are free to consider these things trivial or unimpressive if they wish, but the judgment of mankind appears to run in the other direction.

1. Hilaire Belloc, Economics for Helen (London: J. W. Arrowsmith, 1924), p. 125.
2. Editors of IHS Press, “Introduction,” in Hilaire Belloc, An Essay on the Restoration of Property (Norfolk, Va.: IHS Press, 2002 [1936]), p. 12.
3. James A. Sadowsky, “Capitalism, Ethics, and Classical Catholic Social Doctrine,” This World, Fall 1983, p. 123.
4. Eugen von Böhm-Bawerk, Capital and Interest, 3 vols., trans. George D. Huncke and Hans F. Sennholz (South Holland, Ill.: Libertarian Press, 1959), vol. 1, p. 269; see also Hans-Hermann Hoppe, The Economics and Ethics of Private Property (Boston: Kluwer Academic Publishers, 1993), pp. 96–97.
5. Olwen H. Hufton, The Poor of Eighteenth Century France, 1750–1789 (Oxford: Oxford University Press, 1974), p. 11.
6. William Doyle, The Oxford History of the French Revolution (Oxford: Oxford University Press, 1989), p. 14.
7. Belloc, Essay, p. 28.
8. Thomas E. Woods, Jr., “A Myth Shattered: Mises, Hayek, and the Industrial Revolution,” Ideas on Liberty, November 2001, pp. 42–44.
9. Ludwig von Mises, Human Action, Scholar’s Edition (Auburn, Ala: Ludwig von Mises Institute, 1998 [1949]), p. 308. I owe this reference to Professor Jeffrey Herbener.

A widespread misconception about the market economy is that it was responsible for low wage rates from the beginning of the Industrial Revolution through the early twentieth century. One answer to that claim, as all respectable economic historians now concede, is that the Industrial Revolution introduced the era of rising living standards for the great mass of the population.

But there is much more to be said, since such criticism of the market is not only historically incorrect, but it also completely misconceives the issue. Perhaps the best way to explain why is by recourse to what George Reisman refers to in Capitalism, his sizable 1996 treatise, as “the productivity theory of wages.”* Reisman provides an algebraic derivation of the theory in his book, but I shall simply describe the idea and demonstrate its fruitfulness in the study of economic history.

Reisman cautions against thinking that a rising standard of living implies that workers consistently earn more money. In an economy with what he calls an “invariable money” (essentially an unchanged quantity of money), it is impossible for everyone to earn more money over time. Thus the fundamental way in which people’s standard of living rises is for money to command greater purchasing power. This happens through increases in the productivity of labor—the amount of output per worker. The more output the economy is capable of producing, the greater the purchasing power a worker’s wages will command. According to Reisman, “it is the productivity of labor that determines the supply of consumers’ goods relative to the supply of labor, and thus the prices of consumers’ goods relative to wage rates” (p. 621). In other words, the more production per capita, the lower prices will be relative to wages.

Think of it this way: The American economy in the 1870s possessed a dramatically smaller productive capacity than the American economy of 2003. Labor was drastically less productive back then. As a result, it was physically incapable of producing the sheer volume of products per capita of which our present economy is capable—and, of course, a whole host of goods that we take for granted hadn’t been invented yet.

Although by historical standards nineteenth-century England and the United States enjoyed a far higher standard of living than Europe had ever known, many people understandably look back on that era with revulsion. Goods were certainly far more scarce than today. Leaving emotion aside, let’s use economic science to consider the inevitable constraints that scarcity imposes on living standards.

Suppose some catastrophe wiped out all capital equipment invented and developed over the past 150 years. Gone also are all automobiles and the knowledge to create new ones, fax machines, cellular and standard telephones, e-mail, the Internet, radio, and television. Many conveniences we take for granted no longer exist at all, and the vast majority of the remainder must be made either by hand or with the clumsiest and most inefficient machines. Needless to say, this economy is capable of far less production than it was before the catastrophe. The productivity of labor has plummeted.

Does it not stand to reason that under these drastically changed circumstances we would all have to work much longer and harder to maintain even a minimally acceptable standard of living? Compared with today, the goods we need would be unusually scarce and expensive in terms of the labor time it took to earn the money to buy them. A great many consumers chasing relatively few goods would inevitably produce high prices. Since the relative lack of capital equipment would mean a low productivity of labor, workers throughout the economy, as a matter of simple logic, would have to toil long and hard to produce the amount of consumer goods desired. If in our obstinacy we all determined to maintain a 40-hour work week even in the face of such changed conditions, we would not produce anything approaching the amount of consumer goods previously made, and the result would be still greater impoverishment. It is this simple fact of low worker productivity, rather than any sinister machinations of greedy businessmen, that would account for our low standard of living.

Unconscionable Exploitation?

In effect, this is something like the economy in England during the early Industrial Revolution and, to a lesser but still considerable extent, the American economy in the latter nineteenth century, the periods of alleged unconscionable exploitation by greedy businessmen. Apparently, it has never occurred to critics of the market that the reason people back then could afford far fewer and considerably lower quality goods might have something to do with their inability to produce more. The working assumption among critics appears to be that feeding, clothing, and housing more and more people over time, and making possible a steadily rising life expectancy, is nothing too impressive (although it had never been done in such a sustained and remarkable way anywhere in the world until the eighteenth century). No, these critics expect the increased population that capitalism makes possible to enjoy, right away, spacious and commodious homes, fine cuisine, and ample leisure time, and if they lack these things the only explanation can be that wicked businessmen are depriving the workers of them. That these things might not even exist in any great numbers is not even considered.

What, specifically, could have been done to improve this situation? If goods could be provided in greater abundance, they would be less dear and more within reach of the ordinary consumer. How can goods be provided in greater abundance? By increasing the amount of output per worker. And that can be accomplished through technological innovation and investment in capital goods. When capitalists reinvest their profits they can purchase steam shovels instead of hand shovels, computers rather than typewriters, copy machines rather than the labor of scribes. They can equip warehouses with forklifts, allowing a single worker to perform tasks that might well have required ten workers.

As a result of such investment, productivity and output are increased considerably. The whole process is driven by the profit motive, which leads businessmen continually to search for new and improved products and to cut costs in order to earn premium profits. Competition then serves to pass the quality improvements and cost cuts on to the consumers, who obtain progressively more and better products at lower and lower real prices.

When labor becomes more productive in a given industry, the number of workers it employs can rise or fall, depending on consumer demand. In the automobile industry, where improvements in productivity and consequent cost and price reductions opened up a mass market, the number of workers increased vastly. In agriculture, where improvements in productivity were accompanied by far less than a proportionate increase in food consumption, the number of workers diminished. In this and all other cases in which an increase in productivity led to fewer workers being needed, labor was released for employment elsewhere in the economy. This freed-up labor could then produce goods that consumers wanted but could not have had before because the workers were needed to make things consumers wanted more urgently. Thus the rise in the productivity of labor creates wealth—and raises real wages.

This process is not understood by most of the people who consider themselves qualified to teach economics, history, and “social studies.” Their implicit judgment is that the conditions in the late-eighteenth and nineteenth centuries called for government intervention to redistribute wealth from the capitalists to the workers. One problem with such a plan, says Reisman, is that there was virtually nothing to redistribute. The workers of the early nineteenth century did not lack automobiles and television sets because the capitalists were keeping the whole supply to themselves. There simply were no automobiles or television sets—for anyone. Nor did the workers of those days lack sufficient housing, clothing, and meat because the capitalists had too much of these goods. Very little of such goods could be produced when they had to be produced almost entirely by hand. If the limited supplies of such goods that the capitalists had could have been redistributed, the improvement in the conditions of the workers would hardly have been noticeable. If one person in a thousand, say, is a wealthy capitalist, and eats twice as much and has twenty times the clothing and furniture as an average person, hardly any noticeable improvement for the average person could come from dividing the capitalists’ greater-than-average consumption by 999 and redistributing it. At the very best, a redistribution of wealth or income would have been useless as a means of alleviating the poverty of the past. (p. 653)

In fact, Reisman goes on, such wealth redistribution, in addition to being ludicrously inadequate for fulfilling the expectations of its supporters, would directly harm the long-term interests of the workers themselves, as well as everyone else. If businessmen wish to prosper they must reinvest the vast bulk of their profits to expand their capital stock. That in turn further increases the productivity of labor, increasing the supply of goods produced. These increases, by raising the ratio of consumer goods to the supply of labor, lowers prices relative to wage rates and raises real wages. The cost of wealth redistribution would include the investment in capital equipment that business would be unable to make because its profits would be taxed away. “The truth is,” says Reisman, “that what made possible the rise in real wages and the average standard of living over the last two hundred years is precisely the fact that for the first time in history the redistributors were beaten back long enough and far enough to make large-scale capital accumulation and innovation possible” (p. 653).

Taking Credit

Politicians, who have to justify their existence somehow, naturally want to take credit for the economic progress and rising living standards we have enjoyed for the past two centuries. Virtually all textbook treatments of these issues dutifully parrot the government line: were it not for the power of the state, people would still be toiling 80 hours per week and children would be working in mines. Again contrary to what most people have been led to believe, it is logically inescapable that reduced working hours and the elimination of child labor were brought about precisely by the extension of capitalism. It is beyond tiresome to listen to a modern-day professor’s moral outrage at the fact that nineteenth-century workers often worked 60, 70, or even more hours per week. If only people had been more “socially conscious,” goes the typical argument, these laborers might have been spared having to work so many hours.

There is no doubt that by today’s standards, people in the nineteenth century did indeed work an exhausting schedule. But, again, when output per worker is miserably low, a supply of consumer goods that most people consider adequate requires long hours of work. As productivity increases, and with it the level of real wages, people begin to opt for leisure over additional goods. Without the prod of legislation, employers will discover it is in their interest to require fewer hours of their workers. If someone who once worked 80 hours per week now wishes to work only 60 (three-fourths as many hours) and is willing to accept a wage less than three-fourths his previous wage as a premium on the added leisure, it makes perfect sense for his employer to offer these terms (pp. 660–61).

Reisman does not hesitate to draw the obvious if all-too-rare conclusion from all this: it is the capitalists, routinely portrayed as devilish villains, who are alone responsible for the dramatically higher standard of living that American workers enjoy today. The typical American worker owns an abundance of things that people of previous ages could scarcely have imagined and would have regarded as luxuries. These are due primarily not to the physical effort of ordinary laborers, important as their contribution is, but to the scientific genius of those who invent the machines and tools with which workers can multiply many times over what they could have produced with their bare hands, and to the organizational genius of businessmen who oversee the process of production and who put those machines and tools in the hands of their workers.

Both in the productivity theory of wages and in his treatise taken as a whole, Reisman makes it clear what we should think of those educators, politicians, journalists, and activists who, decade after decade, have poisoned popular opinion by leveling the same drearily predictable accusations against capitalism. By consistently offering more and better products at lower and lower prices the market has made possible the physical survival of countless millions who in more-primitive conditions would surely have perished—the very opposite of those allegations about the “survival of the fittest.” Out of envy, malice, or sheer ignorance, the market’s opponents have denigrated and actively sabotaged the only social order that has been able to rise above the stagnation and squalor of the past.

*George Reisman, Capitalism (Ottawa, Ill.: Jameson Books, 1996). All quotations are from this book.

A most stubborn economic fallacy, especially in my own discipline of history, is that in the unhampered market, output can exceed demand. This is the alleged problem of “overproduction.” The result of this calamity, we are told, is that unsold surpluses pile up, leading to mass unemployment, since the natural solution to overproduction is to lay off workers and reduce production.

This fallacy is evident throughout all American history textbooks, especially with regard to two episodes. First, beginning in the late nineteenth century a wide spectrum of intellectuals and politicians began to advance the theory, never questioned by modern textbook authors, that if the United States were to avoid a depression it would need to gain access to additional foreign markets to dispose of its “surplus” finished goods. This thesis was seriously advanced by Captain Alfred Thayer Mahan, known for his book The Influence of Sea Power on History (1890), and appears to have been held in one form or another by many of the major opinion makers of the time.¹

The second major episode is the Great Depression. Here again, we are told, America’s productive capacity had outrun its abil-ity to consume (“underconsumption” being a corollary of overproduction), and the result was the Depression. (Never mind that the downturn was actually much worse in capital-goods industries than in consumergoods industries, or that the crash of 1929 became an intractable depression only after systematic and profoundly ill-advised government intervention.²)

Any particular firm could have an interest in promoting the overproduction fallacy (even if it knows it is a fallacy) and its corollary, that the government must find foreign outlets for its excess goods. This is because each firm has a limit to how much of its product it can sell domestically at the price it wishes to charge. Anyone would be grateful if the state would help by “opening” foreign markets to its product so it can sell more at that price.

To the extent that the American economy would have drowned in excess capacity in the 1890s without increased exports, the source of the problem was not the market but interventionism, namely, protective tariffs. As Joseph Stromberg explains: “Tariffs made possible home prices which were well above free-market ones. At the same time, the tariffs created artificial gluts, since the full quantities produced could not be sold at the protected prices. Yet, in order to realize the lower unit costs, the full amounts had to be produced. As Andrew Carnegie put it, ‘The condition of cheap manufacture is running full.” The result, namely “specific, sectoral ‘overproduction’ relative to what could be sold in the home market at tariff enhanced prices,” led such firms to look to foreign markets to dump the excess.³

What, then, is the essential rejoinder to these endless warnings about overproduction? First, it is necessary to point out the obvious — namely, that people’s wants are unlimited. Since we are not living in the Garden of Eden, not all wants are satisfied. So consumers will always want more goods: better cars, more spacious and elegant homes, additional computers, and a host of lesser products that people would doubtless want to have if only they were in greater abundance and hence carried lower prices. There is never any problem, therefore, in cultivating people’s desire to consume. The issue is their ability to consume, and how it can be increased.

Say’s Law

It is Say’s Law, developed by the great nineteenth-century French economist J . B . Say, that ultimately explains why there can be no such thing as general overproduction in an unhampered market economy. This law is sometimes summed up as “supply creates its own demand,” but this phrase can be misleading, seeming to suggest that all it takes to foster demand for some good is simply to supply it. In a related error, others have criticized Say for believing that overproduction is impossible in any sector of the economy, a claim he never made. Say was speaking not of individual industries but of the entire economy. In the aggregate, no general overproduction can exist, since production creates the means by which the producers (both capitalists and laborers) can consume. How, after all, apart from receiving alms, can people acquire the products they wish to consume without trading some product that they previously produced (or the proceeds from its sale)?⁴ In this way, one’s supply constitutes the means by which he can demand the consumer goods he wishes to own.

That the principle behind Say’s Law is clearly true is most easily perceptible in a barter economy. Imagine such an economy in which three consumer goods are produced: apples, oranges, and hats. Now suppose the supply of apples doubles. Are we faced now with overproduction and inevitable depression? Obviously not; the creation of more wealth means greater prosperity. But the greater abundance of apples also means that they will lose some of their purchasing power in terms of oranges and hats. According to the law of diminishing marginal utility, orange and hat sellers will be willing to buy more apples only if they are asked to part with fewer of their own goods in payment. That is to say, the price of apples must fall. Thus the price level adjusts to accommodate the greater supply of apples within the existing purchasing power. Even if apple producers are (temporarily) worse off, there is no general overproduction.⁵

Overproduction in particular sectors of the economy is rapidly corrected in a free market. To illustrate this, Benjamin Anderson and George Reisman have asked us to suppose the country’s productive power were somehow doubled. We certainly would not want twice as much of everything that we now buy. Most people’s desire for table salt, for instance, is probably already sated. A doubled supply would likely constitute an overproduction of salt — but only to the extent that the other goods which consumers prefer to additional salt are underproduced. The increased capacity to produce salt would best be exploited, therefore, not by doubling the salt output, but perhaps by increasing it only slightly, if at all, and releasing the excess labor and capital to those industries where consumer demand is greater. Economic downturns, then, involve not excess aggregate output but a misallocation of scarce capital from the consumers’ point of view.⁶

Say himself observed that resources tend to move out of areas where there is a glut and into underexploited areas where increased production holds the prospect of profit. This is sometimes referred to as the uniformity of profit principle. He appears to suggest, however, that political manipulation can interfere with this natural and salutary process: “One kind of production would seldom outstrip every other, and its products be disproportionately cheapened, were production left entirely free.”⁷

Thus while Say’s Law holds in a free market, political intervention can create the economic problems and radical disorder we sometimes encounter.

Say’s conclusion also suggests why it is wrongheaded during poor economic times to believe that the way out lies in an artificial stimulus to consumption. Say’s Law reminds us of what should be obvious: consumption follows production, both logically and temporally. To consume more, we must increase our real demand for goods in the only way possible — through greater production. What increases our real ability to buy is not a mere increase in green paper tickets that the government can bring about through inflation, but rather an increase in what we ourselves produce so that we can acquire the goods we want.

Consumptive Expenditure

Adam Smith made the crucial distinction between consumptive expenditure and productive expenditure. Consumptive expenditure uses up some good without providing for its replacement, such as when a person wears out an air conditioner in his home after a series of hot summers. Productive expenditure involves the expenditure of resources for the purpose of creating still more (and/or more valuable) resources in the future, such that the products more than compensate for the goods consumed in their creation. Investment in machinery that increases productivity in some sector of the economy can be an example of productive expenditure. The free market adjusts productive capacity throughout the production structure in accordance with consumer desires — a greater desire to consume leads to a less extensive capital structure and more consumers’ goods in the present, while less consumption in the present results in a more extensive capital structure and fewer consumers’ goods in the present.

James Mill noted the fallacy of economists’ obsession with consumption:

A thousand ploughmen consume fully as much corn and cloth in the course of a year as a regiment of soldiers. But the difference between the kinds of consumption is immense. The labor of the ploughman has, during the year, served to call into existence a quantity of property, which not only repays the corn and cloth which he has consumed, but repays it with a profit. The soldier on the other hand produces nothing. What he has consumed is gone, and its place is left absolutely vacant. The country is the poorer for his consumption, to the full amount of what he has consumed. It is not the poorer, but the richer for what the ploughman has consumed, because, during the time he was consuming it, he has reproduced what does more than replace it.⁸

In effect, then, exhortations to consume more, or to engage in fiscal policies designed to encourage consumption, essentially prescribe the destruction of wealth as a remedy for economic sluggishness. Rather, we should direct our efforts toward freeing production, the essential source of consumption.

In practice, of course, we do encounter economic difficulties and adjustment problems, but these problems exist because state intervention has impeded the normal adjustment process that rectifies capital misallocation. Sean Corrigan explains why displaced workers often find themselves having difficulty finding employment elsewhere in the economy:

They are unable to find an outlet for their particular skills and talents because the matrix of relative (never absolute, much less average) prices has been made replete with harmful rigidities — thanks to the Fed and the rest of the government — and so cannot adjust to offer them a niche.

Moreover, such niches as do exist are harder to exploit to their maximum because so much scarce capital has been wasted or misallocated, giving people fewer tools with which to work.⁹

According to the Austrian theory of the business cycle, moreover, the artificially lower interest rates that result from centralbank credit expansion lead to misallocations of capital to projects that will yield consumer goods further into the future than real conditions warrant. That is, the rates mislead investors into believing that consumers are more willing to defer purchases than they actually are (since lower interest rates also come about when the savings pool increases). This kind of credit creation in the 1920s is what made the 1929 bust possible and indeed inevitable.

Such government intervention leads to the allocation of investment funds to areas of production that in the absence of central bank credit would be seen as unprofitable. As a result, recessions and depressions do occur, but they do not disprove Say’s insight. To the contrary, they demonstrate the foolishness of state intervention, which impedes what would otherwise be a natural adjustment of production processes toward a condition in which capital is allocated according to consumer desires.

The alleged problem of overproduction, therefore, about which a great deal more could be said, is no problem at all.1 0 The reason we are so much wealthier now than we were 300 years ago is not that we consume more today. We consume more today because we can produce much more, and it is this production that itself both fuels our ability to consume and increases our standard of living.

¹. See Walter LaFeber, The New Empire: An Interpretation of American Expansion, 1860-1898 (Ithaca, N.Y.: Cornell University
Press, 1963).
². Murray N. Rothbard, America’s Great Depression, 4th ed. (New York: Richardson & Snyder, 1983).
³. Joseph R. Stromberg, “The Role of State Monopoly Capitalism in the American Empire,” Journal of Libertarian Studies, Summer 2001, p. 71.
⁴. Receiving alms is not a violation of Say’s Law since the provider of the alms must have produced some good and/or earned the proceeds from the sale of some good.
⁵. For a detailed discussion of this issue, see George Reisman, Capitalism (Ottawa, 111.: Jameson Books, 1996), pp. 559ff. Reisman also shows how even the apple growers themselves stand to benefit in the long run.
⁶. Benjamin M. Anderson, Economics and the Public Welfare: A Financial History of the United States, 1914-1946 (Indianapolis, Ind.: Liberty Press, 1979 [1949]), p. 385; Reisman, p. 567.
⁷. Quoted in William L. Anderson, “Say’s Law: Were (Are) the Critics Right?” Paper presented at the Seventh Austrian Scholars Conference, Auburn, Alabama, p. 11.
⁸. James Mill, Commerce Defended, chapter 4 “Consumption,” www.capitalism.net/Jamesmil.pdf, p. 7.
⁹. Sean Corrigan, “Say’s Law for Our Time,” Mises.org, September 5, 2002.
¹⁰. For more advanced reading on Say’s Law, see Ivan C. Johnson, “A Reappraisal of the Say’s Law Controversy,” Quarterly Journal of Austrian Economics, Winter 2001, pp. 25-53.

Let us consider, first, the corollary assumptions that only political action could have made black economic advancement possible, and that such political action has constituted the unambiguous source of black prosperity. It is routinely asserted as established fact that the Civil Rights Act of 1964 represented a major turning point in the fortunes of black employment seekers. Today’s so-called civil-rights spokesmen have a vested interest in perpetuating the idea that political solutions are always the most desirable and effective. But as Thomas Sowell points out, black employment was improving before 1964: “In the period from 1954 to 1964, for example, the number of blacks in professional, technical, and similar high-level positions more than doubled. In other kinds of occupations, the advance of blacks was even greater during the 1940s–when there was little or no civil rights policy–than during the 1950s when the civil rights revolution was in its heyday.” He also notes that the increase in the number of blacks in professional and technical occupations in the two years following passage of the 1964 Act was actually less than in the year from 1961 to 1962.¹

Similar trends are evident in employment among Hispanics and Asians. “The income of Mexican Americans,” Sowell explains, “rose relative to that of non-Hispanic whites between 1959 and 1969 (after the Civil Rights Act), but no more so than from 1949 to 1959 (before the Act).” The Japanese in America were discriminated against so badly that 120,000 of them were interned in relocation camps during World War II; yet by 1959, Japanese-American households had equaled those of whites in income, and by 1969 they were earning one-third more. Chinese Americans overtook whites in income five years before the 1964 Act.²

Thus nonwhites were well on their way to prosperity even before the landmark 1964 Act. There is still the question of the poor and chronically unemployed within the black community, which has attracted considerable attention over the years. William Julius Wilson and others have attempted to argue that the reason for the increasingly poor performance among lower-class blacks is a dearth of jobs in urban areas. Thus the free market is yet again made the villain, and the state the putative savior.

But this explanation is practically impossible to reconcile with the data. As I have pointed out before, many of the jobs that have been going unfilled are hardly “skilled” jobs whose vocational requirements would eliminate unskilled blacks from the running.³

No serious observer can attribute an inability to secure these kinds of jobs to having been educated in an “underfunded” school system.

Dependency and Entitlement

The perverse incentives of the welfare state have all too frequently enticed the poor, blacks included, away from finding remunerative work and toward a mentality of dependency and entitlement. In 1995 the Cato Institute examined the welfare packages (which, recall, are tax free) in all 50 states and the District of Columbia. In 40 states, the study found, welfare paid more than an $8 per hour job; in 17 it paid more than a $10 per hour job; and in six states and the District of Columbia it paid more than a $12 per hour job. According to researcher Michael Tanner, “In 9 states welfare pays more than the average first-year salary for a teacher. In 29 states welfare pays more than the average starting salary for a secretary. In 47 states welfare pays more than a janitor makes.” In the six most generous states, welfare benefits even constitute more than the entry-level salary for a computer programmer. Such incentives only reinforced certain perverse cultural trends, discussed below.⁴

It is revealing that when the Bureau of the Census asked the unemployed poor in 1990 why they were not working, only 4.1 percent gave as the reason an inability to find work.⁵ Likewise, when Harvard economist Richard Freeman surveyed unemployed inner-city black youths in 1980, 70 percent told him they could easily find a job. By the end of the enormously prosperous 1980s, the figure had risen to 75 percent. They simply refused to take the relatively low-paying jobs open to them, even though the interpersonal and other skills one learns at such jobs have traditionally been the first step toward prosperity for a great many Americans, particularly immigrants eager to succeed.⁶

There are always those who, despite the overwhelmingly destructive effects of the Great Society welfare state, will nevertheless come up with nothing more creative than more of the same.⁷ Perhaps the solution, they argue, is a still greater welfare state, or still more government intervention. Such observers like to point to Sweden, supposedly an example of a prosperous country that nevertheless provides a systematic package of “benefits” from the cradle to the grave.

In fact, though, a major study released in May by the Swedish Institute of Trade (HUI) decisively punctured the myth of welfare-state “prosperity” in Sweden: by the end of the 1990s, Sweden’s median income was $26,800, compared to $39,400 in the United States. More to the point, the HUI economists specifically pointed out: “Black people, who have the lowest income in the United States, now have a higher standard of living than an ordinary Swedish household.”⁸

Further solidifying the moral and practical superiority of free markets and less government, and nicely complementing the HUI study, is the work of Robert Lawson. Professor Lawson recently demonstrated that even if we accept John Rawls’s premise that the just society is the one in which the condition of the least well-off is maximized, we still have to favor the free market, since the condition of the poorest is consistently far higher in market societies than in heavily interventionist ones.⁹ In still further support of this position, Walter Williams wrote an entire book showing how government regulations have (at times deliberately) had disproportionately adverse effects on blacks.¹⁰

Beneath the statistics that economists and social scientists collect is a cultural dimension that cannot be neglected. Last year, Professor John McWhorter, in his controversial Losing the Race: Self-Sabotage in Black America, said what many blacks had been saying privately (and, in Spike Lee’s case, even publicly) for years: a cult of victimology and anti-intellectualism has become widespread throughout black culture in America. “Black America,” he wrote, “is caught in certain ideological holding patterns that are today much more serious barriers to black well-being than white racism, and constitute nothing less than a continuous, self-sustaining act of self-sabotage. . . . It has become a keystone of cultural blackness to treat victimhood not as a problem to be solved but as an identity to be nurtured.

. . . [B]lack Americans too often teach one another to conceive of racism not as a scourge on the wane but as an eternal pathology changing only in form and visibility, and always on the verge of getting not better but worse.”¹¹

Encouraging Victimization

The self-appointed black leadership has positively encouraged this sense of victimization. It is simply impossible to imagine Booker T. Washington or even W.E.B. DuBois doing what Jesse Jackson did in 1999: rushing to the defense of young black men who had initiated a riot following a football game in Decatur, Illinois. Washington would undoubtedly have condemned the violence and demanded of these men the virtue and excellence that would force the white world to respect them. And we can only imagine his shocked outrage at a black leadership that says nary a word about rap “music” that glorifies violence and crime, and teaches young black men to treat women like disposable objects.

Shelby Steele, a professor at San Jose State University, agrees that the traditional explanations for black underperformance trotted out by “liberal” sociologists need to be transcended, and are only making the problem worse. “Of the eighteen black students (in a student body of one thousand) who were on campus in my freshman year,” Steele recalls, “all graduated, though a number of us were not from the middle class.” And the situation now? “At the university where I currently teach, the dropout rate for blacks is 72 percent, despite the presence of several academic support programs, a counseling center with black counselors, an Afro-American studies department, black faculty, administrators, and staff, a general education curriculum that emphasizes ‘cultural pluralism,’ an Educational Opportunities Program, a mentor program, a black faculty and staff association, and an administration and faculty that often announce the need to do more for black students.”¹²

We are dealing here with a matter of the utmost seriousness and complexity, and it is therefore entirely unhelpful to attribute lingering problems in the black community to Ronald Reagan, George Bush, or “capitalism.” It should be obvious that none of these things is relevant to the points raised here. Educational and income disparities between blacks and whites involve a variety of factors, only a few of which can be treated here, but they certainly cannot be reduced to a simplistic condemnation of the free market.

Although government power was brought to bear during the civil rights movement, given the radically changing state of public opinion on race in America (even before Brown), the growth of the black middle class was certainly inevitable.¹³ Meanwhile, an obsessive emphasis on political agitation, left over from the civil rights movement, has served to reinforce the destructive view that blacks can never prosper in an atmosphere of free and voluntary exchange and contract, and that only the power of the state can rectify the injustices that their leaders insist are blacks’ inevitable lot in American society.

The black poverty rate in 1960 was 55 percent; today, fewer than one in four blacks are in poverty. If such progress is to continue, it will have to occur by means of the only method known to man to increase the overall stock of wealth: increased capital accumulation and the private-property order, which has brought such spectacular prosperity, even to the poorest, wherever it has been tried.

Thomas E. Woods Jr. holds a Ph.D. in history from Columbia University and is assistant professor of history at Suffolk Community College (SUNY) in Brentwood, New York.

Notes

1. Thomas Sowell, Civil Rights: Rhetoric or Reality? (New York: William Morrow, 1985), p. 49.
2. Ibid., p. 50.
3. Thomas E. Woods Jr., “The Economics of Infantilism,” Ideas on Liberty (June 2002), pp. 23-24.
4. Michael Tanner, The End of Welfare: Fighting Poverty in the Civil Society (Washington, D.C.: Cato, 1996), pp. 67-68.
5. Ibid., p. 21.
6. Cited in Myron Magnet, The Dream and the Nightmare: The Sixties’ Legacy to the Underclass (San Francisco: Encounter Books, 2000 [1993]), p. 47.
7. The destruction wrought by the welfare state is famously described in Charles Murray, Losing Ground: American Social Policy, 1950-1980 (New York: Basic Books, 1984). Less well known but also excellent is James L. Payne, Overcoming Welfare (New York: Basic Books, 1998).
8. “Study Discovers Swedes Are Less Well-Off than the Poorest Americans,” Reuters, May 5, 2002.
9. Robert A. Lawson, “We’re All Rawlsians Now!” Ideas on Liberty, June 2002, pp. 49-50.
10. Walter E. Williams, The State Against Blacks (New York: McGraw-Hill, 1982).
11. John McWhorter, Losing the Race: Self-Sabotage in Black America (New York: Harper Perennial, 2001).
12. Shelby Steele, The Content of Our Character: A New Vision of Race in America (New York: HarperCollins, 1990), pp. 138-39. When the University of California system moved away from affirmative action several years ago, the usual suspects cried that this was yet another act of hostility by malicious whites. Hardly ever mentioned was that at many of California’s schools it was not unusual for the black dropout rate to be 70 percent or higher (as Steele testified in his own case). This is why John McWhorter strongly favored the move. Happily, there is already evidence that since the scaling back of affirmative action in California, the black dropout rate has begun to decline, as black students find themselves better able to compete in academic environments for which they are more adequately prepared. This is clearly a boon for all concerned.
13. See Paul Craig Roberts and Lawrence M. Stratton, Jr., The New Color Line (Washington, D.C.: Regnery, 1995).

What exactly constitute “economic human rights”? The KWRU website points to Articles 23, 25, and 26 of the United Nations’ Universal Declaration of Human Rights in support of “the rights due every human being.” They include food, clothing, housing, medical care, “necessary social services,” education, work, favorable conditions of work, “just and favorable remuneration,” and the like. Naturally, no one at the organization bothers to justify the grounds on which “every human being” possesses these “rights” other than by this argument from authority.

The closest the site comes to an “argument” is the assertion that the people for whom the organization speaks want things, and some other people have lots of things, so these latter people should be required to give up some of them. Never raised is the question of whether these people with lots of things acquired them honestly or, if so, on what precise grounds the KWRU is justified in demanding that these goods be violently seized from peaceful and honest people.

That so-called “welfare rights” are philosophically fraudulent can be demonstrated by imagining everyone exercising them simultaneously. Surely a right that belongs to human beings qua human beings, such as life itself, ought to be able to be exercised without difficulty by every human being at the same time. If everyone demanded the same welfare right at the same time, no one would get anything, as everyone simultaneously attempted to coerce everyone else.

The libertarian philosopher Frank van Dun recently offered a helpful example. Imagine two people on a desert island: “One can imagine what will happen if they sit there insisting on their ‘right’ of being employed by the other at a just and favorable wage, or to receive unemployment compensation high enough to allow them an existence worthy of their dignity. One can also imagine what will happen if, instead of just sitting there, they attempt to enforce their human rights against one another: their own version of Hobbes’ war of all against all.”1

It is also completely senseless to claim that human beings possess “rights” to goods that in some times and places were not available at all or could be acquired only with the most strenuous toil. Rights obviously cannot be universal or natural to man if they cannot be exercised in all times and places—the very definition of universal.

If in some cases the less fortunate may have a moral claim on the generosity of their fellows, this is a far cry from staking a legal claim to the fruits of someone else’s labor. Forcibly confiscating the justly earned goods of someone you have never met and who has done you no wrong really does require some kind of philosophical justification beyond simply, “We want free stuff!”

This is especially true when we recall the true nature of poverty in the United States. By any conceivable standard, the “poor” in America enjoy a standard of living that people in previous ages (and indeed elsewhere in the world today) could scarcely have imagined. Some 41 percent of our “poor” own their own homes, with another 75 percent owning automobiles and VCRs, and two-thirds having air conditioning and microwave ovens. Virtually all own telephones, refrigerators, and television sets, all of which were once considered luxuries. The average poor person in America has more living space and is more likely to own a car and a dishwasher than the average European. Recalling that we live in a society in which among the poor obesity is a greater problem than malnourishment further helps to put the alleged poverty problem here into perspective. 2

Job Training

It is almost charming that the KWRU can seriously propose increased spending and a federal commitment to job training as the solution to “poverty” without so much as hinting at the $5.4 trillion dollars spent on various federal, state, and local welfare programs since 1965 or the more than 60 different federal job-training programs that currently exist for welfare recipients. 3

And no wonder the activists would rather make placards demanding job training than actually discuss the programs that already exist: federal job training has been one of the most notoriously wasteful government boondoggles of the past 35 years. Consider the Job Corps, a well-known vocational training program for the unemployed that began in 1965. Early on, studies found that those who completed the program had no better success in the job market than so-called “no shows” (people who had been accepted into the Job Corps but who had never shown up), despite the fact that the program cost about the same as providing a Harvard education for every participant. Worse still, throughout the program’s first decade two-thirds of participants never even finished. 4 Is it a hate crime to suggest that perhaps we have happened upon one of the reasons they have had such difficulty finding work?

We might also recall the Boston Compact, a much smaller program in the early 1990s in which private employers guaranteed a job to anyone who graduated from high school. The dropout rate actually rose after the Compact was announced. 5 Such examples could be multiplied ad infinitum.

In many cases, perfectly respectable jobs that require only the most basic skills are easily available, but applicants lack even these. Unless agitators for “economic human rights” are prepared to argue that the poor are complete imbeciles who cannot even be expected to learn basic math, these unsuccessful job seekers can hardly be held blameless for their situation. According to Myron Magnet, the “higher skills” that a steel mill near Chicago recently needed but could not find “amounted to little more than being able to divide 100 by four and, going one step further, to understand the concept of 75 percent.” Moreover, it generally takes “only basic math for a worker to handle the statistical process control that is one of the key recent technological advances in manufacturing.”

Magnet continues: “One didn’t think of secretarial skills as being particularly elevated until recently, when corporations in big cities found that increasing numbers of applicants lacked them. Now anxious companies pay their employees bounties for bringing in qualified applicants for secretarial jobs. Anyone who wants her children . . . to escape poverty needs only to make sure they learn basic literacy, computer typing, and polite, businesslike demeanor in high school.” 6

Can that really be too much to ask?

Staying Out of Poverty

A grand total of 3 percent of married couples who have a high school education are poor. 7 Just complete high school and get married, and you have a 97 percent chance of not being poor. (The Economist reported in 1988 that an American had a less than 1 percent chance of being poor if he simply completed high school, got and stayed married, and held a job, even a minimum-wage job, for at least a year. 8)

To be sure, we’re probably violating the “rights” of the clients of the Poor People’s Economic Human Rights Campaign by demanding anything of them; the logic of their position requires them to believe that for doing nothing at all they are entitled to food, clothing, a home, an education, comprehensive health care, and perhaps 77 other things. Still, sensible people probably don’t consider marriage and a high school education to be insuperable hurdles or a society that demands them akin to Nazi Germany. 9

The fact that a few people own yachts is not a cause of the condition of the poor, nor is it just cause for resentment. But it isn’t difficult to find things that do worsen the condition of the poor. For one thing, the various job benefits that the economic human rights advocates demand naturally make it more expensive and less desirable to hire people in the first place, and therefore create more unemployment. This is one reason that some companies have simply left the United States altogether, all too happy to leave the yelping “social justice” advocates behind. For its part, the Federal Reserve system has consistently and drastically undermined the value of the currency we use, a fact that is likely to be felt more acutely by those with less money.

The suffocating effects of federal regulation also reduce our standard of living. The 1994 Code of Federal Regulations, which lists all federal regulations currently in effect, comprised some 201 books, taking up an incredible 26 feet of shelf space. Its index alone numbers 754 pages. 10 This makes business more costly and all of us less wealthy; some businesses never get started at all because they cannot survive the regulatory regime that has been fastened on us. Social Security confiscates wealth in exchange for a pitiful return (and indeed very likely for no return at all given the way the program is going). In what way can one suggest even jokingly that such a program does anything but defraud the poor, taking money from them that they need in the present in exchange for some indeterminate but certainly minuscule return in the future?

As libertarians well know, the only way to bring about permanent increases in wages across the board is to create a business climate in which capital investment is as unhampered as possible. Increasing the amount of capital equipment at workers’ disposal increases labor productivity and hence wages. With a forklift, a worker may well be able to move enough pallets to earn $25 per hour; without it he’d be lucky to get $8. If someone’s labor is worth only $8 per hour, all the screeching, protesting, and labor organizing in the world won’t get him $25 per hour.

Advocates of economic human rights would doubtless be at a loss to explain why, when unionism was numerically negligible and federal regulation all but nonexistent, real wages in manufacturing climbed an incredible 50 percent in the United States from 1860 to 1890, and 37 percent more from 1890 to 1914, or why American workers were so much better off than their much more heavily unionized counterparts in Europe. 11 It is probably safe to say that few if any of these advocates are even aware of this fact, and probably somewhere around zero ever make mention of it.

It’s time such people learned that stomping one’s feet, shouting demands, and grabbing other people’s things isn’t really how wealth is created, or an especially dignified way for grown men and women to behave.

Notes

1. Frank van Dun, “Human Dignity: Reason or Desire? Natural Rights versus Human Rights,” Journal of Libertarian Studies, Fall 2001, p. 10.
2. For a proper perspective on rich and poor in the United States, see W. Michael Cox and Richard Alm, Myths of Rich and Poor: Why We’re Better Off Than We Think (New York: Basic Books, 2000).
3. The $5.4 trillion figure covers only through 1995 and is cited in Michael Tanner, The End of Welfare: Fighting Poverty in the Civil Society (Washington, D.C.: Cato Institute, 1996), p. 69.
4. Allen J. Matusow, The Unraveling of America: A History of Liberalism in the 1960s (New York: Harper & Row, 1984), pp. 237–39.
5. Jared Taylor, Paved with Good Intentions: The Failure of Race Relations in Contemporary America (New York: Carroll & Graf, 1992), p. 292.
6. Myron Magnet, The Dream and the Nightmare: The Sixties’ Legacy to the Underclass (San Francisco: Encounter Books, 2000 [1993]), pp. 48–49.
7. Linda J. Waite and Maggie Gallagher, The Case for Marriage (New York: Doubleday, 2000), p. 122.
8. “Politics Without Economics,” The Economist, August 6, 1988, p. 8.
9. U.S. Rep. John Lewis once claimed that those who would cut welfare payments are like Nazis. See L. Brent Bozell III, “The Obvious Politics of the Gaffe Patrol,” April 13, 1995, www.mediaresearch.org/columns/news/col19950413.html.
10. . Hans-Hermann Hoppe, Democracy: The God that Failed (New Brunswick, N.J.: Transaction, 2001), p. 62.
11. 11. George Brown Tindall and David Emory Shi, America: A Narrative History, vol. II, brief 5th ed. (New York: W.W. Norton, 2000), p. 692.

Thomas E. Woods Jr. holds a Ph.D. in history from Columbia University and is assistant professor of history at Suffolk Community College (SUNY) in Brentwood, New York.

That is all well and good, but how does a theoretically limited government remain so? Some have argued that it is impossible to restrain a government over time.¹ The framers of the Constitution, for their part, were well aware of the tendency for power to concentrate and expand. Thomas Jefferson spoke of the calamity that would result if all power were vested in the federal government. To be sure, the Constitution was something of a barrier to such tendencies, but any constitution is, after all, only a piece of paper and cannot enforce itself. Checks and balances among the executive, legislative, and judicial branches, a prominent feature of the Constitution, also provide little guarantee of limited government, since these three federal branches can simply unite against the independence of the states and the reserved rights of the people. That is precisely what Jefferson warned William Branch Giles was already happening in 1825: “[I]t is but too evident, that the three ruling branches of [the Federal government] are in combination to strip their colleagues, the State authorities, of the powers reserved by them, and to exercise themselves all functions foreign and domestic.”²

What is necessary, therefore, is some mechanism whereby the federal government may be kept limited and unconstitutional measures frustrated and overthrown. In 1798 Jefferson believed he had identified such a mechanism: the constitutional remedy known as nullification.

First, some historical background. Amidst the naval skirmishes and diplomatic tension associated with what historians refer to as the Quasi-War with France, the Federalists managed to enact legislation that would become notorious: the Alien and Sedition Acts. The prohibition of seditious libel concerned them most.

For Jefferson, the objection wasn’t only that the prohibition would be enforced in a partisan way–though of course it was, with many Republican newspapers and spokesmen targeted for harassment, fines, and even jail time. (Correspondence between Jefferson and Madison at the time includes complaints about mail tampering.³) It wasn’t that seditious libel could be arbitrarily or loosely defined–although, again, in practice it was: one poor soul who expressed the fond wish that the presidential saluting cannon would “hit [President John] Adams in the ass,” was fined $100.⁴ It wasn’t even the curbing of free speech per se, although Jefferson based part of his objection on what he considered the acts’ violation of the First Amendment. (At the time, however, the consensus appears to have been that “the punishment of a seditious libeler did not abridge the proper or lawful freedom of the press.”)⁵

The cornerstone of Jefferson’s objection was that the acts violated the Tenth Amendment, which to him was the foundation of the entire Constitution. Nowhere had the states delegated any authority to the federal government to pass legislation pertaining to the freedom of speech or press. In doing so, then, the federal government had encroached on a state prerogative. For Jefferson, who spoke of binding men by the chains of the Constitution, immediate action was necessary lest such federal usurpations begin to multiply.

Remedy Short of Revolution

Was there a constitutional remedy–that is, a solution short of the extreme measures of secession or violent revolution?⁶ Figures like Daniel Webster and Joseph Story (and later Abraham Lincoln) thought not. Since they subscribed to what might be called the nationalist theory of the Union, whereby the U.S. Constitution had been adopted by the entire American people in the aggregate rather than as a compact among sovereign states, what will be described below as “nullification” appeared to them to be an unlawful revolt by an arbitrary portion of the people rather than as an exercise of sovereignty by a sovereign body.

James Kilpatrick put the question this way: “Are the alternatives two only: submission, or arms? Is the choice truly confined to an acceptance of tyranny on the one hand, or a resort to the sword on the other? Every consideration of reason, common sense, and constitutional theory demonstrate that in a civilized and enlightened society, disputes are not to be so resolved.”⁷ Jefferson agreed.

Certainly the federal government, which was merely the agent of the states, could not be permitted to have the exclusive authority to make commanding judgments about the Constitution, since the obvious long-term consequence would be the eventual concentration of power as it consistently handed down rulings in favor of itself. The states had to be able to make their own interpretations of the Constitution count for something. Even Alexander Hamilton had envisioned a role for the states in restraining the federal government, arguing in Federalist 28 that “the State governments will, in all possible contingencies, afford complete security against invasions of the public liberty by the national authority.”

As far as Jefferson could see, the only way a state could both remain in the Union and retain its liberties in the face of an unconstitutional act by the federal government was for that state to declare the federal action null and void and refuse to enforce it. This was not a recourse to which a state should resort except in the most dire circumstances, of course. It is also a recourse that at first may well sound extreme and possibly unworkable. But the skeptic is invited to suggest another mechanism by which the “rights” of the states may be secured and the federal government kept in check. If the federal government has all the power to interpret the Constitution and the states none, no one has a right to be surprised when the states, as in our own day, are totally eclipsed.

There is, obviously, no provision in the Constitution that explicitly authorizes nullification. That was not Jefferson’s point. He, and later John C. Calhoun, suggested that it was in the nature of compacts that no one side could have the exclusive right of interpreting its terms. This was especially true in the case of the federal compact, since Jefferson and Calhoun contended that the federal government was not a party to it, having itself been brought into being by the joint action of the states in creating a compact among themselves. Since the federal government was merely the agent of the states, it could hardly presume to tell the states, with no room for disagreement or appeal, what their own Constitution meant.

An anonymous Jefferson (who was vice president at the time, it is useful to recall) penned what became known as the Kentucky Resolutions of 1798, which spelled out the objectionable aspects of the Alien and Sedition Acts as well as the states’ rightful response: nullification. (No state actually nullified these acts; the crisis with France came to an end, and the acts were slated to expire in early 1801 in any case.) James Madison penned similar resolutions that were approved by the Virginia legislature.

Let us recall some of Jefferson’s most potent words, ratified by the Kentucky legislature:

Resolved, that the several States composing the United States of America, are not united on the principles of unlimited submission to their General Government; but that by compact under the style and title of a Constitution for the United States and of amendments thereto, they constituted a General Government for special purposes, delegated to that Government certain definite powers, reserving each State to itself, the residuary mass of right to their own self Government; and that whensoever the General Government assumes undelegated powers, its acts are unauthoritative, void, and of no force: That to this compact each State acceded as a State, and is an integral party, its co-States forming as to itself, the other party: That the Government created by this compact was not made the exclusive or final judge of the extent of the powers delegated to itself, since that would have made its discretion, and not the Constitution, the measure of its powers; but that as in all other cases of compact among parties having no common Judge, each party has an equal right to judge of itself, as well of infractions as of the mode and measure of redress.⁸

The great theorist of nullification was Calhoun, one of the most brilliant and creative political thinkers in American history. The Liberty Press edition of Calhoun’s writings, Union and Liberty, is indispensable for anyone interested in this subject-especially his Fort Hill Address, a concise and elegant case for nullification. Calhoun imagined a state holding a special nullification convention, much like the ratifying conventions the states had held when debating the Constitution, and settling the matter there. This is how it worked in practice in the great standoff between South Carolina and Andrew Jackson: when South Carolina nullified a protective tariff in 1832 (its argument being that the Constitution authorized the tariff power for the purpose of revenue only, not to encourage manufactures or to profit one section of the country at the expense of another-a violation of the general-welfare clause), it held just such a nullification convention.

Madison’s Last Word?

That Madison indicated in 1830 that he had never meant to propose either nullification or secession either in his work on the Constitution or in his Virginia Resolutions of 1798 is frequently taken as the last word on the subject.⁹ But Madison’s frequent change of position is well known.¹⁰ Albert Taylor Bledsoe was blunt: “The truth seems to be, that Mr. Madison was more solicitous to preserve the integrity of the Union, than the coherency of his own thoughts.”¹¹

It is true that, at the time, Virginia and Kentucky found little support among the other states for their resolutions (since some of those states were strongly Federalist, they frankly supported the anti-sedition legislation) and South Carolina was all alone in 1832-33. But actions speak louder than words, and if Northern states sharply criticized the nullification of the Tariffs of 1828 and 1832, on the other hand they lifted entire phrases from the Virginia and Kentucky Resolutions of 1798 when themselves nullifying the fugitive slave laws.¹²

The most common argument against nullification is that it would produce chaos, with a bewildering array of states constantly nullifying a bewildering array of federal laws. Given the character of the vast majority of federal legislation over the past several decades (and longer), it is difficult to imagine a libertarian viewing this as an especially grave difficulty.

Having said that, there is little reason to believe that chaos would actually ensue. Consider the historical record. That Americans generally acknowledged the right of a state to secede from the Union-a far more extreme remedy, surely, than nullification-is evident from the number of cases in which states threatened to exercise this option.¹³ Abolitionist and pro-slavery spokesman, protectionist and free trader, all at one time or another counseled secession. Yet was the Union overwhelmed with acts of secession before 1860? Most people have little desire to endure a state of crisis for frivolous reasons. But there can be no doubt that the ever-present threat that an oppressed state might withdraw had the salutary effect of restraining the federal government’s exercise of power.

Moreover, to the fear that nullification would lead to intolerable disorder, James Kilpatrick reminds us of the disorder that characterizes the present system: “If power-hungry federal judges may impose one unconstitutional mandate, they may impose a thousand, each more oppressive than the one before.” Is this not its own kind of disorder? “But if the Constitution is over the [Supreme] Court, who or what finally is over the Constitution? It can only be the States, who under Article V alone have the power to amend or rewrite it.” The theory that the Supreme Court’s interpretation of the Constitution must necessarily be the final word effectively concedes to that body the right substantively to amend the Constitution to mean what the Court says it means. But the right to amend clearly rests with the states. “How, then,” Kilpatrick wonders, “may it be urged that the States ‘unequivocally surrendered’ the control of their most fundamental rights, in the last resort, to a Court they themselves created?”¹⁴

It is hard to find fault with Kilpatrick’s reasoning. In my experience, however, the squeamish always seem to fall back on some hard case that allegedly renders nullification impracticable, even dangerous. Thus, one might argue, even if the doctrine of nullification did not degenerate into general confusion in peacetime, what should happen if a state or group of states should invoke it during war, potentially threatening the nation’s security? Most proponents of nullification have correctly noted that it is precisely in such situations that we would logically expect the interests of the states to be most consonant and their allegiance to the federal government most secure. More to the point, one might well wonder what a group of states was doing in the same union in the first place if a portion of them actually desired to sabotage the prosecution of a just war.

The main point that nullification aims to address is that a government allowed to determine the scope of its own powers cannot remain limited for long. This is a lesson we should have learned by now. Moreover, since piecemeal solutions to reducing federal power have accomplished nothing, we can hardly afford to dismiss out of hand the idea of nullification, a remedy that is at once creative and intelligent, and recommended by some of the greatest political thinkers in American history.

Thomas Woods Jr. holds a Ph.D. from Columbia University and is a professor of history at Suffolk Community College in Brentwood, New York.

Notes

1. Thus see Hans-Hermann Hoppe, “On the Impossibility of Limited Government and the Prospects for a Second American Revolution,” in Reassessing the Presidency, ed. John V. Denson (Auburn, Ala.: Ludwig von Mises Institute, 2001), pp. 667-96.
2. Thomas Jefferson to William B. Giles, December 26, 1825; http://etext.lib.virginia.edu/jefferson/quotations/jeff1060.htm.
3. Cited in William J. Watkins, Jr., “The Kentucky and Virginia Resolutions: Guideposts of Limited Government,” Independent Review, Winter 1999, p. 391.
4. Paul Johnson, A History of the American People (New York: HarperCollins, 1997), pp. 240-41.
5. Leonard W. Levy, Constitutional Opinions: Aspects of the Bill of Rights (New York: Oxford University Press, 1986), pp. 165ff.
6. Although one can make a fairly substantial constitutional case for secession, and thus in a sense secession is a constitutional remedy, what Jefferson was seeking was a solution in which a state could remain in the Union while at the same time resisting an act of federal oppression.
7. James J. Kilpatrick, The Sovereign States: Notes of a Citizen of Virginia (Chicago: Henry Regnery, 1957), p. 190.
8. Virginia Commission on Constitutional Government, We the States: An Anthology of Historic Documents and Commentaries thereon, Expounding the State and Federal Relationship (Richmond, Va.: William Byrd Press, 1964), pp. 143-44.
9. James Madison to Edward Everett, August 28, 1830; reprinted in North American Review, October 1830, p. 537.
10. Professor Constantine Gutzman of Western Connecticut State University, who has written extensively on Madison and his role in (and later recollections and interpretation of) the events of 1798, is particularly scathing on this point: “[Madison] could have listened to the wisdom of the leading men of his state, but he chose first to denigrate them, then to ignore them, and, once his own cohort had died off, to distort their and his own record.” K.R. Constantine Gutzman, “‘Oh, What a Tangled Web We Weave. . .’: James Madison and the Compound Republic,” Continuity, Spring 1998, p. 28. Gutzman argues that despite his later protestations, Madison certainly appeared to be calling for nullification in 1798; see Kevin Raeder Gutzman, “From Interposition to Nullification: Peripheries and Center in the Thought of James Madison,” Essays in History 36 (1994), pp. 89-113.
11. Albert Taylor Bledsoe, Is Davis a Traitor? or Was Secession a Constitutional Right Previous to the War of 1861? (Richmond, Va.: Hermitage Press, 1907), p. 174.
12. Kilpatrick, pp. 214-15.
13. Thus see Thomas J. DiLorenzo, “Yankee Confederates: New England Secession Movements Prior to the War Between the States,” in Secession, State and Liberty, ed. David Gordon (New Brunswick, N.J.: Transaction, 1998).
14. Kilpatrick, p. 194.

The standard view of the Industrial Revolution among the general public is that it led to the widespread impoverishment of people who had hitherto been enjoying lives of joy and abundance. For at least the past several decades, however, alternative interpretations of this critical period have grown so abundant that even Western civilization textbooks, always the last to adapt to new trends in scholarly thinking, have been forced to concede the existence of what is referred to as the “standard of living debate” surrounding the Industrial Revolution. Already in the 1940s and 1950s, the great Austrian economists F. A. Hayek and Ludwig von Mises were among those who advanced an alternative view.

One of the reasons that so many falsehoods and fallacies had come to surround our understanding of the Industrial Revolution, according to Hayek, was that the historians who had studied the matter had been blinded by their own ideological preconceptions. Many of them were Marxists, who believed as part of their creed that industrialization simply had to have made the workers miserable. As Hayek puts it: “[B]ecause the theoretical preconceptions which guided them postulated that the rise of capitalism must have been detrimental to the working classes, it is not surprising that they found what they were looking for.” In short, they had not approached the evidence in the spirit of impartial rationality that befits a scholar, but rather with the ideological ax to grind that characterizes the propagandist.¹

Economist and philosopher Leopold Kohr was far from alone among intellectuals suspicious of capitalism when he suggested in his book The Breakdown of Nations (1957) that the tremendous rise in reform movements and social criticism in the wake of the Industrial Revolution must have been an indication of worsening conditions. “[A]n increase in reform movements,” wrote Kohr, “is a sign of worsening, not of improving, conditions. If social reformers were rare in former ages, it could only have been so because these were better off than ours.”²

But according to Hayek, this is not necessarily so; in fact, the exact opposite is more likely the case. The very fact that we hear complaints in the late eighteenth and early nineteenth centuries about the appalling conditions in which many people lived and worked is, ironically enough, a point in the Industrial Revolution’s favor. Before the Industrial Revolution, everyone fully expected to live in abject poverty, and what is more, they fully expected a similar fate for their descendants. The astonishing wealth that the Industrial Revolution brought forth now made people impatient with any remaining pockets of poverty. Before the Industrial Revolution, when everyone lived in grinding poverty, no one noticed or expressed outrage. Thus, as Hayek notes, we see in the eighteenth century “an increasing awareness of facts which before had passed unnoticed.” He goes on: “The very increase of wealth and well-being which had been achieved raised standards and aspirations. What for ages had seemed a natural and inevitable situation, or even as an improvement upon the past, came to be regarded as incongruous with the opportunities which the new age appeared to offer. Economic suffering both became more conspicuous and seemed less justified, because general wealth was increasing faster than ever before.” ³

One might also mention in this context the famous observation of the great economist Joseph Schumpeter. He offered the additional argument that more than anything else the stupendous wealth which capitalism created was, ironically, what enabled the critics of capitalism to occupy the position of full-time intellectual, enjoying the comforts of leisure and civilization that the system they so decried made possible. Schumpeter feared, in fact, that this development would prove fatal to capitalism. The rise of a distinct class of intellectuals, utterly ignorant of economics, who blame capitalism for every social ill would tend over time to wear down the public’s attachment to the system and would ultimately lead to the replacement of capitalism by an avowedly socialist economy. In short, Schumpeter feared, the very success of capitalism sowed the seeds of its eventual destruction.

Capitalism Creates the Proletariat

Hayek goes on to say that the “actual history of the connection between capitalism and the rise of the proletariat is almost the opposite of that which these theories of the expropriation of the masses suggest.”⁴ In Hayek’s view, capitalism created the proletariat in the sense that the new opportunities for work that it created meant that many more people could survive. “The proletariat which capitalism can be said to have ‘created’ was thus not a proportion which would have existed without it and which it had degraded to a lower level; it was an additional population which was enabled to grow up by the new opportunities for employment which capitalism provided.”⁵ Before the Industrial Revolution a person unable to make a living in agriculture, or who had not been provided by his parents with the tools necessary to go into an independent trade, found himself in dire straits indeed.

What the Industrial Revolution made possible, then, was for these people, who had nothing else to offer to the market, to be able to sell their labor to capitalists in exchange for wages. That is why they were able to survive at all. The Industrial Revolution therefore permitted a population explosion that could not have been sustained under the stagnating conditions of the pre-industrial age. Hayek and Mises dispute the suggestion that that age was prosperous and satisfactory. The standard tale, of course, is well related by Mises:

The peasants were happy. So also were the industrial workers under the domestic system. They worked in their own cottages and enjoyed a certain economic independence since they owned a garden plot and their tools. But then “the Industrial Revolution fell like a war or a plague” on these people. The factory system reduced the free worker to virtual slavery; it lowered his standard of living to the level of bare subsistence; in cramming women and children into the mills it destroyed family life and sapped the very foundations of society, morality, and public health.⁶

Mises joins Hayek in suggesting that conditions prior to the Industrial Revolution were in fact catastrophically poor. The economy on the eve of the Revolution was hopelessly static, and possessed no outlet whatever for the increasingly sizable number of people for whom a living in agriculture or domestic manufacture was impossible.

As Mises argues, the very fact that people took factory jobs in the first place indicates that these jobs, however distasteful to us, represented the best opportunity they had. (This is an illustration of Murray Rothbard’s concept of “demonstrated preference,” according to which an individual’s preferences, when expressed in voluntary action, provide the only absolutely reliable indicator that he has substituted what he believes will be a more satisfactory state of affairs for a less satisfactory one.) “The factory owners,” Mises writes, “did not have the power to compel anybody to take a factory job. They could only hire people who were ready to work for the wages offered to them. Low as these wage rates were, they were nonetheless much more than these paupers could earn in any other field open to them. It is a distortion of facts to say that the factories carried off the housewives from the nurseries and the kitchens and the children from their play. These women had nothing to cook with and to feed their children. These children were destitute and starving. Their only refuge was the factory. It saved them, in the strict sense of the term, from starvation.”⁷

Mises concedes that in the first decades of the Industrial Revolution “the standard of living of the factory workers was shockingly bad when compared with the contemporary conditions of the upper classes and with the present conditions of the industrial masses. Hours of work were long, the sanitary conditions in the workshops deplorable. . . . But the fact remains that for the surplus population which the enclosure movement had reduced to dire wretchedness and for which there was literally no room left in the frame of the prevailing system of production, work in the factories was salvation. These people thronged into the plants for no reason other than the urge to improve their standard of living.”⁸

Mass Production

Another central point is that industrial capitalism is dedicated to mass production. “The processing trades of earlier ages,” Mises explains, “had almost exclusively catered to the wants of the well-to-do. Their expansion was limited by the amount of luxuries the wealthier strata of the population could afford.”⁹ Factory production, on the other hand, was geared toward the mass production of inexpensive goods for the common man. This represents an extraordinary step forward in everyone’s standard of living. And it is this principle on which the entire capitalist system is based:

The outstanding fact about the Industrial Revolution is that it opened an age of mass production for the needs of the masses. The wage earners are no longer people toiling merely for other people’s well-being. They themselves are the main consumers of the products the factories turn out. Big business depends on mass consumption. There is, in present-day America, not a single branch of big business that would not cater to the needs of the masses. The very principle of capitalist entrepreneurship is to provide for the common man. . . . There is in the market economy no other means of acquiring and preserving wealth than by supplying the masses in the best and cheapest way with all the goods they ask for.¹⁰

Our understanding of historical events necessarily influences our political views here and now. Our view of the Industrial Revolution indirectly colors our perception of present-day economic issues. Does capitalism, when left undisturbed, tend to increase everyone’s well being, or is government intervention necessary to prevent widespread impoverishment? This is what is at stake in the ongoing debate over the Industrial Revolution, and in this undertaking F. A. Hayek and Ludwig von Mises were noticeably ahead of their time.

Notes

1. F.A. Hayek, “History and Politics,” in Capitalism and the Historians, ed. F.A. Hayek (Chicago: University of Chicago Press, 1954), p. 22.
2. Leopold Kohr, The Breakdown of Nations (New York: Rhinehart & Co., 1957), p. 155.
3. Hayek, “History and Politics,” p. 18.
4. Ibid., p. 15.
5. Ibid., p. 16.
6. Ludwig von Mises, Human Action: A Treatise on Economics, 3rd. rev. ed. (Chicago: Henry Regnery, 1966 [1949]), p. 618.
7. Ibid., pp. 619–20.
8. Ibid., p. 620.
9. Ibid.
10. Ibid., p. 621.

It has recently been suggested that we cease to use the term “Founders” to refer to those American thinkers and politicians who influenced the formation of the American union and the writing of the Constitution and insist instead on the term “framers.” This idea has much to recommend it. “Founders” possesses certain unacceptable overtones. It suggests that a group of men at a discrete moment in time “founded” the United States out of thin air, as though nothing were owed to the colonial inheritance. But to understand the true history of American liberty, we have to begin not with the 1780s and the Constitution, but with Jamestown and Massachusetts.

By now the thesis of David Hackett Fischer’s important book Albion’s Seed: Four British Folkways in America is familiar to students of colonial America. The period from 1629 through 1775, commencing with the emigration of English Puritans from the east of England to Massachusetts Bay and concluding with the stirrings of revolution, was characterized by the migration of peoples from four distinct regions of England. Following the Puritans, Fischer identifies as a second group a small, putative aristocracy and a sizable number of indentured servants who originated in the south of England who made their way to Virginia (c. 1642-75). The third migration originated in the North Midlands of England and Wales and terminated in the Delaware Valley (c. 1675-1725). Finally, from approximately 1718 through 1775, a fourth group, consisting of immigrants from the borders of North Britain and northern Ireland, made their way to the Appalachian backcountry.^[1]

Naturally, these groups shared a number of obvious and important traits. They hailed from the same part of Europe, spoke a common language, and at least in a broad sense shared the same religion. Indeed, it was precisely these shared characteristics that John Jay cited in the Federalist Papers—specifically #2—as a crucial source of the comity and order that characterized the American republic. “Providence,” he wrote, “has been pleased to give this one connected country to one united people—a people descended from the same ancestors, speaking the same language, professing the same religion, attached to the same principles of government, very similar in their manners and customs.” In other words, the peoples of the various colonies possessed enough common characteristics to make a federal union a plausible idea and at least theoretically possible in practice.

But while much of Jay’s analysis is well taken, Fischer insists that the cultural differences between the peoples who comprised the United States were real, significant, and enduring. In the mid-seventeenth century one Puritan, speaking of Virginians, declared them “the farthest from conscience and moral honesty of any such number together in the world.” Likewise, the Virginian William Byrd II, referring to the Puritans, warned a correspondent that “a watchful eye must be kept on these foul traders.” The two groups, in turn, shared a dislike of the Quakers. (It was frequently said that members of the Society of Friends, as the Quakers were known, would “pray for their fellow men one day a week, and on them the other six.”) The Quakers returned the favor. Although the Puritans thought they had purged their worship of the ritual and “superstition” that had made the Church of England so distasteful to them, theirs was still too outward and formalistic a religion for the Quakers. Decades before William Penn settled Pennsylvania in the 1680s, Quakers living in Rhode Island and elsewhere would make their way up to Massachusetts in an effort to rouse its benighted inhabitants from their dogmatic slumber and awaken them to the aridity of their faith. Quakers would disrupt Puritan church services, heckle ministers, and on occasion would even walk naked up and down the church aisles. The Friends were banned repeatedly from Massachusetts. In turn, as late as 1795 one Quaker referred to New England in general as “the flock of Cain.”^[2]

The mutual antagonism of these groups contributed in a peculiar way to the development of American liberty. Each of these peoples would be vigilant to exclude interference in their internal affairs by any of the others. The much-heralded problem of reconciling the interests of large and small states at the Constitutional Convention has, in Fischer’s view, obscured the more interesting, meaningful, and revealing task of the framers, which was “to reconcile different political cultures,” as they were found in the various regions. (One of the reasons Patrick Henry opposed the Constitution was that he believed it did not go far enough in ensuring regional integrity; he was sure that when one section became powerful enough, it would use its clout to oppress the others.)

Delicate Balance

Balancing these different political cultures was often a delicate procedure indeed. The very idea of freedom possessed varying connotations in the several colonies. When, for example, the First Amendment declared that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof,” this “deceptively simple statement,” in Fischer’s view, concealed a “regional compromise of high complexity.” “Its intent,” he goes on, “was to preserve religious freedom of Virginia and Pennsylvania, and at the same time to protect the religious establishments of New England from outside interference.”^[3] To develop a policy that would be satisfactory to all, therefore, it was simply decided that the federal government should have no authority whatever vis-à-vis the various religious postures adopted by the several states.

There was, of course, a great deal more than mutual antagonism that gave impetus to the tradition of American liberty. What characterized the American colonists, for the most part was, first, sheer practicality—they were practical men, not schemers—and second, an unswerving commitment to self-government. These two qualities are not easily separated; when, for example, the states cautiously ratified the federal Constitution in the 1780s, their insistence that it remain a strictly limited union was based partly on their unwillingness to relinquish major prerogatives of self-government, and partly on their lack of interest in making a confederation an end in itself, or a self-justifying goal, as Clyde Wilson put it. The American revolutionaries were not like the French, the most radical of whom sought to extirpate the smallest remnant of pre-revolutionary France from historical memory. The Americans had no intention of anticipating the French example by abandoning the Gregorian calendar and beginning anew with the Year I in commemoration of the establishment of the new republic. The American union was simply a practical arrangement, brought into being to accomplish specific and finite objectives.

Lasting Liberty

It was precisely the lack of inclination among any of these peoples to remake the world, or even their own civilization, according to an arbitrary blueprint that helped make American liberty both possible and lasting. The nineteenth-century Massachusetts Whig Rufus Choate, an important American legal thinker and sometime congressman and senator, pointed with pride to the sober judgment and statesmanship of his native section:

There was another great work, different from this, and more difficult, more glorious, more improving, which they had to do, and that was to establish their system of colonial government, to frame their code of internal law, and to administer the vast and perplexing political business of the colonies in their novel and trying relations to England, through the whole colonial age. Of all their labors this was the grandest, the most intellectual, the best calculated to fit them for independence. Consider how much patient thought, how much observation of man and life, how much sagacity, how much communication of mind with mind, how many general councils, plots, and marshalling of affairs, how much slow accumulation, how much careful transmission of wisdom, that labor demanded. And what a school of civil capacity this must have proved to them who partook in it! Hence, I think, the sober, rational, and practical views and conduct which distinguished even the first fervid years of the Revolutionary age. How little giddiness, rant, and foolery do you see there! No riotous and shouting processions, no grand festivals of the goddess of reason, no impious dream of human perfectibility, no unloosing of the hoarded-up passions of ages from the restraints of law, order, morality, and religion, such as shamed and frightened away the new-born liberty of revolutionary France. Hence our victories of peace were more brilliant, more beneficial, than our victories of war.^[4]

Nothing could have been further from the minds of the colonists than the suggestion that by virtue of having settled in a new land they had inherited a unique divine mandate to remake the world. The Puritans, it is true, spoke in terms of a divine mission. John Winthrop’s biblical allusion to a “city on a hill” suggested that the godly community of Massachusetts Bay might lead to a regeneration of the Church of England and indeed the entire world. The important proviso, however, was that this regeneration was to take place by example rather than force. With their gaze fixed firmly heavenward, the Puritans would have considered it an act of supreme impiety and classic human folly to expect the regeneration of the world through any mere human enterprise. It was only when the stern Calvinism of the Puritans had given way to the optimistic Unitarianism of nineteenth-century New England, and ultimately to the secular utopias of Progressivism and social democracy, that the city on a hill imagery came to possess the imperialistic overtones with which we are so familiar today.

That the original Massachusetts settlements had their theocratic aspect is not really in question. The law was expected to reflect biblical precept as precisely as possible. The franchise was restricted to church members; to become a church member, one had to undergo a process for which interrogation is probably too strong a word, but one by which so-called “pillars of the church” would attempt to determine, as far as it lay within the province of human capacity to discern, whether a prospective member belonged to the elect—that is, had been eternally predestined to heaven—or to the damned. The latter group, although excluded from the franchise and from reception of the Lord’s Supper, were nevertheless required to attend church. Steeped as they were in covenant theology, the Puritans believed that if they succeeded in establishing a truly godly community, God would look upon them with favor; if they failed, they would be subject to His wrath. They wished to live among like-minded folk in order better to live out a shared ideal.

In the Dedham (Massachusetts) Covenant drawn up during the 1630s, it was resolved “that we shall by all means labor to keep off from us all such as are contrary minded, and receive only such unto us as may probably be of one heart with us.”^[5] The entire enterprise contained an element of utopianism, to be sure, in that the settlers sought to “build the most perfect possible community, as perfectly united, perfectly at peace, and perfectly ordered as man could arrange.”^[6] It was, however, a utopianism that ended at the community’s borderline. They wanted simply to be left alone.

Forgotten Commitment to Liberty

The community aspect of early New England has been so often emphasized that the Puritans’ commitment to traditional English liberties has tended to be forgotten. Relatively little known outside the rarefied circles of colonial scholarship is the fact that it was a popular movement in the late 1630s that demanded the explicit codification of the colonists’ rights. Winthrop, the key figure in the Puritan migration and a longtime governor of Massachusetts Bay, had always favored having as little written law as possible in order to give him and to give his judges the discretionary authority they believed they needed to rule in accordance with the Bible. In the minds of the colonists themselves, however, this discretion was simply too great.

In 1641, with Winthrop temporarily voted out of office on these very grounds, they secured passage of what became known as the Massachusetts Body of Liberties. The document’s provisions, of which there are over 100, include items familiar to the student of British law and politics: the principle of no taxation without representation, the right to a jury trial, and the guarantee that no person would be deprived of life, liberty, or property without due process of law. (It also contains a peculiar provision prohibiting wife beating, excepting when the husband is acting in self-defense.)^[7]

Over time, a series of factors would gradually dissolve what some might consider the more disagreeable aspects of community life in Puritan New England. The factors included the pressures of a growing population, which forced people to settle ever further from the town center—thereby rendering themselves less easily observed and controlled by government and religious authority—as well as the increasing attraction of theological liberalism. Thus what had once been a self-consciously corporate enterprise would eventually make room for a greater degree of individual liberty.

Virginia’s development took just the opposite path. It started off as a distinctly individualistic colony. The early settlement of Virginia was dominated by young single males. A host of factors, prominent among them Virginia’s (not entirely undeserved) reputation as a disease-ridden deathtrap, served to discourage the kind of self-consciously corporate and family-oriented migration that had characterized the Puritan experience. Gradually, as the mortality rate declined and the colony’s prosperity became widely known, it became more sensible for entire families to make their homes in the Chesapeake.

As Virginia became more settled and established, it also became more aristocratic. The Virginia aristocracy would grow attached to the principle of self-government, and these men took their responsibilities seriously. It was a strict requirement that every member be present especially for the opening session of the House of Burgesses, and that any absence had to be excused. Poor James Bray: in 1691 the House of Burgesses was so offended by his explanation for his absence that the Speaker actually issued a warrant for his arrest, and held him in custody until he made an apology.^[8] This was government by an elite and with a restricted franchise, it is true, but the importance of the franchise in safeguarding liberty has been greatly exaggerated. (Recall that F. A. Hayek warned of making a “fetish of democracy.”) What is important is that this elite was composed of an extraordinarily talented group of men who, when the crisis came, were able to articulate precisely where and how American rights and liberties were being threatened.

In keeping with most of the colonial tradition, the Virginians were also men of a uniquely practical bent. This aspect of the Virginia gentry has frequently been obscured by historians’ careless conflation of this colonial elite with the French philosophes. It is true that Virginia planters were skilled in law, meteorology, medicine, and so forth, but this was not because they were trying to make an ideological statement about the sovereign unity of reason or any such thing. As Daniel Boorstin observes, “How devious it is to explain these plantation necessities as if they were inspired by the distant example and abstract teachings of the European Enlightenment! They were nothing more than an index to the problems of a Virginia planter.”^[9]

Moreover, and again in contrast with the philosophes, the Virginians were especially devoted to their region, to their particular plot of earth. “Their localism has been given far too little attention and too little credit,” Boorstin notes. “In these days, when States’ rights are out of fashion, we are too often told that a man’s preoccupation with the habits of the place where he lives can only drag the national progress. We are fortunate that 18th-century Virginians thought differently. Their concern with the special requirements of their own particular place on earth not only flavored their political life and expectations; it gave all their thinking the aroma of the specific and kept all their social ideals within finite bounds.”^[10]

Intermediary Institutions

Ultimately, therefore, the colonies succeeded in providing the individual liberty that makes a rational and civilized life possible, while at the same time cultivating a corporate sentiment that provided a source of resistance to centralizing and consolidationist schemes. With the advantage of hindsight we can see the importance of this latter consideration, which in some libertarian analyses might be overlooked. The need for vigorous intermediary institutions was especially emphasized by the outstanding classical liberal Benjamin Constant: “The interests and memories which are born of local customs contain a germ of resistance which authority suffers only with regret, and which it hastens to eradicate. With individuals it has its way more easily; it rolls its enormous weight over them effortlessly, as over sand.”^[11]

The French revolutionaries, for example, despised the local customs and peculiarities that dotted their country’s landscape and reorganized France into arbitrary “departments” that bore no relation to its historic regions. In our own century, the deliberate and coordinated destruction of local institutions and intermediary associations has been a principal weapon of various totalitarian systems in eliminating potential sources of resistance. Hitler, of course, despised German federalism, which he correctly perceived as an obstacle to his consolidation of power. Stalin, for his part, attempted to starve the Ukraine into submission when standard Soviet propaganda proved insufficient to divest it of its traditional national feeling. In the soft totalitarianism of social democracy, we have seen how our own government has abetted social upheavals at the local level in order to strengthen its control everywhere.

It was the combination of their strict practicality and their well-cultivated corporate identity that caused the American colonists to look with suspicion on confederations of any kind. That good reasons could be adduced for uniting with their fellow colonies for limited and practical purposes was not in doubt. But the terms of such confederations would have to be spelled out clearly and explicitly, and any such intercolonial alliance would have to be kept under a vigilant watch. Thus it was only belatedly that the Puritans banded together in an intercolonial alliance, the so-called Confederation of New England. Persistent rumors of imminent Indian hostilities, and ongoing suspicions of the Narragansett tribe in particular, led the colonies to consider such a move. And yet, in the classic American tradition, the colonists kept a close watch on this Confederation.

New England had lived without incident for some years in increasing proximity to New Netherland. But when in 1652 Cromwell attacked the Netherlands and the two mother countries were thus at war, the possibility of a colonial clash, with each side arming its Indian allies, worried New Englanders. Connecticut and New Haven began to beat the drums for war. “Massachusetts chose this moment,” Alden Vaughan notes, “to question the fundamental right of the United Colonies to declare offensive war over the objections of any General Court. Massachusetts was not about to be dragged into an international war by its three small and imperious neighbors.” Vaughan also observes that the strength of the Confederation was seriously impaired by Massachusetts’s constitutional challenge, but this outcome only reinforces the point that the integrity of self-government was the overriding consideration in the minds of the colonists.^[12]

Overreaching Crown

That the robust if zealous character of community life in Puritan New England had accustomed its inhabitants to the principle of self-government was made dramatically apparent toward the end of the seventeenth century when the Crown attempted to establish its authority more firmly there and elsewhere. Partly in an effort to ensure that British trade regulations would be properly enforced, and partly out of a legitimate concern for the colonies’ effective defense against a potentially aggressive New France, King James II established during the 1680s the so-called Dominion of New England, which combined Massachusetts, Maine, and New Hampshire into a single government under a single royal governor. As time went on, James II would annex Rhode Island, Connecticut, New York, and the Jerseys to the Dominion, and had his sights on Pennsylvania at the time he was deposed.^[13] Its first governor was the hapless Joseph Dudley, the son of the old Puritan governor Thomas Dudley, but the most memorable figure associated with the Dominion was the hated Sir Edmund Andros, who took power in late 1686.

Given the colonists’ attachment to self-government, Andros would have aroused bitterness under the best of circumstances. But he was by temperament distinctly unsuited to the task. His style of governance seemed calculated to create resentment: he levied taxes by his own fiat, for example, and jailed those who protested these usurpations. The enraged colonists, vigilant in protecting their liberties, were waiting for an opportunity to strike. It came with the Glorious Revolution of 1688.

Communication was slow in the seventeenth century, so it was several months after the fact that the American colonies learned that James II had been deposed and William and Mary installed. On April 4, 1689, word reached Boston that the new king and queen wanted “all magistrates who have been unjustly turned out” to resume “their former employment.” That was all the citizenry needed to hear. “The machine-like precision with which [this parallel revolution] unrolled points to careful plans and leadership, which no one has yet unearthed,” writes Samuel Eliot Morison. “The townspeople rose, the countryside rose, Andros and some of his principal councillors were thrown into jail.” A meeting presided over by the last governor under the Bay Colony charter adopted the “Declaration of the Gentlemen, Merchants, and Inhabitants” that had been drawn up by the eminent Puritan divine Cotton Mather.^[14] The Dominion was at an end and self-rule was again in effect.

It was the same spirit that led the colonists to reject Benjamin Franklin’s proposed Albany Plan of Union in 1754. Under the pressure of Indian war, Benjamin Franklin and Thomas Hutchinson—the latter of whom would play an ignominious role in the events leading up to the American War for Independence—drew up a scheme according to which the colonies would yield a considerable amount of their authority to a new inter-colonial governing structure. Not a single colonial assembly ratified the plan.

We can see, then, why it is misleading to date the tradition of American liberty from the late 1780s, since the Constitution of the United States was in fact only the culmination of generations of practical self-government on the part of Americans. At the time of the framing of the Constitution and the formation of an allegedly “more perfect union,” the colonists had precedents for challenging the powers of a confederation, as in the case of the Confederation of New England, for rejecting a confederation, as in the case of the Albany Plan of Union, and for bringing down a confederation by force, as in the case of the Dominion of New England. It can hardly be surprising, therefore, to learn that at the time of the ratification of the Constitution, three states—Virginia, New York, and Rhode -Island—in acceding to the new confederation, explicitly reserved the right to withdraw from the union at such time as it should become oppressive. In so doing they were only exercising the vigilance and libertarian principle that had animated the American experience during the colonial period.

Thus when a union of polities becomes an end in itself, as it had in the minds of some by the time of Daniel Webster, but certainly since the Civil War, the repudiation and indeed perversion of the colonial ideal is complete. Nothing could be more obvious than the traditional American wariness of confederations—which, whatever their advantages, the colonists consistently viewed in terms of the threats they posed to self-government. Had the American union, the confederation inaugurated by the Constitution, been understood to be perpetual and indestructible, the states, which had just fought a war for self-government against the British empire, would never have entered it. What the colonial period has to teach us, then, is that the truly American sentiment is not Andrew Jackson’s famous toast, “Our federal Union—It must be preserved!” but John C. Calhoun’s reply, “The Union—Next to our liberties, most dear!” []

Notes

1. David Hackett Fischer, Albion’s Seed: Four British Folkways in America (New York: Oxford University Press, 1989), p. 6.
2. Ibid., pp. 821-22.
3. Ibid., p. 830.
4. Rufus Choate, “The Colonial Age of New England,” in The Works of Rufus Choate, with a Memoir of His Life, ed. Samuel Gilman Brown (Boston: Little, Brown, and Co., 1862), pp. 365-66.
5. Kenneth A. Lockridge, A New England Town: The First Hundred Years (New York: W.W. Norton, 1985), p. 5.
6. Ibid., p. 16.
7. Edmund S. Morgan, The Puritan Dilemma: The Story of John Winthrop (Glenview, Ill.: Scott, Foresman, & Co., 1958), pp. 155-73; Samuel Eliot Morison, The Oxford History of the American People, vol. 1, Prehistory to 1789 (New York: Oxford University Press, 1965), pp. 108-109.
8. Daniel Boorstin, The Americans: The Colonial Experience (New York: Random House, 1958), p. 113.
9. Ibid., p. 108.
10. Ibid., p. 141.
11. Quoted in Ralph Raico, “Benjamin Constant,” New Individualist Review, Winter 1964, p. 53.
12. Alden T. Vaughan, New England Frontier: Puritans and Indians, 1620-1675, 3rd ed. (Norman, Okla.: University of Oklahoma Press, 1995), pp. 174-75.
13. Morison, p. 167.
14. Ibid., p. 171.

The American tradition of decentralism has attracted adherents on both sides of the ideological spectrum and from all sections of the country. William Appleman Williams, a man of the New Left, actually preferred the Articles of Confederation over the Constitution, and insisted that the core radical ideas and values of community, equality, democracy, and humaneness simply cannot in the future be realized and sustained—nor should they be sought—through more centralization and consolidation. These radical values can most nearly be realized through decentralization and through the creation of many truly human communities. Students for a Democratic Society leader Carl Oglesby, in his book Containment and Change, pointed with approval to such right-wing partisans of the old republic as Howard Buffett and Garet Garrett, and went so far as to declare that in a strong sense, the Old Right and the New Left are morally and politically coordinate.

While decentralist and even secessionist sentiment was widespread throughout the North at least through the early nineteenth century—recall, for example, that former Secretary of State Timothy Pickering twice garnered support for a plan by which New England and New York would secede—these principles remain most closely associated with the American South. And yet these principles, while securely grounded in the Constitution, found their salience for the average Southerner less in their cogency in the realm of abstract theory than in the natural loyalties he felt toward the persons and institutions closest to him. Nathaniel Hawthorne, himself a Southern sympathizer, once remarked that a state was about as large an area as the human heart could be expected to love, and that the local and particular would always possess a stronger claim on the individual’s allegiance than such a distant abstraction as the Union. John Greenleaf Whittier once wrote of that exemplar of the old South, John Randolph of Roanoke:

Too honest or too proud to feign

A love he never cherished,

Beyond Virginia’s border line

His patriotism perished.

Thomas Jefferson, among the most forceful advocates of localism in early America, pointed in 1791 to the decentralist Tenth Amendment as the cornerstone of the American republic: I consider the foundation of the Constitution as laid on this ground: That `all powers not delegated to the United States, by the Constitution, nor prohibited by it to the States, are reserved to the States or to the people.’ Yet Jefferson’s ideal political order went far beyond a recognition of mere states’ rights: as Dumas Malone points out, Jefferson’s ideal political order called for a far greater decentralization, in which self-governing towns would make virtually all their own political decisions without outside interference. He envisioned a hierarchical structure of town, county, state, and finally national government, and his goal was a system in which no entity of a higher order would infringe on the just prerogatives of one of a lower order.

Despite the honorable lineage of states’ rights advocates, led by the sage of Monticello, some people dismiss the states’ rights argument, as framed by Southerners, as merely a grandiose justification for slavery. While the historical and constitutional arguments adduced in its favor cannot be explored here in any depth, it should be recalled that they were compelling enough to force even the Progressive historians Charles and Mary Beard to concede that the South had rather the better of the argument. Moreover, as Professor Eugene Genovese reminds us, of the five Virginians who made the greatest intellectual contributions to the strict constructionist interpretation of the Constitution—George Mason, Thomas Jefferson, John Randolph of Roanoke, St. George Tucker, and John Taylor of Caroline—only Taylor could be described as proslavery, and even he regarded it as an inherited misfortune to be tolerated, rather than celebrated.

Wartime propaganda aside, America’s War Between the States was merely the American counterpart of a worldwide trend toward national centralization, as illustrated by the contemporaneous experiences of Italy, Germany, and Japan. In the United States, however, the saccharine language of justice and rights obscured the real significance of the war and Reconstruction. Yet even historian Vernon Parrington, no man of the Right, had reservations about the outcome of the war, which he considered disastrous for American democracy, for it removed the last brake on the movement of consolidation, submerging the democratic individualism of the South in an unwieldy mass will. States’ rights, he believed, had been not merely an abstract principle but an expression of the psychology of localism created by everyday habit.

A Step in the Wrong Direction

For some Northerners, the subjugation of the South and the central state’s subsequent efforts toward cultural and political homogenization were the first step toward realizing their own imperial ambitions for the United States. Secretary of War William Seward articulated this view most clearly. Seward held a distinctly millennial view of his country’s role in the world, convinced that America had a mission to spread republicanism throughout the globe. In order for his plan to be realized, however, order would first have to be established at home and the unchecked power of the central state vindicated. It is no coincidence that within a generation after the last occupying forces left the South at the end of Reconstruction, the United States had embarked on its career of empire.

The revolution that began in the 1860s has progressed with a cold and relentless logic, reducing historic communities to mere administrative units of the central state. Jefferson warned of the dire consequences if all decision-making power became centralized in Washington. It hardly needs saying that this centralization has come to pass; worse still, more and more legislative functions are now being delegated to global institutions. Ordinary citizens have been known to beat city hall from time to time, but their prospects for challenging a decree of the World Trade Organization are slight.

Thinking Locally, Acting Locally

What steps can be taken to reverse this trend? Here are a few suggestions:

1. We must revive local control as an issue in our national political discourse. From school curricula to crime control, we should insist that, regardless of our own positions on these issues, they are properly decided at the local level. Of course, under such a Jeffersonian regime not all communities will adopt policies that suit our personal tastes. But if we are serious about restoring local control, we must resist the temptation to interfere in the affairs of communities to which we do not belong.

2. If local control is to have any meaning, the jurisdiction of the imperial Supreme Court must be drastically curtailed. The surprisingly short amount of time the Framers spent discussing the judiciary at the Constitutional Convention suggests their own view of its relative importance. Alexander Hamilton described it as the least dangerous of the three branches, and Jefferson’s opposition to the Court’s imperial designs was notorious. Never did the men of the early republic imagine that it would play the quasi-legislative role it has assumed in the twentieth century.

The jurisdiction of the Supreme Court can be restricted with relative ease. Article III, Section 2, of the federal Constitution provides several relatively minor categories of law in which the Court shall enjoy original jurisdiction. In most cases, however, the Supreme Court shall have appellate Jurisdiction . . . with such Exceptions, and under such Regulations as the Congress shall make (emphasis added). At any time, therefore, a simple majority of Congress can strip the Court of jurisdiction in a given matter and return usurped legislative prerogatives to the people and their representatives.

Ample precedent exists for such measures. After the Dred Scott decision, abolitionists spoke of stripping the Court of its appellate jurisdiction in all cases involving slavery. Two decades later, when it became clear that in the case of ex parte McCardle the Supreme Court would find the Reconstruction Acts unconstitutional, Congress passed an act in 1868 removing the Court’s jurisdiction over such issues, in accordance with Article III, Section 2. (When the case was reheard in 1869, the Court acknowledged the right of Congress to take this action.) In 1935, after handing down its ruling in Nortz v. United States, the Court seemed on the verge of declaring unconstitutional the government’s repudiation of the gold standard; Congress promptly passed a law removing the Court’s jurisdiction in this area. In the wake of the apportionment cases of the early 1960s, the House passed a measure, defeated in the Senate, that would have deprived the Court of its jurisdiction there as well. In 1979, Senator Jesse Helms authored a resolution that would have done the same thing in matters of state laws regarding voluntary school prayer. The list could go on.^[1]

That these are precedents of which we would uniformly approve is doubtful: that they are precedents, however, is certain. It is worth noting in this connection that while the Confederate Constitution of 1861 provided for a Supreme Court, public opinion was so antagonistic toward such an institution that the implementing legislation was never passed. The Confederate legal order remained one of state judicial supremacy.

3. All U.S. military intervention must be opposed on a priori grounds. The example of Secretary Seward reminds us that our most ardent global crusaders tend to be those least concerned with, and often actively hostile toward, the American decentralist tradition. To the extent that such men give any thought to American regionalism and federalism at all, they see in foreign intervention an effective way of cementing the bonds of union at home. The political scientist Bruce Porter, in his recent War and the Rise of the State (1994), comes close to suggesting that the central direction and planning occasioned by war—to say nothing of the massive ideological propaganda that has become a hallmark of modern warfare—might be necessary to lift Americans out of their ethnic and regional parochialisms in the post-Cold War era. This tactic would exemplify what the libertarian journalist Felix Morley called nationalization through foreign policy.

Blanket opposition to foreign intervention will win us no popularity contests. Television and newspapers reserve their most intemperate name-calling and opprobrium for those whose only crime is to uphold the dictum of John Quincy Adams—that America is a well-wisher of liberty everywhere, but defender only of her own. That the distinctly honorable position of maintaining friendly relations with foreign nations and opposing our own government’s murderous military adventures should have incurred the isolationist smear is one of the great propaganda triumphs of our century. Recall that the nineteenth-century British classical liberal Richard Cobden, who opposed every instance of British adventurism in his own lifetime, was referred to not as an isolationist but, appropriately, as the International Man.

Describing the Republican Party of his day, John Randolph listed the following as its first principles: Love of peace, hatred of offensive war, jealousy of the state governments toward the general government. This, in a nutshell, is the political program of the American decentralist. Writing in Chronicles, Bill Kauffman summed up the common interest in localism shared by grassroots activists of widely varying perspectives: The new American populism has 1,000 offshoots, but a Southern League partisan in Alabama and an anti-nuclear dump activist in Allegheny County, New York, are comrades in the nascent movement that is opposed, as Jerry Brown said in Chronicles, to `a global focus over which we have virtually no control.’ In that spirit, decentralists across the political spectrum should set aside mutual recriminations and remember that our real foe is the central state, whose imperial designs bode ill for the future of what Edmund Burke called the little platoons of civilization.

1.   See the discussion in Forrest McDonald, A Constitutional History of the United States (New York: F. Watts, 1982).