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Understanding Personal and Economic Liberty
Book Review: Charles Murton
Unless we can make the philosophic foundations of a free society once more a living issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects for freedom are indeed dark. But if we can regain that belief in the power of ideas which was the mark of Liberalism at its best, the battle is not lost.
Ronald Kitching is a life member of the Mont Pelerin Society who made a major contribution to F.A. Hayek’s lecture tour of Australia in 1976. He is thus eminently qualified to write a book on Austrian School free market economics. In his working life he has been a drilling contractor and consultant on drilling, and a farmer in the Atherton Tablelands in Queensland.
From the first page of the body of the book he draws attention to the factors necessary for human progress: the rule of law, secure private property rights, free markets, low levels of taxation and honest money (i.e. a commodity standard such as gold, not corruptible by governments). As he points out, with these in place “the resulting capital accumulation allows maximised welfare and liberty for all regardless of race, religion or location, in any and every society…When [these] are sabotaged by the arbitrary action of governments the wheel of progress slows and finally stops.”
He traces the growth of British liberty through John Locke and the radicalism of the Whigs such as John Wilkes, until the tragedy of the Great War, which led to heavy taxation and the beginning of Britain’s terrible decline to its present status as a toothless, exhausted lion. He also mentions the dystopic Marxist and Nazi horrors that followed later in the century.
In today’s world the great promise of the nineteenth century has vanished. Ron Kitching shows us how it can be restored.
High taxation levels, so dear to the Left, do great harm, and there are hidden methods of taxation, such as loss-making government corporations, and inflation itself. During periods of the greatest growth in wealth taxation levels were low (income tax was actually illegal in the United States until 1913!), but at today’s levels of taxation, and especially with the taxing of savings and capital gains, the accumulation of capital so necessary for improved standards of living for everybody, has slowed disastrously.
Kitching points out the destructive stupidity of payroll tax in a nation supposedly concerned with unemployment, and stresses that taxation should not only be minimal, but levied on consumption rather than production (an income tax, even a non-progressive income tax, discourages production, and production is the root of all progress).
His next topic is inflation (which is an increase in the money supply, not a general increase in prices). Apart from its other calamitous effects, inflation is a hidden tax. Ron Kitching describes the German hyperinflation of 1923 and its inhuman effects, and he shows that genuine kindness and compassion necessitate fiscal responsibility. And how can inflation be controlled, so that horrors such as 1923 Germany cannot recur? A commodity money such as gold is the only safe answer.
A gold standard does not mean that inflation cannot occur. It certainly occurred in Spain after the gold discoveries in the Americas, when it required a gold coin to buy a loaf of bread. But soon trade spread the gold throughout Europe, and no harm was done. A gold standard prevents runaway inflation, and that degree of increase in the money supply does immense and cruel harm to people, and it completely ruins an economy. The need for honest money — money that has intrinsic value — is discussed in detail in chapter 16.
In the absence of the ideal of a gold standard, the author does propose a novel idea for how inflation could be controlled: if there is a 1 per cent increase in the money supply (over a permitted 1 per cent) then those who are always responsible for inflation will be punished with a 2 per cent drop in salary. I don’t think it would be passed in parliament, but it’s a superb idea.
The benefit of free trade is the only thing in economics which can be mathematically demonstrated. It improves our standard of living, and it improves the standard of living of the country with which we are trading. It is the only effective form of ‘foreign aid’, and yet it is reviled everywhere, by both socialists and conservatives. The next chapter of the book, ‘The tariff myth’, deals with the harm done by import tariffs.
Kitching then discusses the responsibility of the trade unions in causing the social evil of chronic unemployment (especially amongst the young), and union responsibility for the lack of innovation by Australian businesses — which has been stupidly criticised by Labor MPs like Barry Jones, the very people who supported the union thuggery which prevented capital investment in new plant in the first place.
Having discussed these basic ideas, he moves on to a particular discussion of the Australian experience: the growth of socialist ideas in Australia, including the pernicious influence of left-wing favourite ‘Nugget’ Coombs, the flight of entrepreneurial ability and capital in the face of strangling government regulation (primary industry is discussed in detail), and the inevitable failure of government ‘solutions’.
There is abundant proof around the world of the success of free enterprise in restoring nations devastated by war, and rapidly enriching nations which are comparatively poor. Post-war Germany and Japan, Taiwan, Hong Kong and Singapore are all discussed. Kitching lists the factors necessary for a free, wealthy and rational society (really an expanded list of the five factors he gives in the book’s preface), and shows that the final choice is between reform and totalitarianism, because government interference never ceases.
Private property and economic liberty can only exist within a framework of properly enforced law (law rather than destructive legislation). Ron Kitching discusses Frederic Bastiat’s The Law, Hayek’s The Constitution of Liberty, and Bruno Leoni’s Freedom and the Law.
In the later chapters of Understanding Personal and Economic Liberyt other specific subjects are covered from a classical liberal viewpoint: the arts, immigration, and the constitution. The author discusses the history of attempts by power-hungry governments to change the Australian constitution in order to augment their own power, those governments invariably offering the rationalisation that the constitution is ‘out of date’.
This leads the author to his concluding chapter, which includes a section, ‘The psychological roots of anti-liberalism’, which investigates the mental pathology of socialism. This needs to be studied in more detail, because it lies at the heart of the whole problem. Given socialism’s manifest failure, why do socialists think as they do?
The book has many excellent special features. It is studded with memorable quotes from defenders of liberty (Ron Kitching’s favourite defenders of economic liberty are Ludwig von Mises, Freidrich Hayek, and Frederic Bastiat), and has a number of good reading lists, especially in the appendix dealing with the great authors of classical liberalism and related subjects. Personally, I was very happy to see Maxwell Newton mentioned too. He was the person who was instrumental in turning me away from socialism, and towards classical liberalism.
Another bonus is an appendix in which the public letters of John Bright are printed. With appropriate footnotes this might make a book in itself. (John Bright was a member of the House of Commons and a free trader who opposed the Corn Laws, which placed a heavy tariff upon the import of grain into Britain. These absurd laws added greatly to the misery and mortality of the Irish potato famine).
Some criticisms:
The index does not appear in the table of contents.
Chapter 23, “Notes on Jean Jacques Rousseau”, might be better as an appendix.
Ronald Kitching uses capital letters in a very arbitrary fashion. In the table of contents he has two chapter headings, ‘The Inflation Crisis’ and ‘The Tariff myth.’ These should be either ‘The Inflation Crisis’ and ‘The Tariff Myth,’ or ‘The inflation crisis’ and ‘The tariff myth.’
Endless other examples of arbitrary capitalisation could be cited. And there are other errors: for example, question marks omitted — an all-too-common problem these days — and misspellings. The former Labor leader is Kim Beazley, not Kim Beasley, and the founder of Apple Computers is Steven Jobs, not Stephen Jobs).
Presumably Ron Kitching would like to see his book have lasting value. If that is the case, passages such as “The recent Redfern riot…” (page 165) needs to be changed to “The Redfern riot in 2004…”
Personally I was disappointed not to see the author tackle the horrific crisis in education in Australia today, which I believe can only be solved by the withdrawal of all government funding and legislation from all levels of education. Nevertheless the book’s virtues far outweigh its few faults. It is strongly recommended to all Australians interested in Austrian School economics, and how the principles of the Austrian School apply to Australia.
BrookesNews.Com
Monday 16 April 2007
F.A. Hayek (quoted on page 220 of Understanding Personal and Economic Liberty)