A Splendid Education in Free Market Economics

Faith of Our Fathers
Mary Sennholz, editor
1997, 389 pp. Paper: $19.95

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The Morality of Capitalism
Mark W. Hendrickson, editor
1996, 209 pp. Paper: $14.95

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Free to Try
Introduction by Hans F. Sennholz
1995, 137 pp. Paper: $14.95

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The Industrial Revolution and Free Trade
Burton W. Folsom, Jr., editor
1996, 178 pp. Paper: $14.95

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Up from Poverty: Reflections on the Ills of Public Assistance
Hans F. Sennholz, editor
1997, 200 pp. Paper: $14.95

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Free-market advocates seeking to convert others face a perennial pedagogical problem: Most people with economic opinions are economic illiterates–and economics is notoriously forbidding for nonspecialists. Not only is it often complicated, but most economic writings are bafflingly abstruse. Hence, a crying need for accessible works arguing for free enterprise, achieving clarity without sacrificing content. Happily, the Freeman Classics series brilliantly meets that need.

To date, the series contains sixteen volumes, composed of essays and articles from The Freeman, the monthly journal of the Foundation for Economic Education. Authors include clergymen Edmund A. Opitz, John K. Williams, and Robert A. Sirico; economists Ludwig von Mises, Friedrich A. Hayek, and Hans F. Sennholz; libertarian policy analysts Lawrence W. Reed and George C. Leef. Space precluding examination of the whole series, we confine ourselves to five volumes that address topics most likely to interest clergy and seminarians.

Religion’s role in America’s development and public life is hotly contested; some argue that the Founders were indifferent to religion, others that America and its freedom are products of Christian faith. Faith of Our Fathers abundantly supports the latter view. Not only did desire for religious freedom motivate many colonists, but clergymen such as John Witherspoon were active in achieving American independence, and the Founding Fathers saw religion as a vital underpinning of morality and order. Moreover, the Bible, while counseling obedience to authority, warns that big government means tyranny and oppression (1 Sam. 8 and 1 Kings 12).

Several authors maintain that morality depends on freedom, including economic freedom. Since choices have no moral significance unless freely made, without free institutions, morality is impossible. Also, Benjamin A. Rogge argues, economic freedom is consistent with “certain fundamental moral principles of life itself,” such as autonomy and personal responsibility ( Faith of Our Fathers, 230).

A very wide-ranging and searching volume, Faith of Our Fathers also ably criticizes the modern intellectual climate of materialism, positivism, and egalitarianism as inimical to freedom. Frequently made moral criticisms of the free market as selfish, materialistic, impersonal, etc., don’t hold up in light of common sense and the biblical teaching of personal responsibility. “The materialist’s problem is the sin within his heart, not his environment” ( Faith of Our Fathers, 264). The authors’ explorations of “the crisis of our age” encompass as well the pitfalls of majority rule; the roots of anticapitalist thinking in envy and rebellion against God and the human condition; the danger posed by higher education in fostering such myths as automatic progress, man’s natural goodness, and egalitarianism.

Many clergy are either hostile to free enterprise on moral grounds, or unaware of its moral merit. The Morality of Capitalism goes far to rectify that. While acknowledging capitalism’s achievement of unprecedented prosperity and living standards, most of the authors defend it on moral grounds: It respects the rights and dignity of others by allowing people to use only persuasion and voluntary exchange, not force, to mutual benefit and to attain desired ends.

To succeed, therefore, capitalists must serve others; as Rev. John K. Williams observes, “the allegedly ‘selfish’ man–the one who seeks great wealth–can only do so by providing other people with what they desire at least cost to these people” ( Morality of Capitalism, 31). Those who serve best, gain most. Then, too, Christ’s parable of the Talents teaches, Fr. Sirico shows, that getting ahead through honest enterprise and work is good. “As regards the material world, it is a story about capital, investment, entrepreneurship, and the proper use of scarce economic resources. It is a direct rebuttal to those who see a contradiction between business success and living the Christian life” ( Morality of Capitalism, 81).

The anticapitalistic mentality also receives thorough criticism, especially in Israel Kirzner’s penetrating and comprehensive “The Ugly Market,” which ranges from specific attacks (materialism, selfishness, greed) to their sources (envy, resentment, contempt for ordinary people and for self-centeredness). Other essays expose the immorality of coercive government programs–affirmative action, government-mandated health care, and Social Security.

Free to Try ably dispels anticapitalists’ ignorance of entrepreneurs’ role in the market and the good that entrepreneurs do. An entrepreneurial economy makes the proverbial rags-to-riches upward ascent possible for many, illustrated by examples from Ego Brown the shoeshine man to Sam Walton the retailer. Investing their own fortunes and risking failure, entrepreneurs greatly multiply the choices open to consumers, create employment opportunities for others, and raise the standard of living.

Unfortunately, the badly misunderstood entrepreneurs must contend with envy, most famously formulated by Marx’s labor theory of value, which claims that entrepreneurs exploit workers by diverting some of the worker-created value to themselves, while contributing nothing to its creation. Howard Baetjer and Rev. John K. Williams ably explode this fallacy, and Gary North, brilliantly and provocatively defending ticket scalpers, makes some profound points about the psychology of envy. Far from being exploiters or parasites, entrepreneurs are the indispensable venturers whose insight and initiative make the economy work.

Well, yes, but didn’t the Industrial Revolution and free trade immiserate the poor and working classes? Not so, contends The Industrial Revolution and Free Trade. Harsh as early factory conditions were, they were actually an improvement for agricultural laborers displaced by the enclosure movement. Often desired by parents, child labor was ended not by paternalistic legislation, but when the parents’ rising labor productivity made it unnecessary. Moreover, the market brought numerous social benefits; for example, greater prosperity meant cities and towns could afford sanitation measures for fighting infectious diseases. Free trade, other essays argue, allows consumption of cheaper commodities from abroad, thus increasing the real incomes and well-being of consumers–whereas protection of domestic industries does the opposite.

The clergy’s laudable concern for the poor frequently finds expression in endorsement of the welfare state. Up from Poverty argues, however, that this is a false answer. For one thing, all charity, both public and private, faces the “Samaritan’s dilemma”: While morally right, assistance to the needy increases the need for assistance, harming the needy’s own interests. Private charity is better, because the givers have an incentive to ensure that charity is wisely spent. Also, welfare fosters the illusion that we can live costlessly at others’ expense, when, in fact, it seriously burdens William Graham Sumner’s “forgotten man”–the upright, hardworking taxpayer of modest means. There is, too, Michael Levin reminds us, a grave moral problem in coerced compassion; “we are all individually responsible for our fates, a responsibility that cannot be undone by forcing some people to pay for the heedlessness of others” ( Up from Poverty, 95).

Not only is its theory dubious, but the welfare state’s practice is dysfunctional. Welfare discourages self-reliance and encourages dependence. The ably presented histories of Puerto Rico, saddled for decades with massive statism, and of the catastrophically expensive and demoralizing Swedish welfare state, offer grim lessons in how to wreck an economy. Besides, while imagination, initiative, and hard work enable people to leave poverty and even rise to affluence, as did Andrew Carnegie and Lena Himmelstein (Lane Bryant), the welfare state’s regulations and taxes increasingly impede this escape route.

There’s a better way to fight poverty, the authors persuasively argue: economic freedom and private charity. Freeing up the labor market would enable more people to escape poverty; private charity both succors the helpless and spiritually benefits the givers; and, as Kenneth McDonald observes, “Helping other people to independence is the true charity” ( Up from Poverty, 174).

The theoretical expositions in these volumes are usually highly competent and accessible. Unfortunately, many articles illuminating free enterprise’s practice and statism’s follies are dated. In Free to Try, for example, the pieces are five to fifteen years old. Some updating might have been wise.

More seriously, some arguments are questionable. “Capitalism honors and promotes charity and virtue” ( Morality of Capitalism, 63) is only half right. Virtues such as initiative, industry, and honesty, yes; but markets neither promote nor discourage charity. The oft-made free-trade assertion that production’s sole purpose is consumption, is overstated; people also work for, say, the fulfillment found in their vocations. The assertion that morality requires freedom, meaning political and economic freedom, rests on a profound confusion between exterior (economic and political) freedom, which is not a necessary condition for morality (Christ, the apostles, and the martyrs did not live in free societies), and interior freedom (free will), which is.

Overall, though, the arguments are sound. Capitalism does comport better with morality than other economic systems; welfare is spurious compassion; enterprise is meritorious. The focus on principles, especially moral ones, is attractive. So is the unfailingly calm, reasonable tone. The volume of supporting evidence is impressive, as is the range of topics, both within individual volumes and in the series. Besides the five volumes examined here, the Freeman Classics include volumes on specialized topics, such as public education, health care, private property, the gold standard, environmental policy, labor markets, and unions. Interested readers will find cogent, thought-provoking arguments for free-market arrangements.

The Freeman Classics are an invaluable treatment of free-market economics. Even specialists will profit from them, and for nonspecialist readers, they cannot be too highly recommended.