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.