Freeman

ARTICLE

Change

FEBRUARY 01, 1960 by ROBERT H. EAGLE

Mr. Eagle is an Inventory Management Spe­cialist in the General Services Administration in Washington, D.C.

History records continual change. As man moved out of caves and into tents, as he began domes­ticating animals and devising and improving tools, as he developed the science of specialization, as his tastes and desires underwent alter­ations, as he began to envision dif­ferent ways of living than he had dreamed of before and to realize that comforts and amenities which at first seemed visionary were really possible—these ever-chang­ing phenomena altered the status quo. Existing patterns of conduct, production, distribution, consump­tion, and social relationships were more or less constantly being re­vised, sometimes slowly, sometimes fast. And these changes continue.

To suppose that human action will ever become static and stationary, all changes abolished, is hardly tenable when one considers the na­ture of human wants, the insatia­bility of man’s desires, and their variety. Because of these facts of human action, any effort to main­tain the status quo in economic life is doomed to failure. As new pro­ductive processes are developed, as new products are invented, exist­ing ones revised, and others dis­carded, the patterns of production, distribution, and consumption will continue to be subject to alteration. Prices and wages must themselves change to reflect these more basic changes.

Rigidity and flexibility cannot coexist in harmony. As long as de­sires for changes and improve­ments collide with factors resist­ing change, conflict ensues. Im­provements require change, and change requires flexibility. A dy­namic economy that is sensitive to people’s wants and needs must be flexible. Rigid prices and wages are barriers to progress. As long as man’s desires and relative values are changing and he conceives more efficient productive processes, such rigidities cause industrial conflict and chaos.

When Government Intervenes

However, for decades, we have been witnessing two sets of coun­tervailing human forces in con­stant conflict with each other—one set of pressures resisting change, the other set demanding change. Into this melee steps the State, the apparatus of compulsion and coer­cion, presumably to help both sides. It will try to maintain the prices of farm and industrial products, thus freezing the pattern of production and productive processes in indus­try and agriculture. Then, when new goods and services are not forthcoming in given amounts at the prices people are willing to pay, the government attempts to amelio­rate these ineluctable results by expansion of credit, creation of ad­ditional money, by public works, social security, unemployment com­pensation, and so on.

By trying to keep everything as it is, the government represses progress, thus depriving the popu­lation as a whole of a large portion of the potential increase in living standards. Then when large seg­ments of the economy are de­pressed as a result of the first policy, the government adopts a second policy to allay the results of the first. This is like running over a pedestrian forward and then try­ing to undo the damage by revers­ing direction and backing over him.

First, the government creates re­strictions which are intended to resist changes and their effects which people believe harmful to them. Then it intervenes to help stimulate the sort of changes it first tried to prevent.

Price supports make price-sup­ported goods more bountiful, until production quotas are instituted for the purpose of making them scarcer. These interventions re­duce real income which would otherwise be available for such things as school construction and other wants and needs. Having held production down and prices up, thus resisting change in the form of greater output at less cost, the government then turns around to take care of the resulting "inade­quacies" and "deficiencies" in the economy, usually asserting such deficiencies to be implicit in the free enterprise system. The gov­ernment then attempts to allocate from the remaining resources funds for school construction, low-price public housing, and the like.

In a free economy, however, the forces making for change (including more goods at lower prices) provide an increase rather than a restriction of output and produc­tive capacity which are available for meeting the wants and needs of the people, as the people see their own wants in accordance with their own scale of values.

It has always been characteris­tic of Americans to want more and more education for their offspring. The free market makes increasing resources available for meeting such wants and needs through changes—through more efficient productive processes and the in­crease and utilization of capital ac­cumulation. But capital accumula­tion is much more forthcoming when the value of the dollar is not being constantly eroded by mone­tary expansion on the part of the government. Government price supports and production quotas are the very antithesis of economic growth, if by economic growth one means more goods and services of the kind people want most. It is only in the free market economy, unhampered by price maintenance and restrictions on production, that needs are optimally met.

Gradual Change Is Tolerable

One consideration put forward to urge state intervention is that economic change affects some peo­ple adversely compared to others. This fact cannot be denied. One must always adjust to necessary changes. However, the most dras­tic changes, the upheavals in the economy, the crash programs, have resulted from governmental intervention. Left alone, the econ­omy tends to progress in a more normal manner. Capital accumula­tion, essential to increased produc­tivity, results from individual sav­ings. There is a natural tendency, when economic growth is left in the hands of individuals working alone or voluntarily through cor­porate instruments, for new and expanded projects not to outstrip their potential profitability, or more accurately, profitability as it can be foreseen and predicted by individuals risking their own sav­ings in new ventures.

However, when investment comes out of heavy taxation fall­ing upon the public as a whole, and directed by functionaries whose own savings are not as directly in­volved, vast projects are under­taken which draw away from other potential projects the required fac­tors of production. Whether these projects are the ones that people would willingly support through their voluntary purchases is an­other question. And if the people don’t want these projects enough to indicate their approval by pay­ing freely for the services offered, then why should such "services" be undertaken by taxation, borrowing, and the creation of additional money which does not represent actual willing abstention from cur­rent consumption on the part of individuals? What the people can­not do for themselves, the govern­ment cannot do for them, except by making a government decision which the people have not made independently, and then enforcing the decision on all. Even so, the government cannot of itself "pro­vide services." Only people can. So interventions on the part of gov­ernment themselves make for changes—the effects of which the government in the first place inter­vened to ameliorate.

Entrepreneurs vs. Bureaucrats

When an entrepreneur sees a po­tential profit in a project, what is he really envisioning? That by bor­rowing money which has been saved by those who have not con­sumed all their income or wealth, accumulated in banks and insur­ance funds, he can hire men and buy materials, build plants, and produce products at a price which people will willingly pay and which will pay the wages, interest, and other charges which constitute the costs of the potentially profitable project. The profits accruing to the entrepreneur under free enter­prise reflect the approval the con­sumers have bestowed on his en­terprise.

But we should also observe the factors that bring about undesir­able results. They include increas­ing the money supply artificially, causing misinvestments of capital and maladjustments in labor, and handouts to industries which are not profitably serving the public. Such interventions, by postponing adjustments necessary to reflect the changing demands of the peo­ple and improvements in produc­tive processes, make the inevitable adjustment much more severe when it finally occurs.

Restrictions on production, price supports, tariffs, embargoes, quotas, and wage and price control, dampen the changes that are latent and inherent in economic and so­cial life. Like a dam which builds up an overpowering volume of wa­ter, they finally inundate society like a tidal wave. But our present-day politicians seem to reflect the attitude of Louis XV and Madame de Pompadour: "Apresnous, le deluge."

Unchanging Basic Principles

Is there, then, nothing change­less and absolute? The changes dis­cussed in this paper come about as a result of decision and choice (conscious or unconscious). In other words, change is directed toward a goal or goals. It is the very existence of eternal principles and immutable laws that makes human progress a possibility. Progress consists of gaining a bet­ter understanding of the change­less and eternal laws of the uni­verse and living more in accord with them. Change for the better consists of acknowledging the changeless values of individual lib­erty and moral responsibility, and taking the realistic, rational steps that follow from an ever clearer discernment of those timeless ideas inherent in the God-given hu­man spirit. Change for the better consists of a greater realization of the idea of freedom as opposed to slavery in any form and under any guise—the idea of individual worth as opposed to the deification of "the masses"—the idea of human equality before the law as opposed to special privileges and immuni­ties.

Changes That Bring Progress

Recognizing the inevitability of change in technology, production, and taste—the mutations of phys­ical phenomena—we also need to recognize the immutable frame­work of universal laws and abso­lute values within which they exist—recognize those things that re­main constant. The recognition of the existence of those things that never change enables us to work most effectively with the change­able. So-called changes for the bet­ter that ignore basic principles are not feasible and eventually result in chaos and turmoil. Operating in accordance with the laws and values that are changeless enables change to be progress, brought about rationally, based on princi­ple, and consciously Directed to­ward the enduring goals of man­kind.

These goals, ideas, values, laws, absolutes, never change. But as long as they are not fully realized, any step toward a greater expres­sion and implementation of them implies a change—a change for the better. It is only because of the existence of immutable laws and ideals that there can be any pat­tern, guide, or rationale for pur­poseful change in contrast to pur­poseless drifting—a meaningless ebbing and flowing. The immuta­ble relationship between cause and consequence furnishes a frame­work within which all changes take place.

Change for the better, the status quo, or retrogression—which shall it be? Our problem lies in under­standing the ultimate goals of hu­man action, in recognizing the available alternatives for that ac­tion, and choosing the appropriate means for attaining the desirable ends. Then change will mean a bet­ter life for all mankind.

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February 1960

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