Spencer Heath Archive

Item 2196

Taping by Spencer MacCallum during discussion at a seminar at the Foundation for Economic Education (FEE), Irvington-on-Hudson, New York, of Heath’s defense of the proposition of the day as presented by Dr. Murray Rothbard

June 23, 1957

 

 

 

It seems to me we ought to evaluate what is laid before us .. and not knock it down. He probably has some viewpoints with some merits, and anyway, it seems to me that if we have any goods of our own, we ought to praise them to the customer and try to sell them, and not try to unsell somebody else’s goods. There is not much in it for us if we succeed in doing that, which is pretty hard to do anyway. I am glad we have heard from a banker, a real banker. I never called myself a banker, but for a good many years I was part owner of several banks, and I was a depositor in several banks, and I was a substantial borrower in several banks. And for the most part, I want to say that my dealing with banks hasn’t been unsatis­factory. It’s been helpful to my business. But with government all my dealings have resulted in loss.

But we make a mistake, I think, when we think that we cannot apply democracy to our free enterprise business. If we can’t, our public business is in a bad way. It’s been in a bad way a long time. And I think it’s going to stay in a bad way until we can find some way of conducting our public affairs in some manner similar to the manner in which we conduct, and profitably conduct, our private affairs. Now we have an example of democracy in our free enterprise, a voting democracy, if you will. The ideal of a democracy, you know, is to do things together by consent of all and coercion of none — to do creative things together. Now when a lot of people want to do something creatively, they are likely to pool their resources in some kind of an organization. That often happens; it happens in thousands of things. When we pool our resources in a specific kind of organization, we usually call it a corporation. And in that corporation, we follow our property in proportion to what we have put in. So every part owner has a voting influence, a voting right in that corporation in proportion to what he has con­tributed to the body of the corporation, namely its assets. That is a democracy. And that same democracy does the voting; it elects the staff by the democratic process of electing officers. And the officers conduct the business in a manner reasonably satisfactory to the voting owners of the property. I merely offer that as an indication that you can have a voting democracy in respect to your public affairs as in your private affairs. Just because we have a lot of people who go to the polls and vote for the fellow who kisses the most babies and promises the most pensions, isn’t any guarantee that we can’t have a genuine democracy in private enterprise — which we can have and do have. We had better learn a lesson from life, and not from something that fails — which democracy in government has always done historically. And serving of one another by corporate entities in a cooperative manner democratically administered, as I have just said, is not a unique, strange animal; it is something with which we are fairly familiar, but we somehow haven’t identified it as being democratic.

     Now, we have set up some kind of a government agency, a central bank, and Dr. Rothbard tells us that it is in effect the government, because the government appoints the officers. Very good, then — and appoints them for life. And so the government appoints the officers of the United States Supreme Court, and appoints them for life. Isn’t that a part of the government? I’ll say it is. And so when the government sets up people in charge of a central bank for life, it hasn’t divorced them from the government, it has made them a part of it. To say otherwise is a fallacy, I would say, right there.

     Now, we want a stability in our currency. If we are keeping accounts with one another, suppose all the people in this room were doing things for one another, we would want to have some way to measure what we do. If we couldn’t measure what we did, how would we ever know when we were even? How could we ever balance our accounts? We would get diverse ideas about that. We would think we had received entirely too little from the other fellow, and he would think he had received too little from us, and we couldn’t settle the account. Then we would have to resort to fisticuffs, which is the customary way when you haven’t any rational way, which accountancy is. And accountancy is rational because it shows the ratios between what people do for one another. And you can balance that ratio and make it come out rationally and even. Now we have that balancing system, and to have that we have got to have some kind of a unit. And as Dr. Thurn says, that unit ought to have some stability. Now I’ll tell you where that unit gets its stability. I don’t care whether the unit is a lump of gold, like sort of a nest egg that the hen thinks she has to have before she can lay any more eggs, or whatever it may be. And he sees it the same way; he doesn’t think it has to be a lump of this thing or that or the other, just so there is a unit that is being employed. We are doing business with one another in an exchange system where there is a mar­ket. That unit is operating every day. Never mind whether it has gold or what it has behind it, it is working; because people are voting in this democracy — and here again we have got some democracy, that works. The market is a democratic institution, because it is the great place or institution in which we pool our properties for the purpose of exchanging them, exactly as we pooled our properties in a corporation for the purpose of administering those properties productively — creatively — for other persons. And so, the market, where we pool our properties, there is where we need to vote — and there we do vote. And there, too, we have a property qualification, just exactly as we have a property qualification when we vote in a corporation. So when we voters go to the market and vote, how do we vote? Why I vote everything that I relinquish to the market up as high as I can, and everybody who desires that thing votes it down as low as he can, and the result is that we come to a certain level that we call the current price. Now there is some stability for you. It is the consensus of all the voting people in the voting democracy of the market, voting according to the property qualification which they get automatically in this truly democratic institution called the market. So then we have some stability there, and in consequence of that, we can pass almost any kind, I think without exception, any kind of piece of accountancy, be it a check, token or what not, or coin or check or poker chip or whatever you wanted to call it, so it has figures on it. When in the market my friend does something for me, and I owe him how much, why the market tells me and tells him. And if I write him a token of some kind with that figure that the market says on it, he’ll be satisfied and so will I. If we make any mistake and it doesn’t have the same figures on it as have been voted for in the democracy of the market, neither one of us will be satisfied. We will correct the matter immediately. So in the market, we have a stability of the voting, of the consensus, the kind of calculus of feeling, sentiment, or desires, the autonomous feeling of the society that it needs more of this and less of that and so on, and rates things accordingly so as to keep our civilization alive and well functioning.

 

     Now then, to have that, we must use these tokens of some kind. Dr. Rothbard tells us that if we can get the government out of the token business — writing false tokens — … If I write a token, it has to indicate that I have put something in the market or I don’t get the token; I am going to or will put something in. When government writes a token, it doesn’t pool any properties in our market. On the contrary, it depletes our market, takes out of the market by use of these false tokens, which are nothing in the world but governmentally legalized counterfeiting, which causes us a great deal of trouble because we can’t keep our accounts properly with one another if the numbers are put in there by the “pumping” process, as he calls it, rather than by the service process which we must all use if we want to have any tokens. I haven’t any token to offer any one of you that I didn’t get out of the market because I put something in there. And that’s legitimate; and that’s stable. Now the instability of the market is due to the fact that the govern­ment votes in the market, votes things out of the market without putting anything in. That’s what upsets the whole thing and causes the instability.

     Now I think on this whole thing which is a very compli­cated thing as I am sure all of us who have read Dr. Rothbard’s beautiful little brochure — beautiful little tour de force, I call it — it has given us a beautiful picture of how the thing is working under government domination. Implicitly there, we can see how it might work without government domination, and that is the high value I seem to see in his work. By showing us how badly it works, under government regulation historically from way back, he gives an inti­mation and an implicit suggestion as to how it normally could work. And then he tries to tell us, later on, how we can get rid of some of this incubus of government so the thing can work in the way he has implied — what is the physiology of it in terms of the obverse or reverse of the pathologic which he has been describing to us. I think that is a very helpful thing to do; I am very happy to

follow in that thought. Above all, we want to find out the gold that is in his proposition, sift it out, and avail ourselves of it, value it, and take advantage of it and use it for our intel­lectual and our, I might even say, our artistic enlightenment.

 

     That’s all; I’m all for finding out what Dr. Rothbard has given us, and learning from him. And if anybody else here knows any more about this whole thing than Dr. Rothbard does, I think he ought to have a session. And if Dr. Rothbard knows more about it than we do, right now, and I think he does, I think he ought to have a good session and lay it down on the table and let us use as much of it as we can. And I am sure we can use a lot of it.