Government should protect and
de[1]fend against domestic and foreign aggression
the lives and property of the persons under its jurisdiction settle disputes
that arise, and leave the people otherwise free to pursue their various goals
and ends in life. Ideally, the government should be a sort of caretaker, not of the
people themselves, but of the conditions which will allow individuals, producers,
traders, workers, entrepreneurs, savers, and consumers to pursue their own
goals in peace.
He analyzes the failures of
socialism and the welfare state and shows what consumers and work[1]ers can accomplish when they are free under
capitalism to determine their own destinies. When government protects the
rights of individuals to do as they wish, so long as they do not infringe on
the equal freedom of others to do the same, they will do what comes
naturally—work, cooperate, and trade with one another.
So we see that the best
economic policy is to limit government to creating the conditions which permit
individuals to pursue their own goals and live at peace with their neighbors. The government's obligation is simply to protect life and property and to allow
people to enjoy the freedom and opportunity to cooperate and trade with one
another.
CAPITALISM
The attacks against capitalism—especially
with respect to the higher wage rates—start from the
false assumption that wages are ultimately paid by
people who are different from those who are employed in the factories.
The capitalist system was
termed "capitalism" not by a friend of the system, but by an
individual who considered it to be the worst of all historical
systems, the greatest evil that had ever befallen mankind. That the man was Karl Marx.
In economic policies, there
are no miracles. It was the application of the principles of the free market
economy, of the methods of capitalism, even though they were not applied
completely in all respects. Every country can experience the same
"miracle" of economic recovery, although I must insist that
economic recovery does not come from a miracle; it comes from the adoption
of—and is the result of—sound economic policies.
SOCIALISM
In using the term freedom as
applied to human be[1]ings, we think only of freedom within
society. Yet, today, social freedoms are considered by many people to be
independent of one another. Those who call themselves "liberals"
today are asking for policies that are precisely the opposite of those
policies which the liberals of the nineteenth century advocated in their liberal
programs.
Freedom means something only
within the framework of society. Freedom in society means
that a man depends as much upon other people as other people depend upon him.
The fact is that, under the
capitalistic system, the ultimate bosses are the consumers. The sovereign
is not the state, it is the people. And the proof that they are the sovereign
is borne out by the fact that they have the right to be foolish. This is the
privilege of the sovereign. He has the right to make mistakes, no one can
prevent him from making them, but of course, he has to pay for his mistakes.
INTERVENTIONISM
The government ought to do all
the things for which it is needed and for which it was established. The government ought to protect the individuals within the country against the violent and
fraudulent attacks of gangsters, and it should defend the country against foreign
enemies. ‘Interventionism means that the government wants to do
more. It wants to interfere with market phenomena
INFLATION
When people talk of a
"price level," they have in mind the image of a level of a liquid
that goes up or down according to the increase or decrease in its quantity,
but which, like a liquid in a tank, always rises evenly. But with prices, there
is no such thing as a "level." Prices do not change to the same
extent at the same time. There are always prices that are changing more
rapidly, rising or falling more rapidly than other prices. There is a reason for this.
The government may think that
inflation—as a method of raising funds—is better than taxation, which is always
unpopular and difficult. In many rich and great nations, legislators have often
discussed, for months and months, the various forms of new taxes that were
necessary because the parliament had decided to increase expenditures. Having
discussed various methods of getting the money by taxation, they
finally de[1]cided that perhaps it was better to do it by
inflation.
We must remember that, in the
long run, we may all be dead and certainly will be dead. But we should ar[1]range our earthly affairs, for the short run
in which we have to live, in the best possible way. And one of the measures
necessary for this purpose is to abandon infla[1]tionary
policies.
FOREIGN INVESTMENT
A businessman cannot pay a
worker more than the amount added by the work of this employee to the value of
the product. He cannot pay him more than the customers
are prepared to pay for the additional work of this individual worker. If he
pays him more, he will not recover his expenditures from the customers. He
incurs losses and, as I have pointed out again and again, and as everybody
knows, a businessman who suffers losses must change his methods of business, or
go bankrupt.
But a few decades later,
capital investment abroad began to play a most important role in world affairs. Foreign investment meant that British capitalists invested
British capital in other parts of the world. They first invested it in those
European countries which, from the point of view of Great Britain, were short
of capital and backward in their development. It is a well-known fact that the railroads
of most European countries, and also of the United States, were built with the
aid of the British capital. You know that the same happened
in this country, in Argentina.
POLITICS AND IDEAS
Political speeches, editorials in newspapers, pam[1]phlets, and books were written in order to persuade. There was little reason to believe that one could not convince the majority that one's own position was absolutely correct if one's ideas were sound. It was from this point of view that the constitutional rules were written in the legislative bodies of the early nineteenth century. These political changes, brought about by interventionism, have considerably weakened the power of nations and of representatives to resist the aspirations of dictators and the operations of tyrants. The legislative representatives whose only concern is to satisfy the voters who want, for instance, a high price for sugar, milk, and butter, and a low price for wheat (subsidized by the government) can represent the people only in a very weak way; they can never represent all their constituents
Dictatorship, of course, is
no solution to the problems of economics, just as it is not the answer to the
problems of freedom. A dictator may start out by making promises of every sort
but, being a dictator, he will not keep his promises. He will, instead,
suppress free speech immedi[1]ately, so that the newspapers and the
legislative speechmakers will not be able to point out—days,
months or years afterward—that he said something different on the first day of
his dictatorship than he did later on.
Everything that happens in
the social world in our time is the result of ideas. Good things and bad
things. What is needed is to fight bad ideas. We must fight all that we dislike
in public life. We must substitute better ideas for wrong ideas. We must refute
the doctrines that promote union violence. We must oppose the confiscation of property, the control of prices,
inflation, and all those evils from which we suffer. Ideas and only ideas can
light the darkness. These ideas must be brought to the public in such a way
that they persuade people. We must convince them that these ideas are the right
ideas and not the wrong ones. The great age of the nineteenth century, the great
achievements of capitalism, were the result of the
ideas of the classical economists, of Adam Smith and David Ricardo, of Bastiat, and others.
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