Saturday, April 20, 2013


Chapter 8, Omnibus Reform

There are no tyrants among men; there are only tyrannies, and the mother of tyrannies is money monopoly.

The launching of a nonpolitical, universal monetary system will mark the beginning of a revolution in its most consummate sense. Figuratively speaking, it will reverse the world upon its axis. Just as the political monetary system trends power toward the state, so the system based on true money will release the natural forces that trend society toward private initiative, enterprise and democracy. Pending this fundamental reversal, all resistance to statism is futile. As long as the only available monetary system is political, exchange, that process by which the social order functions, will never accomplish its natural purpose, the development of prosperity and freedom.

To rely on education to reverse the present trend toward statism shows a want of comprehension of the naturalness of personal enterprise. No one needs to be educated in private initiative and enterprise. These qualities arise spontaneously. All that is needed is that the counterfeiting power of the state, which robs productive effort and rewards parasitism, be removed. The various educational efforts to propagate personal enterprise are worse than wasted, because they imply that but for propaganda and indoctrination, personal enterprise would be overwhelmed by state-sponsored systems. In reality, it is the tax-supported institutions that are artificial and that must, therefore, conduct crusades to proselytize supporters to their cause. Under the present political monetary system, personal enterprise cannot be saved by propaganda. Freed from the perversion of that system, it will need none.

The appeal of the welfare state lies in its seductive promise of wealth with the least possible effort. That, under the illusory system of the welfare state, the benefits to some are the loot of others, is beside the point. The beneficiaries may not realize this, or, realizing it, may argue that it operates in their favor rather than against them. We cannot stop this pernicious robbery of the industrious and reward of the indolent by attacking it on the reward side. Every beneficiary is aware of his benefits and is grateful for them. As for those robbed, there is complete bewilderment as to the cause of their loss. However, we would not accomplish anything but rebellion against the state if we made it clear to all the Peters that they are being robbed for the benefit of the Pauls. The cause of the injustice is political, but the remedy is not.

The trouble has arisen from the failure of personal enterprisers to provide a sound monetary system of, by, and for personal enterprise. In their default, the state has contrived a socialized system. We are neither grounded in the philosophy of personal enterprise nor intelligently opposed to socialism, if we do not realize that a socialized monetary system must generate socialism. If, realizing it, we continue to tolerate it, we forfeit our right to complain against the inevitable trend toward statism. But even if we are opposed to the mother of socialism as well as her whelps, it is not words, but works, that are called for. Sooner or later we must institute a nonpolitical monetary system.

Through its deficit spending policy, the state has begun its acquisition of control. Unless this be halted, all reform is useless, all idealizing vain. Indeed, so subverted have men's minds become under the influence of the state's seemingly unlimited power that reformers almost universally turn to political rather than economic means of reform. Thus their reform efforts effected through political action, actually salute and strengthen the generator of the evils against which the reforms are directed.

Vindicating the Democratic Ideal

No reform that invokes the power of the state can be predicated on democracy. The state's profession of being an instrument of democracy is pure sham. It is inherently exploitative and autocratic, because it has no means of invoking support by appeal to voluntary patronage. It lives by taxation and functions by edict: To regard the state as the implement of democracy, when it is itself anti-democratic, is surely the most consummate delusion of man. This delusion deepens as the state expands its means of robbing industry through the insidious process of issuing counterfeit money, which gives the state the appearance of being a generator of wealth, provider of welfare, and guarantor of security. Conversely, as the state's prestige is increased by this deceptive device, that of personal enterprise declines, and business becomes the culprit for all the ills of society. The extent to which this idea of the benign state and the malign business community prevails among would-be reformers can be seen in the frequent "pass-a-law" provisions that occur in their proposals. These laws are usually directed against business and prosecuted by the presumed defender of justice, government. Let us have done with the idea that democracy can reside in, or operate through, the state; nothing can be democratic that is not dependent upon voluntary patronage.

Instead of expanding state activities, they must be contracted. To what extent the state should be reduced cannot be determined in theory. We must first free personal enterprise through a nonpolitical monetary system and give it an opportunity to show how far it can go in taking over the activities of local, state, and national governments. In this way will the activities of the various governmental entities be brought from a tax-supported basis into the sphere of personal enterprise, with its attendant competition and voluntary payment for services rendered.

Thus the ultimate domestication of government will be accomplished only as, and in the degree to which, personal enterprise is prepared to render community services on an optional basis and at competitive prices. For there is profit in rendering service, and the boundaries of private and public service are not fixed. The extent to which private enterprise may absorb so-called public services depends solely upon the vision and initiative of enterprisers. There is already in existence an impressive body of thought, developed by Spencer Heath, which is directed toward just such ends. Such worthy aims, however, await the liberation of personal enterprise from the political monetary system. Only then shall we be able to reverse the present trend and begin whittling down the sphere of the state by enlarging that of personal enterprise.

The state presently renders disservices as well as services, and the citizen must pay for both, either by open taxation or by hidden taxation in the inflated prices he pays for the things he buys. Once the state is denied its power to impose taxes by watering the money stream and is confronted with an aggressive personal enterprise movement that will take over services for which there is actual demand, its disservices will be recognized as such simply because personal enterprise will make no bid for them. Public resistance to taxation will then dispose of them.

Exchange, served by a true monetary system, is a constant reform mechanism. It is the sifter of proposals and projects, the natural mechanism whereby all undertakings are measured for public approval. Its constituency votes early and often, making change and progress facile. Served by an unbiased monetary system, it will be the perfect instrument of democracy. Here will democracy function, vindicating its ideal.

Chapter 9, Economic Democracy

Rising from tiny springs of rebellion in the consciousness of primitive men, democracy, like an ever expanding river, deepening and widening, has swept aside all the ancient forms of political government, and with them their pretenses of divine power and aristocratic preference. Its traditional service to humanity, however, has been only that of a negator of tyranny and presumption in the political sphere. In the future, it will be recognized and acclaimed for its more positive service in the economic sphere.

Under the constant challenge of democracy, the modern state has abandoned its former attitude of arrogance and now cloaks its undertakings in such flattering phrases as "democratic government," "rule of the people," "equality," "welfare state," and so on. These pretenses have been forced upon the state by the very failure of democracy as yet to assume a positive role in the affairs of mankind. The state is a positive organ and, as such, retains the initiative and leadership to which the people must turn for the "remedy" of this ill or that. Though the state is impotent to do more than change one economic ill for another, we cannot blame the demagogy of politicians for promising salvation from all the ills of mankind. This must continue, and the people must go on suffering under the delusion that they can resort to the political means of salvation, until an agency functioning through the economic means is supplied.

The ultimate accomplishment of democracy in the political sphere is the perfection of the rule of the majority. If this be all that democracy can deliver to society, the game is not worth the candle. It is little comfort to the individual, striving to express his personality, to know that democracy has wrested government from the hands of a few and placed it in the hands of a majority. Human aspirations for freedom can never be gratified as long as there is a veto power over self expression, whether imposed by a man on horseback or by means of the ballot box.

Yet the democratic state has no means of functioning other than by popular elections. That being so, the functions of the state must be limited to those public services which are desired by all. Consider the folly of undertaking to express the people's will in all human affairs by an occasional election at which, in one confused shout, we sound our yeas and nays on a multitude of questions. At the same time, we select representatives to guess what it all means, and to divine from it how to execute our will on hundreds of issues that arise after we have given our confused "mandate." Is not our boasted political equality but the equality of frustration? Can we have self-government, and at the same time delegate the power to govern? Are we indeed fit for self-government if we accept these delusive exercises as the processes of democracy? Can democracy offer nothing better?

Turn, now, from this sham democratic process offered by the state, with all its trappings of majesty, power, ritualism and futility, to a sphere in which real democratic expression obtains - so far as the state does not stultify it. This sphere of democracy has a true balloting system, whereunder every ballot is the clear and irrevocable mandate of the buyer through which he expresses his will, his aspirations, his freedom, and his personality. In this balloting system, elections are held every hour of every day. Its voting booths are the market places of the world, its candidates, the goods and services offered by competing vendors. In this balloting system there is no tyranny by the majority. Every voter wins the election. Whether he chooses the blue label, or the red, or the green, no one is denied his choice. Here every man is a king, and the economic constituency is made up of sovereigns in cooperation.

This voting system is the elective process over which the house of economic democracy must assert its exclusive sovereignty. It dispenses with the legislative process, for it is governed not by man-made laws but by a natural law that cannot be broken or biased by any man. This law, which provides absolute equity, is the natural law of competition, or, better, the law of cooperation, since it automatically rewards him who cooperates and withholds rewards from him who does not. The house of economic democracy requires no constitution and no executive or judicial mechanisms. These powers reside in the buyer, who exercises them by the simple criterion of self interest. As the whole consists of its parts, so the exercise of these powers by buyers in endless variety and circumstance compounds the social order in perfection.

Every power of the state must arise either by delegation from the citizen, or by usurpation. If we but give the matter a little independent thought, we can see that the money power can neither be delegated to the state as agent, nor exerted by it as principal. It can reside only in the same place where resides the productive power, and can be exerted only in association with the bargaining power. These powers belong not to the government, but to the individual, for he alone can produce wealth, and he alone can express selectivity and exercise bargaining power in the market place. Professed money springing from any other source is pure counterfeit. It is a menace to the social order, which is utterly dependent upon the functioning of true money.

We all know that the rise in men's living standards from primitive times to the present has come about through the specialization of labor, which is made possible by exchange, and that this in turn has been facilitated by the use of money. But do we realize that, without the guidance of the money-pricing system, we would lack all cue as to what products we should apply our specialized labors to? Production and exchange constitute a vast cooperative system wherein the cooperators are mostly strangers and usually remote from one another. Most of civilized man's energies are devoted to the production of things for which he as an individual has no direct use. His only way of knowing that some other individuals have use for his product is by the reaction of the market to his product in the form of a money price. The money-pricing system is the antenna of exchange, constantly keeping the cooperative mechanism responsive to demand and supply, by bringing together those buyers and sellers who at any given moment have mutual interests-and in the process regrouping and realigning those interests.

As we pass money from hand to hand, we give little thought to the delicate precision with which it preserves the equity of economic democracy and advances the social order. Every transfer of money registers an impulse on the market that changes the price of some commodity or commodities. These registered prices give the signal for more or less production of the commodities affected, thus keeping human energy, which is the generator of all values, intelligently applied. This readjustment is in progress every moment of the day and night. This is the dynamics of social progress, constantly rewarding the efforts of those who conserve human energy and remain responsive to the buyer's will, and punishing those who do not. If there can be omniscience on earth, here it abides, and it is this all-seeing eye that political planners would sacrifice for the blind directions of bureaucracies.

It is through the preservation and perfection of the monetary system that economic democracy will demonstrate its potential for human welfare. In this way it will avert the disaster that is now threatened by the attempt of the state to exercise a power it cannot command. The challenge is by no means difficult if we ignore the jumble of complexities that have been written about money. Let us forget the false premise of political money power. Let us endeavor neither to reconcile the irreconcilable, nor by some protective device to legitimize the illegitimate. The establishment of a nonpolitical monetary system is but an undertaking in accountancy.

In renouncing the political money idea, we abandon the idea of monetary nationalism. Trade is homogeneous; it knows no nationality, race, color, creed, or caste. Moreover, a truth is universal. Once a monetary science develops, it will no more be localized or nationalized than mathematics is today. There opens before the mind, therefore, the prospect of a universal monetary unit and system that will operate without regard for political boundaries. It will have no nationality or politics. None will be coerced to participate. None will be barred. There will be but one monetary language for the world, and a democratic monetary system will unite people everywhere in the universal freedom of exchange.

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