The noted author of Economics in One Lesson here applies that lesson to some of the fallacies of socialism.

The other day I received a letter from a correspondent previously unknown to me, which began by saying how much he had learned from and agreed with some of my books. But then he went on to say that a large number of questions were bothering him that my books had failed to answer. There followed a long list.

The writer declared that he rejected socialism, and implied that he admired free enterprise. But all of his ostensible questions revealed that he had in fact accepted most of the socialist criticisms of the free enterprise system.

I answered his letter politely and briefly. But it was so typical of many I receive, and so typical of much thinking and writing in the daily press, that I felt tempted to expand my answer and make it more explicit, even at the cost of being a little less polite.

If I had done this, my answer would have run somewhat as follows:

Dear Sir: I very much appreciate your kind remarks about some of my books and articles, and your expressed agreement with them, but I am surprised by how easily influenced you seem to be by so many of the current anti-capitalist criticisms. Most of these are carping or groundless, but they are endlessly repeated. Let’s take up some of your objections in the order in which you state them:

·          1. You charge that in large areas competition has in fact disappeared, and you give a number of supposed illustrations. Now competition has never been, is not now, and will never be "perfect." Economists cannot even agree with each other regarding what "perfect competition" would be like if it existed. The most frequent outcome of really vigorous competition, for example, is for the winners to put the losers out of business. You complain that there are now only four automobile companies in America. Actually, in the comparatively short history of the motor industry there have been scores of companies and makes—remember the Haynes, Duryea, Pierce-Arrow, Packard, Peerless, Hudson, Stutz, Studebaker, Nash, Willys, Maxwell, Essex, Edsel? — that lost out in the quality, price, or sales competition. Only two companies, if they really compete with each other, can provide sufficiently effective competition. In politics, most people even prefer only a two-party competition.

·          2. You complain about the inability of the consumer to assess the quality of many a commodity or service. Again, let me point out that consumers never have been, and never will be, perfectly able to assess the quality of a given commodity or service until after they have bought and used it. Even after that they may only know how good or bad the particular example is that they bought or used.

·          3. You talk of the inability of the consumer to obtain the goods or services he may want. Of course not every consumer will be able to obtain at all times the exact product or service he may want, but under even our present "impure" private competitive system he obtains far more of what he wants than he can, or ever could, under a socialist system. The American consumer, in fact, has a greater range of choice than he or anyone else has ever previously obtained in history. One has only to think of today’s average supermarket.

·          4. You talk of "the recent rediscovery of limitations in resources such as energy, raw materials, food, etc." There have always been and will always be such limitations. If there were no shortages, nobody would be able to sell anything at a price. Everything would be free as air and water are today. (What we pay for in water is chiefly the cost of bringing it from somewhere else into the home. Air, too, can have a price when it has to be purified or brought under pressure into a mine.) The greater the shortage of anything, the higher its price. Increasing population, of course, tends to increase relative shortages. But increasing competition, new capital investment, and technological advance, still work to relieve shortages and to reduce the real cost of hundreds of commodities.

·          5. You talk about "planned obsolescence" as if it were an established fact. It is mainly if not entirely a myth. If one automobile company planned a car that would break down in a few years, it would soon find itself out of business. If the Big Four American motor companies secretly agreed to make cars that fell apart in a given time, consumer dissatisfaction and foreign competition would soon put all four of them out of business. What is called "planned obsolescence" by anti-capitalist critics is something radically different. It is in fact vigorous competition, constantly introducing real improvements, that makes a consumer dissatisfied with his old car and more eager to buy a new one. The Ford Company kept building the Model-T for many years to avoid precisely what you call "planned obsolescence"; but competition forced it to change its ways. A socialist government would have continued endlessly to turn out Model-T’s—after the private industry it had taken over had developed them. It is odd how the anti-capitalists talk of free enterprise’s greatest virtues as if they were great evils.

·          6. Competition leads industry to do exactly the opposite of what its critics charge it with doing. Over the years the tire industry has made continuous improvements in its product. Tires now last for incredibly more miles than they once did. Again and again firms in the industry have feared that this increased mileage would not only reduce sales but drive them out of business. But the individual tire manufacturer had no choice. Competition forced him to keep improving and improving. It is only a government-owned, socialized industry that could afford to keep its tires constantly unimproved. It is no coincidence that the industry that has improved least in this country in the last half century is the postal service. Whatever improvement it has had has consisted in making use of the inventions of private industry.

·          7. You attach to your letter a list of seventeen "innovations which are all possible with present technology—but have not been made:’ Let me point out that we do not have to wait for the existing big companies to make any of them. Anybody with moderate capital is free to start making them if there really would be a sufficient demand for them, and if they could be made and sold at a cost that yielded a profit.

• 8. You express fears about the future world population. You say that if it continued to increase at the present rate, "the average population density over all land areas of the world, including Antarctica, would in the year 2350—only 375 years hence—be the same as that of Manhattan during a working day now:’ Without checking on that or other calculations you make, let me point out that the situation you envisage is simply impossible. Thomas Malthus noticed nearly 200 years ago that there had been a tendency of population to increase faster than the means of subsistence. But this would tend to bring a near-starvation that would in time bring the population growth to a halt. Modern society is increasingly aware of this, and increasingly taking steps to keep the population down to avoid such a consequence. Contraception is more and more widely practiced. A recent story in The New York Times states that fewer people in Germany are having children, and that the birth rate there has already fallen even below the death rate.

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Nearly all the criticisms of free enterprise in your letter are very fashionable at the present moment. As they are answered, new criticisms will be made. Partly this is the result of a healthy human desire for constant betterment, for a constant approach toward perfection. But partly, also, it is the result of chronic socialist thinking which overlooks the enormous, progress that capitalism has already made possible, and demands that everybody else produce an instant Utopia framed in accordance with the critics’ own dream world.

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Herbert Spencer

The more numerous public instrumentalities become, the more is there generated in citizens the notion that everything is to be done for them, and nothing by them. Every generation is made less familiar with the attainment of desired ends by individual actions or private agencies; until, eventually, governmental agencies come to be thought of as the only available agencies.