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CAPITALISM: |
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The Clearest and
Most Comprehensive Contemporary Defense of the Capitalist
Economic System Available |
Literature and Lectures by Edith Packer, George Reisman, and Others |
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Environmentalism Refuted *by George Reisman
Because of ignorance
of the contributions of von Mises, the great majority of the
intellectuals, and of the general public too, which has been subjected to
the educational system fashioned and run by them, continues to believe
such things as that the profit motive is the cause of starvation wages,
exhausting hours, sweatshops, and child labor; and of monopolies,
inflation, depressions, wars, imperialism, and racism. At the same time,
they believe that saving is hoarding and a cause of unemployment and
depressions, as is, allegedly, economic progress in the form of
improvements in efficiency. And by the same logic, they regard war and
destruction as necessary to prevent unemployment under capitalism. In
addition, they believe that money is the root of all evil and that
competition, is "the law of the jungle" and "the survival
of the fittest." Economic inequality, they believe, proves that
successful businessmen and capitalists play the same social role in
capitalism as did slave owners and feudal aristocrats in earlier times and
is thus the logical and just basis for "class warfare." Real, positive
knowledge of the profit motive and the price system, of saving and capital
accumulation, of money, economic competition, and economic inequality, and
of the harmony of interests among men that results from the joint
operation of these leading features of capitalism—all of this knowledge
is almost entirely lacking on the part of the great majority of today’s
intellectuals. To obtain such knowledge, it would be necessary for them to
read and study von Mises, who is far and away the most important source of
such knowledge. But they have not done this. Ignorance of the
ideas of von Mises—the willful evasion of his ideas—has enabled the
last three generations of intellectuals to go on with the delusion that
capitalism is an "anarchy of production," a system of rampant
evil, utter madness, and continuous strife and conflict, while socialism
is a system of rational planning and order, of morality and justice, and
the ultimate universal harmony of all mankind. For perhaps a century and a
half, the intellectuals have seen socialism as the system of reason and
science and as the ultimate goal of all social progress. On the basis of
all that they believe, and think that they know, the great majority of
intellectuals even now cannot help but believe that socialism should
succeed and capitalism fail. Ignorant of the
contributions of von Mises, the intellectuals were totally unprepared for
the world-wide collapse of socialism that became increasingly evident in
the last decades of the twentieth century and that culminated in the
overthrow of the communist regimes in Eastern Europe and the former Soviet
Union. Carrying their ignorance to the depths of depravity, they have
apparently chosen to interpret the undeniable failure of socialism not as
evidence of their own ignorance but as the failure of reason and
science. Socialism, they believe, is the system of social organization
implied by reason and science. Its failure, they conclude, can only be the
failure of reason and science. Such is the state of ignorance that results
from ignorance of the contributions of von Mises. This much at least
must be said here about the actual relationship between socialism and
reason. Reason is an attribute of the individual, not the collective. As
von Mises repeatedly said, "Only the individual thinks. Only the
individual acts." So far from being any kind of system demanded or
even remotely supported by reason, socialism constitutes the forcible
suppression of the reason of everyone except that of the Supreme
Dictator. He alone is to think and plan, while all others are merely
to obey and carry out his orders. A system in which one man, or a few men,
presume to establish a monopoly on the use of reason must, of course,
fail. Its failure can certainly not be called a failure of reason. It can
no more be called a failure of reason than it could be called a failure of
human legs if one man or a handful of men were somehow to deprive the rest
of the human race of the power to use its legs and then, of course, found
its own legs inadequate to support the weight of the human race. So far is the
failure of socialism from being a failure of reason that it would be much
more appropriate to describe it as a failure of lunacy: the lunacy
of believing that the thinking and planning of one man or a handful of men
could be substituted for the thinking and planning of tens and hundreds of
millions of men cooperating under capitalism and its division of labor and
price system. (Of course, because they never bothered to read von Mises,
the intellectuals do not even know that ordinary people do in fact engage
in economic planning, planning that is integrated and harmonized by the
price system. From the abysmally ignorant perspective of the
intellectuals, ordinary people are chickens without heads. Thinking and
planning are allegedly actions that only government officials can
perform.) Because of ignorance
of the contributions of von Mises, one cannot expect very many people to
know that Nazism was actually a major form of socialism and thus that the
fifteen million or more murders for which it was responsible should be
laid at the door of socialism. Nazism and all of its murders aside,
Marxian "scientific" socialism was responsible for more than eighty
million murders in the twentieth century: thirty million in the former
Soviet Union, fifty million in Communist China, and untold millions more
in the satellite countries. The great majority
of the intellectual establishment never took these latter mass murders
very seriously and certainly did not regard them as being caused by the
nature of socialism. (They did take seriously the murders committed by the
Nazis, which, in their ignorance, they blamed on capitalism.) Even when,
late in the twentieth century, well after the great majority of the
murders had been committed and were known to the world, President Reagan
characterized the Soviet Union as "the evil empire," the
intellectual establishment was capable of no other response than to
criticize him for being impolite, undiplomatic, and boorish. Now the reality is
that the great majority of intellectuals of the last several generations
have blood on their hands. Morally speaking at least, in urging the
establishment of socialism and/or in denying or ignoring its resulting
bloody consequences, they have been accessories to mass murder,
either before the fact or after the fact. And, indeed, the
intellectuals have some form of awareness of their guilt. For not only do
they blame reason and science for the failure of socialism but they now
also regard reason and science, and its offshoot technology, as profoundly
dangerous phenomena, as though they, and not socialism, had been
responsible for the mass murders. Indeed, the same intellectual quarter
that a generation or more ago urged "social engineering" has
taken the failure of social engineering so far as to now oppose
engineering of virtually any kind. The same
intellectual quarter that a generation or more ago urged the totalitarian
control of all aspects of human life for the purpose of bringing order to
what would otherwise allegedly be chaos, now urges a policy of laissez-faire—out
of respect for natural harmonies. Of course, it is not a policy of
laissez-faire toward human beings, who are to be as tightly controlled as
ever. Nor, of course, is it a policy that recognizes any form of economic
harmonies among human beings. No, it is a policy of laissez-faire toward nature
in the raw; the alleged harmonies that are to be respected are those
of so-called eco-systems. But while the
intellectuals have turned against reason, science, and technology, they
continue to support socialism and, of course, to oppose capitalism. They
now do so in the form of environmentalism. It should be realized that
environmentalism’s goal of global limits on carbon dioxide and other
chemical emissions, as called for in the Kyoto treaty, easily lends itself
to the establishment of world-wide central planning with respect to a wide
variety of essential means of production. Indeed, an explicit bridge
between socialism and environmentalism is supplied by one of the most
prominent theorists of the environmental movement, Barry Commoner, who was
also the Green Party’s first candidate for President of the United
States. The bridge is in the
form of an attempted ecological validation of one of the very first
notions of Karl Marx to be discredited—namely, Marx’s prediction of
the progressive impoverishment of the wage earners under capitalism.
Commoner attempts to salvage this notion by arguing that what has
prevented Marx’s prediction from coming true, until now, is only that
capitalism has temporarily been able to exploit the environment. But this
process must now come to an end, and, as a result, the allegedly inherent
conflict between the capitalists and the workers will emerge in full
force. (For anyone interested, I quote Commoner at length in Capitalism.) Concerning the
essential similarity between environmentalism and socialism, I wrote: The
only difference I can see between the green movement of the
environmentalists and the old red movement of the Communists and
socialists is the superficial one of the specific reasons for which they
want to violate individual liberty and the pursuit of happiness. The Reds
claimed that the individual could not be left free because the result
would be such things as "exploitation," "monopoly,"
and depressions. The Greens claim that the individual cannot be left free
because the result will be such things as destruction of the ozone layer,
acid rain, and global warming. Both claim that centralized government
control over economic activity is essential. The Reds wanted it for the
alleged sake of achieving human prosperity. The Greens want it for the
alleged sake of avoiding environmental damage . . . [And in the end,] [b]oth
the Reds and the Greens want someone to suffer and die; the one, the
capitalists and the rich, for the alleged sake of the wage earners and the
poor; the other, a major portion of all mankind, for the alleged sake of
the lower animals and inanimate nature (Ibid., p. 102). If the world’s
intellectuals had been open to the possibility that they had been wrong
about the nature of capitalism and socialism—profoundly, devastatingly
wrong—and taken the trouble to read and understand the works of von
Mises in order to learn how and why they had been wrong, socialism would
have died once and for all with the Soviet Union, and the whole world
would now be moving toward laissez-faire capitalism and unprecedented
economic progress and prosperity. Instead, the intellectuals have chosen
to foist the doctrine of environmentalism on the world, as a last-ditch
effort to destroy capitalism and save socialism. II All that I have said
up to now should be understood as in the nature of an introduction. I
consider the substance of my talk to be the refutation of the two
essential claims of the environmentalists and then a critique of their
essential policy prescription. The two essential claims of the
environmentalists, which I take for granted are already well known to
everyone, are (1) that continued economic progress is impossible, because
of the impending exhaustion of natural resources (it is from this notion
that the slogan "reduce, reuse, recycle" comes), and (2) that
continued economic progress, indeed, much of the economic progress that we
have had up to now, is destructive of the environment and is therefore
dangerous. The essential policy
prescription of the environmentalists is the prohibition of
self-interested individual action insofar as the byproduct of such action
when performed on a mass basis is alleged damage to the environment. The
leading concrete example of this policy prescription is the attempt now
underway to force individuals to give up such things as their automobiles
and air conditioners on the grounds that the byproduct of hundreds of
millions or billions of people operating such devices is to cause global
warming. And this same example, of course, is presently the leading
example of the alleged dangers of economic progress. The basis of my
critique of the essential claims of the environmentalists is Carl
Menger’s theory of goods. The basis of my critique of their essential
policy prescription is the spirit of individualism that runs throughout
the writings of Ludwig von Mises. In his Principles
of Economics, Menger develops two aspects of his theory of goods that
are highly relevant to the critique of the environmentalists’ two
essential claims. The first aspect is his recognition that what makes what
would otherwise be mere things into goods is not the intrinsic properties
of the things but a man-made relationship between the physical
properties of the things and the satisfaction of human needs or wants.
Menger describes four prerequisites, all of which must be simultaneously
present, in order for a thing to become a good, or, as he often puts it,
have "goods-character." He writes: If a thing is to
become a good, or in other words, if it is to acquire goods-character, all
four of the following prerequisites must be simultaneously present:
The last two of
these prerequisites, it must be stressed, are man made. Human
knowledge of the causal connection between external material things and
the satisfaction of human needs must be discovered by man. And
command over external material things sufficient to direct them to the
satisfaction of human needs must be established by man. For the most
part, it is established by means of a process of capital accumulation and
a rising productivity of labor. All this has
immediate bearing on the subject of natural resources. It implies that the
resources provided by nature, such as iron, aluminum, coal, petroleum and
so on, are by no means automatically goods. Their goods-character must be
created by man, by discovering knowledge of their respective properties
that enable them to satisfy human needs and then by establishing command
over them sufficient to direct them to the satisfaction of human needs. For example, iron,
which has been present in the earth since the formation of the planet and
throughout the entire presence of man on earth, did not become a good
until well after the Stone Age had ended. Petroleum, which has been
present in the ground for millions of years, did not become a good until
the middle of the nineteenth century, when uses for it were discovered.
Aluminum, radium, and uranium also became goods only within the last
century or century and a half. An example
concerning goods-character being created only after the establishment of
command sufficient to direct the resource provided by nature to the
satisfaction of a human need would be the case of petroleum deposits lying
deeper than existing drilling equipment could go. As drilling equipment
improved, command was established over deposits lying at greater and
greater depths. Those deposits, to the extent that they were known, then
became goods, which they had not been before. Similarly, for some years
after the creation of the goods-character of petroleum, those petroleum
deposits containing a significant sulfur content were unuseable for the
production of petroleum products and were therefore not goods. Their
goods-character was created only when Rockefeller and Standard Oil
developed the process of cracking petroleum molecules, which then made
sulfurous deposits useable. The second aspect of
Menger’s theory of goods that is highly relevant to the critique of the
environmentalists’ essential claims is his principle that the starting
point both of goods-character and of the value of goods is within us—within
human beings—and radiates outward from us to external things,
establishing the goods-character and value first of things that directly
satisfy our needs, such as food and clothing, which category of goods
Menger describes as "goods of the first order," and, second, the
means of producing goods of the first order, such as the flour to bake
bread and the cloth to make clothing, which category of goods Menger
describes as "goods of the second order." Goods-character and
the value of goods then proceed from goods of the second order to goods of
the third order, such as wheat, which is used to make the flour, and
cotton yarn, which is used to make the cloth to make the clothing. From
there they proceed to goods of the fourth order, such as the equipment and
land used to produce the wheat, and the raw cotton from which the cotton
yarn is made. Thus, goods-character and the value of goods, in Menger’s
view, radiate outward from human beings and their needs to external things
more and more remote from the direct satisfaction of human needs. In Menger’s own
words: "The goods-character of goods of higher order is derived from
that of the corresponding goods of lower order." (p.63) And: ".
. . the value of goods of higher order is always and without exception
determined by the prospective value of the goods of lower order in whose
production they serve." (p. 150) And as to the value of goods of the
first order: "The value an economizing individual attributes to a
good is equal to the importance of the particular satisfaction that
depends on his command of the good." (p. 146) "The determining
factor . . . is . . . the magnitude of importance of those satisfactions
with respect to which we are conscious of being dependent on command of
the good." (p. 147) In Menger’s view,
it is clear that the process of production represents a progression from
goods of higher order to goods of lower order, that is, from goods more
remote from the satisfaction of human needs and the source of the value of
all goods, to goods less remote from the satisfaction of human needs and
the source of the value of all goods. The process of production
unmistakably appears as one of continuous enhancement of utility, as it
moves closer and closer to its ultimate end and purpose: the satisfaction
of human needs. To apply Menger’s
views to the critique of the essential claims of environmentalism, it is
first necessary to stress the fact that in his account of things,
nature’s contribution to natural resources is implicitly much less than
is generally supposed. According to the prevailing view, what nature has
provided is the natural resources that man exploits, that is, for example,
all of the iron mines and coal mines, all of the oil fields and
natural-gas wells, and so on. At the same time, according to the
prevailing view, man’s only connection to these allegedly
all-nature-given natural resources is merely that he uses them up, with no
means of replacing them. It is generally thought, for example, that while
man produces such things as automobiles and refrigerators, his sole
connection to the natural resources used in their production, such as iron
ore, is merely to use them up, with no possibility of replacing them. As I say, in
Menger’s view, nature’s contribution to natural resources is much less
than what is usually assumed. What nature has provided, according to
Menger, is the material stuff and the physical properties of
the deposits in these mines and wells, but it has not provided the
goods-character of any of them. Indeed, there was a time when none of
them were goods. The goods-character
of natural resources, according to Menger, is created by man, when
he discovers the properties they possess that render them capable
of satisfying human needs and when he gains command over them
sufficient to direct them to the satisfaction of human needs. All that needs to be
added to Menger’s view of the man-made creation of the goods-character
of natural resources is a precise, explicit recognition of the extent
of the things Menger refers to that nature has provided and which
are not yet goods, but which, under the appropriate circumstances, might
become goods, or, at least, from the domain of which things might be drawn
to a greater extent to receive goods-character by virtue of man’s
contribution to the process. In other words, what precisely has nature
provided with respect to which man might discover causal connections to
the satisfaction of his needs and over greater portions of which he might
gain command sufficient to direct such things to the satisfaction of his
needs? My answer to this
question is that what nature has provided is matter and energy—matter
in the form of all the chemical elements both known and as yet unknown,
and energy, in all of its various forms. I call this contribution of
nature "the natural resources provided by nature." Natural
resources in the much narrower sense of "goods," as Menger uses
the term, are drawn from this virtually infinite domain provided by
nature. Natural resources that are goods in Menger’s sense are natural
resources provided by nature that man has made useable and accessible by
virtue of discovering properties they possess that enable them to satisfy
human needs and by virtue of gaining command over them sufficient to
direct them to the satisfaction of human needs. What is essential
here is to grasp the distinction between the two senses of the expression
"natural resources." First, there are natural resources as
provided by nature. Such natural resources, as I say, are matter, in all
of its elemental forms, and energy, in all of its forms. And then, second,
drawn from this domain, are natural resources to which man has given
goods-character. We are already
familiar with the fact that an outstanding characteristic of natural
resources in the first sense, that is, of natural resources as provided by
nature, is that none of them are intrinsically goods—that their
achievement of goods-character awaits action by man. A further, equally
important characteristic of natural resources as provided by nature, and
which now needs to be stressed as strongly as possible, is the enormity
of their quantity. Indeed, for all practical purposes, they are
infinite. Strictly speaking, they are one and the same with all the
matter and energy in the universe. That is the full extent of the
natural resources supplied by nature. Thus, in one sense,
the sense of useable, accessible natural resources—that is, of goods as
Menger defines the term—the contribution of nature is zero.
Practically nothing comes to us from nature that is ready-made as a
useable, accessible natural resource—as a good in Menger’s sense. In
another sense, however, the natural resources that come from nature—the
matter, in the form of all the chemical elements, known and as yet
unknown, and energy in all of its forms—are virtually infinite in
their extent. In this sense, nature’s contribution is boundless. Even if we limit our
horizon exclusively to the planet earth, which certainly need not be our
ultimate limit, the magnitude of natural resources supplied by nature is
mind-bogglingly huge. It is nothing less than the entire mass of the
earth and all of the energy that goes with it, from thunder
storms in the atmosphere, a single one of which discharges more energy
than all of mankind produces in an entire year, to the tremendous heat
found at the earth’s core in millions of cubic miles of molten iron and
nickel. Yes, the natural resources provided by nature in the earth alone
extend from the upper limits of the earth’s atmosphere, four-thousand
miles straight down, to its center. This enormity consists of solidly
packed chemical elements. There is not one cubic centimeter of
the earth, either on its surface or anywhere below its surface, that is
not some chemical element or other, or some combination of chemical
elements. This is nature’s contribution to the natural resources
contained in this planet. It indicates the incredibly enormous extent
of what is out there awaiting transformation by man into natural resources
possessing goods-character. And this brings me
to what I consider to be the revolutionary view of natural resources that
is implied in Menger’s theory of goods. Namely, not only does man create
the goods- character of natural resources—by obtaining knowledge of
their useful properties and then creating their useability and
accessibility by virtue of establishing the necessary command over
them—but he also has the ability to go on indefinitely increasing the
supply of natural resources possessing goods-character. He enlarges
the supply of useable, accessible natural resources—that is, natural
resources possessing goods-character—as he expands his knowledge of
and physical power over nature. The prevailing view,
that dominates the thinking of the environmentalists and the
conservationists, that there is a scarce, precious stock of natural
resources that man’s productive activity serves merely to deplete is
wrong. Seen in its full context, man’s productive activity serves to
enlarge the supply of useable, accessible natural resources by converting
a larger, though still tiny, fraction of nature into natural resources
possessing goods-character. The essential question concerning natural
resources is what fraction of the virtual infinity that is nature
does man possess sufficient knowledge concerning and sufficient physical
command over to be able to direct it to the satisfaction of his needs.
This fraction will always be very small indeed and will always be capable
of vastly greater further enlargement. As I stated a moment
ago, the supply of useable, accessible natural resources expands as man
expands his knowledge of and physical power over the world and universe.
Up to now, although considerably expanded in comparison with what it was
in previous centuries, man’s physical power over the world has been
essentially confined to the roughly thirty percent of the earth’s
surface that is not covered by sea water, and there it has been further
confined to depths that are still measured in feet, not miles. Man is
literally still just scratching the surface of the earth, and the far
lesser part of its surface at that. And nowhere is he dealing with nature
nearly as effectively or efficiently as he someday might. In addition to the
examples previously given with respect to iron, petroleum, aluminum,
radium, and uranium, consider the implications for the supply of useable,
accessible natural resources of man becoming able to mine at greater
depths with less effort, to move greater masses of earth with less effort,
to break down compounds previously beyond his power, or to do so with less
effort, to gain access to regions of the earth previously inaccessible or
to improve his access to regions already accessible. All of these increase
the supply of useable, accessible natural resources. They do so, of
course, by virtue of creating what Menger describes as command over things
sufficient to direct them to the satisfaction of human needs. All of them
bestow the character of goods on what had before been mere things. As I wrote in Capitalism: Today,
as the result of such advances, the supply of economically useable natural
resources is enormously greater than it was at the beginning of the
Industrial Revolution, or even just one or two generations ago. Today, man
can more easily mine at a depth of a thousand feet than he could in the
past at a depth of ten feet, thanks to such advances as mechanical-powered
drilling equipment, high explosives, steel structural supports for mine
shafts, and modern pumps and engines. Today, a single worker operating a
bulldozer or steam shovel can move far more earth than hundreds of workers
in the past using hand shovels. Advances in reduction methods have made it
possible to obtain pure ores from compounds previously either altogether
impossible to work with or at least too costly to work with. Improvements
in shipping, railroad building, and highway construction have made
possible low-cost access to high-grade mineral deposits in regions
previously inaccessible or too costly to exploit. And, I added: There
is no limit to the further advances that are possible. Reductions in the
cost of extracting petroleum from shale and tar sands have the potential
for expanding the supply of economically useable petroleum by a vast
multiple of what it is today. Hydrogen, the most abundant element in the
universe, may turn out to be an economical source of fuel in the future.
Atomic and hydrogen explosives, lasers, satellite detection systems, and,
indeed, even space travel itself, open up limitless new possibilities for
increasing the supply of economically useable mineral supplies. Advances
in mining technology that would make it possible to mine economically at a
depth of, say, ten thousand feet, instead of the present much more limited
depths, or to mine beneath the oceans, would so increase the portion of
the earth’s mass accessible to man that all previous supplies
of accessible minerals would appear insignificant in comparison (p.
64). The key point here
is that, following Menger’s insights into the nature of goods, the
supply of economically useable, accessible natural resources is expandable.
It is enlarged as part of the same process by which man increases the
production and supply of all other goods, namely, scientific and
technological progress and saving and capital accumulation. The fundamental
situation is this. Nature presents the earth as an immense solidly packed
ball of chemical elements. It has also provided comparably incredible
amounts of energy in connection with this mass of chemical elements. If,
over and against this massive contribution from nature stands motivated
human intelligence—the kind of motivated human intelligence that a free,
capitalist society so greatly encourages, with its prospect of earning a
substantial personal fortune as the result of almost every significant
advance, there can be little doubt as to the outcome: Man will succeed in
progressively enlarging the fraction of nature’s contribution that
constitutes goods; that is, he will succeed in progressively enlarging
the supply of useable, accessible natural resources. The likelihood of
his success is greatly reinforced by two closely related facts: the
progressive nature of human knowledge and the progressive nature of
capital accumulation in a capitalist society, which, of course, is also a rational
as well as a free society. In such a society, the stock of scientific and
technological knowledge grows from generation to generation, as each new
generation begins with all of the accumulated knowledge acquired by
previous generations and then makes its own, fresh contribution to
knowledge. This fresh contribution enlarges the stock of knowledge
transmitted to the next generation, which in turn then makes its own fresh
contribution to knowledge, and so on, with no fixed limit to the
accumulation of knowledge short of the attainment of omniscience. Similarly, in such a
society the stock of capital goods grows from generation to generation.
The larger stock of capital goods accumulated in any generation on the
foundation of a sufficiently low degree of time preference and thus
correspondingly high degree of saving and provision for the future,
together with a continuing high productivity of capital goods based on the
foundation of advancing scientific and technological knowledge, serves to
produce not only a larger and better supply of consumers’ goods but also
a comparably enlarged and better supply of capital goods. That larger and
better supply of capital goods, continuing on the same foundation of low
time preference and advancing scientific and technological knowledge, then
serves to further enlarge and improve the supply not only of consumers’
goods but also of capital goods. The result is continuing capital
accumulation, on the basis of which, from generation to generation, man is
able to confront nature in possession of growing powers of physical
command over it. On the basis of both
of progressively growing knowledge of nature and progressively growing
physical power over nature, man progressively enlarges the fraction of
nature that constitutes goods, i.e., the supply of useable, accessible
natural resources. III I turn now to the
second aspect of Menger’s theory of goods that relates to the critique
of the essential tenets of environmentalism, namely, his view of the
process of production as one of continuous enhancement of utility as it
moves from goods of higher order to goods of lower order. All that it is
necessary to add to Menger’s view is recognition once again of the fact
that the earth is an immense ball of solidly packed chemical elements. Now
these chemical elements constitute man’s external material surroundings,
i.e., his environment. They are the external material conditions of
human life. When these facts are
kept in mind, it becomes clear that the process of production, and the
whole of economic activity, so far from constituting a danger to man’s
environment, as the environmentalists claim, have the inherent tendency to
improve his environment, indeed, that that is their essential
purpose. This becomes obvious
as soon as one realizes that not only does the entire world physically
consist of nothing but chemical elements, but also that these elements are
never destroyed. They simply reappear in different combinations, in
different proportions, in different places. As I wrote in Capitalism: Apart from what has
been lost in a few rockets, the quantity of every chemical element in the
world today is the same as it was before the Industrial Revolution. The
only difference is that, because of the Industrial Revolution, instead of
lying dormant, out of man’s control, the chemical elements have been
moved about, as never before, in such a way as to improve human life and
well-being. For instance, some
part of the world’s iron and copper has been moved from the interior of
the earth, where it was useless, to now constitute buildings, bridges,
automobiles, and a million and one other things of benefit to human life.
Some part of the world’s carbon, oxygen, and hydrogen has been separated
from certain compounds and recombined in others, in the process releasing
energy to heat and light homes, power industrial machinery, automobiles,
airplanes, ships, and railroad trains, and in countless other ways serve
human life. It follows that insofar as man’s environment consists of the
chemical elements iron, copper, carbon, oxygen, and hydrogen, and his
productive activity makes them useful to himself in these ways, his
environment is correspondingly improved. Consider further
examples. To live, man needs to be able to move his person and his goods
from place to place. If an untamed forest stands in his way, such movement
is difficult or impossible. It represents an improvement in his
environment, therefore, when man moves the chemical elements that
constitute some of the trees of the forest somewhere else and lays down
the chemical elements brought from somewhere else to constitute a road. It
is an improvement in his environment when man builds bridges, digs canals,
opens mines, clears land, constructs factories and houses, or does
anything else that represents an improvement in the external, material
conditions of his life. All of these things represent an improvement in
man’s material surroundings—his environment. All of them represent the
rearrangement of nature’s elements in a way that makes them stand in a
more useful relationship to human life and well-being. Thus, all of
economic activity has as its sole purpose the improvement of the
environment—it aims exclusively at the improvement of the external,
material conditions of human life. Production and economic activity are
precisely the means by which man adapts his environment to himself and
thereby improves it (p. 90). If anyone should ask
how the environmentalists could miss the fact that precisely production
and economic activity constitute the means whereby man improves his
environment, the answer is that the environmentalists do not share
Menger’s (or Western Civilization’s) starting point of value, namely,
the value of human life and well-being. In their view, the starting point
of value is the alleged "intrinsic value" of nature—that is,
the alleged value of nature in and of itself, totally apart from any
connection to human life and well-being. Such alleged intrinsic value is
destroyed every time man changes anything whatever in the preexisting
state of nature. When the
environmentalists speak of "harm to the environment" in
connection with such things as clearing jungles, blasting rock formations,
or the loss of this or that plant or animal species of no known or
foreseeable value to man, what they actually mean in the last analysis is
the loss of the alleged intrinsic values constituted by such things, and
not any actual loss whatever to man. On the contrary, they are eager to
sacrifice human life and well-being for the preservation of such alleged
intrinsic values. To them, the "environment" is not the
surroundings of man, deriving its value from its relationship to man, but
nature in and of itself, deriving its value from itself—i.e., allegedly
possessing "intrinsic" value. Of course, the
environmentalists also frequently pose as supporters of human life and
well-being, and at such times they direct their fire at various
comparatively minor negative byproducts of production and economic
activity, such as local degradation of the quality of air or water, while
totally neglecting the enormous positives, which, of course, are of
overwhelmingly greater significance. What guarantees that
the positive benefits of production and economic activity incalculably
outweigh any negatives associated with their byproducts is the principle
of respect for individual rights. Although by no means always observed,
this principle requires that one’s production and economic activity not
only benefit oneself but also that insofar as any other people are
involved in the process, the use of their labor and property must be
obtained only by their voluntary consent. And, of course, to secure their
voluntary consent, their cooperation must be made worth their while. Thus, for example,
if I wish to construct a building, not only will I benefit from it, but
also all those who work for me in its construction and all those who
supply me with materials and equipment for constructing it. So too will
the building’s purchaser or tenants—if I construct it for the purpose
of sale or rent. In addition, no third party’s property or person may be
harmed by my action. For example, I risk serious legal penalty if I
construct my building in a way that undermines a neighboring building’s
foundation or which makes my building unsafe for passersby. The major complaints
the environmentalists currently make concern the fact that I heat and
air-condition my building—to be sure, not I as one isolated individual,
but as one of many tens or hundreds of millions of individuals using
fossil fuels or CFCs. In so doing, mankind is allegedly guilty of the
crime of increasing the level of carbon dioxide and other greenhouse
gases, thereby causing "global warming," or increasing the level
of ozone-destroying molecules in the upper atmosphere, thereby causing
higher rates of skin cancer. And because mankind is allegedly guilty in
these ways, the environmentalists assume that I as one individual man must
be restricted, if not prohibited altogether, in my use of fossil fuels and
CFCs, even though I, as one individual, am utterly incapable of causing
any of the effects alleged; and the same, of course, is true, mutatis
mutandis, for each and every other individual. IV Here I want to turn
to the enormous spirit of individualism that is found in von Mises. Only
individuals think and only individuals act, says von Mises. It follows, of
course, that it is only for his own actions that an individual should be
held responsible. The son should not be punished for the sins of the
father; one member of a race or nation or economic class should not be
held responsible for the deeds of any other members of that race, nation,
or economic class. And so too should it
be in the case of any alleged environmental damage. If an individual, or
an individual business enterprise, is incapable by himself of causing
global warming or ozone depletion, or whatever, on a scale sufficient to
cause harm to any other specific individual or individuals, then there is
absolutely no proper basis on the individualistic philosophy of von Mises
for prohibiting his action. As I say in Capitalism, "To
prohibit the action of an individual in such a case is to hold him
responsible for something for which he is simply not in fact
responsible. It is exactly the same in principle as punishing him for
something he did not do (p. 91)." The individual
should not be punished for consequences that can occur only as the result
of the actions of the broader category or group of which he is a member,
but do not occur as the result of his own actions. Thus, even if it is
true that the combined effect of the actions of several billion people
really is to cause global warming or ozone depletion (neither of these
claims has actually been proven—the claims of global warming have all
the certainty of a weather forecast, extended out to the next 100
years!), but even if, as I say, the claims were true, it still
would not follow that any proper basis existed for prohibiting any
specific individual or individuals from acting in ways that only when
aggregated across billions of individuals resulted in global warming or
ozone depletion or whatever. If global warming or
ozone depletion or whatever, really are consequences of the actions of the
human race considered collectively, but not of the actions of any given
individual, including any given individual private business firm, then the
proper way to regard them is as the equivalent of acts of nature.
Not being caused by the actions of individual human beings, they
are equivalent to actions not morally caused by human beings at
all, that is to say, to acts of nature. Once we see matters
in this light, it becomes clear what the appropriate response is to such
environmental change, whether global warming and ozone depletion, or
global cooling and ozone enrichment, or anything else nature may bring. It
is the same as the appropriate response of man to nature in general.
Namely, individual human beings must be free to deal with nature to their
own maximum individual advantage, subject only to the limitation of not
initiating the use of physical force against the person or property of
other individual human beings. By following this principle, man will deal
with the any negative forces of nature resulting as byproducts of his own
activity taken in the aggregate in precisely the same successful way that
he regularly deals with the primary forces of nature. Allow me to
elaborate on this. Here we are. We enjoy an incredibly marvelous
industrial civilization, whose nature is indicated by the fact that
because of it vast numbers of human beings can travel at breathtaking
speeds for hundreds of miles at a stretch in their own personal
automobiles, listening to symphony orchestras as they go—indeed, can fly
over whole continents in a matter of hours in jet planes, while watching
movies and drinking martinis; can walk into darkened rooms and flood them
with light by the flick of a switch; can open a refrigerator door and
enjoy delicious, healthful food brought from all over the world; can do
all this and so much more. This is what we have. This, and much, much
more, is what people everywhere could have if they were intelligent enough
to establish economic freedom and capitalism. But all this counts
for virtually nothing as far as the environmentalists are concerned. They
are ready to throw it all away because, they allege, it causes global
warming and ozone depletion, i.e., bad weather. And the best way,
they say, for us to avoid such bad weather, and thus to control nature
more to our advantage, is to abandon modern, industrial civilization and
capitalism. The appropriate
answer to the environmentalists is that we will not sacrifice a hair of
industrial civilization, and that if global warming and ozone depletion
really are among its consequences, we will accept them and deal with
them—by such reasonable means as employing more and better air
conditioners and sun block, not by giving up our air conditioners,
refrigerators, and automobiles. More fundamentally,
the answer to the environmentalists is that the appropriate response to
environmental change, whether global warming or a new ice age, is the
economic freedom of a capitalist society. Sooner or later, such
environmental change will occur—if not in this new century or even in
this new millennium—then certainly at some time in the more remote
future. At that time, it will require vast changes in human economic
activity. Some areas presently used for certain purposes will become
unuseable for those purposes. Conceivably, they might even become
uninhabitable. Other areas presently uninhabitable or barely habitable,
will become much more desirable. Major changes in the comparative
advantages of vast areas will take place, to which people must be free to
respond. As I wrote in Capitalism,
Even
if global warming turned out to be a fact, the free citizens of an
industrial civilization would have no great difficulty in coping with
it—that is, of course, if their ability to use energy and to produce is
not crippled by the environmental movement and by government controls
otherwise inspired. The seeming difficulties of coping with global
warming, or any other large-scale change, arise only when the problem is
viewed from the perspective of government central planners. It
would be too great a problem for government bureaucrats to handle . . . .
But it would certainly not be too great a problem for tens and hundreds of
millions of free, thinking individuals living under capitalism to solve.
It would be solved by means of each individual being free to decide how
best to cope with the particular aspects of global warming that affected
him. Individuals
would decide, on the basis of profit-and-loss calculations, what changes
they needed to make in their businesses and in their personal lives, in
order best to adjust to the situation. They would decide where it was now
relatively more desirable to own land, locate farms and businesses, and
live and work, and where it was relatively less desirable, and what new
comparative advantages each location had for the production of which
goods. Factories, stores, and houses all need replacement sooner or later.
In the face of a change in the relative desirability of different
locations, the pattern of replacement would be different. Perhaps some
replacements would have to be made sooner than otherwise. To be sure, some
land values would fall and others would rise. Whatever happened
individuals would respond in a way that minimized their losses and
maximized their possible gains. The essential thing they would
require is the freedom to serve their self-interests by buying land and
moving their businesses to the areas rendered relatively more attractive,
and the freedom to seek employment and buy or rent housing in those areas.
Given
this freedom, the totality of the problem would be overcome. This is
because, under capitalism, the actions of the individuals, and the
thinking and planning behind those actions, are coordinated and harmonized
by the price system (as many former central planners of Eastern Europe and
the former Soviet Union have come to learn). As a result, the problem
would be solved in exactly the same way that tens and hundreds of millions
of free individuals have solved much greater problems, such as redesigning
the economic system to deal with the replacement of the horse by the
automobile, the settlement of the American West, and the release of the
far greater part of the labor of the economic system from agriculture to
industry (pp. 88-89). A rational response
to the possibility of large-scale environmental change is to establish the
economic freedom of individuals to deal with it, if and when it comes.
Capitalism and the free market are the essential means of doing this, not
paralyzing government controls and "environmentalism." And both
in the establishment of economic freedom and in every other major aspect
of the response to environmentalism, the philosophy of Ludwig von Mises
and Carl Menger must lead the way. * * *
* * * George
Reisman, Ph.D. is Professor of Economics at Pepperdine University’s
Graziadio School of Business and Management and is the author of Capitalism:
A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996). This
article is an excerpt from Dr. Reisman's Ludwig von Mises Memorial Lecture delivered
at the Austrian Scholars Conference 7 (2001). Copyright © 2001 by
George Reisman. All rights reserved. It
originally appeared on the web site of the Mises Institute on April 20,
2001. |
