JULY 01, 1971 by PAUL L. POIROT
This little piggy went to market. But the market was closed—indefinitely—by order of the government.
There had been a lot of complaints about the market:
· It takes a person at his word and holds him responsible for his actions.
· It allows unwanted resources to go unclaimed and unused.
· It permits scarce and valuable resources to be owned and controlled by the highest bidder.
· It allows foreigners to compete on equal terms with domestic suppliers and buyers.
· It lets prices for goods and services rise or fall in response to demand and supply.
· It permits people to hire or to work for one another on terms mutually agreeable.
· It lets buyers and sellers use anything they please as money.
· It lets the owner consume, save, offer for sale, or otherwise use, waste, pollute, or abuse his property as he chooses.
· It allows a person to succeed or fail in accordance with his decisions and actions.
· It allows a person to specialize in any business or profession, or to live a life of self-subsistence, as he chooses.
· It allows people to congregate in centers of trade and culture.
In short, the market respects the dignity of every human being and lets him do just as he pleases with what is properly his own, leaving him free to reap the benefits and suffer the consequences of his own actions.
A market economy can hardly be described as a natural development, such as might be found among plants, bees, birds, or animals in the wild. It is the result, rather, of human reason applied to the problems of the individual in society. The theory or premise behind the market is that the most practicable and desirable form of society is one that maximizes personal freedom of choice and minimizes violence among men. Insofar as possible, let man do as he pleases, acting alone or in strictly voluntary association with others. And this is the purpose of the market: to facilitate voluntary association and trade.
However, by definition and by nature, a voluntary association is unable to police itself, has no means of enforcing the rules of the association within its own membership and no means of protecting itself from nonmembers. The market, for instance, has no market method of coping with a buyer or a seller who resorts to coercion or fraud to effect a trade, no way to keep the market open and operating in the face of those who would close it by violent methods.
So, the human reason that calls for a market economy, in order to maximize the exercise of personal freedom of choice, also demands a framework of government, a government strictly limited in scope and function to policing the market, protecting the life and property of everyone who comes to trade in peace, and making sure that no person or group is permitted to block any peaceful trader from the market. This appears to be the minimum governmental force required to police the market and thus maximize the freedom of the individual, release his creative energies for peaceful production and trade, reduce his incentive and temptation to resort to violence to obtain or defend what he wants.
In other words, the optimum release of creative human energy requires a framework—or perhaps a leavening—of organized police power, a government of strictly limited scope and purpose to minimize violence among men. If this reasoning be correct, it suggests a corollary proposition: Any expansion or extension of governmental force beyond the minimum required to police the market necessarily and inevitably drives individuals and groups to acts of violence against one another. Such aggravated violence involves destruction of human and other resources that might otherwise have been turned to peaceful and constructive use.
The Ultimate Intervention
Such was the situation on the fateful day our hypothetical "little piggy" went to market and found it closed. Not satisfied with the risks and pressures of open competition, this and that person and group had sought and obtained government intervention in its own behalf:
· Protection against foreign suppliers of goods and services.
· A special license or exclusive trading privilege.
· A right to strike and keep competitors from taking the job vacated.
· zoning ordinances to force neighbors to keep their distance.—unlimited supplies of money and credit.
· Fair trade laws to prevent price cutting.
· Minimum wage laws.
· Laws to hold prices up, or to hold prices down.
· Rent control laws.
· Low-cost public housing projects.
· Guaranteed income in old age, or at any age.
· Free schooling, medical care, dental care, legal aid, food stamps.
· A little privilege here, a little pressure there, and so forth and so on.
Yet, the more the government is asked to intervene on behalf of some persons and groups at the expense of others, the more difficult it is for anyone to compete in the open market to serve himself by peacefully serving others. No sooner is a special privilege granted by government to a particular person or group than other persons or groups begin fighting to obtain "their fair share." And whatever the grant of privilege or power, it is never enough; the beneficiaries demand more, and turn to violence to get it.
From Violence to Famine
The market cannot cope with violence, which destroys savings and investments, tools and facilities of production, the incentive to specialize and trade. This coercive detour of the market leads back toward conditions of famine and starvation chronically suffered by slaves, serfs, and socialists. People unfree or unwilling to compete in the market for possession and use of scarce resources inevitably find themselves trying to subsist on rations. Instead of faring each according to his ability and his effort, each hopes to share according to his need. The individual ceases to be responsible for what he produces or consumes; these choices are made for him by someone else. He stands to gain or lose nothing by producing more or less. Nor is it to his advantage to save, since his savings would be confiscated. The share rationed to him is in proportion to his lack of productivity. When violence closes the market, famine cannot be far behind.
One need not rely on theory or imagination to test the procedures and effects of closing the market.
In the Communist Manifesto of 1848, Karl Marx drew up the blueprint, spelled out various of the most important measures "to centralize all instruments of production in the hands of the state." The blueprint has been followed, the measures applied, in
In a sense, and in the light of the trend of developments in the
Experiences in Agriculture
In any event, whether or not Marx realized what he was doing, understood what he was saying, or knew where his ideas were leading in 1848, there would seem to be little excuse for confusion about the results of coercion in the latter part of the twentieth century. Indeed, one need not look beyond quite recent domestic experiments and experiences in agriculture for necessary proof of the failure of coercive practices and the reasons why nothing is to be gained by any person or group through further ventures in that direction.
What, for instance, have the cotton growers of the
Similar, if not identical, experiences could be reported for American growers of wheat, corn, tobacco, rice, peanuts, sugar cane and beets, various fruits, vegetables, nuts, and other specialty crops under marketing orders, agreements, or cartel grants of one kind and another. Nor does the attempted producer-monopoly seem to hold up with greater success when bolstered by international commodity agreements such as those for wheat, cotton, sugar, coffee, and so on. The mathematics of political power simply doesn’t work out right to give a relatively small group of specialized producers a great and generous handout from a larger group of frustrated consumers.
A Cauliflower Cartel
Aside from the political impracticality, consider the simple economics of the producer-cartel or monopoly. For the sake of argument or illustration, let’s suppose there are 1,000 growers of cauliflower in the
Of these thousand growers, one of them is the largest and one the smallest commercial producer of cauliflower in the nation. And there’s every likelihood that the larger one achieved his position through efficient production. Chances are that the relatively few of the very large growers are the low-cost, efficient ones, whereas several of the smaller producers may be operating at no profit, perhaps at a loss. (Size, of course, does not necessarily mark success; the point is that some growers are more efficient than others.) Of the thousand growers, no doubt the majority of smaller producers would be very happy to see the few larger ones cut back their output. But why should any large, efficient grower want to thus restrict trade or take himself out of the market? And if he did, what would stop 10,000 other farmers from trying to supply the cauliflower market he had just vacated? Of course, a law would be needed to prohibit cauliflower production by those who could show no previous records of production. And it also would be necessary to prohibit imports of cauliflower from abroad, if the domestic monopoly were to be effective.
So, there would be production and marketing quotas for each of the 1,000 privileged growers, not to mention endless quality controls and other governmental rules and regulations. An efficient cauliflower grower should want no part of any such "protective" arrangement. And if he only knew it, neither should the inefficient loser among the growers wish to be artificially shielded from or blinded to his failure. Far better to know the truth, so that he might turn his labor and other resources immediately to something more potentially profitable to him than cauliflower growing.
Finally, it is not to be supposed that a cauliflower monopoly begins and ends with cauliflower growers. This coercive action affects other persons and groups, some seeking a comparable special privilege for themselves, others seeking opportunities to return to the open market. If all the devious consequences of coercive intervention could be foreseen and understood, it seems unlikely that mature and responsible adults would ever want to try to price themselves out of the market.
Free Market: Who Needs It?
Many people will not be greatly concerned about the producers who may suffer as a consequence of closing the market. Their professed concern is rather for the poor. Who cares about a few producers, some of whom had accumulated sizable fortunes! Why keep the market open for that type of person? Why not try some form of profit-sharing or dividing the wealth or other socialistic program to give the millions of the poor a better chance?
The fact is that the successful businessman or entrepreneur probably would make out pretty well for himself under any system. Whatever "the rules of the game," he’d find his way toward the top. And, sad to say, the poor within a market economy would still be the poor, for the most part, under any other arrangement.
So, it is the poor who stand to lose the most, comparatively, as a consequence of closing the market. The competitive market economy is the only system that channels the creative efforts of the most aggressive and capable individuals into serving the needs and wants of the poor. That is really why we can’t afford to let the market be closed.