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                   Imprimis, On Line  -- July, 1993
        
        Imprimis, meaning "in the first place," is a free
        monthly publication of Hillsdale College (circulation
        435,000 worldwide). Hillsdale College is a liberal arts
        institution known for its defense of free market
        principles and Western culture and its nearly 150-year
        refusal to accept federal funds. Imprimis publishes
        lectures by such well-known figures as Ronald Reagan,
        Jeane Kirkpatrick, Tom Wolfe, Charlton Heston, and many
        more. Permission to reprint is hereby granted, provided
        credit is given to Hillsdale College. Copyright 1992.
        For more information on free print subscriptions or
        back issues, call 1-800-437-2268, or 1-517-439-1524,
        ext. 2319.
        
             ---------------------------------------------
        
                         "The Road to Freedom"
                            by George Roche
                      President, Hillsdale College
        
             ---------------------------------------------
        
                          Volume 22, Number 7
              Hillsdale College, Hillsdale, Michigan 49242
                               July 1993
        
             ---------------------------------------------
        
        Preview: In this issue of Imprimis, based on a lecture
        delivered at the 20th annual Ludwig von Mises Lecture
        Series in April 1993, Hillsdale College President
        George Roche contrasts the brutal reality of communism
        with its idealistic promises and false claims about
        human nature. In so doing, he makes the moral case for
        the free market and examines how all members of society
        prosper when individuals are left to make their own
        decisions. He concludes, "Free men know what tyrants
        never learn, that the ultimate economic resource is the
        mind and energy of a free person."
        
        ---------------------------------------------
        
        
                    Morality According to Karl Marx
        
        The biggest story of our times is this: Communism is
        dying. But perhaps the most striking feature of its
        demise is that it is not accompanied by much of a
        celebration of the triumph of capitalism in the West.
        You would expect countless books, articles and
        spokesmen proclaiming victory for the free market. You
        would expect a massive intellectual defense and
        explanation of capitalist ideas--and perhaps some
        crowing about how much better they are. You also would
        expect political leaders in the West to redouble their
        efforts to expand liberty. True, there has been some of
        each of these, but there has been no concerted effort
        to claim victory.
        
             The near-silence is ominous. It is as if we had
        achieved great ends with evil means and ought to be
        ashamed rather than exultant at our success. This
        guilty feeling is itself a communist hangover. We
        should be rid of it once and for all, or Marx will have
        the last laugh. Moreover, we must seek to understand
        the cause of the communist demise. Until we understand
        the cause, we will not be able to heal the frightful
        wounds communism leaves behind, and we will ourselves
        remain in peril of repeating the same mistakes.
        
             We do know that without a doubt the economic
        performance of communism has been dismal everywhere it
        has been tried. Communism simply cannot compete with
        free markets. But it was not economic failure that
        really killed communism in Eastern Europe or the former
        Soviet Union or that is in the process of finishing it
        off in Latin America and Asia. We would be greatly
        mistaken if we assumed that people in closed societies
        only want more consumer goods. Certainly they would
        like more and better food, housing, clothes and
        appliances--wouldn't we all? But it is not a yearning
        for mere possessions that moves them. After all, they
        have from the beginning endured economic disaster and
        terrible privation.
        
             Ultimately, the death of communism has been
        brought about by its own spiritual failure. The triumph
        of "capitalism" is equally a spiritual victory, but we
        in the West have been slow to recognize it as such. I
        put "capitalism" in quotation marks because it is a
        Marxist coinage and a hate word. It is also bad
        coinage--all systems are necessarily capitalist,
        because they all have to allocate capital. But everyone
        is pretty much agreed about its Marxist and principal
        meaning: a free market system based on the ownership of
        private property and the free exchange of goods. I am
        happy to accept this meaning and insofar as I use the
        term, that is what I mean by it.
        
             When I say capitalist ideas are better, I mean
        precisely in their spiritual dimension. Of course they
        are more efficient; everybody knows that. It is hardly
        worth saying. What few see, however, is their moral
        goodness. We are still blinded by that awful bit of
        Marxian theory called "the theory of surplus value"
        that has for more than a century stood moral law on its
        head. The theory long ago disappeared from formal
        economics (even the communists found it an
        embarrassment), but its false conclusion is still with
        us. It is summarized by an economic encyclopedia (which
        mentioned the "notoriety" Marx gave it) as follows:
        "Profit is unpaid labor appropriated by capitalists as
        a consequence of the institution of private property."
        
             In other words, according to Marx, the capitalist
        system alone causes poverty (by paying low wages),
        unemployment and periodic depressions. Private property
        is bad. Rent and interest are stolen from workers.
        Capitalists are all greedy, grasping, mean and
        exploitative. By extension, wealth is considered ill-
        gotten and tainted (this has led many a rich person to
        finance revolutionary causes out of guilt for earning
        or inheriting wealth). We need only document real cases
        of nasty capitalists and exploited workers (of which
        there are, of course, many), ignoring everything else,
        to make the case seem valid. But it is nonsense, and
        the evidence against it, in both theory and fact, is
        overwhelming.
        
             Marx's theory is the perfect excuse for every
        personal failure in the market. With it, you can blame
        anything on the capitalist (your boss, your foreman,
        society, the system). You didn't succeed because you
        were being exploited and stolen from. It is human
        nature to want to excuse one's own mistakes, and here
        Marx offers absolution for any failing, free for the
        asking. You don't even have to repent. But there is a
        price: To believe it, you have to learn to hate. The
        "bourgeoisie" is to the communist dictators what the
        Jews were to Hitler: the hate object used to "unite the
        people." Totalitarianism always requires a permanent
        enemy, a group to hate. The hate object must be an
        abstract class (individuals are too concrete and too
        well known to each other), and it must be "evil." Once
        a would-be dictator persuades you to hate this class,
        you are his slave. He is in complete control. You even
        stop thinking for yourself. It is only a short step
        beyond this to justify or to take part in genocide--the
        gulag or the Holocaust.
        
             It is little remembered now, but Marx first
        advertised his theories as more economically efficient.
        They got nowhere. In fact, they were drubbed by
        experience: Capitalism was booming and wages were
        rising rapidly when in the mid-19th century he
        published his predictions that workers would be reduced
        to poverty. Only when they lost the argument about
        efficiency did Marx and the communists turn to a moral
        argument, saying that capitalism was unjust. Only then
        did they prevail, for there was no rebuttal in moral
        terms. The claims of capitalist evils have been the
        whole strength of communism ever since and still
        pollute such intellectual swamps as Beijing, Ethiopia
        and a number of American college campuses.
        
        
                          Morality in Econ 101
        
        But capitalism is not unjust, nor it is unnatural or
        immoral; its structure and rules are as ethical as they
        are efficient. It is communism, on the other hand, that
        is unjust, unnatural and immoral, as is finally
        becoming clear after the cruelest century in human
        memory--a century when nearly 170 million people
        sacrificed their lives, mainly on the altar of statism
        and socialist or communist ideology. Whereas socialism
        and communism appeal to hatred and envy, capitalism not
        only appeals to our moral instinct to help others, but
        harnesses our energies to that purpose and rewards most
        those who do the most for humanity.
        
             All of us, you see, live in a whirl of activity
        that involves the transfer of goods and services. We
        sell our labor and produce, or rent and invest our
        capital, for money. With our money we buy food,
        clothing, shelter and the niceties of life. And there
        are only two ways goods can be transferred. The first
        is one-sided and involuntary to one of the parties: One
        party takes what the other has, without giving anything
        of value for it. This is called stealing (or in some
        cases, taxes). Obviously, in such a one-sided transfer,
        the first party gains and the second party loses. It
        may look like a break-even transaction, but it is not;
        it reduces the value of the goods to both parties, and
        is a net loss to the nation. It also directs future
        behavior by both parties to less productive channels,
        adding to the net loss.
        
             The second kind of transfer is two-sided: Both
        parties voluntarily agree to the exchange. Its key
        feature is that it is freely chosen. This, and this
        only, may be called an economic exchange; the word
        exchange even implies mutual consent. When we see why
        both parties agree, we have the key to the whole of
        modern economic science. It is simply human nature.
        Each of us is one of a kind, not only in mind and body,
        but in our talents, wants and goals. We each have a
        scale of values for what we want, how much we want it,
        and what we will do to get it. Moreover, our wants and
        goals change constantly: We want food when we are
        hungry, not right after a meal. We each know what is
        the best thing to do according to our particular needs
        at a given moment, and we act on our self-knowledge;
        nobody else knows, and nobody else can decide for us.
        No two of us ever have quite the same scale of values
        directing what we do.
        
             You can easily see this theory in operation at a
        well-stocked cafeteria: Rarely will two people choose
        exactly the same meal. The differences between us are,
        as the saying goes, what make horse races--and the
        whole free market. We make different exchanges because
        we value things differently. You exchange your dollar
        for a loaf of bread because you value the bread more
        than the dollar. The baker agrees to the exchange
        because he values the bread less than the dollar. Such
        is the nature of all exchanges in the market, no matter
        how complicated they may seem in their details. It is
        invariably a matter of people trading something they
        value less for something they value more.
        
             The principles we derive from this fact are so
        important that they figuratively make the world go
        round. First, both parties gain from the exchange. This
        refutes the notion that there is only so much wealth to
        go around and if somebody gets some of it, he has to
        take it away from somebody else. What hogwash! Wealth
        is constantly being produced and consumed. It is merely
        distributed through the marketplace. The more of it
        there is, the easier it gets for all of us to have
        some: That is simple supply and demand.
        
             Second, the goods or services freely exchanged
        increase in value, because both parties value them more
        highly. Or, you can say that they move from less to
        more valuable usage through more efficient allocation.
        Free exchanges are a constant process of moving goods,
        capital, and labor to where they are most useful,
        making us all richer in the bargain.
        
             The third principle is incentive. When we make a
        good exchange and are rewarded for it, we have a
        greater motive to do it again. Reward for our effort
        brings out our best in the marketplace. But when we are
        cheated out of what we earn or own by crime or
        confiscatory taxes, we lose interest in working so
        hard. Every dollar taken away is a disincentive to
        economic production.
        
             But we don't necessarily abide by these principles
        here in the U.S., and that ought to serve as a warning
        to those in the postcommunist world who want to imitate
        us. By mid-1992, federal, state and local governments
        were consuming 45 percent of the national income. That
        was before the election of President Clinton. Just
        imagine how that figure is bound to go up in the next
        four years. We are still a wealthy people, but no
        nation can survive forever so great and systematic an
        assault on its ability and incentive to produce. If our
        moral sense no longer tells us this, our gift for
        economics should. Every dollar we confiscate is
        devalued. The so-called transfer makes it worth less to
        both the taker and the taken. At the same time, every
        confiscation is a disincentive to future production.
        When our earnings are taken away, we have less reason
        to earn, and we will do less tomorrow.
        
             The worst part of the whole tax-thy-neighbor
        system is that it is so addictive--it feeds on itself.
        When so much of our money is taxed away, we feel
        cheated and lose all our moral qualms about getting to
        the trough ourselves, one way or another, to get it
        back. That's only fair, isn't it? No, it isn't. All we
        are doing is resorting to the same means that cheated
        us in the first place and we are giving overweening
        government its strongest hold on us.
        
        
                         A Brighter Road Ahead
        
        There is a brighter road ahead, though, as evidenced by
        the fall of communism in Eastern Europe and the former
        Soviet Union. Against seemingly impossible odds,
        country after country has thrown off its communist
        yoke. In the Christmas season of 1989, we all watched a
        very special celebration in Berlin, and we knew the
        impossible dream had come true. East and West
        Berliners, reunited after decades, hugged, laughed,
        poured champagne, wept, and defiantly danced on that
        monument to barbarity that had divided them, the Berlin
        Wall. Uncounted millions wept and laughed with them,
        and church bells rang the world over. Here, for all
        humanity to see, was the symbolic reunion of long-
        divided Europe and of the world, in freedom.
        
             Here, too, all saw that communism was no longer a
        potent idea contending for the minds and hearts of men.
        It was just one more instrument of power, naked power
        of men over men, such as we have seen countless times
        before in history. Its last pretensions as an
        idealistic moral philosophy collapsed as its borders
        were broken. The crimes it had so long concealed were
        laid bare; it lay in the destruction and reek of its
        own works, economically exhausted and spiritually
        destitute.
        
             To the inquiring souls among the younger
        generation, communism must seem like some evil,
        forgotten sect whose incantations and chants were like
        witch doctors shaking bones. (Whatever did they mean by
        "dialectical materialism" or "the theory of surplus
        value"?) Those of us who have been through more of the
        struggle may find these events more like awakening in
        surprise and immense relief as an awful nightmare ends.
        
             In Prague, Warsaw, Budapest, and even in Moscow,
        the celebration of the triumph of capitalism that has
        been so conspicuously lacking in the West has been
        loud, exuberant and unrestrained. Obviously, we take
        our market economy too much for granted. It has been
        more admired, and at times better understood, where it
        was absent and where the brunt of a coercive system was
        felt everyday. In fact, there was a poll taken among
        ordinary Moscow citizens with this question: "Which
        system do you think is superior to the other,
        capitalism or socialism?" The response was: capitalism,
        51 percent; socialism, 32 percent. I'm glad they didn't
        poll Harvard.
        
             In this vein, my favorite story is one about the
        huge Institute of Marxism-Leninism in Czechoslovakia.
        It was disbanded as soon as the communist rulers were
        tossed out, except for its Department of Bourgeois
        Economics, which had been set up to study our ideas in
        order to use them against us. The staff in this
        department had secretly become capitalists through
        reading the works of Ludwig von Mises, F. A. von Hayek,
        Milton Friedman and other defenders of the free market.
        Said the new Czech finance minister, "The world is run
        by human action, not by human design"--a plain
        reference to Mises' masterwork, Human Action. (One of
        Hillsdale College's proudest possessions is the
        personal library of Ludwig von Mises, who left the
        entire annotated collection of his beloved books to
        Hillsdale College, which he described as "that
        educational institution which most strongly represents
        the free market ideas to which I have given my life.")
        
             Events in the postcommunist world--and here I am
        not even talking about political events or the violence
        that has erupted in Bosnia, Azerbaijan, and elsewhere--
        are still swirling and changing too rapidly to foresee
        how they will end. It is not going to be easy for
        citizens of the new republics to rebuild their
        decimated economies or to learn the ways of
        entrepreneurial capitalism after decades of
        suppression. But they have three things going for them
        that give great hope. First, they have their churches
        back-- churches that were, in fact, highly instrumental
        in the downfall of communist rule, by their teaching
        and moral leadership. Second, they know at least the
        theory of free markets--I think they could teach us a
        thing or two--and they certainly have experience in how
        not to run an economy. Third, in large measure, they
        have their freedom back. Freedom is what makes
        everything work. We don't know quite how, because we
        can't predict what free men and women will do, but we
        can be confident that they will find ways to make
        things work.
        
             Something else I've noticed that hasn't been
        mentioned anywhere is how direct and blunt the new
        leaders in Eastern Europe and Russia are. They talk as
        if they had long been truth-starved, as indeed they
        were, and use none of the evasions or nuances of
        politicians. And they tell us incredible things. All
        this time, they say, they were cheated. Communism was a
        hoax. It wasted their hard labor. It left them with
        nothing. Worse, it made war on their spirit and left
        behind "a decayed moral environment," in the words of
        Czech President Vaclav Havel.
        
             Back in 1984, an East German girl, wise beyond her
        years, sadly told a visitor from the West: "It doesn't
        make any difference what we become when we grow up. We
        will still always be treated like children." She was
        saying, like Havel, that the very fulfillment of life
        through adult responsibility and moral choice was
        impossible under communist suppression. Others--God
        bless the human spirit that can laugh even in the worst
        of times--have said the same thing with jokes. Here is
        the wry assessment of an East German on "the six
        miracles of socialism":
        
         There is no unemployment, but no one works.
        
         No one works, but everyone gets paid.
        
         Everyone gets paid, but there is nothing to buy.
        
         No one can buy anything, but everyone owns
        everything.
        
         Everyone owns everything, but no one is satisfied.
        
         No one is satisfied, but 99 percent of the people
        voted for  the system.
        
        
                           What Free Men Know
        
        For nearly a century, the Left in this country has
        claimed that socialism, whether represented by Soviet-
        style communism or European-style socialism, is morally
        superior to our market-based capitalist system. They
        have criticized every aspect of America, all the while
        chanting their chants and rattling their bones. They
        have compared our "failures," real and imagined, with
        their utopian pipe dreams.
        
             Through the testimony of those forced to live
        under communism and socialism, we know that the truth
        is exactly the opposite of all the promises. In the
        former Soviet Union, in the name of "equality" and
        "economic justice," the party bosses gave themselves a
        cut of the wealth one hundred to one thousand times
        greater than that of the masses. They created a ruling
        class, the nomenklatura, more autocratic and
        exploitative than the tsars. In a system much like
        apartheid, except far more virulent, they reserved for
        themselves all the top jobs, the best education, the
        best medical care, and up to 100 percent of the quality
        goods sold in special stores that only they could
        patronize.
        
             So shamelessly did the nomenklatura bleed workers
        that, by some of their own calculations, it was
        estimated that 86.5 percent of the Soviet population
        were dirt poor. Many did not have running water or
        electricity. Only 11.2 percent of the population could
        be called middle class. That left just 2.3 percent with
        virtually all the power and privilege; and among these
        was a "super-elite" of about 400,000 people who alone
        had access to such luxuries as the system was able to
        import. The promises were all frauds. "Power to the
        people" turned out to be totalitarian power in the
        hands of a tiny, highly privileged ruling class.
        "Economic justice" turned out to be rank exploitation.
        
             Recent years have been bad for the nomenklatura
        and good for the people. The cause of freedom has
        blossomed not only in Eastern Europe and Russia but
        around the world. Today, for the first time in history,
        a greater number of the world's people are free than
        are not. Many more enjoy some limited freedoms, and
        free nations outnumber the unfree.
        
             Free men know what tyrants never learn, that the
        ultimate economic resource is the mind and energy of a
        free person. Only from a free mind comes the direction
        of all productivity and the innovation that is
        tomorrow's prosperity. It is said that we now live in
        an information economy. This is true enough, but it is
        not the whole picture. Add to it an unprecedented
        mobility for the movement of economic resources--assets
        as well as data. Thought and money can and do travel
        almost anywhere in a split second, too fast for the
        plodding state to catch up. It is this mobility and
        versatility that gives individuals the upper hand at
        last. There is no turning back.
        
             The growing power of the global marketplace is
        bringing this fact home everywhere. Its power has
        exposed the weaknesses of socialism and communism and
        has helped tear down the Iron Curtain. Its power is
        fundamentally moral and as such deserves all the moral
        support we can give it. The message of the
        postcommunist newcomers to the marketplace is directed
        toward every would-be tyrant: "We are not things to be
        used by you, but free people with inalienable rights.
        In the market, it does not matter how we came into the
        world but what we make of ourselves. We join in
        cooperative effort for the good of all. If you
        interfere, you harm all people. If you oppress us, you
        will lose all that we have to offer and become poor.
        Throw away your chains and your barbed wire; they are
        useless now."
        
        
                           Tomorrow's Agenda
        
        As I said at the outset, communism is dying, but we
        need no more than the unrepentant Left to remind us
        that the war of ideas is not over. It may even grow
        more intense. The rejection of communism leaves a
        vacuum that other "isms" and ideologies will rush to
        fill. Certainly among them will be milder forms of
        socialism that build the power of the state. It is the
        business of all who stand for individual rights in a
        civilized order to refute these efforts and make our
        own ideas heard. The answer to bad ideas is good ideas.
        Let us never forget that the war of ideas is a real
        war, with real casualties should we fail.
        
             One cannot predict the politics and perils of
        tomorrow exactly, but the enemies of the moral order
        change little. We know them. We can in some measure
        anticipate their assaults by their beliefs and goals
        and plan our own strategy accordingly. The enemy, as
        ever, will be the exploiters, the wielders of power and
        privilege. They will take positions against the
        traditional and the normal, against home and family,
        against distinction between man and woman, against
        human nature itself: positions which, on analysis, will
        treat people as mere conveniences to somebody's plans,
        not as individuals of infinite worth. Whatever they
        seek, they will be armed with ideological formulas and
        warped words. Above all, they will try to force their
        schemes on us, using the power of government.
        
             Such resort to government "solutions" always seems
        to me a giveaway that something wrong or dishonest is
        involved. In freedom, persuasion--not coercion--is the
        way to get one's ideas across, and the only way.
        Imposing them by law denies to others their liberty,
        their dignity, their right to their own opinions. It
        is, in fact, an act of contempt toward them and an act
        of pride in oneself--a claim to know better than we
        what is best for us. In the view of Nobel laureate F.
        A. von Hayek, this is the "fatal conceit." In the
        Judeo-Christian view, it is sin. Deep down, it implies
        a false, secularist view of life that throughout this
        century has been at war with Western, and especially
        American, ideals. It is precisely the kind of thinking
        that has collapsed due to hard experience in Eastern
        Europe and Russia; but it is still rampant here. We
        need not know the whys and wherefores of a given
        statist scheme to realize that it serves bent thinking
        and bad purposes. It will, of course, be made to sound
        good, as if it were correcting injustice instead of
        creating it, or helping the needy instead of making
        them dependent and helpless. It will, of course, have
        the support of all the familiar "opinion makers" in the
        academy, the media and the Washington Beltway. But it
        is going to cost us dearly, not only in taxes and
        liberty but in moral values.
        
             Certainly in the coming years we will have to deal
        with liberalism, a set of once-noble ideas that sold
        its soul to statism decades ago and now grows more
        decadent every day. It remains strong, but as a reflex.
        Tap any liberal with a rubber hammer, and an informed
        person can predict where the knee will jerk. The reflex
        the Left constantly encourages is: Uncle Sam is there
        to do what individuals can't or won't accomplish on
        their own. If we agree with this reflex, we forget the
        basic facts of life. Government can't do anything for
        us without first taking from us the means to do it.
        Government's only tool is force, and force is usually
        the worst possible tool to apply in social matters.
        Neither must we forget that we ourselves, as free men
        and women, are the doers, builders and producers.
        Running to Uncle Sam with our problems only takes away
        from our own freedom and resourcefulness.
        
             We have, I'm afraid, lost our fear of big
        government, and we had better regain it soon. America
        is not immune to suffocation by an Old World-type
        state, any more than Eastern Europe or Russia has been.
        Our survival is at stake. We are seeing momentous
        change around us, but cannot be sure where it will take
        us. Will a springtime of liberty bloom into a full
        summer of peace? Or will our hopes collapse before some
        new peril? Surely it is up to us to create the right
        tomorrow for our children by taking charge today. There
        has never been a generation in the history of the world
        that has had such an enormous opportunity to make a
        clear choice and to have such a strong hand in
        implementing that choice. We can play our part in
        shaping the world now emerging, or we can stand aside
        and be overrun. The other side is working against us.
        We have to be better. We have to lead with the right
        ideas.
        
             Ideas, not armies, rule the world. We believed too
        easily that tanks, barbed wire, secret police and
        instruments of thought control and totalitarian power
        were decisive and that slaves could never be free. The
        events of the last several years have proved us wrong.
        It was false belief, not barbed wire, that enslaved. In
        the end, the wire was cut and the Iron Curtain broken
        by simple human choice, not arms. Those who had been
        trapped behind the barricades said, "Enough!" and were
        freed.
        
        
             ---------------------------------------------
        
        George Roche has served as president of Hillsdale
        College since 1971. Firing Line, the MacNeil-Lehrer
        News Hour, Today, Newsweek, Time, Reader's Digest and
        the Wall Street Journal have chronicled his efforts to
        keep the College free from federal intrusion. Formerly
        the presidentially appointed chairman of the National
        Council on Educational Research, the director of
        seminars at the Foundation for Economic Education, a
        professor of history at the Colorado School of Mines,
        and a U.S. Marine, he is the author of ten books,
        including five Conservative Book Club selections, among
        them: America by the Throat: The Stranglehold of
        Federal Bureaucracy, A World Without Heroes: The Modern
        Tragedy, Going Home, and A Reason for Living. His most
        recent book is One by One: Preserving Freedom and
        Values in Heartland America.
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