Introduction
Chapter 1 The Problems of Cities
One Man’s Atlantis
Right Rules Promote Right Outcomes
Rule No. 1: Freedom of Exchange
Rule No. 2: Property Rights and Control
Explicit Ownership, No Zoning
Rule No. 3: Only Minimize Coercion
Nonmarket Pricing of Services
Summary: Toward the Good City
Part VIII On Education
Introduction
Chapter 1 Financing Higher Education in the United States
Statement of the Problem
The Effect of Below-Cost Pricing on Higher Education
Problems of Finance
Problems of Rationing
Problems of Motivation
Problems of Educational Efficiency
Customer Control
The Arguments for Below-Cost Pricing
The Social Benefits of Higher Education
The Egalitarian Argument
Education and Equality of Opportunity
Conclusions
Recommendations
Chapter 2 The Promise of the College
Part IX On What to Do
Introduction
Chapter 1 The Businessman and the Defense of Capitalism
Chapter 2 Reflections on the Election of 1964
Chapter 3 The Foundation for Economic Education: Success or Failure?
Index
One of the signs of advancing age in the American college professor is a tendency for him to write less and publish more. This seeming paradox is easily explained by the phenomenon of Collected Works, that is, by what on television would be described as reruns. As in television, no great public outcry is needed to bring forth the reruns; a question from his wife, a polite suggestion from a colleague, and the cut-and-paste operation is under way.
I have put together here what I believe to be the best of the rather meager output of my professional career up to this point. For reasons (mostly financial) that always seemed adequate at the moment, I have been more of a speechmaker than a writer. Thus, you will find that many of the pieces in this collection are but speeches put down on paper.
I have edited the manuscripts, but only to make them more readable and to reduce duplication of ideas and phrasings. In most cases, I successfully resisted the temptation to erase those statements that, in the light of later knowledge, would cast doubt on my omniscience (for example, some moderate words in praise of Richard Nixon, written in May 1971). The papers are grouped in categories that make sense to me, but obviously some of the papers could as easily have been placed in other groupings.
Some of those holding the markers for my intellectual debts are identified in the papers; others, just literally too numerous to mention, will have to be content with an occasional and probably very accurate, “But of course I said that long ago—and more elegantly.”
Very explicit words of appreciation need be directed to Catherine Fertig, my secretary and an expert at deciphering handwritten manuscripts; to Marise Melson, my daughter and copyeditor, who is possessed of a good sense of style in manuscripts and in life; and to my late wife, Alice, for her patient, loving, and low-key nagging of me to finish this project.
Can Capitalism Survive?
The basic ideas of this paper were expressed on a number of occasions and in various forms. It was first presented in the exotic setting of a business conference held at the Playboy Club in Lake Geneva, Wisconsin. In somewhat different form, it was later presented in the Ludwig von Mises Lecture Series at Hillsdale College. I am presenting it here as the first paper because it poses the Big Questions—as identified by Joseph Schumpeter and agreed to by Ben Rogge.
Can capitalism survive? No, I do not think it can. The thesis I shall endeavor to establish is that the actual and prospective performance of the capitalist system is such as to negative the idea of its breaking down under the weight of economic failure, but that its very success undermines the social institutions which protect it, and inevitably creates conditions in which it will not be able to live and which strongly point to socialism as the heir apparent.1
These words were written in 1942 by Joseph Schumpeter, Austrian-born Harvard social scientist, in his prophetic work, Capitalism, Socialism and Democracy. Inasmuch as I intend to build my comments around this work, it might be appropriate for me to reinforce my own judgment of Schumpeter’s competence with a statement by the Nobel Prize-winning economist, Paul Samuelson. In one of his Newsweek columns in 1970, Samuelson wrote:
It is just twenty years since Joseph Schumpeter died. Although it is not my practice to tout profitable speculations, today I’d like to suggest that Schumpeter’s diagnosis of the probable decay of capitalism deserves a new reading in our own time. The general reader cannot do better than begin with his 1942, Capitalism, Socialism and Democracy.
Nothing that has happened in recent years at Berkeley or Harvard would come as a surprise to those who have absorbed this work. And if there are good clubs in the great beyond, one can picture Schumpeter—an 87-year-old by this time, martini glass in hand—reading The New York Review of Books and chuckling with clinical amusement. Only his Viennese veneer keeps him from saying, “I told you so.”2
(In common with his sometime colleague at Harvard, John Kenneth Galbraith, Schumpeter was possessed of a very healthy ego. He is reported to have remarked in his later years that, as a young man, he had had three ambitions: to become one of the world’s greatest economists, one of the world’s greatest horsemen, and one of the world’s greatest lovers. He continued by saying that he was happy to report that he had succeeded in two of those ambitions. He did not identify which two.)
I
On what does Schumpeter base his forecast, and how does all this relate to the life and times of the American businessman today? Bear with me; all will be revealed in due course. We begin with the analysis.