MAY 01, 1996 by HANS SENNHOLZ
Dr. Sennholz is president of the Foundation for Economic Education.
When Leonard Read was laboring to launch the Foundation for Economic Education in early 1946, the American people were engaged in the giant task of converting from wartime to peacetime production. There were shortages of meat, sugar, and cereal products despite record-breaking crops. More than one million workers were out on strike in such essential industries as steel, motors, electrical equipment, and communications. Congress and the media were debating the wisdom of price and wage controls, which had affected almost every aspect of economic life since the spring of 1942. The Truman Administration not only was unable to cope with the vital problems of labor unrest, soaring prices, black markets, and shortages, but, according to some economists, was actually causing them. By the end of the year, it was so discredited that the people rose on election day and turned the Democrats out of both houses of Congress where they had ruled supreme since Franklin D. Roosevelt’s first election.
Much more needed to be done than just change the political guard. Public opinion, that indicator of the political, social, and economic climate, which caused the people to cast their votes and the legislators to enact the contentious laws and regulations, needed to be changed. Most economists whose names attracted attention were concerned with macroeconomic schemes for a centrally managed economy. Among these were the Keynesian professors such as Paul Samuelson and W. Fellner as well as the devout Marxians Oskar Lange, L. R. Klein, and P. M. Sweezy. Many younger economists were doing government work in the numerous offices of the federal government. The War Production Board, Office of Price Administration, and other government agencies were swarming with economists charting the course of “reconstruction.”
Many Americans had come to accept the philosophical premises of the New Deal, differing only on the team of politicians who could carry out economic intervention most efficiently and effectively. They were convinced that the old economic order of unhampered competition and individual enterprise no longer served the interests of the working people, that greedy entrepreneurs and capitalists were abusing and exploiting them, and that legislators and regulators should be called upon to head off such evils.
Leonard Read saw the great issues of his time in a different light. His ideological mentors were William Graham Sumner and T. N. Carver, his favorite authors J. B. Clark, C. J. Bullock, and F. W. Taussig. From the day Leonard settled in Irvington, Henry Hazlitt and Ludwig von Mises were his staunch allies and steady companions. Together they set out to awaken public interest in sound economics and rekindle the freedom philosophy. The task was momentous and urgent. “A new generation, one which has never experienced economic liberty, is taking over,” they wrote. “Young men who have become accustomed to being regimented and restricted are coming into positions of responsibility in business. The job of economic education must be undertaken now while those who appreciate the value of liberty are still in position to support it.” To undertake this giant task, they molded the Foundation for Economic Education (“FEE”).
A 1946 Outline of Proposed Activities and Reasons Therefor expounded five basic principles of education which were to become FEE’s guiding principles.
1. “The Foundation shall confine itself to the field of ideas. It shall not disparage or support particular persons or political parties. Its purpose shall be a program of economic education rather than political campaigning. It shall content itself with presenting its findings for whatever use citizens want to make of them.”
2. Education cannot be imposed. Unless economic enlightenment is wanted and sought it falls on barren ears. FEE must create a desire for economic understanding and then serve the desire thus created.
3. FEE will conduct an “integrated program of production, promotion, and distribution,” engaging scholars and specialists now working in isolation and calling on others to assist FEE from the outside.
4. Since the intellectual leaders of tomorrow cannot be known today, the only way to reach all possible leaders is by “creating opportunity for the enlightenment of all.”
5. There is an intellectual hierarchy among scholars. The thought leaders from all walks of life must reach out to those who write, expand, and explain to yet larger groups until “almost any literate person can understand and appreciate” the importance of economic knowledge.
Freedom education not only imparts knowledge of economic theories and principles but also aims to develop a sense of right, self-reliance, and responsibility. It needs writers and teachers who can explain the meaning and beauty of liberty, who impart knowledge and teach by example. Leonard Read, therefore, surrounded himself with men and women of excellence, seekers of knowledge and students of liberty such as V. Orval Watts, Frank Chodorov, F. A. Harper, George C. Roche III, The Reverend Edmund A. Opitz, and others. He invited famous professors such as Fred Rogers Fairchild of Yale University, J. Hugh Jackson of Stanford University, and Leo Wolman of Columbia University to join him on the board of trustees. This they did as a gesture of endorsement of a great task and noble endeavor to which they gladly contributed some of their time and effort.
The Foundation helped to revive and guide the intellectual opposition to the ideological mainstream. It refused to be fashionable but, instead, stood for what it believed to be right. In time, FEE was to become a “home” for the friends of freedom everywhere, a bright beacon of hope inspiring the creation of numerous similar organizations at home and abroad. After ten years on Leonard’s senior staff, F. A. Harper left FEE to found the Institute for Humane Studies on the west coast. Ken Ryker created the Freedom Center in Fort Worth, Texas, and Ralph Smeed The Center for Market Alternatives, in Boise, Idaho. In other countries, Antony Fisher and his friends founded the Institute for Economic Affairs in London; Alberto Benegas Lynch established the Centro de Estudios sobre la Libertad in Buenos Aires; Manuel F. Ayau built a new university, Universidad Francisco Marroqun in Guatemala City; Gustavo Velasco and Agustin Navarro created the Instituto de Investigaciones Sociales y Económicas in Mexico City, and Nicomedes Zuloaga forged the Instituto Venezolano de Análisis Económico y Social in Caracas. To all, FEE pointed the way and instilled new hope for the future of freedom.
Hope ever tells us that tomorrow will be better. All things change, and we must change with them. Half a century has passed since the doors of FEE first opened. That which stood in front of the founders is behind us, and that which they could not foresee is before us. The “Evil Empire” has disintegrated and the overall political and economic climate of the world has improved dramatically. The old conditions of superpower confrontation and constant danger of nuclear devastation may have given way to amicable negotiations and discussions. The Soviet empire in all its forms and colors, which had degenerated to a backward collectivistic prison, was weighed in the balance and found wanting. All over the world the political and economic gates have opened, permitting individual freedom to advance. But they may close again if the opening is misunderstood and misinterpreted. Only the philosophy of individual freedom and the property order can keep them open.
Socialistic countries have collapsed because the system itself is chaotic, unnatural, and inhuman; but the doctrines and values of socialism are very much alive in all parts of the world. They live on in the minds of many Americans under the labels of “social market economy,” “moderate” Democratism or Republicanism, “middle-of-the-road,” or just “welfarism,” and merely proceed more slowly to the same destination: economic poverty and social disintegration.
Socialism and welfarism are cousins of the same family having many features in common. Both are guided by messianic objectives such as “social justice” or “social security” to which all individual concerns are held captive. In the name of “social justice” both enslave their people—one by barbed-wire fences, and the other by tax collectors who force their victims to spend half their working lives laboring for “the will of the people.” Both resort to legislation and regulation to arrange and settle all things. Both politicize economic activity and collectivize many manifestations of social life. Both substitute public law for contract law, passing hundreds of public laws in every session of the legislature and imposing countless new regulations every year. Both make a mockery of property rights. One confiscates means of production and allocates income, while the other forcibly redistributes income from the means of production. The difference is minimal when both consume more than one half of the social product.
In the name of “social security” both systems create much insecurity. When the crime rates soar, one may inflict cruel and unusual punishments on the violators, while the other incarcerates millions of its citizens in comfortable recreation centers. Both destroy self-reliance, responsibility, and morality. Where government makes all decisions, everyone is merely obliged to obey. No one is responsible for the consequences of his blunders, but everyone has “rights” which are claims against all others. Both disavow family responsibility for the education of children and the care of the old and sick. Both erode the basic Judeo-Christian values of honesty, fairness, trustworthiness, reliability, diligence, frugality, and dependability. Both give birth to a “new morality” which actually is immorality and dissolution.
Social disintegration may take the form of soaring crime rates, growing underground economic activity, ethnic and racial confrontations, and even calls to arms. An early symptom is the growing weight and gravity of politics, which turn into an unending bitter battle about taxes and entitlements. Politicians become rancorous spokesmen for their special entitlement groups while all the rest, in their view, are strangers, enemies, or thieves and highwaymen. While the economy stagnates or even declines, the people belligerently cling to their political privileges and entitlements: the young clutch their educational benefits from the nursery to medical school (always at other people’s expense), the elder generation clings to Social Security and Medicare benefits, and millions of middle-aged Americans thrive on government payrolls or subsist on public assistance. The number of government employees now exceeds that of all American manufacture. The number of people with “entitlements” is incalculable. In a society so torn by political conflict it may be difficult, if not impossible, to halt the social deterioration.
All Western welfare states are heading toward disintegration. The weight of the pyramid of entitlement debt amounting to trillions of dollars is likely to crush the very system that incurred the debt. It will cause welfare governments to default in one form or another to both their creditors who financed the pyramid and to the entitlees who were promised much more. The ultimate default ofttimes leads to angry polarization and even bloody confrontation. In societies of homogeneous ethnic and cultural composition, the crisis may give rise to a political and economic command system which brutally suppresses all entitlement conflicts. In societies with various ethnic and cultural classes, individual alienation tends to turn into civil strife and bloody warfare.
The potential for political, social, and economic strife may be greater today than when FEE was born. Surely, the United States now is the sole superpower of the world and no longer needs to fear any one adversary. It rules the world as no country ever did. But it may also be weaker morally and spiritually than it was half a century ago. The welfare state has eroded the moral fiber of the people, has created a conflict system with classes of beneficiaries and victims, and fostered the growth of multiculturalism which breeds hatred and hostility. It casts doubt on the feasibility of a roll-back or even purge of the conflict system and raises the spectre of civil violence in case the benefit system should fail to meet the demands of the entitlees. Economic stagnation and decline tend to seriously aggravate the social conflict.
The task of education is more urgent and momentous than ever. There is but one method of preserving our freedom and maintaining the social peace, and that is by disseminating the seeds of Judeo-Christian morals and economic knowledge by means of education. As public tax-supported education is a root cause of the rise of welfarism and an important pillar of the conflict system, this can be done effectively only by the means of purposeful private education. There is no room for complacency. It is imperative that we face political and social turmoil with courage and self-assurance, always pointing toward the light of freedom.
The Foundation for Economic Education is dedicated to preserving and strengthening the moral and ideological foundation of a free society. It is not just one of many organizations seeking to impart economic knowledge and promote the cause of freedom. From the day it opened its doors in 1946 to this very day it has never compromised its principles. It cares more for the truth than for popularity, for truth is its own witness.
The Foundation shuns politics and keeps a respectful distance from politicians. Government has come to be an institution of booty and privilege, and is managed primarily on class-war principles. Many people plunge into politics to make their own and their electorate’s fortune and care only that the world will last their span of days.
The Foundation seeks to impart not only economic knowledge but also individual values which are essential for social peace such as honesty and integrity, industry and self-reliance, prudence and courage, and charity toward all men and women.
Wisdom, knowledge, and virtue are necessary for the preservation of our freedom and the republican form of government. Therefore, we must discover and disseminate the seeds of virtue and knowledge through every part of society by all means at our disposal. We must dedicate ourselves and our labors to this very end.