Freedom in a revolutionary economy (1974) | ARCHIVES


Announcer: The American Enterprise Institute presents
the Distinguished Lecture Series on the Bicentennial of the United States. Our host for this thought-provoking series
is Vermont Royster, Pulitzer Prize-winning journalist with “The Wall Street Journal”
and Professor of Journalism and Public Affairs at the University of North Carolina. Vermont: I’m Vermont Royster with another
and the American Enterprise Institute series of Distinguished Lectures of the American
Bicentennial. To help celebrate the 200th anniversary of
our nation, the AEI has gathered some of the nation’s leading scholars and educators to
share with us their views on the American Revolution and how it still affects us today. The Distinguished Lecture Series is a part
of the AEI’s continuing effort to open the major issues of our time to serious discussion
from several points of view. The AEI is a nonprofit nonpartisan institution
located in Washington D.C. Tonight’s lecture takes place in one of the
most historic locations in all America, the one-time capital of the Colony of Virginia,
Colonial Williamsburg. Colonial Williamsburg is dedicated to keeping
alive the arts and crafts and techniques employed by our ancestors in the 18th century. Groups such as these musicians known as the
Ars Colonia are encouraged to share their antique artistry with Williamsburg’s
visitors. Colonial Williamsburg covers 173 acres in
the heart of present day, Williamsburg, Virginia. The buildings are all restored or reconstructed
on the basis of exacting research. Perhaps the most historic of all Williamsburg
buildings is the old Capitol reconstructed on the exact site and to the smallest detail
of the original which was burned down. It was here in the Capitol that men like George
Washington, Thomas Jefferson, Patrick Henry, and George Mason helped shape the foundations
of our government. It was here that Patrick Henry spoke out so strongly against
the Stamp Act that he was accused of treason to the crown. “If this be treason, make the most of it,”
Henry shouted to a shocked House of Burgesses. It was here also that George Mason issued
Virginia’s Declaration of Rights which led directly to the Declaration of the Independence. The Capitol was rebuilt in 1934 and the Virginia
House and Senate still hold ceremonial sessions here. At that 1934 dedication, John D. Rockefeller
Junior summed up the sentiment of the day, perhaps best of all. “What a temptation,” said Rockefeller, “to
sit in silence and let the past speak to us of those great patriots whose voices once
resounded in these halls. Today, I shout and my raised voice is heard
in Williamsburg except perhaps or a pride of joy when I visited to discover some new
insight into the beginnings of America and the opportunities are many. Craftsmen dressed in authentic costumes, demonstrate
the techniques of that trade as practiced in the 18th century by many of the arts of
the period of becoming lost to progress. By continuing to practice these odds, the
classrooms of Williamsburg are keeping alive a major part of the American heritage. Such places as the barbershop, The Millinery
Shop, the jewelry store, and a dozen other establishments stand on the original sites
on which they were built in the early days of American history. In addition to the arts and crafts and tradespeople,
there’re over 200 rooms in Williamsburg furnished with American and English antiques. This is the kitchen of the Wetherburn’s
Tavern exactly as it looked when the chef prepared supper for one of our founding fathers. The bedroom in the tavern looks today as it
did to a weary traveler who may have spent the night in this very room over 200 years
ago. Unlike today, however, it was rare for a bed
to be used by just one person. At times, as many as 12 guests stayed the
night in a room this size. Perhaps, that was one of the reasons that
many taverns of the day had such large and well-stocked tap room. Raising the Capitol building in Williamsburg
exactly a royal mile away, stands the Wren Building of the College of William and Mary. The Great Hall of the Wren Building is the
site of tonight’s lecture by G. Warren Nutter. Dr. Nutter will speak on freedom in a revolutionary
economy. He is introduced by the President of William
and Mary, Dr. Thomas A. Graves Junior. Dr. Graves: It is fitting that the lecture
this evening in the Wren Building, oldest academic building in continuous use in the
United States is sponsored by an association of graduate students and the college’s school
of business administration. The managers of American industry and commerce
in the decades ahead must cope with complexities beyond a comprehension of senior executives
of just a few decades ago and light years beyond the dimensions of problems faced by
their business counterparts to centuries before. One distinguished writer on management thought
has called this the age of discontinuity and while it may be, it is the responsibility
of institutions such as the College of William and Mary to reduce, if possible, the personal
shock of discontinuity by preparing its graduates to cope with change on an analytical and rational
basis. How well this is done will be examined by
those who follow us into the Wren Building’s Great Hall on some future occasion. We are indeed fortunate to have with us this
evening, a distinguished gentleman who has had no difficulty in coping with change in
his own life, educator, author, government official, but above all, scholar in economics. Dr. G. Warren Nutter illustrates the scope
of mind and flexibility of performance demanded of leaders in our own time. His current position as Paul Goodloe McIntire,
professor of economics at the University of Virginia was interrupted for four years by
service as Assistant Secretary of Defense for International Security Affairs. Earlier, he had served with distinction on
faculties, at Lawrence College, and at Yale University before coming to the University
of Virginia in 1957. Ladies and gentlemen, Dr. G. Warren Nutter,
freedom in a revolutionary economy. G. Warren Nutter: Thank you very much, President
Graves, Mr. Armstrong, distinguished guests. As I stand in these inspiring surroundings,
I cannot help being haunted by a sense of reincarnation. The Nutters were early settlers on this continent. Among the Puritans arriving in Dover, New
Hampshire on the second voyage of the Mayflower, the chronicles tells us, was one hate evil,
Nutter, who if he accomplished little else of note at least left behind a name to be
lived up to. About the same time, the 1630s, Christopher
Nutter appeared in Jamestown to sire the Virginia branch of the family. No doubt there were Nutters in the environs
of Williamsburg plying their ordinary trades when this renowned university was founded
and this magnificent Great Hall was erected. Later in the 1760s, Captain William Nutter
lead others in the family to the western frontiers of Virginia where he built Nutter Fort in
the neighborhood of what is now Clarksburg. So I have the feeling of returning in their
behalf to an ancestral home. That was half my family, the other half fleeing
oppression in Eastern Europe late in the 19th century and traveling in steerage, immigrated
into this land of promise through the teeming cosmopolitan centers of our republic. These two strains of sturdy and ordinary folk
from whom I have had the good fortune to be descended, differed greatly in origin, but
they shared one thing in common, the will to seek freedom and opportunity. They found both in widely separated times
and places within the same society. It is natural then that I reflect on this
rich heritage as I speak tonight on freedom in a revolutionary economy. Times change. When my townsman, Thomas Jefferson journeyed
to Williamsburg in May 1779, hopefully, not waiting too long in line to fill his horse,
and shortly afterward took up residence in the palace as governor, Virginia was at war. Strange things were happening in the economy
and they were to become stranger over the ensuing two years of Jefferson’s stewardship. Inflation was rampant, goods were requisitioned,
property was impressed, salt rationed, hoarding declared a crime, and exports put under embargo. Short of arms, Virginia launched an abortive
project to produce them in a state arsenal. If price and wage controls were not widely
or vigorously applied, it was in spite of constant urgings by the desperate continental
Congress to do so. The lessons of experience were simply too
compelling, wherever and whenever tried and the new states fighting for independence,
price and wage fixing had brought nothing but great economic mischief. As we assemble here today in Williamsburg
on the eve of the Bicentenary of our republic, we may be grateful for one important difference
in the times, we are not now at war. In that respect, times have changed. This is not to say that the harsh measures
resorted to in the Revolutionary War were normal for the colonial period as well, quite
the contrary. Under the British policy of salutary neglect
in force until 1763, the colonial economy had been largely spared the mercantilist imprint
of the age. “Plenty of good land and liberty to manage
their own affairs, their own way,” Adam Smith observed, “seem to be the two great causes
of the prosperity of all new colonies.” But why, he wondered, had progress been so
much more rapid in the English colonies of North America than in other European colonies
throughout the world? The answer was not to be found, he thought,
in a richer or more abundant soil, but rather in institutions that enabled the English colonists
to make better use of the plentiful resources at their disposal. These were first, political, as Smith put
it, “in everything except their foreign trade, the liberty of the English colonists to manage
their own affairs their own way is complete. It is in every respect equal to that of their
fellow citizens at home and is secured in the same manner, by an assembly of the representatives
of the people, who claim the sole right of imposing taxes for the support of the colony
government.” But there was more. Plenty of good land meant not only abundant
resources but also in a less literal sense, the elbow room needed by new social order
if it was to discard those vestigial institutions that had stifled progress for so long under
the established order of things. A case in point was land tenure itself, which
could be freed from the bonds of primogenitor and entail in the absence of an entrenched
nobility or similar aristocracy. The new society could, when permitted by the
mother country, strike out in new directions and prosper accordingly. The contribution to the mother country was
in Adam Smith’s eyes, strictly that of a mother. “In what way, therefore, has the policy of
Europe contributed either to the first establishment or to the present grandeur of the colonies
of America?,” he asked. In one way, and in one way only, it has contributed
a good deal. “Magna virum mater,” it bred and formed the
men who were capable of achieving such great actions and of laying the foundation of so
great an empire, and there is no other quarter of the world of which the policy is capable
of forming or has actually, and in fact formed such men. The colonies owe to the policy of Europe,
the education and great views of their active and enterprising founders, and some of the
greatest and most important of them as far as concern their internal government, owe
it to scarce anything else. The cultural flow did not, of course, cease
with the founding of the colonies. The book from which I’ve quoted, “The Wealth
of Nations,” was, for one thing, published the same year as the Declaration of Independence. And then there was James Watt’s invention
of the steam engine scarcely a decade before. This remarkable confluence of ideas laid the
foundation for a revolutionary society. All at once, it seems, there sprang forth
this congenial triad, a novel concept of representative government, a science of economics, and an
industrial technology, each revolutionary in its own right and exponentially so when
combined together. These ideas had their proximate origin into
amazingly small circles of minds, one located in the incipient United States and the other
in Scotland. Though no Virginian can gladly resist the
temptation to do so, I will not dwell on the American circle so well known to us as our
founding fathers. And as far as the Scottish circle is concerned,
the only point I wish to make here is that Smith and Watt were once colleagues at the
University of Glasgow and John Rae, Smith’s biographer, describes their relation in this
way. “There is nothing in the university minutes
to connect Smith in any more special way than the other professors with the university’s
timely hospitality to James Watt. But as that act was a direct protest on behalf
of the industrial liberty against the tyrannical spirit of the trade guilds so strongly condemned
in “The Wealth of Nations,” it is at least interesting to remember that Smith had a part
in it. What it may be recollected was then a lad
of 20 who had come back from London to Glasgow to set up as mathematical instrument maker,
but though there was no other mathematical instrument maker in the city, the Corporation
of Hammermen refused to permit his settlement because he was not the son or son-in-law of
a burgess, and had not served his apprenticeship to the craft within the burgh. But in those days of privilege, the universities
also had their privileges, the professors of Glasgow enjoyed an absolute and independent
authority over the area within college bounds, and they defeated the oppression of Watt by
making him mathematical instrument maker to the university and giving him a room in the
college buildings for his workshop and another at the college gates for the sale of his instruments. In these proceedings, Smith joined and joined
we may be sure, with the warmest approval. Watt’s workshop was a favorite resort of Smith’s
during his residence at Glasgow College, for Watt’s conversation, young though he was,
was fresh and original and had great attractions for the stronger spirits about him. Watt on his side, retained always the deepest
respect for Smith, and when he was amusing the leisure of his old age in 1809 with his
new invention of the sculpture machine, and presenting his works to his friends as the
productions of a young artist just entering his 83rd year, one of his first works he executed
with the machine was a small head of Adam Smith in ivory. Respect for Smith was hardly confined to Watt
or Scotland, for “The Wealth of Nations” migrated easily and widely abroad, finding an eager
audience in many parts and certainly on our shores. Our founders were familiar with this great
work in one way or another, some more than others. Alexander Hamilton, Tench Coxe, or whoever
wrote the renowned “Report on Manufactures,” paraphrased Smith at length and quoted him
verbatim at one point, though without acknowledging the source. Deliberations at the Constitutional Convention
revealed a much wider group acquainted with the emerging science of economics. Passage of time has caused different verdicts
to be rendered on the originality, rigor, and consistency of Smith’s masterpiece, but
history leaves no doubt about its massive impact and significance. Its genius derived from the molding together
of fragments of evolving economic thought into a synthetic whole masterfully applied
to familiar situations in a way that revealed a coherent system for organizing social activity,
not easily envisaged before and destined to capture the imagination of thoughtful leaders
ready to grasp revolutionary ideas. It, like the declaration and the ensuing constitution,
struck a spark in receptive tinder. Social thought was not to be the same afterward
as before. Ideas do have consequences dependent on the
historical conjuncture into which they are thrust, and this was a propitious time for
exciting ideas. Vermont: Dr. G. Warren Nutter has been discussing
the role played by economic philosophy in the development of the American system in
the revolutionary period. In just one moment, he will continue his lecture. The magnificent great Governor’s Palace was
one of the first major buildings built in Colonial Williamsburg. The building has been a silent witness to
some great moments in history, but perhaps one of the most bizarre scenes to be played
out just beyond its walls occurred in 1718, shortly before the palace was finally complete. The surviving members of the crew of Blackbeard,
the pirate, were brought to Williamsburg after that capture and one by one, they were hanged
here and punishment for that crime’s on the high seas. At the time of the hangings, the Virginia
General Assembly was meeting in the large building designed by Christopher Wren for
the College of William and Mary. Inside that building today, Dr. G. Warren
Nutter is continuing his lecture on freedom in a revolutionary economy. G. Warren Nutter: Those who easily discern a simple
order in history and uncomplicated nexus of cause and consequence, may single out one
or another factor as the dominant force shaping the course of events in those times, but not
I. Such sweeping interpretations of history obscure
more than they reveal. Opportunities and constraints are the stuff
of history, together with chance, reflective thought, and choice. And none of these elements flows mechanically
or predictably from the nature of man, custom institutions, or any other readily identifiable
single source. History is instead the product of all these
interacting forces mutually influencing each other. My only object then is to give revolutionary
ideas and sober reflection their do in this singular epoch. When the delegates assembled for the Constitutional
Convention, there was good reason in circumstances of the time for their attention to be drawn
to the related issues of strengthening government at the national level and of regulating commerce,
a term that had roughly the same meaning then as economic policy has today. Prosperity had not spontaneously emerged in
the wake of independence contrary to great expectations before the fact. Instead of prosperity, there was depression,
aggravated in no small measure by the confused and confounded government of the confederation. Experience in dealing with these troubles
was modest from all points of view. Influential leaders were in their 30s, conscious
economic policy on the part of government in London as well as at home, had a history
of scarcely more than a score of years and precedents for the envisaged new order were
lacking altogether. Imagination and vision were bound to assume
commanding importance. Wherever and however they acquired their economic
vision, the makers of the constitution deliberately gave wide berth to the economy of the nation
being formed, reserving only a restrained guiding hand for government. In saying this, I am mindful of the persistent
controversy over how much power the pervading constitution makers intended to bestow upon
the government of the union. On this score, however, I find quite persuasive
the case made by William Grampp, eminent historian of the economic liberalism. Concentrating on the 11th hour efforts at
the convention to expand the economic role of the federal government, Grampp notes that
what is interesting is that the proposals, all of them controversial, almost provocative,
should have been made only a few days before the convention adjourned, when unanimity was
urgently needed, and when many delegates were trying heroically to find compromises that
would produce it. Proposals such as that made by Madison to
empower the federal government to charter corporations had been made earlier in the
convention. That they were made again so near the time
of adjournment suggests that their advocates were making a last great effort to write broad
economic powers into the constitution. Perhaps they prevailed upon Franklin in the
belief that his great authority would be decisive, but they were defeated. The very extensive powers proposed by Randolph,
Morris, Franklin, Hamilton, and Madison were reduced to the limited provisions of section
8 of article 1 which include the power to tax, borrow, regulate commerce, pass uniform
bankruptcy laws, coin money, establish post offices and post roads, and grant patents. The limits thus established take on significance
when compared with the traditional economic powers of the age, which as Grampp observes,
can be to deduced from the controls which the governments of France and England exercised
or tried to exercise during the period of mercantilism from the 16th to the middle of
the 18th century. The fixing of prices, wages, and interest
rates, prohibitions of forestalling and engrossing, regulating the quality of goods, licensing
of labor, programs to increase the population, sumptuary control, monopoly grants, and other
exclusive rights, incorporation, state enterprise, and the control of foreign trade and finance,
including the protection of domestic industries. The convention considered only four, monopoly
and other exclusive rights, control of foreign trade, state enterprise, and sumptuary control. The last two were rejected. The granting of monopoly rights was restricted
to patents and copyrights. The control over foreign trade was left in
an ambiguous state except for the prohibition of export taxes. Although not made explicit, the constitution
allowed some power to increase the population because the federal government could offer
free land as an inducement to immigration. Good often issues more from powers denied
to government than from those granted, and this was surely the case as far as economic
development over our republic’s first century is concerned. None of the prohibitory provisions of the
Constitution was to take on greater significance than the one forbidding individual states
to erect barriers to commerce among themselves. Making trade free within an internal market
that was to expand the vast proportions permitted the economy to indulge, for example, in recurrently
restrictive tariffs as the politics of a good century and a half seem to dictate without
serious hindrance to economic progress. Individualism is perhaps the term that best
captures the essential spirit of the time and it once implies the complex of derivative
values. Liberty for the citizen, which is to say the
person deemed competent and responsible, liberty to make his own decisions, power for the citizen
mainly in the form of private property to realize his potential, humanitarian concern
for the less fortunate and incompetent and equality of all citizens before the law and
of the electorate within the politic. If the thinker-turned-statesman had his moment
at the founding of the republic, it was to be the practitioner, pure and simple, the
doer, the man of action who was to dominate the scene for at least the next century, when
pragmatism became America’s watchword. The individualistic spirit found expression
in the world of affairs, not in philosophic reflection, as each was swept up in the excitement
of his workaday world, his farm or business, his trade or profession, his public or private
life. The nation, it would seem, was too busy enjoying
the fruits of progress to ponder its causes and theory emerged from practice. Political thought issued from practicing politicians
and economic thought interestingly, from practicing jurists. Economists such as there were, were either
special pleaders or academic amateurs. In his classic essay on early American economic
thought, the late Frank Fetter wondered why the fertile and original conceptions which
sprang as it were spontaneously from the new environment in America, did not come to fruition
in a constructive and more lasting system of American economic thought. He found much of the answer to lie in partisanship
which blocks the path of disinterested scientific effort whenever personal prejudices and pecuniary
or class interests are affected by the application of any kind of theory to practical problems. The consequence and in turn reinforcing cause
was lack of a learned profession of economics. As Fetter observes, “It is a remarkable fact
that during the whole period, before 1870, there was not a single so-called political
economist who had received the minimum amount of special training demanded today for the
practice of law or medicine or for the pursuit of the natural sciences. All were trained primarily in some other field,
theology, moral philosophy, literature, languages, law, practical politics, journalism, business,
or some branch of natural science. In political economy, they were all self-trained
amateurs, who as it were, happen to wander into this field. If the study of the more exact sciences were
pursued only by men with such dominant motives and such unspecialized training, little scientific
progress could be expected. I leave it to others to judge whether the
absence of trained economists made us better or worse off in this first century of sweeping
economic development. However that may be, the fact is that there
was no body of qualified scholars, skilled in critical thought to observe the unfolding
economy, issue commentary, formulate general principles, apply them to problems of the
time and advise on policy. Instead, it was the law issuing from acts
and cases, that was to shape a framework for the economy, articulate its principles and
guide policy. Vermont: Dr. G. Warren Nutter has been discussing
the facts that the framework for America’s economy was shaped in the early 1800 despite
the fact that there was no body of trained economist to guide and shape our economic
policies. In just one moment, Dr. Nutter will continue. Williamsburg became the capital of Virginia
in 1699 after the original capital, Jamestown burned down. In 1780, the capital was moved from Williamsburg
to Richmond in order to escape the advancing British army. Soon, Williamsburg went into a decline and
it became a decaying ghost town for almost a century and a half. Then in 1926, John D. Rockefeller Junior decided
to support and finance the town’s restoration. Williamsburg is now one of America’s most
important national shrine. It has been visited by every president since
Franklin Roosevelt and by such foreign dignitaries as Winston Churchill and Queen Elizabeth II. Today’s distinguished visitor is Dr. G. Warren
Nutter, who is discussing freedom in a revolutionary economy. G. Warren Nutter: The spirit of the time may be
fairly interpreted as enthusiasm for venture, viewed as the source of prosperity and progress. Consequently, the law leaned over backwards
not to hinder the entrepreneur, not to hold him unduly responsible for incidental harm
flowing from venturesome activity. It was as if “nothing ventured, nothing gained”
had become the literal creed of the age. For as Hurst points out, “The insistence on
a showing of criminal intention in any case involving liability amounted in effect to
a presumption in favor of the independence of individual action. The middle 19th-century rationale of the law
of negligence into tort reflected the same basic value judgment. Expansion of economic energies brought men
into closer, more continuous relations in situations increasingly likely to yield harm. Nonetheless, at first, the law emphasized
the social desirability of free individual action and decision. Liability in tort should normally rest on
a showing of fault on the actor’s part. Action at one’s peril was the exception. Hence the burden lay on the injured person
to show reason why the law should intrude its force to shift some of the burden of loss
onto the one who caused injury. This attitude, no doubt, appears strange to
a generation accustomed to the rhetoric of Ralph Nader and the Sierra Club. I’ve dwelled on these legal presumptions of
the last century, neither to extol nor to disparage them, but to stress their importance
as a manifestation of the social ethic of the time. Who is to bear the burden of proving what,
and why? The presumptive answers given to these questions,
say more about a society’s conception of the good life than any list of good intentions
no matter how long. In the matter of fact world of our first century,
freedom took on concrete meaning in the marketplace, and it worked. A continent was settled, a nation built and
prosperity persistently augmented. Now, grandeur was to take the center of the
state. It’s neither my bent nor purpose to prolong
this historical narrative, for the moment will shortly be upon me for a summing up and
there’s more interpretive ground yet to be covered. Suffice it to say that our first century laid
the basis for the second still fresh in memory. We gradually moved toward a turning point
similar to the one faced earlier in England. As Winston Churchill was to write at the turn
of the 20th century, “The great victories have been won. All sorts of lumbering tyrannies had been
toppled over. Authority was everywhere broken. Slaves were free. Conscience was free. Trade was free. But hunger and squalor and cold were also
free and the people demanded something more than liberty. How to fill the void was the riddle that split
the liberal party.” Changing opinion ultimately brought forth
a second revolution, a revolution in social thought, born of economic crisis, some two-score
years ago. In the formative years, we seem determined
to make up for lost time in the realm of social philosophizing. The vanguard of social reformers comprised
a multiplying band of intellectuals, spawned by affluence, emboldened by their own peculiar
sense of superiority, motivated by the animus of the onlooking outsider, and hence, as Schumpeter
perceived, inherently inclined to become angry social critics by profession. Learned economists, conspicuously absent during
our first century, appeared in abundance and assumed the role of growing importance. To be sure, ardent defenders of the free society
were to be found in the intellectual ranks, particularly among economists, but they were
vastly overshadowed by the critics in due course. The way was prepared for the sharp inversion
of social values that has taken place over the last generation, an inversion that has
materialized in the form of colossal government as the share of the nation’s net product passing
through the hands of government has risen from less than a sixth to more than two-fifths. Security, protection, comfort, equality, all
seem to have advanced in the scale of importance about self reliance and freedom. The fundamental transformation has occurred
in the prevailing conception of the good society. Vermont: Dr. G. Warren Nutter has been discussing
the development of the United States since the period of the revolution. In just a moment, he will examine how economic
principles are affecting the America of today. The College of William and Mary, the locale
of our lecture, has long been associated with some of the great names in American history. Among its alumni are Thomas Jefferson, James
Monroe, and John Marshall. Four of the first 10 presidents were associated
in some way, with William and Mary, including George Washington, who was chancellor for
11 years. Our speaker at William and Mary today is Dr.
G. Warren Nutter, who is concluding his lecture on freedom in a revolutionary economy. G. Warren Nutter: If social change is to move in
the right direction, in accord with the standards of the civilized world, there must be those
who stir and prod, who keep the public alert to inequities, who find fault with the established
ways of maintaining social order. It is natural to point the finger of blame
at the existing system and to seek salvation in its opposite, but therein, also lies the
great danger of our day. Those who protest against the failures of
the market, real and imagined, too often see their remedy in turning affairs over to government
in expanding the political order and contracting the economic, relying more on coercion and
less on mutual consent. The danger we run in looking first to government
to solve problems is that progress will grind to a halt, that discontent will vanquish progress
and the race will be over. Over the ages, the bane of progress has been
too much government, not too little. Over most of our history, the question of
what middle ground was to be occupied by our society between the poles of anarchy and despotism
was resolved by the presumption that matters are best left to individual choice and mutual
consent unless the contrary is prove beyond reasonable doubt. The burden of proof was upon him who maintained
that a task entrusted to the market could be better performed by transferring it to
the government. The state had its work cut out for itself,
but classical liberalism implied a certain ordering of tasks to guide the emphasis of
governmental activity. First, the state had to provide the necessary
political and legal framework for the market by maintaining order, defining property, preventing
fraud, enforcing contracts, and assigning responsibility. Second, it should disperse power by diminishing
inequality of income and opportunity and by inhibiting monopolization. Third, it was to perform desirable functions,
too costly for individuals or voluntary associations such as the establishment of a sound monetary
system, maintenance of public health, and promotion of safety. Fourth, it needed to help the poor and unfortunate
and to act as guardian for the incompetent, protecting those who could not cope with the
normal responsibilities of life. Fifth, it should stabilize general economic
conditions. And sixth and finally, it should provide welfare
services to the public in the form of social security, unemployment assistance, and various
other desired collective goods. That ordering has been turned upside down
by the social outlook of today, and the shifting emphasis has caused government to undertake
the activist role formally assumed by the mark. One may be permitted to wonder whether there
is not some profound confusion in a society that strives so hard to retain a peacetime
economy through seven long years of war and then leaps into a wartime economy almost the
moment peace breaks out. More fundamentally, something must be wrong
in a society that feels compelled to treat each new problem no matter how routine, as
a monumental crisis and hence chooses to live in a continual atmosphere of tension, sacrifice,
and fear. As a friend of mine has put it, if the price
system is not to be trusted with adjusting a 20% gap between supply and demand of energy,
perhaps it had better hang up its spikes. But I’m here today to note the trend of affairs,
not to pass judgment or to prophesy the ultimate outcome. Who can see what is…what will come in the
next two centuries any more clearly than our forefathers could envisage what vast change
lay ahead in the two just completed? In a way, the starting point of the times
is similar. Recall the traditional mercantilist controls
of central government rejected by our founders. The fixing of prices, wages, and interest
rates, the outlawing of forestalling and engrossing, the regulating of the quality of goods, the
licensing of labor, the setting of sumptuary standards, the granting of monopoly rights,
the chartering of corporations, and the establishing of state enterprises. They have all found a congenial home in the
new deals, fair deals, new frontiers, great societies, and new federalisms of our age. Yet the very environment being created by
them affords us something to react against in the same way that our forefathers did,
perhaps once again to the benefit of liberty. As the saying goes, good judgment comes from
experience and experience comes from bad judgment. Let me end then on a soft note of hope in
keeping with the occasion. The mood is, unfortunately, one of hope rather
than expectation, for there is little in the momentum of unfolding history to comfort those
who cherish freedom. What is there to prevent the fraction of income
tax by government from rising to half, three quarters and more? There is a hope and it is this, having become
so impressed with the fact that freedom is not everything or the only thing, perhaps
we shall put that behind, that discovery behind us and comprehend before it is too late that
without freedom, all else is nothing. Thank you very much. Vermont: We have just heard a lecture by Dr.
G. Warren Nutter on freedom in a revolutionary economy. Dr. Nutter expressed concern that government
is undertaking too strong a role in our economic affairs, but many tasks preempted by government
could be handled in the marketplace. Dr. Nutter’s thesis is one of several varied
looks at present-day America presented by the American Enterprise Institute as a part
of its observance of the Bicentennial of the United States. If you would like a copy of Dr. Nutter’s lecture
or of the entire series, write the American Enterprise Institute. That’s A-E-I, Post Office Box, 19191, Washington
D.C., 236. Until next time, this is Vermont Royster and
thank you for joining us.

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