GTN Tory Classics No. 7: Production, Limits, and Private Property

There are nine words in the following essay, the fourth in the seven-part series of economic essays that I wrote in 2009, that I wish I had not included. Those are the words “The latter is not particularly relevant in this context” in reference to Dr. Garrett Hardin’s “Lifeboat Ethics”. What Dr. Hardin had written in “Lifeboat Ethics” is in fact very relevant to the subject matter of this essay.

This essay is both an economic and an ecological essay. It begins with the basic economic argument for growth – that a company by producing larger quantities of its product can sell its product at a lower cost per unit to the consumer and increase the wages of its employees while increasing its profits. It then moves to the ecological question of the sustainability of growth. The kind of economic growth where consumer and producer, employer and employee, all benefit from increased productivity cannot be sustained forever because we live in a finite world with finite resources. In the final part of the essay, I contrast Ronald Wright’s approach to the subject of limited resources with Garrett Hardin’s as expressed in “The Tragedy of the Commons”.

The point I was arguing towards was the goal of the conservation of resources is better served by private rather than collective ownership. Both of the Garrett Hardin essays I mentioned are on the subject of the conservation of resources. “The Tragedy of the Commons” speaks directly to the question of private resources vs. common resources. “Life-boat Ethics” does so in a less direct manner. In the late 1960’s, Kenneth Boulding had written an essay about limited resources and conservation in which he compared people living on this planet to the crew of a spaceship, who must co-operate with each other, and conserve their limited resources, for their voyage to be a success. The “spaceship earth” metaphor caught on and had become popular among ecologists when Hardin’s “Lifeboat Ethics” was published by Psychology Today in 1974. Hardin suggested that a more appropriate metaphor was that of lifeboats, adrift at sea, each with room and resources for a limited number of people. There are people in the sea surrounding the lifeboat, and the compassionate thing to do would seem to be to bring those people onto the lifeboat. If the boat is already at its carrying capacity, however, this will cause the boat to capsize. If that happens, then an act of compassion, intended to take people who are in a place of peril in the sea and put them in a place of safety in the boat, will have the opposite result of putting everyone on the lifeboat into the same perilous situation as those they intended to but failed to rescue.

Hardin applied this metaphor by criticizing liberal immigration and foreign aid policies. While I agree with much of this criticism I did not see it as relevant to the point I was trying to make by referring to Hardin’s other essay. It occurred to me, however, as I re-read my essay in preparation for posting it here, that there is another aspect of Hardin’s lifeboat metaphor which does speak to the matter of the conflict between growth-fuelled prosperity and limited resources. In Boulding’s original “spaceship” metaphor, the entire planet is one spaceship and ecological problems are global problems. In Hardin’s “lifeboat” metaphor there is not one lifeboat but many, every first world country being considered a lifeboat. This suggests that problems which the “Spaceship Earth” metaphor treats as global problems are better thought of as local problems and addressed on a smaller scale.

Economic growth is like biological growth. The division and multiplication of cells is necessary for good health, but only up to a point. When cells multiply past that point they cause harm rather than health. We call this cancer. Likewise, economic growth can be good and necessary or it can be harmful. When economic growth results in lower prices to the consumer, higher wages to the worker, and more profits for the company this is good. At some point, however, growth becomes harmful. Economically, that point is when more of a product is produced than there is demand for. When growth passes this point it ceases to be beneficial to everyone – sales drop off, profits decline, production has to be slowed down or halted and there are massive layoffs. This is also the point where growth necessarily becomes ecologically harmful – to produce more of a product than there is demand for is wasteful, although it is possible for growth to become ecologically harmful at an early point if demand for a product is greater than the available resources.

There is a tendency among ecologists to blame private ownership and freedom for the problems of excessive growth. This is unfortunate because, as Hardin has shown, privately owned resources are better maintained and conserved than publicly owned resources. Or, more accurately, resources are best maintained when the person who profits from their use is also the person who pays the cost for their use. The “tragedy of the commons” occurs because in a commons, people privately profit from their use of commonly owned resources in which the cost of use is divided and spread out. A person or company could try to export the cost of use of his or their privately owned resources, and it is human nature to try and do just this, but it is easier to accomplish this, especially on a large scale, with the collusion of government. Just as a private bank can inflate currency and cause an economic bubble and recession, but a large central bank can do so on a much larger scale, so a company looking to pass its costs off onto other people will find it easier to do so by making use of taxpayer funded public utilities and infrastructure and with the help of the people who make and enforce bylaws. At the heart of most if not all of the economic and ecological problems caused by excessive growth that we experience today you will find a large, heavily centralized, state.


Production, Limits, and Private Property


By Gerry T. Neal
June 21, 2009

Here’s a question: Can a business at the same time a) increase its profits, b) increase its wages/salaries, and c) lower the price of its profits?

The answers that probably spring to mind are either “Yes, if it wants to go broke” or “No, you idiot, where did you learn your math?”. Without information as to how a company would go about doing this these answers are both reasonable. After all, lowering your price lowers your revenue, while increasing wages increases your costs. How can both exist simultaneously with an increase in profit? Something doesn’t add up.

Actually, however, there is a way to do it. Let’s say you have a company that is producing 1000 units of its product an hour and selling them at $5.00 a unit. Your revenue then, after selling an hour’s worth of your product, is $5000. From this you pay the costs of that hour of production (including wages) and after costs what remains of the $5000 is your profit.

Now let’s suppose you take that profit and re-invest it in a capital-improvement project that increases your company’s productivity so that with the same labor force you can now produce 5000 units per hour. Since you are now producing more you decide to lower the price of your product by half to $2.50 a unit. At this lower price, the revenue from selling an hour’s worth of your product is now $12,500. That is 2 ½ times more than you made previously. From that you can increase the wages of your employees, which you should be doing as their productivity has gone up making their labor more valuable to you. You will still be able to make a greater profit than you did before.

When a company improves production, then, it benefits everybody – the owner/shareholders, the employees and customers of the company. They are all better off than before.

What works for a company can also work for a country. If a country’s leaders wish to improve the standard of living of their people what is the best way to do it? Pass minimum wage laws? Set price controls? Create safety nets of social benefits to create a “floor” beneath which your citizens theoretically cannot drop? No. Each of these methods is known to backfire making things worse than they were before.

A government that wishes to increase its people’s standard of living should encourage the improvement of production so that there is more material wealth being generated. Recognizing this fact, governments have attempted to do just that in one of two ways.

Lenin and Stalin in the Soviet Union attempted to increase industrial production with their New Economic Policy and Five Year Plans. Mao in Red China attempted to increase agricultural and industrial production in his “Great Leap Forward”. Both of these experiments in central, state-planned economic development, proved to be catastrophic failures. So has every other attempt to do it this way.

In contrast, in Western countries like the United Kingdom, Canada and the United States, production was left in the hands of privately owned companies that were allowed and encouraged to compete with one another in a free market. This is the method that has always worked. Improved production generated higher profits and wages and lower costs for the consumer increasing the standard of living in general.

Of course a large part of the benefit of improved production has been eaten up by our governments. They have raised taxes to an obscene level and generated inflation by printing more money to support their projects, most of which are wasteful and useless. Raising taxes takes money out of production in the private sector where it can be more useful. Inflation decreases the value of money which in term decreases the benefits to the consumer of lower costs in the marketplace brought about by improved production.

Now we come to another question. That question is this: Can the improvement of production go on forever?

A lot of people seem to think the answer to this is yes. These people believe that history is marching ever upwards and that human ingenuity will always find newer, better, more efficient ways of making newer and better products, causing today’s luxuries to become tomorrow’s necessities, as the standard of living keeps rising higher and higher. The name for this belief is “progress”. It is what progressives, aka liberals, used to believe before they switched over to believing in the infinite capacity of the state to bring out the natural goodness in people and morally improve society through social programs.

The answer, however, is no. While production can be improved, generating high profits, high wages, low costs and a general improved standard of living, this can only be done within certain limits. For we humans are finite, limited creatures, living in a finite, limited world. We forget this to our own peril.

What are the limits in question? Well, if we wish to have our three-fold benefit of improved production, the obvious first limit to come to mind is that of demand. Demand refers to how much of your product people are willing to buy. It is the other criteria determining market price. Remember that you and your employees only benefit as producers from improved production if you are able to sell enough of your product at the reduced price to generate more in revenue that you did prior to the improvement. Whether you are able to do this or not depends entirely on how much demand there is for your product.

A company that ignores that limit will generally harm only itself. The same cannot be said for the next limit. That limit is the availability and cost of raw materials and energy. These are limited resources. Some raw materials are renewable resources, like wood for lumber and paper companies, but being renewable does not mean being infinite. Trees take a long time to grow after all. Other raw materials, such as metals and useful stone like granite and marble, exist only in set quantities. These may be recyclable or reusable but they are not renewable. Yet other raw materials exist only in set quantities, are not recyclable or reusable, and can be used up. The obvious examples of these are petroleum and coal, which are used both as raw materials and as sources of energy.

Ecologists remind us of these limits, even if economists are often prone to forget them. Unfortunately, their recommendations for conserving resources are generally less than helpful. Ronald Wright, for example, in his 2004 Massey Lectures published as A Short History of Progress, tells of how human societies in the past have got carried away with production and ignored the limits of their resources, falling into “progress traps” that led to tremendous human suffering when the resources were depleted. He warns, in the alarmist fashion of the typical environmentalist, that we are doing the same thing today on a larger, global scale, that we are almost at the point of no return, and that this is our last chance. He is very vague in his recommendations as to how to go about fixing things, however, although one quickly picks up on the fact that he is sympathetic to socialism over the free market.

An ecologist who was helpful, on this subject, was the late Dr. Garrett J. Hardin. Apart from Hardin’s Law – “you cannot do only one thing” - his most famous contributions to ecological thought were the concepts of “The Tragedy of the Commons” and “Lifeboat Ethics”. The latter is not particularly relevant in this context but “The Tragedy of the Commons” deals with the heart of the matter.

“The Tragedy of the Commons” is a story of a medieval commons – a pasture owned collectively by a community in which each member of the community was allowed to keep his sheep. Since the cost of maintaining the commons was shared but the profit from raising the sheep was private, everyone who kept their sheep there had a stronger motive to increasing their own number of sheep at the public expense than to try and conserve the resource. As a result the pasture became overgrazed.

The point of all this, Hardin argued, was that a system where costs were shared, but profits were private, was the worst possible system for preserving limited resources. The other options are to make the profits collective (socialism) or to privatize the costs by privatizing the resources.

The privatization of resources, Hardin argued, was the best way of conserving them. Observation easily bears Hardin out on this. Domesticated animals are never on the endangered species list. Paper and lumber companies make sure that plenty of trees are replanted. If you want to see well kept houses, green lawns, and beautiful gardens, you go to neighborhoods where people own their own homes, not to rental districts.

Conversely, if you want to find litter the best place to look is in ditches and public parks. Pollution is a problem primarily in rivers, lakes, seas, and the air, all of which are resources which are held in common.

To put it simply, people take care of their own property, and are much more likely to take a long-term view of resources which are their own, than resources that are held in common with others.

Private property, then, is the foundation of both true ecology and sound economics. Private property owners competing in a free market are the best producers. They are also the best conservers of resources. The companies that are most likely to deplete resources rather than conserve them are the companies that try keep their profits private while throwing their costs onto the public. That is accomplished through collusion with government.

GTN Tory Classics No. 5: Basic Economics

The essay that follows was originally the third in a seven part series beginning with “The Economic Age” and ending with “The Free Trade Cult”. The introductory essay to that series was the last essay I re-posted here in my “Tory Classics” series. I wrote that essay as an introduction to the economics series because I wanted to start by placing economics in perspective by arguing that economics is not the most important thing in the world. The following essay is a more typical introduction to the topic of economics and deals with such basics as production, distribution, and consumption.

Towards the end of this essay I argue that production is more important than distribution or consumption because without production there would be nothing to distribute or consume. This is the most important point in the essay. Many are the free market economists who seem to understand everything else about economics except this point.

Basic Economics


By Gerry T. Neal
June 4, 2009

Every country’s economy has three basic parts: production, distribution, and consumption. Production refers to the creation of material wealth and consists of agriculture and manufacturing. Consumption is the use of the material wealth created in production. Distribution is how material wealth gets from the producer to the consumer.

Material wealth is not the same thing as money. Material wealth includes land and buildings, food and clothing, and other goods that people need or want. Money is just one good out of many and its primary function is to simplify the exchange of other kinds of goods.

Goods which are used to produce other goods are called “capital goods” or just “capital”.

Some people believe that the best and fairest economy is one in which capital goods are owned collectively by the public with distribution being in the hands of the state. These people are called socialists. Others believe that capital goods do not have to be publicly owned but that the system – production, distribution, and consumption – entirely or in part, should be under strict government regulation.

These people have been proven wrong time and again. So much so that they should be embarrassed to express their views in public.

What happens when production is controlled by the state? We need look no further than the late USSR and Red China during the days of Mao to find our answer to that. The state proved incompetent in the production of even the simplest of goods and massive poverty, starvation, and misery was the result.

Without state control of production, there can only ever be partial state control of distribution and consumption. This control takes the form of the state confiscating wealth from the private sector through taxation and handing it over to other people.

Some people believe this is the compassionate thing to do. They are mistaken. Only people can be compassionate, not governments. If you are genuinely compassionate you will express that by helping the poor out of your own wealth. To support with your words and votes, a policy in which the state helps the poor from money it takes from people other than yourself, is not a genuine form of compassion. It is, in fact, a way of avoiding being compassionate, by placing the responsibility for helping the poor onto the shoulders of the state and the taxpaying public instead of bearing it yourself.

The government social programs that make up what is called “the welfare state” were sold to voters as initiatives that would eliminate poverty and bring about a general prosperity. Have they done so? Far from it. Instead they created a permanent and growing, privileged, underclass. They created tensions that threaten to rip the social fabric into pieces by fostering a sense of frustrated entitlement in the poor and a sense of resentment in the middle class which is forced to bear most of the tax burden for the upkeep of the poor.

The idea that the production, distribution, and consumption of material wealth should be planned and controlled by the state is simply wrong. It has never worked in the past, it is not working in the present, why would we be so foolish as to think maybe it will work in the future.

No, the production, distribution, and consumption of material wealth are best left in the hands of private property owners, who buy and sell the goods they produce and the services they offer, in a free market.

A market is a situation (not necessarily a place) in which someone trades something they own for something someone else owns. A “free” market is a market where buyer and seller are allowed to come to their own terms as to the exchange. Let us say a dairy farmer goes to the market to sell his milk and his neighbor who keeps chickens goes to the market to sell his eggs. The dairy farmer needs eggs and the chicken keeper needs milk. The dairy farmer is willing to trade a liter of milk for a dozen eggs and the chicken keeper is willing to make this exchange and so they do so. The price they have decided upon is fair and just. What the dairy farmer is willing to accept in exchange for his milk is based on his own calculations of his own needs, and what the chicken keeper is willing to accept in exchange for his eggs is based on his own calculations of his own needs. No set of government experts anywhere would be better qualified to judge these matters than the farmers involved.

If government experts are not competent to come up with a better price for a single exchange than the participants, they are much less competent to set prices for everybody in the country. Their attempts to do so only cause harm.

When the government says “You cannot buy labour for less than so-many dollars an hour” this is not benefiting workers. No one’s work becomes more valuable because the minimum wage rises. All this does is eliminate jobs that are not worth paying someone minimum wage for. The jobs thus eliminated, are generally the jobs that would otherwise be taken by people entering the workforce, trying to get the experience that better paying jobs require. Everyone who ever got frustrated because all available jobs required experience which could not be obtained without getting a job can thank the government – and the bleeding hearts and the unions which demanded minimum wage laws from the government – for it.

Most market transactions do not consist of the direct barter of goods like eggs and milk. The eggs and milk are both sold for money instead. Money is the medium of exchange in an economy and as such it is the single most valuable commodity. Historically, precious metals like gold and silver have made the best moneys. We no longer use them for money today because governments prefer a paper (or electronic) currency that they can control. By controlling the money supply, they are able to devalue it through inflation (increasing the money supply). This allows the government to confiscate the country’s wealth without raising taxes because they get to spend the new money at the old value of money, before the increase in the money supply causes money’s value to drop relative to other goods in the market.

This discourages saving because if your money is going to be worth less in the future than it is today it makes more sense to spend it now than to save it. Saving is important, however, if a person or a country wishes to become wealthy – or even financially independent. Inflation is the path to national poverty.

We don’t notice inflation as much if consumer prices are not rising. If the production of consumer goods has increased the inflation will keep the prices of those goods from dropping rather than causing it to rise. Thus governments have encouraged manufacturing companies to step up production by outsourcing to countries where it can be done cheaper, causing consumer prices to remain relatively stable while they drain the country’s wealth through inflation.

But what happens when a country increases consumption and allows others to do its production?

Production is more important than distribution and consumption (and agricultural production, which produces necessities is more important than manufacturing which produces luxury items). Production creates wealth which is distributed through the market. Without production there would be nothing to distribute. Consumption uses wealth up. Consumption without production leads to poverty.

Those who think that outsourcing their country’s productive capacity will lead to prosperity because it brings consumer prices down would do well to consider that.

A sound national economy requires production on the part of private property owners, who sell their goods in a free market, and a stable money supply that keeps its value thus encouraging people to save.

GTN Tory Classics 4: The Economic Age

One of the things I dislike the most about contemporary politics is the exaggerated importance it attaches to economics. This is true both of those who favour economic freedom and private property on the one hand and those who believe in a state-planned economy and/or collective ownership of property on the other.

This does not mean I attach no importance to these matters. I believe in private property and in laws protecting private property. I believe that economic decisions are best made by those who will be most affected by the outcome of those decisions. For most economic decisions this amounts to the free market position - that people are themselves the best judges of what to buy and what to sell, how much to spend or ask for in a market exchange. Some economic decisions, however, must be made by the leaders of communities or the governments of countries. These are decisions whose outcome affects the entire community or country.

Examples of the first kind of economic decision include decisions as to what kind of career to train for, whether to stay in a job or look for a new one, whether to open a new business or seek employment, whether to save, invest,or spend one's income, and, if one has this option, what other than essentials to buy with one's income.

Examples of the second kind of economic decision include decisions as to whether a country needs domestic production of a particular commodity or whether it is better to rely upon foreign imports and decisions as to how much and what kind of infrastructure to build and maintain out of the public purse.

These decisions cannot be made in isolation from each other, of course. The decision a government takes, to protect its domestic iron industry, because a consistent supply of foreign iron is threatened by war, will affect the choices of those buying and selling iron and deciding whether to go into an iron-related line of work. Likewise, economic decisions at the level of a community or country, cannot properly be made without taking people's personal economic choices into consideration.

In 2009 I wrote a series of economic essays, most of which
were arguments for economic liberty and against socialism. It ended with "The Free Trade Cult", which argues that history demonstrates that free trade doesn't work the way economic liberals say it does. I intend to post several of the essays from this series including "The Free Trade Cult". The first essay in the series, the one which follows, was "The Economic Age". This essay came first, because it contained the most important thing I wished to say about economics - that we, whether we be capitalists or socialists, place too much importance on economics.

The Economic Age


By Gerry T. Neal
June 2, 2009

“The age of chivalry is gone. -- That of sophisters, economists, and calculators, has succeeded; and the glory of Europe is extinguished forever.”

Those famous words were spoken by Edmund Burke in 1793, in response to the murder of Marie Antoinette by the revolutionaries in France. 2 years previously the 18th Century Whig statesman had written Reflections on the Revolution in France in which he rejected the abstract, rationalist, planning that led to the horrors of the French Revolution which had only just begun, and embraced the Tory view of traditional, organic society in which authority, rights, and liberty were firmly established by prescription. He had seen, even then, where the Revolution was headed.

Clearly, Burke did not think very highly of economists. What did he mean by the word “economist”? The context of Burke’s remarks would suggest that “economist” like “sophister” and “calculator” was being used to describe a class of people who rejected the noble sentiments of the age of chivalry – the gallantry and honor that, as Burke had just remarked, should have caused “ten thousand swords” to leap to Marie Antoinette’s defense. These people replaced these sentiments, with numbers, cold reason, and pragmatic materialistic calculations of their own self-interest.

Burke’s lament, was over seeing the day when such people would become dominant, when society would be rationally planned from the top down, and when people would be primarily guided by cold, rational, materialistic, pragmatic motivations in their everyday decisions rather than by noble sentiments and loyalties. He believed, that much of what made life worth living, which he summed up in the phrase “the unbought grace of life”, would fall by the wayside and perhaps be lost in such a society.

Burke was correct in his beliefs and his predictions. We see the evidence all around us. Far too many people identify “the good life” with obtaining material possessions and dismiss concepts like honor, loyalty, virtue, and character. The concept that true happiness is not related to how much you have compared to other people but to being satisfied with what you have and where you are, while familiar to the ancients and the great Christian ethicists, is alien to such people. This is true regardless of whether the rational materialist favors “capitalism” or socialism.

That does not mean that economic questions are unimportant or that “capitalism” and socialism should be regarded as equally good or equally bad.

Economics, a term derived from the Greek word for the management of a household, is today used to describe the discipline which studies the mechanics of the production, trade, and consumption of material goods and services. Thought on these subjects has been recorded for millennia, of course, but as a distinct formal discipline economics was only in its infancy stage in the 18th Century. While the nature of the discipline is such as to make it especially attractive to people with the rationalist, materialistic mindset Burke decried, it is by no means necessary for one to be a rationalist, materialist to form an educated opinion on these subjects.

Edmund Burke’s own views on economics are known to us. He was a friend of Adam Smith who published his An Inquiry into the Nature and Causes of the Wealth of Nations in 1776. Smith, who died in 1790, once remarked that Burke was the only man he had ever known who “thinks on economic subjects exactly as I do, without any previous communications having passed between us”. Burke, for his part, had heaped praise on Smith’s book. This suggests that Smith’s comment was no exaggeration.

Smith’s book marked the beginning of what is now called classical economics. It is both a history of the evolution of production and commerce and an argument for the free market. The specialization resulting from the division of labor results in greater production of any given product. The same principle applies on a larger scale to the specialization resulting from commerce. As everybody produces more and more of the product they specialize in to sell to others who in turn are producing other products, the general wealth of the nation increases, everybody is better off, and the best thing the government can do to facilitate the process is to keep out of the way.

Later, the term “capitalism” would be applied to Smith’s system. This was not Smith’s term. It was in fact coined by Karl Marx to refer to the period in his dialectic understanding of history, in which feudalism was supplanted by industrialism and commerce, and which Marx believed would be supplanted by revolutionary socialism leading to his communist utopia in its turn. The identification of Marx’s “capitalism” with Smith’s free market probably came about because Smith’s glorification of commerce could be seen as championing the activities and interests of the emerging bourgeoisie class. Marx, who saw everything in terms of class conflict, identified the bourgeoisie as the heroes of the capitalist revolution against feudalism and the villains in the coming revolution of the proletariat.

It is interesting that Marx regarded capitalism, not as a conservative or reactionary force in society, but a revolutionary one. As Marx was a champion of the revolutionary cause this observation on his part has to be regarded as praise of capitalism, which may seem odd, but actually makes sense when one considers his view of history as progressing towards a certain end.

Was Marx right? If he was right about capitalism being a revolutionary force what does that say about Smith’s arguments for the free market, which were endorsed, as we have seen by the leading 18th Century opponent of revolution?

The answer to the first question is yes. If we define capitalism as the historical transformation of rural societies with a predominantly agricultural economy into urban societies with a predominantly industrial economy, then capitalism was undoubtedly revolutionary. Capitalism weakened all sorts of ties that are fundamental to a functioning society. The ties between people and the land they live on were weakened as people moved en masse from the farms into the cities looking for work. The ties between people and previous generations were weakened as crafts and trades were removed from the home and concentrated in factories and stores. Institutions like the family were undoubtedly weakened and Thomas Carlyle was not unjustified in remarking that human interaction was being cheapened by being reduced to the “cash nexus”.

A few observations are necessary at this point. The first is that capitalism as described above was not the free market Adam Smith was advocating. The rise of modern, manufacturing-based economies, concentrated in large scale factories in urban centers, was accomplished with the active assistance of governments. This is a matter of the historical record.

The second is that those who condemn capitalism for its atomizing effects on society will not find an acceptable alternative in socialism or communism. Socialism’s objection is not to an urban economy centered on industrial manufacturing. Its objection is to that economy being in the hands of private owners instead of “the people”. The negative results of capitalism described above were regarded as positive and progressive by Marx. If capitalism was revolutionary, socialism is a thousand times more revolutionary.

A third observation is that manufacturing and increased production are not themselves the problem. It is not wrong for a society to desire a higher material standard of living for its people and this can only be achieved by increasing production. What is wrong is when people and society place make material prosperity their ultimate goal and make all other considerations subservient to that goal.

Adam Smith argued for a free market on the grounds that it was the best system for maximizing human industry and production and therefore increasing the nation’s material wealth and standard of living. He was right but his was not the best argument for the free market. The best argument for the free market is that freedom is itself a good. Moreover, freedom, the right and ability of people to make their own decisions for themselves (including economic decisions), is a superior good to any material goods that can be manufactured, bought, and sold. It is for this reason that a free economy should be defended against the advocates of a planned economy. The latter believe that they can somewhere find a group of experts competent enough to make everybody’s economic decisions for them.

That is the same arrogant mindset of rationalistic planning that Edmund Burke saw devastating France in the 1790s.