Libertarian Land Philosophy:
Man's Eternal Dilemma
Oscar B. Johannsen, Ph.D.
BOOK V: COOPERATION, GOVERNMENT AND THE STATE
Chapter 1 - Directed versus Spntaneous Cooperation
"Louis XIV was quite literal when he said,
"L'etat c'est moi." ("I am the State"). The
State is a person, or a number of persons, who exercise force,
or the threat of it, to cause others to do what they otherwise
would not do, or to refrain from satisfying a desire. The
substance of the State is political power, and political power
is coercion exercised by persons on persons; the superhuman
character assumed by the State is intended to hide this fact and
to induce subservience. The strength of the State is Somsonian,
and can be shorn off by popular recognition of the fact that it
is only a Tom, a Dick and a Harry." [Frank Chodorov - Out
of Step]
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Human beings congregate for some common purpose. It may be to have
social intercourse; it may be to arrive at a better understanding of
one another; it may he to increase their production of goods.
In economic activities, individuals cooperate with one another as
they have learned that they can produce more wealth with greater
ease than they could without such cooperation.
Cooperation can take two forms. It can either be directed or
spontaneous cooperation. Individuals cooperate with one another
under the direction of one individual or a small number of
individuals, or they can cooperate spontaneously.
Directed cooperation may occur through voluntary agreement by the
participants for a specific purpose and period of time. For example;
the eight individuals in a racing shell agree that the coxswain
shall direct their actions, ordering them at what pace to row and
guiding the shell as he thinks best. It is as though they were
merged into one body with the coxswain the brain and the other eight
man the rest of the body.
A business is another form of directed cooperation. The head of the
company directs the employees and determines the duties each has to
perform. This is also on a voluntary basis. The employees are free
to work for the businessman or not, as they choose. (As stated
previously the businessman is merely another laborer who directs the
activities of the rest of the workers in the company. Actually, the
laborers are hiring the capital and land which the businessman may
own, but the technique for accomplishing this is by hiring
themselves out as laborers.)
It is important to realize that the participants voluntarily
subject themselves to the direction of one person or a small coterie
of individuals for the purpose of attaining the goal in mind with
the greatest economy of effort.
It might not be amiss to point out that though the participants
take orders, wise managers usually do not give more orders than
necessary. The smart coxswain does not tell the oarsmen how best to
conserve or utilize their strength. The oarsmen decide themselves
which is the best way to adapt themselves to his directions.
A businessman lets each employee utilize his talents in the way the
employee deems best as long as he is doing the task assigned to him.
It is a matter of judgment whether explicit directions should be
given or whether it is wisest to let the individuals use their own
initiative. Possibly the difference between a successful and
unsuccessful executive is the difference between the amount and
method of commands given to the employees. Too much direction may
stifle initiative, create resentment and lead to poor results.
On the other hand, too much laxity may result in confusion. The
precise amount of direction is a delicate one. Possibly the best
formula is enough direction to prevent overlapping and collisions of
authority and functions, yet not so much as to inhibit the freedom
of the employees to use their own judgment and intelligence.
Submission by individuals to directed cooperation is for the
attainment of some goal and must be on a voluntary basis if it is to
be efficient. The oarsmen accept the coxswain's orders so as to win
the race. They do not accept any orders from him on whom they should
marry, what emporiums they should patronize, with whom they should
associate, or which books they should read.
Employees submit to the direction of an employer voluntarily in
order to secure wages They are well aware that wages come from the
sale of the wealth or the services in which the company specializes.
The employer's direction is accepted only insofar as it relates to
the business. If he transgresses his proper sphere and interferes in
their personal affairs, thoughts or beliefs, he will either be
ignored, or advised politely, or in no uncertain terms, that such
matters are of no concern of his. The reverse also applies. Often
employees resent orders which are definitely related to their work.
It an employee arrives late and leaves early, his resentment when
the employer remonstrates is obviously unjustified.
Some conception of the limits of directed cooperation is necessary,
for if the boundary lines are not recognized, this form of
cooperation may he abused by the directors, and the directed. The
abuses usually involve ignoring the rights of the participants, the
most likely one being that the voluntary basis is forgotten or
ignored. Slaveowners direct their slaves. This is directed
cooperation but obviously not on a voluntary basis. It is not
surprising, therefore, that slaves rarely produce as much as free
individuals do. They resist over-exerting themselves. Why should
they? What incentive is there? Anything produced above that which is
necessary to keep them alive as working machines is taken from them.
The slaveowner thinks they are shiftless, lazy and dumb. But he is
the one who is stupid. His conceit will not permit him to realize
that his slaves are no different than he is. He works only for his
own good, not theirs. They work only for their own good, not his.
Most recognize that slavery is inefficient. Yet, in some cases
directed cooperation may appear to be the most effective means of
attaining a goal. So, some intellectuals have jumped to the
conclusion that this method should be applied to most, it not all,
the productive activities of individuals. They do not approve of
slavery, but they are unaware of how easily directed cooperation can
slide into what amounts to slavery, although not labeled as such. It
may very well be that it is not so much any assumed superiority of
production which appeals to them as they may realize that this is
not likely to he the case. Rather, it is that they believe this
method will yield a fairer distribution of the wealth produced among
those producing it. Thus, even if directed cooperation is less
efficient, they would prefer it on the assumption that the
distribution would be fairer. So, they urge the creation of a State
in which the economic activities of the people are directed by a
small coterie of officials at the top, that is, they urge the
establishment of a socialistic economy.
The mass of the people know little of the difference between a
directed and a spontaneously operating economy. If they have been
living in poverty for years in a nation in which the marketplace is
presumed to be the determinant, and in which not only capital but
land is treated as though it were private property, they may feel a
change would help then. So, they may submit to the intellectuals
urgings, as they did in Czarist Russia. But, after a socialistic
economy has been in operation for a while, the people recognize that
it is not attaining the ends promised. As the realization permeates
the nation, the people may wish to alter or change the economy. But
to do that interferes with the plans under which the economy is
working, so it is necessary to use force to keep the people in line.
Starry-eyed socialists believe it is possible to have an economy
based solely on directed cooperation with the people still having
the luxury of freedom of speech, press and assembly. Such
intellectuals are living in a dream world. Communists are smarter.
They know that if people are not compelled to stay at the tasks
assigned, they will stop whenever the jobs become irksome. Socialism
usually is initiated on the naive assumption that all will receive
equal pay. But if that is so, why should an ore miner work in the
bowels of the earth, under dangerous conditions, when he can get the
same pay for sitting at a desk? He simply will not. But if he does
not mine iron ore, the steel necessary for the construction of
automobiles will not be forthcoming, so their production ceases.
Therefore, if autos are to be built the ore miners' freedom to stop
producing must be proscribed, or the plan breaks down.
Thus, not only ore miners but all must be tied to their jobs. With
this restriction on their economic freedom must also come
prohibitions on .their freedom of speech, press and assembly. If the
people have this freedom, sooner or later, they are bound to
congregate possibly for the purpose of denouncing the plans. At
least they will write and speak to one another urging that the plans
be changed. But this is impossible for if there is any material
change in the plans, economic chaos may ensue. Therefore, not only
economic but social freedoms must be proscribed.
An army is the directed organization par excellence. What army
could tolerate its soldiers taking leave whenever they wished, or
questioning the decisions of the generals? If a society is organized
on the lines of a directed economy, it is transformed into a huge
army. The principles which govern an army must be invoked for any
semblance of production to be attained.
The alternative means of cooperating is by spontaneous cooperation.
No individual, or group of individuals, directs the cooperating
parties- All cooperate with one another voluntarily because it is to
their advantage. The cooperation may be quite unconscious and
directed to a goal which few of the participants know or care about.
For example, the merchant who sells nails is cooperating
spontaneously with his customer. He voluntarily yields his nails in
return for money. What the customer does with the nails is no
concern to him. The nails may be used in the construction of a
house, so though the merchant does not know it, he is helping to
construct the building. He cooperated not because he is an altruist
but because it was to his advantage. Selling the nails provides him
with money which he uses for purposes of his own. Conversely, the
buyer is also voluntarily cooperating with the merchant and
willingly exchanges his money for the nails. He does not know what
is to be done with the money nor does he care. His cooperation is
obtained because it is easier for him to buy nails than it is to
make them.
In strolling down a street, people voluntarily cooperate with one
another by pacing themselves so as not to collide. Often it may be
observed that those going in one direction tend to stay on one side
of the walk and those going in the opposite direction on the other
side. No one instructs them to do it. They do it hardly without
thinking as it is to their advantage. If an emergency occurs and
people mill around a spot some individual may take it upon himself
to direct them to move in one way or the other. They will usually
accept his direction if it seems sensible to do so. Such would be an
instance of directed cooperation but only for a specific purpose and
at a particular time.
Whether cooperation is on a directed or spontaneous basis is
ordinarily determined by the circumstances. Whichever is the best,
as nearly as can be ascertained, tends to be adopted. In most cases,
it may well be that a mixture of directed and spontaneous
cooperation is practiced. The extent to which one predominates will
depend upon the situation.
Spontaneous cooperation probably tends to exercise mental as well
as physical capacities to a greater degree than directed
cooperation. It might, therefore, be the preferred mode, but this is
conjectural. Eight oarsmen and a coxswain in a shell represent the
physical strength of eight individuals and one brain. This is more
efficient than if each of the nine individuals decided to row at his
own pace. However, in another situation, spontaneous cooperation
might be better. These same nine individuals, if they were salesmen
who were permitted to use their own ideas and methods would probably
produce more than if they were forbidden to do their own thinking
and had to follow some plan set up by a sales manager.
For purposes of differentiation, when one or the other of these two
methods of cooperation appears to predominate in a nation they are
usually given labels. If a directed economy predominates, it is
ordinarily called a socialistic society, whereas if a spontaneous
one predominates it is usually called a capitalistic economy. It
does not mean that both forms of cooperation are not practiced for
both are. The terminology is merely to emphasize the difference in
philosophical approach.
In a socialistic economy, a small coterie of individuals direct the
many. In a capitalistic society, the many direct each other. To put
it succinctly, in a directed economy, the direction is. from the
top. In a spontaneous economy, the direction is from the bottom.
As the marketplace is the means by which the many rule, a
spontaneously directed economy is often called a market economy.
This is a more accurate characterization than capitalistic. All
societies, socialist or otherwise are capitalistic, for they all use
capital, that is, they all use tools.
In a market economy, the people decide what shall or shall not be
produced by buying or not buying. As pointed out previously, they
vote for automobiles by buying them and against buggies by not
buying them. This control is exercised with little thought or
knowledge of the tremendous forces which have been set into motion.
The people are merely satisfying their desires. Their decisions to
buy or not to buy are delicately balanced. They wish to satisfy a
desire at a particular price. If the desired good cannot be obtained
at that price, they prefer not to have it. Paradoxically, however,
anyone can have whatever human beings can make if he is willing to
pay for it. A person can have a handsome horse drawn carriage today,
though probably none are made any more. All he has to do is to pay
the price, and it will be custom made.
As stated before, the market economy probably represents the only
form of democracy possible. Here everyone votes by buying or not
buying regardless of race, creed, color, age or previous condition
of servitude. On the other hand, a socialistic economy, that is, one
whose emphasis is on directed cooperation is a dictatorial one. The
people must obey the commands of the dictator. Those who assume that
socialism and freedom are compatible are merely deluding themselves.
As it is impossible for a nation to be organized on the basis of
directed cooperation in which all voluntarily submit, resort must be
made to force. This means tyranny. Under such a society,
inefficiencies multiply. Square pegs are put in round holes.
Individuals are compelled to work at certain tasks when they are
better qualified to do other things. It is impossible to place most
of the people in their proper niches no matter how many
sophisticated psychological and industrial techniques may be
employed to solve this problem. The very fact that a person is
forced to perform a particular task may mean it will be done
inefficiently simply because he is under compulsion. If he believes
he is qualified for a better position and is denied the opportunity
to make the change, he may sulk and perform his duties so
reluctantly that the results are minimal.
In a market economy, he can leave his job and try another one. If
it turns out he is not qualified, he may have to return to his old
assignment, but at least he had the freedom to make the move. Of
course, today, even in a market economy as in the United States,
individuals feel they are tied to their jobs. But this is because of
the institutional arrangements which make it so difficult and
hazardous to change jobs. A man with a wife and four children is
well aware that jobs are not that plentiful that he can change
positions so easily without jeopardizing his future. But eliminate
these unjust institutional relationships and the tendency will be
reinforced for individuals to find their proper places in the
economy. But, at any rate, they do have the freedom to change. The
laborer in a totalitarian society can only envy such freedom of
choice.
Spontaneous cooperation is less likely to be abused than directed
cooperation. It may, however, degenerate into mobocracy. People may
be transformed from rational individuals spontaneously cooperating
for sound goals into a maddened mob spontaneously cooperating to
attain an unjust goal, as lynching a man with no more consideration
of his rights, or the rights of anyone in their way, than a dictator
would have. However, thankfully, this does happen too often.
Directed cooperation is the one that tends to be abused. It is the
one which must be constantly watched because it can easily
degenerate into a dictatorship.
Probably individuals who live in a free society apply both forms of
cooperation to the optimum degree necessary to attain their ends. As
they are free to adopt whichever method is best, they tend to do
that. Through error, inertia, or lack of knowledge, they may use one
when the other would be better. They may intermingle both with
preference for one type when the reverse would be wiser. However, in
the long run, competition tends to insure the most efficient
adaptation of the two forms.
Where the emphasis is on a directed economy, the marketplace is
subordinated, and the people's freedom circumscribed. As people are
not permitted to choose the form of cooperation which circumstances
might require, almost inevitably the result is inefficiency is piled
upon inefficiency. And, of course, as pointed out previously not
only is economic freedom restricted, but there is precious little
social freedom, such as freedom of speech, press and assembly.
A logical question which way arise in the reader's mind is whether
there is not a third type of economy -- a mixed one. Such would be
one which has adopted many socialistic practices and yet is still
considered to be a capitalistic rather than a socialistic society.
Sweden is an example.
Of course, to divide cooperation up into two classifications is an
arbitrary distinction which is made in order to facilitate
understanding. One could narrow the definitions and thereby increase
the number of classifications. But it is questionable if anything of
value would be gained. Rather, it would appear that an economy
should be put in one or the other class based on certain
distinctions.
Probably the most important one is whether private property it
permitted not only of consumer goods but of capital. Also, whether
people are free to exchange their property, if they wish to do so ..
If such is the case the economy would still have to be called a
market economy even if the government owns and operates many
industries, as is true in Sweden. The market place still is the
determining factor, and all businesses, those privately as well as
governmentally owned, abide by its decisions. This does not mean
that the government may not impose many restrictions as minimum wage
rates, and so restrict the free operation of the market. But, at
least in general the marketplace still rules. Almost everyone ,could
say that the United States is the example, par excellence, of a
capitalistic or market economy. Yet it has placed many restrictions
on credit and prices of one sort or another.
On the other hand, in a society in which people are not permitted
to possess property, other than their personal belongings and
consumer goods, particularly if they are not permitted to own
capital, such an economy would be a directed one. The Soviet Union
is clearly a directed economy even though it does permit a certain
amount of private enterprise on an extremely limited scale. The most
notable example of this deviation from socialism is the small
private plots of land which it permits peasants to farm.
Parenthetically, the reason it permits this limited degree of
private enterprise is because that is the only way it can assure
that the people get enough to eat. Actually, this concession is one
of the most crushing indictments of socialism.. If the socialistic
philosophy is sound, it should certainly work in the most important
area of economic endeavor -- the raising of food. Even if socialism
succeeded in industrial activity, the fact that it does not in
providing for man's greatest need, makes the whole concept suspect.
Probably the principal reason why many nations are said to have
mixed economies is because in those countries the governments are
taking over more and more industries and operating them. But as long
as the governments buy and sell in the open market, hire at the
going rates and bow to the dictates of the marketplace they would
still have to be considered market economies. This is true even
though the governments may use their power to control the market to
a degree.
The United States owns and operates the post offices and has
protected itself with a monopoly. But all its purchases and all its
hiring of employees are in accord with the dictates of the
marketplace. It also owns and operates projects as the TVA . Here
again its hiring and purchases are in the marketplace. No one
questions the fact that the United States is a market economy. True
its interferences in the marketplace hurt the economy. Giving itself
a postal monopoly has resulted in such atrocious service that, in
desperation, it has established a quasi private organization to run
the post offices. Here is one instance where it is turning, at least
to a degree, to private enterprise to solve a problem. Ordinarily,
governments make matters worse for when their regulations cause an
industry to go downhill. Instead of removing the controls they add
to them, thereby compounding the problems.
As long as the marketplace is still the arbiter. It would appear
that a nation should be classified as having a market economy. When
the marketplace is definitely not in control, then the country
should be classed as having a directed economy.
It is an unfortunate truism that the marketplace is viewed with
suspicion by many. This is probably because of institutional errors,
such as an unsound system or land tenure, which lead to serious
economic disturbances. Recurring periods of depression and
prosperity arise. This causes many people to jump to the conclusion
that the problems occur because cooperation is not planned, that is,
because it is not directed. They assume that the marketplace cannot
automatically dovetail the myriad economic relationships. They feel
the increasing complexity of organized society requires conscious
direction to prevent clashes. They do not believe that the
unplanned, uncoordinated activities of individuals, each seeking to
serve his own ends, will work out to the advantage of all. They do
not believe in the "invisible hand'' which Adam Smith said
directed men's activities automatically via the marketplace. They
feel that someone has to act as an umpire to control the imbalances
-- that someone being the government.
The truth is that it is beyond the competence of any individual or
coterie of individuals, to control an economy and eliminate or
correct any imbalances. No one can possibly foresee what will happen
if a particular action is taken. A government adopts a regulation to
correct a situation. In doing so, it creates problems in areas it
never knew had any relationship to the one it tried to correct. But
everything is related to everything else, directly or indirectly.
What happens in New York City has an effect on a small backwater
town in the Dakotas, though it may be ever so slight and impossible
to trace. When the United States government kept the price of wheat
up domestically through its Farm Board, it had no intention of
encouraging the raising of wheat in other countries, but that is
what happened. Farmers there saw the opportunity to undersell the
United States on the world market.
Some have assumed that the invention of the computer makes it
possible for a government to direct and plan the activities of a
nation. But this is illusionary. Computers do not work by magic.
They have to be programmed and this is done by men.
If a problem has arisen which the government feels it can solve by
means of a computer, it must still search out the facts. But this
takes time, and even assuming that the facts are accurate (which is
quite an assumption), they would most likely be out of date. Time
and again, the Federal Reserve Board has increased the quantity of
exchange media, hoping to revive business, only to discover that
apparently the natural forces of recovery had been at work and its
action heated up the economy unnecessarily. It acted on facts
applicable to an earlier time period. The facts were now obsolete.
The monetary authorities, while they might have suspected it, could
not know it.
In a sense, spontaneous cooperation is a form of decentralized
action. Its application probably becomes more necessary as
civilization becomes more complex. If directed cooperation were
utilized exclusively, it would probably work best in a simple
primitive society where it was possible for an individual, or small
group of individuals, readily to acquire a fairly comprehensive view
of the overall economy. Actions taken might not be as detrimental to
the economy as would be the case if a highly developed society were
involved.
The brain simply cannot manipulate too many complex variables at
the same time. Therefor, the control of intricate machinery must be
automated as much as possible, with only a few manipulations
dependent upon human action. As our airplanes become more
sophisticated, the pilots require ever more automatic controls.
Under spontaneous cooperation, each individual scrutinizes the
relatively small area of the economy in which he is interested. If
he is making shoes, he keeps tabs on the shoe industry. He notes how
shoe prices vary, how leather prices change, what substitutes exist,
what type of footwear seems to be desired at one time or another,
anything which relates to his business. He tries to anticipate. He
is not overly concerned with other fields. He leaves them to others.
At the same time, his competitors are just as carefully scanning the
shoe industry as he is. They also arrive at judgments and take
actions. It one businessman errs and produces high-heeled shoes when
it turns out that low-heeled shoes are demanded, only he and those
in his concern suffer. The public does not for others have probably
correctly anticipated the new fashion. Individuals constantly make
errors, but many of these errors are compensated for by other
individuals who are in the same area of activity.
If the shoe industry is a government monopoly, the planners might
concentrate on shoes and neglect overshoes. If bad weather ensued
for a long period, there probably would not be a sufficient quantity
of overshoes. Bureaucrats almost invariably make monumental errors.
One needs only to read the history of the Federal Reserve System and
its vain attempts to control the economy by monetary policy to be
convinced. . Its errors are piled one on top of the other. It is not
that those in charge are unintelligent or foolish. On the contrary,
they are usually men of the highest order of intelligence and
probity. Their error is in attempting to do something beyond the
competence of humans, so they are doomed to failure.
It is rare that the error of an individual or corporation would
have serious effects on a whole economy. There are too many
competitors who most likely are doing things differently, more in
line with what should be done. They either compensate for the error
or reduce its seriousness.
Volumes have been written on the ghastly failures of societies
operating on the principle of compulsory directed cooperation.
Nonetheless people look with favor on such cooperation when economic
problems arise. "If the market works so perfectly, why this
terrible depression?" Such is a common complaint. It is almost
impossible to convince the victim of a depression that it is not the
mode of cooperation which is at fault, but something more
fundamental. In a manner of speaking, spontaneous cooperation might
be likened to the blood system. It is not the fault of that system
if someone injects poison into it and the blood stream distributes
it until a vital spot is reached with fatal consequences. It is true
the poison could not have killed the person without the aid of the
circulatory system. But the solution is not to eliminate the blood
system. It is to prevent the injection of the poison.
Something analogous happens in a market economy. An erroneous
policy is adopted and is put into effect through the marketplace.
The result may be calamitous for the nation, but the solution is not
to abolish the marketplace. It is to eliminate the erroneous policy.
If a person steals money and then spends it in the marketplace, you
do not eliminate the market to prevent thievery. But that, in
effect, is what is urged by those who assume the market is at fault
and wish to eliminate or control it.
Today, economic injustice is commonplace in our society. Much of it
is not even recognized as being unjust but nonetheless it has its
deleterious effect. Only the more glaring injustices are apparent,
such as business and labor monopolies. These injustices may even be
multiplied by the marketplace, but it is the injustices which should
he eliminated, not the market. Most, if not all, of these injustices
are brought into being by governmental interference.
If the government gives an individual a monopoly, granting that
person the sole right to distribute electricity in a community, the
person is in a position to obtain exorbitant profits. He can charge
all the traffic will bear. A superficial student might say the
marketplace was at fault for it permitted the monopolist to charge
outrageous prices. Therefore, the marketplace must be controlled. As
a matter of fact, this is precisely what is done today. The utility
is controlled through a bureaucracy. This is done because it is
assumed that the spontaneous direction of the marketplace must be
aided in the form of some directed cooperation.
Actually, it is the granting of the monopoly which prevents the
marketplace from exerting control. Other individuals are prevented
from establishing competing utilities. If they were permitted to do
so, the competition in the marketplace would exert the exact degree
of control necessary to give the people the electricity they desire
at the price they are willing to pay for it.
It is argued, of course, that producing electricity and
distributing it is a "natural monopoly". This is not true.
If there is any "natural monopoly", it is the ownership of
land. Actually, there is nothing natural about that, any more than
there is anything natural about owning human beings. All the
economic activities of people can be controlled by the marketplace
without the interference of government with the single exception of
the land. This activity does require government, but even in this
instance the marketplace is used as the means to control the land.
In the case of an electric utility, the excuse given is that a
community cannot permit two, three or more companies as the highways
would become a forest of electric poles. But this is not necessarily
so, as two or three competing companies could cooperate with one
another to use the same poles to save the expense of erecting new
ones. Competing railroads today use the same tracks; competing
utilities could use the same poles.
Even if there existed the inconvenience of too many poles, this is
a minor price to pay compared to the problems caused by permitting a
monopoly with a bureaucracy established to control it. And, of
course, if you have two or three utilities in competition with one
another in a city like New York, any utility failure would not
result in the massive blackouts for which it has become noted. It is
hardly likely that all the companies would have failures at the same
time. Only some of the businesses and homes would be without
electricity, not all.
An examination of the so-called "natural monopolies" will
show that they can all be controlled and regulated by the
spontaneous action of the marketplace, just as grocery and hardware
stores are. It may be necessary for individuals to use a bit of
ingenuity to insure that the marketplace is the controlling factor,
but it can be done. As was pointed out, railroads compete and use
the same trackage. Competing public utilities could use the same
poles or underground conduits. Two or three competing bus companies
can use the same city streets. More than two or three companies
would probably prove unprofitable, so the streets would not be
cluttered with buses, as many assume would occur.
Thousands of taxicabs operate in New York City. Although the city
does regulate the driver by requiring licenses, this is unnecessary.
What it has done is to cause these licenses to have an absurd
monopoly value. It is not the fault of the marketplace. It is the
city government's restriction which has given the licenses this
monopoly value. This value may be dropping now that "gypsy"
taxicabs have stepped up their competition. These are unlicensed
taxis which do not have the same privileges of cruising to pick up
passengers, as the licensed ones. Nonetheless, apparently they do.
They operate primarily in high crime areas, where the licensed taxis
are loathe to go. The City looks the other way. It is rather
startling proof that licenses are unnecessary.
The above are just a few examples to give the reader some idea of
how the so-called "natural" monopolies can be controlled
by the marketplace.
Recapitulation
Two modes of cooperation are open to men -- directed and
spontaneous cooperation. Spontaneous cooperation, by its very
nature, is voluntary. No individual, or group of individuals,
directs the cooperating parties. Each one voluntarily cooperates
because it is to his advantage to do so.
Directed cooperation is under the direction of one person or a
small number of individuals. For it to be effective, and in
accordance with the principles of freedom, those cooperating must
voluntarily agree to the direction.
Both modes are necessary in all societies. Which mode will be
adopted depends upon the circumstances. Probably, in most cases they
are intermingled to a greater or lesser degree.
Directed cooperation is the one which must be guarded against most
carefully for it is the one which may degenerate into tyranny. A
socialistic society is one whose philosophical basis is that of
directed cooperation. Since it is impossible to obtain the voluntary
consent of those directed in such an economy, it necessarily must
resort to force. An army is the example, par excellence, of a
socialistic economy. !t is as illusionary to believe it is possible
to have freedom of speech, press and assembly in a socialistic
society as it is to believe it is possible to have the soldiers in
an army free to criticize and oppose the decisions of the General
Staff.
A capitalistic society; more accurately labeled a market economy,
is one whose philosophical basis is that of spontaneous cooperation.
It represents the only form of democracy really possible. Here
everyone votes by buying or votes against by not buying. regardless
of race, creed, color, age or previous condition of servitude.
To put it succinctly: in a directed economy, the direction is from
the top. In a spontaneous economy, the direction is from the bottom.
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