Book Review: Social Economy and the Price System by = Murray N. Rothbard

Book Review:=20 'Social Economy and the Price System' by Raymond T. Bye, = Macmillan,=20 New York, 1950

by Murray=20 N. Rothbard
by Murray = N.=20 Rothbard

(From Christian=20 Economics Vol. IV, No. 6 [March 11, 1952])

Financed by the = Rockefeller=20 Foundation, Professor Bye=92s Essay in Welfare = Economics, as he=20 styles this work, is neither welfare nor economics. It is a = bland=20 blueprint for a system of "benevolent" slavery, with the = State=20 treating the people like permanently backward children. The = theme=20 runs constantly throughout the book: the consumer =96 every = person =96=20 cannot be trusted to run his own life and make his own = decisions. At=20 every turn, he must be guided, harassed, and commanded by = the=20 all-wise State, acting presumably under the advice of = alleged=20 "experts" in the proper procedures of tyranny.

An=20 economist cannot presume to impose his own values on his = fellowmen;=20 if he does, he becomes a dictator instead of a scientist. = Bye begins=20 by denying this principle, leaving himself free to attempt = to=20 rearrange consumers=92 choices by force. He is critical = because in=20 scientific economics "apparently each individual is = presumed to=20 be competent to judge for himself. This narrow approach will = certainly not do." Of course not, especially if the = economist=20 wishes to transform himself into a dictator.

If=20 individuals are not ends in themselves, what goals does Bye = set up=20 for our world? It is "the group," "group cohesion," "group=20 solidarity," "effective group organization" =96 these become = the ends=20 into which individual human beings must be fitted. The = fitting, of=20 course, must be accomplished by the State. As a result, Bye = makes=20 the amazing statement that individual happiness is a fairly = good=20 thing, because "unless human beings are happy in their = work, they=20 cannot be good producers or good co-operators; but above = all,=20 happiness is essential to group solidarity."

Beginning in such an = auspicious=20 manner, Bye proceeds to ladle out liberal doses of = dictatorial=20 regulations. Should "we" permit inequality of = incomes, and=20 how much? Certainly, asserts Bye, there should be a great = deal of=20 enforced equality, in order to promote "group = cohesion."=20 "We" should "divide the social income" (which=20 presumably has been dumped into some sort of convenient heap = for Bye=20 and the State to divide as they see fit) according to the=20 "principles" of "a guaranteed minimum,"=20 "incentive," and "common surplus."

The=20 first guarantees everyone a "fair standard of living" = to=20 support group strength; the second doles out a little=20 "incentive" to the wards so they can produce for the = group;=20 and the third commands that the State take society=92s=20 "surplus" income and use it to promote projects for = group=20 welfare. The principle of incentive, incidentally, works = "by=20 making the right to receive income conditional upon = performing the=20 duty of producing correspondingly" =96 the slave must be = forced to=20 work to recompense his master for his board and keep. =

It=20 is not surprising that Bye considers collectivism superior = to=20 freedom =96 or "capitalism." Collectivism can put = Bye=92s=20 principles into efficient operation, thereby eliminating the = "capitalist" problems of monopoly, income inequality, = competitive wastes, depressions, and unemployment. = Furthermore,=20 collectivism will benefit, rather than hamper, the consumer, = "because there will be no acquisitive advertising to = mislead=20 consumers"; instead, the State can "provide a = comprehensive=20 program of consumer education to improve the wisdom of = consumers=92=20 choices."

The=20 State "because of its long-range view" is far more = able to=20 invest and save than private individuals, and its statistics = enable=20 it to plan the economy far more efficiently. Bye concludes = that=20 "collectivism offers a program for the systematic = reorganization=20 of the whole economic process=85such a system offers the = prospect of=20 an economic order in important respects superior to = capitalism."=20

Viewing collectivism = with such=20 favor, Bye praises the alleged industrial and economic = achievements=20 of the Soviet Union: "The Soviet Union found that by = forcing the=20 people to curtail their present consumption=85it was = possible to=20 arrive in a few years at a stage of industrialization that = might not=20 have been accomplished by individual saving in less that = several=20 generations=85 Had not World War II forced the Soviets to = turn their=20 industrial power to the making of munitions, the plants = accumulated=20 by the forcible saving might by now have rewarded the = Russian people=20 with a stream of consumable products that would represent a = very=20 marked rise in their standard of living."

For=20 some reason, however, Bye refuses to reward the Nazi and = Fascist=20 states with the honor of being called "collectivist." = "Nazism and=20 fascism were not collectivist systems. They were = manifestations of=20 mass hysteria arising out of economic chaos under the = leadership of=20 mad adventurers." On the other hand, the tyrannical = excesses in=20 Soviet Russia are due to things "purely Russian," such as = absence of=20 industrialism, no tradition of democracy, and Marxian and = other=20 ideological extremes. Because of political dangers = associated with=20 these regimes, Bye looks more enthusiastically to the slowly = evolving collectivism of Great Britain "with its faculty = for wise=20 leadership and its long tradition of democracy." =

Economically, he has = not doubt=20 of the virtues of the collectivist slave-state. Yet, in the = process=20 of concocting his plans, he has abandoned economic science = and=20 replaced it with a program designed to remake other people = by force=20 in ways which he thinks best. Yet the supreme irony is that = a=20 complete collectivist State could not carry out its plans = because it=20 could not calculate economically. Only free-market prices = permit=20 calculation. Would-be planners are busily foisting tyranny = and=20 poverty on people in pursuit of plans which cannot succeed.=20

~=20 Jonathon Randolph [Murray N. Rothbard]

Murray N. Rothbard = (1926=961995), the founder of modern libertarianism and the = dean of=20 the Austrian School of economics, was the author of T= he=20 Ethics of Liberty and For=20 a New Liberty and many other books = and=20 articles. He was also academic vice president of the = Ludwig von=20 Mises Institute and the Center for Libertarian Studies, and = the=20 editor =96 with Lew Rockwell =96 of The=20 Rothbard-Rockwell Report.

Murray=20 Rothbard Archives

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