Recruiting the Young
by Dr. Fred Schwarz, part 2

1. The Dynamic Nature of Money
      Money is not static. The same amount of money spent three or four times will distribute three or four times as many goods. There is an intriguing story about a man who wrote a check for a hundred dollars without having any money in the bank. With it he bought a certain article. The man from whom he purchased the article took the check and, without cashing it at the bank, used it to purchase certain goods. These he sold for one hundred and twenty dollars, making a profit of twenty dollars on the deal. The person to whom he gave the check did likewise. This happened ten times, each person making a profit of twenty dollars, before the check finally reached the bank where it was dishonored. The ten people who had handled it got together and decided that to avoid trouble, each of them would contribute ten dollars to cover the check. This was done; the hundred dollars was paid; and each of them was richer by ten dollars. This story simply illustrates that the question of credit and rate of circulation of money must be considered.

2.  The Role of Psychology in the Economy
      Suppose everyone is persuaded that a depression is coming and decides not to buy another automobile for twelve months. The result would be an immediate depression in the automoble industry with all the consequences that follow. It is quite obvious that the psychological attitude of the people has a tremendous bearing on the economic situation of a country. This is an aspect of economic theory to which Marx gave little attention.

3. The Relation of Advertising to Distribution
      The question of the psychological outlook of the consumer naturally leads to the question of advertising and its role in distribution. During the recession in 1958, this factor was understood more completely and a campaign started urging people to buy. The recession did not develop into a depression. The Marxist cycle was broken.
      Marx himself cannot be blamed for his failure to consider the role of advertising as the advertising industry was not in existence during his lifetime. It is the followers of Marx who are culpable in this respect.

4. Consumer Credit
      An outstanding development of modern Capitalism is consumer credit. Goods are purchased not with money presently owned, but by a promise to pay in the future. This has become such a large factor in the economy that any analysis which does not consider this is obviously fallacious.

5. The Continually Expanding Market
      Human aspirations are limitless, and under a free economy these form a continually expanding market. A large percentage of American industry now produces items that did not even exist a few years ago. The vast electronics industry, for example, has been a very recent development. The double-car garage is now as normal to the modern home as the faucet with running water. Soon the motorboat will be the routine companion of the car.

6. People’s Capitalism
      Possibly the most devastating repudiation of the Marxist doctrine is the development of people’s Capitalism within the United States. Marx foresaw the wealth of the community being concentrated in fewer and fewer hands. The class owning this wealth he called the bourgeoisie, and the natural forces within Capitalism would constantly diminish the number of this class.
      Contrary to the expectations of Marx, the ownership of American industry is constantly enlarging.  It is quite conceivable that in a short period, the number of stock holders will exceed union membership. The profits received by the vast majority of these stock holders are utilized for purchasing.
      This renders the whole argument of the “class war” ridiculous. Nothing does such damage to the principles of Marxism as the development of worker ownership in American industry. Proletarian stock holders certainly make the concept of universal class war somewhat ludicrous.

7. The Role of Government and Legislation
      Finally, the Marxist analysis ignores the role of government and legislation in relation to the economy. The anti-trust laws have restrained the development of monopoly within the American economy. Whatever the individual viewpoint of the role of government in economic affairs, it is a factor that cannot be ignored.

      In spite of the foregoing, the Marxist analysis has convinced many people. It would be a simple matter to go before any inexperienced student group and, taking them unprepared, convince practically every one of them that the Marxist argument is sound. This is what the Communists have done. Students throughout the world are being taught as a basic principle that the Capitalist system is evil and the creator of depression and war. Disenchantment with the Capitalist system is the first step in the conversion of a student-intellectual to Communism.
      If the situation is considered objectively, it will be seen that there is much to be said in support of Capitalism. The Capitalist system has produced more goods, provided a more equitable distribution, and maintained a higher level of personal freedom than any other system in the world has been able to do.
      The Korean student who spoke to me said, “Of course, in American there is far more freedom than anywhere else.”
      “That’s interesting,” I replied. “How did the American people get that freedom?”
      He looked at me, puzzled.
      “Let’s think about it for a while,” I said. “The freedom in America has a material and a spiritual foundation. The material foundation is the efficient production of goods in quantity and their extensive distribution is so that most people have the material requirements of freedom— sufficient food, shelter, clothing, transportation, and other necessities. The material system within America has produced more food, clothing, and shelter per individual than any other system. Add to this material abundance the spiritual concept of man as the child of God, created, loved, redeemed, infinite in value, and possessed of certain inalienable rights. The result is this freedom you admire.”
      Then I asked, “What is the material system that has produced these goods in such quantity and distributed them so widely?”
      “I don’t know,” he replied.
      “You most certainly do know. You have been telling me for half an hour how bad it is. It is the Capitalist system. Did it never occur to you that maybe the Capitalist system that you abhor so much stands in causal relationship to the freedom you cherish so highly?”
      He was lost. This had not been part of the closed circle of argument that he had heard. His arguments were all worked out and complete. These new ideas came in and shattered the symmetry and perfection.
      The idea of collective ownership fascinates some people, but its benefits are a mirage. The story is told of a visitor to a

Russian factory who asked the workers, “Who owns this factory?’
      “We do,” they replied.
      “Who owns the land on which it is built?”
      “We do.”
      “Who owns the products of the factory when they are made?”
      “We do.”
      Outside in a corner of a large park were three battered jalopies. The visitor asked, “Who owns those cars out there?”
      They replied, “We own them, but one of them is used by the factory manager, one is used by the political commissar, and the other is used by the secret police.”
      The same investigator came to a factory in America, and said to the workers, “Who owns this factory?”
      “Henry Ford,” they replied.
      “Who owns the land on which it is built?”
      “Henry Ford.”
      “Who owns the products of the factory when they are made.”
      “Henry Ford.”
      Outside the factory was a vast park filled with every make and variety of modern American automobile. He said, “Who owns all those cars out there?”
      They replied, “Oh, we do.”
      You may take your choice but, personally, give me the automobile.
      The concept that Capitalism is inherently evil and collective ownership inherently good is contradicted finally by one unanswerable fact. Wherever Communism is in power, the people flee by the millions. They leave everything they love, and they flee to loneliness and the unknown to escape the horror of life under Communist rule.
      By contrast, when all the evils of the Capitalist system have been admitted, the fact remains that every year multiplied thousands risk their lives, not trying to get out of America, but trying to get in. They swim the Rio Grande River. Their goal is not to live at America’s highest standard, but to live at her lowest. On a comparative basis, the economic system of competitive free enterprise has produced abundance and liberty and is a magnet to the less fortunate.
      Many students, however, have a sense of shame concerning Capitalism. They have been convinced by Communist arguments that the Capitalist system is evil, that it has failed, and that it must be replaced. Once convinced of this, a student has taken the first step toward becoming a Communist. 

Life, Liberty and Property
By Thomas Sowell

      Beginning with a review of various conceptions of property that have existed over the centuries, Richard Pipes builds a strong historical case for the necessity of property rights as a prerequisite for freedoms in general in Property and Freedom: The Story of How Through the Centuries Private Ownership Has Promoted Liberty and the Rule of Law (New York: Knopf, 328 pp., $30).
      A leading authority on Russian history, Pipes demonstrates empirically the wider consequences of that country’s centuries-long failure to develop property rights comparable to those of Western Europe.  In disregarding property rights, the Communists were to some extent following in the traditions of the czars.
      Incidentally, both the czars and the Communists understood that property rights promoted economic progress and a higher standard of living.  But both regimes were more concerned with maintaining their own despotic power than with economics.  Only after Russia suffered humiliating defeats in the Crimean War and then in the Russo-Japanese War did it recognize the need to promote economic growth through property rights and industrialization.
      Property and Freedom is particularly needed today, when so many scholars and politicians treat property rights as nothing more than a special privilege for the land rich.  Even courts of law, especially since the New Deal era, often have treated property rights as expendable privileges of the few that must give way before the rights or “needs” of the many.
      Some economists have in recent times begun to show how property rights promote the material well-being of millions of people who are not property owners, but Pipes’ book may carry that much-needed message to historians and others who do not keep up with the interdisciplinary field of law and economics.  Economic prosperity, however, is not all that depends on property rights.  Individual freedom cannot exist where those who hold political power can confiscate property at will or tell owners how they can and cannot use it.
      Perhaps the most frightening part of this book is its account of the ease with which property rights have been circumvented or rendered meaningless in the 20th century – often by arguments, or even mere rhetoric, of unbelievable shallowness.  The concept of “rights,” which for centuries had been recognized as a necessary protection against the tendencies of governments to expand their powers at the expense of the people, has been transformed into a means of facilitating that very expansion.
      Unlike rights to life, liberty and the pursuit of happiness,

which safeguarded citizens against government, new “rights” to a living wage, affordable housing and other things which can only be obtained at the expense of other people require government not only to extract money from people but also to subject them to ever-growing regulations and ever stiffer penalties for failing to live up to these newly imposed obligations.
      The Americans with Disabilities Act of 1990, which mandates that employers make allowances for employees whose “mental illness” renders them more troublesome and less efficient employees, is one of the landmarks in this trend.  At one time, when property rights included the right to free contract on mutually agreed terms, no such issue would even have arisen, much less led to such bizarre results.  Employment was a free choice on both sides and could be ended whenever either side so chose.  Today, Big Brother has a big say in  who is hired and who is fired.
      The rapid spread of forfeiture laws has led to equally bizarre cases in which people’s cars, boats and other property have been confiscated without their having been convicted of anything – or even without their having been charged with a crime.  Indeed, the key Supreme Court case in forfeiture law involved a yacht on which the remains of a single marijuana cigarette had been found.
      But how many people own yachts?  And of course we are all in favor of laws against drug dealers.  What the Nazis proved half a century earlier, however, was that the grossest violations of the most basic rights would arouse little opposition in the general population if the targets of these violations had first been demonized.  These violations, once accepted, then could be successively extended to other groups as government power expanded.
      Political rhetoric can bestow halos as well as horns.  Environmentalist invasions of property laws have been justified by noble purposes, even when they destroyed the value of property for which people had worked a lifetime.  As the final chapter of Property and Freedom notes, there has been belated awareness in the courts that destroying half the value of someone’s property is the same as confiscating half of it and is equally deserving of compensation.  But this is but one glimmer of hope in a spreading darkness of political destruction of a fundamental right.
      In a sense, Pipes’ book is also but one glimmer of light.  Good as it is, it needs the support of many more other writings and movements to spread an understanding of the high stakes involved in the property-rights struggle – a struggle that looks like a special privilege of a few, but which is a basic freedom of all.

Insight, August 23, 1999 p.26

continued from page 1

      Because it ignores human nature, socialist production falls off; needs are not met; people are not satisfied; poverty is not reduced.  If understanding the nature and limitations of human beings is the beginning of political wisdom, then the Marxists have yet to begin.  We are fallen creatures, and we are creatures of incentive.   No political or economic system can succeed if it ignores those fundamental facts.

Marxism entails a faulty view of cause and effect
      The Marxists do more than simply ignore that which must not be ignored, they also misunderstand economic cause and effect.  Marxists believe the fallacy of social determinism, which says that economic conditions and political circumstances shape everything and everyone, rather than the other way round.  Marxists seem not to have asked (or understood) what shapes economic conditions and political circumstances–namely, persons.
      Human beings, not impersonal forces, are the real shapers and movers in human history.  Public policy and political theory are conceived and enacted only by real and identifiable human beings, not by any alleged impersonal forces of change set loose in the world at large.  Individual human beings are the true catalysts in political affairs, not “the spirit of the age,” not “the winds of freedom and equality,” not “historically determined class struggle,” not even “ideas whose time has come.”  People are responsible for hatching failed economic policies, for inciting Marxist revolutions, and for inter-racial oppression, on the one hand, as well as for the acquisition and maintenance of political freedom and material prosperity, on the other.
      Until the Marxists recognize from whence arise both human failures and human successes, they will continue to generate ill-conceived policies.  It can be no other way.  No correct answers are possible for the Marxists until they discover who is answerable; and until they discover who is answerable, they chase illusory excuses and imaginary scapegoats.  Put differently, behind nearly every political and economic result lies an idea, whether good or bad, and behind every idea is a human mind.  Yet Marxists continue to talk, to analyze and to act as if impersonal forces shaped both us and the world in which we live.
      The Marxist vocabulary, and the worldview it embodies, permit no other conclusion.  Marxist nomenclature, for example, which focuses so heavily on class struggle and class analysis, ignores the obvious fact that only individuals

exist, not so-called classes. Rather than beginning with the irreducible fact of the fallen human individual, rather than building its theory on the basis of individual dignity, worth, autonomy, and sinfulness, Marxism sees only classes, aggregates, and masses—the bourgeoisie and the proletariat, for example.  Marxists never realize that such artificial categories are merely their own interpretation of reality and not reality itself.  Such things as classes are not really things at all; they are a leftist’s sociological fiction.  As Marx Bloch observed in a different context, a nomenclature that is thrust upon the external world rather than derived from it will always end by distorting the world because it raises its own failed interpretive categories to the level of the true and the eternal.  In place of real, live, human individuals, Marxists have substituted a leftist construction of classes and of class warfare.
      Class-based analysis is merely a Marxist, shorthand method of identifying, interpreting and manipulating the actions and conditions of the six billion individuals who now live on this planet.  It is a blatant example of what philosophers call reification—making a nothing into a something.
      I cannot explain this important point and the Marxist conceptual failure it entails any more plainly than has Rose Wilder Lane, a noted writer from an earlier generation, and the well-known daughter of Laura Ingalls Wilder:
      In the human world there is no entity but the individual person–So far as Society has any existence, it exists when boy meets girl, when Mrs. Jones telephones Mrs. Smith, when Robinson buys a cigar, when the motorist stops for gasoline...when the postman delivers the mail[,] the labor bosses discuss a strike...and the dentist says ‘Wider, please.’ Human relationships are so infinitely numerous and varying every moment, that no human mind can begin to grasp them.
      To call these relationships Society, and then discuss the welfare or progress of Society, as if it existed as a bee swarm does, is simply to escape from reality to fairyland.2
      Such ideas, of course, were not new with Rose Wilder Lane.  Centuries ago Aristotle understood that those with wealth and those without it were likely to be intellectually and socially crippled by the distorted way they viewed each other as only either rich or poor, rather than as real and unique human individuals.
      Modern Marxists are subject to the same ancient interpretive delusion to which Aristotle alluded.  Because sloppy language makes sloppy thought possible, this misguided Marxist vocabulary binds Marxists—and those

unfortunate souls over whom Marxists rule—in the chains of deep political error.  The Marxists not only see aggregates where only individuals exist, they also see only imperialists, revolutionaries, the bourgeoisie and the proletariat.  That is, the Marxists not only fall afoul of the fallacy of aggregation, they apply laudatory or pejorative labels to the aggregates they have created, and thereby applaud or condemn countless indiviuals for no other reason than that those individuals happen to fall into one or another artificially constructed Marxist category.  For such these and other such “offenses,” tens of millions of persons, quite literally, have died at the Marxists’ bloody hands.  Being a member of the Marxist-constructed category called “bourgeoisie” can, and has, been the death of many persons.
      But make no mistake about it, even though people—and not impersonal forces or faceless aggregates—rule the world, one must not conclude therefore that ideas are either unimportant or inconsequential.  To think so is a grave error.  As Richard Weaver properly observed, ideas have consequences.

Bad ideas have bad consequences.  But ideas do not have consequences apart from the people who conceive them, refine them, and apply them.  Thus, on their own, ideas do not lead us places; we take them somewhere.  Only to the extent that people act upon their beliefs do ideas have consequences.  People do not always do so; but when they do, they themselves are the active agents in history, not merely their mental conceptions.
      Marxism is a bad idea—indeed it is a massive collection of bad ideas—and when Marxists try to apply those bad ideas to the real world of real people, very bad things happen—always.

ENDNOTES
      ¹Ludwig von Mises, Money, Method, and the Market Process, edited by Richard M. Ebeling (Norwell: Kluwer Academic Publishers, 1990) pp. 223, 221-222.
      ²Rose Wilder Lane, The Discovery of Freedom (New York: The John Day Company, 1943), pp. 5, 6.

q    “One of the more peculiar legacies of the epic struggle known as the Cold War is the fact that while the West may have won its geopolitical phase, the cultural sphere remains fixedly under the influence of the Hollywood left.  Nowhere is this bizarre condition better reflected than in the popular understanding of the Hollywood Blacklist, the mid-century intersection of politics and culture.
      “Consider the reception accorded director Elia Kazan on receiving his special Oscar earlier this year.  It largely ranged from hostile and grudging, to merely ambivalent.  Such reactions derive from the misbegotten notion that those, such as Mr. Kazan, who ‘named names’­—i.e., disclosed the identities of secretly organized Americans who were willing participants in a conspiracy guided by Moscow—committed a crime far greater than those who engaged in the conspiracy itself.  And so it is that the ‘informers,’ the disillusioned ex-communists who acquired their wisdom the hard way, have been culturally ostracized, while the informed-upon have been embraced, even celebrated–certainly never held responsible or called upon to explain their zealous allegiance to the likes of Joseph Stalin through purges, show trials, the Ukraine famine, the Hitler-Stalin pact and the gulag.
      “A bizarre condition, indeed.  Director Edward Dmytryk, who died last week at age 90, once came up with a good name

for it: ‘What thousands of liberals have believed since [the Blacklist] was that one must allow a seditious Party to destroy one’s country rather than expose the men or women who are the Party.  In other words, naming names is a greater crime than subversion.  That’s what I call the “Mafia Syndrome,” and I find no shame or indignity in rejecting it.’  This quotation comes from Mr. Dmytryk’s fascinating memoir, ‘Odd Man Out,’ perhaps the most illuminating and intelligent account of the Blacklist period.
      “Published when Mr. Dmytryk was 87, the book tells the story of the director’s experiences as a Communist in Hollywood who rapidly became disillusioned with the party after a series of eye-opening experiences, ranging from his astonishment at learning that Arthur Koestler’s ‘Darkness at Noon’ was forbidden reading to party members, to his final rupture over party efforts to compel him to change and reshoot the script of ‘Cornered’ (incidentally, a pretty good, noirish, post-World War II movie).  While Mr. Dmytryk may well have thought that his involvement with the party was over, his life had already taken an unalterable turn leading first to one kind of infamy as a member of the so-called Hollywood Ten, the group of famously uncooperative witnesses called upon to testify before the House Committee on Un-American Activities, and later to another kind of

infamy as the only member of the Hollywood Ten to break ranks.
      “In recent years, Mr. Dmytryk would say, somewhat ruefully, that his obituaries would primarily remember him for his relationship to the Hollywood Ten, not for his direction of such memorable movies as ‘Murder, My Sweet’ with Dick Powell, and ‘The Caine Mutiny’ with Humphrey Bogart.  He was right.  The career in movies that Mr. Dmytryk pursued since 1922 (when he worked as a 14-year-old messenger boy at Paramount Pictures), was indeed overshadowed by his very much unplanned role as a warrior of the early Cold War, with certain newspapers, namely the Los Angeles Times, passing along the fearsomely ugly judgements of nameless ‘critics.’
      “But if, in this bizarre era, Mr. Dmytryk’s outspokenness as a former Communist and an anti-communist did take something away from his artistic legacy, it added another legacy, one that eventually may even transcend all others.  One day, perhaps, Edward Dmytryk will be widely recognized not only as an accomplished Hollywood director, but also as a man of history who rose to the exacting demands of a dangerous era with integrity, intelligence and courage.”
      The Washington Times, July 9, 1999, p. A16

q    “Hundreds of American leftists who moved to the Soviet Union to sample the wonders of Josef Stalin’s communist regime in the 1920s and 1930s disappeared without a trace.  According to a report by the Associated Press based on previously secret Soviet files, State Department declassified documents and interviews with survivors of Stalinist purges, there is ‘reason to believe’ that many of those who disappeared were executed – shot, usually in the back of the head with a small-caliber pistol – for crimes such as wearing American clothes or talking favorably about life in the United States.
      “Some of those Americans who went missing had been deported for subversive activities, but many were idealistic factory workers (including labor-union activists), teachers, engineers and others recruited by the Soviets as advisers.  ‘The United States had made no effort to find its victims of the Stalin era,’ the article asserts.  ‘Internal State Department memos show that the U.S. Embassy in Moscow closely watched the arrests and sent reports of the terror to Washington.’
      “Of those who were not executed, most died in prison-labor camps or ‘closed cities.’  Until now they have not even been a footnote to the accounts of millions killed in Stalin’s savage purges.”
      Insight, August 23, 1999, p. 34

q    “Not only does the left not apologize for its support of Josef Stalin and its later opposition to anti-Communism, its adherents continue to vilify their opponents who were morally right.
      “This year’s Academy Awards controversy over honoring film director Elia Kazan with a Lifetime Achievement Award is another good example of the left never apologizing, no matter how great its crimes.
      “Those leading the protests against Elia Kazan, who informed against eight members of the Communists in the film industry before the House on Un-American Activities Committee in 1952, are almost all former Communists or their supporters.  The moral inversion here is breathtaking.  The people living in luxury and freedom who supported Josef Stalin and his Soviet Communist Party have not only never apologized for the tens of millions of dead victims and the hundreds of millions of other victims of Communism, they walk around acting as if they are the victimized party.
      “Former Communists and their children now write memoirs about their parents’ time as Communists as if it were some Golden Age of Idealism, rather than an evil time of willful ignorance regarding unspeakable horrors.
      “In the words of Professor Alan Wolfe of Boston University, a contributing editor to the New Republic:
      To this day, former Communists portray themselves as innocent activists wanting only what was best for their country. . . .Who are they, or their like-minded sympathizers today, to insist that Kazan was vile whereas their intentions were only pure?. . .It is time for U.S. Communists to admit their mistakes.
      “The liberal identification with leftist ideas has been repeatedly demonstrated during the Kazan controversy.  In the mainstream (i.e., liberal) news media, the controversy is always depicted as: ‘Will Kazan apologize?’ or ‘Is it time to forgive Kazan?’ or ‘Can we separate artistic achievement from character (i.e., great art from an evil man)?’  I am unaware of a single exception–e.g.,describing the controversy as ‘Will former Hollywood Communists and fellow travelers finally repent?’  Or ‘What if Kazan had informed on members of the Nazi party?’
      “Indeed, what if Kazan had informed on members of the Nazi party or Ku Klux Klan members or, lowest of all, tobacco company executives?  Wouldn’t the mainstream (i.e., liberal) media, in any of these situations, have regarded Elia Kazan as a moral hero?
      “In the leftist worldview, it is only Kazan, not the Hollywood supporters of Stalin’s regime, who has to say he is sorry.  The reason?  Because left means never having to say you’re sorry.”
      The Prager Perspective, February 1-15, 1999 p. 4,5