ARTICLE

To Alleviate Misfortune

NOVEMBER 01, 1963 by LEONARD E. READ

"No one must profit from the misfortune of others."

This, like several clever plausi­bilities, is an international socialistic cliché. In Norway, for in­stance, the socialists are arguing, "No one must profit from the ill­ness of others," their aim being to bring all retail drugstores in­to state ownership and operation. The socialists, here and elsewhere, will, invariably, use bad predica­ment, disaster, misfortune as an argument for socialization.

It is important that we not be taken in by this "reasoning."

Once we concede that socialism is a valid means to alleviate distress, regardless of how serious the plight, we affirm the validity of socialism in all activities. Or, in other terms, when we rule out profit or the hope of gain as a proper motive to supply drugs or to alleviate illness or to provide other remedies for misfortune, we must, perforce, dismiss profit as a proper motivation for the attain­ment of any economic end.

Consider the scope of misfor­tune. True, illness is a misfortune as would be the nonavailability of drugs. But suppose there were not a single physician or surgeon! Or no food! Or no transportation of any sort! Most of us would think of ourselves as the victims of mis­fortune were we to be deprived of electricity. And telephones? Cloth­ing? Heat? Shelter? Gas and oil? Indeed, the absence of any good or service on which we have become dependent qualifies as mis­fortune. Imagine the disappear­ance of all power tools. This would be more disastrous than a head cold, diabetes, pernicious anemia, or the inability to get a prescrip­tion filled at a drugstore. Our de­pendence on power tools is such that most of us would perish were they to disappear. But does the possibility of their disappear­ance (and the inevitable mass suffering and death that would follow it) warrant the setting up of a state owned and operated power tool industry?

Viewed in economic terms, man spends his earthly days working himself out of and insuring against this or that type of mis­fortune. Bad predicament is our lot except as we succeed in ex­tricating ourselves, and it is no more to be identified with sick­ness or drug shortage than with fuel or housing or food scarcity.

Scarcity of Goods and Services Is the Problem

Economics, as a discipline, con­cerns itself with the means of overcoming the scarcity of goods and services, and it matters not one whit what good or service is in short supply. Broadly speak­ing, two systems, now in heated contention, are advanced as the appropriate means to overcome economic misfortune.

The first, to any casual ob­server, looks more like chaos than a system. Its credo is freedom in exchange: Let everyone act crea­tively as he wishes, unattentive to five-year plans or the like; that is, let each person pursue his own gain or profit—willy-nilly, if you please—as long as he allows the same freedom to others. Govern­ment, the social agency of com­pulsion, has no say-so whatsoever in creative actions; it is limited to framing and enforcing the taboos against fraud, violence, predation, and other destructive actions. This philosophy permits no man to ride herd over men. Would-be dictators, mind your own business! The right to the fruits of one’s own labor is of its essence, individual freedom of choice its privilege, open oppor­tunity for everyone its promise, the hope of personal achievement—gain or profit—its motivator. Call this the market economy.

The second is definitely a sys­tem: an organized, political hier­archy planning everything for everyone. The hierarchy prescribes what people shall produce, what goods and services they may ex­change and with whom and on what terms. In this command economy people are ordered where to work, what hours they shall labor, and the wage they shall re­ceive. It is arbitrary people-con­trol by the few who succeed in gaining political authority. The political eye is on the collective; freedom of choice, private owner­ship, and profit are among its ta­boos. Briefly, it is the state owner­ship and control of the means as well as the results of production. Call this socialism.

Socialism Has Been Tried

No question about it, the re­sults of production can be and are successfully socialized, that is, they can be and are effectively ex­propriated. Further, they can be and are redistributed according to the whims of the hierarchy and/or political pressures. But so­cialism, like Robin Hoodism, de­mands and presupposes a wealth situation which socialism itself is utterly incapable of creating.¹ It can redistribute the golden eggs but it cannot lay them. And it kills the goose!

Refer to the early Pilgrim ex­perience, 1620-23. All produce was coerced into a common ware­house and distributed according "to need." But the warehouse was always running out of provender; the Pilgrims were starving and dying. They did, in fact, socialize the results of production but, by so doing, they weakened the means and, thus, had little in the way of results to distribute.2

Those who have few if any in­sights into the miracle of the mar­ket are led into the false notion that the communalization or com­munization or socialization of an activity reduces costs because no profit is allowed. The fact is to the contrary. The oldest socialized activity in the U.S.A. is the Post Office. It loses $2 million daily and the cost of the service is con­stantly on the increase.3

The Profit Motive

A distinguishing feature of the market economy is the profit and loss system. But, contrary to what casual scrutiny reveals, profits are not added into price; they are, in effect, taken out of cost. The profit and loss system is an impersonal, couldn’t-care-less, signaling sys­tem: the hope of profits entices would-be enterprisers into a given activity and losses ruthlessly weed out inefficient, high-cost produc­ers. The profit on the first ball point pens cried out, "Come on in, the water’s fine." Today, there are ball point pens used for give­aways.⁴ I paid $250 for my first radio. An incomparably better one can now be had for $7.95. To claim that such examples number a mil­lion would be a gross understate­ment.’

Conclusion: When an activity is in the doldrums, threatening misfortune, we should not attempt revival by a resort to socialism, for it can perform no more than a malfunction: political redistribu­tion! Be the dying industry drug­stores or agriculture or railroads or opera or whatever, remove the fetters! Free the market, which is to say, let the hope of profit at­tract all aspiring producers and let the stern, uncompromising, im­personal lash of losses weed out the inefficient, leaving only the most efficient in charge of over­coming our bad predicaments.

Apart from theory and looking solely at the enormous record, the individuals sorted out by the mar­ket are more efficient (lower-cost) managers of human and natural resources than are political ap­pointees. If we remove the hope of profit as a means to alleviate mis­fortune—poverty, illness, misery, disaster—we shall increase our misfortunes and make them per­manent.    

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Footnotes

¹ This fact requires a lengthy ex­planation. See "Socialism: A Barren System," The Freeman, March, 1963.

² For further explanation of the Pil­grim experience, see "Conscience of the Majority," The Freeman, March, 1961.

³ For a critique of socialized mail de­livery and the case for free market de­livery, see The Freeman, July, 1957 and October, 1962.

⁴ See "Profits" by Dr. Benjamin A. Rogge, The Freeman, August, 1963.

⁵ One corporation alone manufactures more than 200,000 items. The total for the nation is incalculable.

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Ideas on Liberty

Milk Cow or Watchdog?

Some 2,000 years ago, it was Plutarch who warned: "The real destroyer of the liberties of the people is he who spreads among them bounties, donations, and benefits." And it was an old French peasant who made the sad observation after the collapse of France in World War II, burdened with social subsidies: "My country fell because we had come to consider France as a cow to be milked and not a watchdog to be fed."

From the Reporter published by the Associated Industries of Missouri