We are living at a turning point of history. Every day another mouldy Marxist monument collapses, exposing its starving tenants and scattering its fat feudal over-lords. All over the world, fearful and fleet-footed politicians are discovering the evils of central planning. Even Bob Hawke, who has spent his life defending the closed shop and apeing the comrade societies, now regularly denounces the command economy.
Sudden conversions of convenience always arouse suspicion. We must watch what they do, not what they say.
The fundamental difference between a command society and a free society is seldom recognised. Because of this ignorance, politicians in all parties have lumbered us with an unstable and incompatible concoction of freedom and controls called “The Mixed Economy”. This hybrid is stronger than the Communist donkey which fathered it, but slower than the Capitalist mare which fed it. And, like all mules, it is stupid and sterile.
A mixture of food and poison is still poison, and a mixture of freedom and controls is not free. We need to seize this climate of change to get the poison out of our economic system before we are overtaken by the vigour of those now escaping from the crumbling communist empires.
The essence of the command economy is government control and central direction enforced by edict. Its priests are econometricians, its managers are bureaucrats, its lifeblood is statistics and its rationing system is the queue. In such a society, if you don’t obey you don’t eat. The ultimate sanction of the command economy is the hangman.
Such systems are enormously inefficient because they discourage individual responsibility and enterprise and utilise only that small fraction of knowledge possessed by the planners. As the failures of the central plans become obvious, there is a demand for more power, more statistics, more experts and more industry committees. This merely makes the problem worse.
The essence of the free economy is private property and the freedom to contract. It could be called “The Contract Society”. It operates by way of voluntary co-operation in a decentralised fashion using a myriad of private buying and selling promises and contracts, written and verbal, long term and short term. Price is its rationing system and the consumer is king. In such a society, if you don’t work you don’t eat and the ultimate sanction is the bailiff.
The contract society operates horizontally in free exchange between free men. The command society operates vertically in coerced exchanges between master and slave.
The extent to which our Contract Society Thoroughbred has been repeatedly violated by the Command Society Donkey can be judged by the extent to which government has produced muleish laws restricting freedom of contract.
The list is endless. Every government marketing and business monopoly is a complete negation of the freedom to contract as are all wage and price tribunals.
In a contract society there is no room or need for trade regulations and quotas, statutory business licences, government subsidies, industry councils, local content rules, investment controls, training taxes or government business ventures. And the morality of retrospective legislation is so offensive that not even a self respecting communist donkey would thrust it on us.
If Bob Hawke and his comrades have really experienced a miraculous conversion, they should get off the world stage and start the overdue reforms at home.
Two small examples highlight the way in which our contract society is undermined by the command mentality. They illustrate the fact that our freedom to contract is being killed, not by the knockout punch, but by the torture of a thousand cuts.
The first example concerns born-again Bob in 1985.
Some Australian cricket players decided to sign a tour contract with the South African Cricket Union. This upset mightily the great cricket commandeer in Canberra. He urged the players to break their contracts and, in a total denial of the sanctity of contracts, promised that “The government will be ready to assist should there be any suggestion of legal action against those who break their contract.”
The second example comes from Queensland last year. Mr S, a Victorian house painter, quoted a fixed price of $350 to paint a roof for a West End woman. She accepted the contract. He did the job that afternoon and was paid the next day. A dispute then arose whether or not he should have painted the gutter. Instead of providing arbitration, the bureaucracy told the painter his contract was unenforceable because, under Queensland’s Fair Trading Act, all door-to-door contracts are subject to a cooling off period of 10 days. For them, retrospective legislation is OK; for us, contracts may only be prospective.
This and many other restrictions on the freedom to contract were introduced with the aim of preventing people from suffering the consequences of foolish decisions. This is the usual excuse for all interventions. Once this line is crossed there is nowhere to draw a new line until all decisions are taken out of the hands of the foolish people and given to the all-knowing bureaucrats.
The ultimate result of protecting people from their own foolishness is to fill the world with fools.
That is no favour to any society.
What then is left for our army of politicians and bureaucrats? Most should resign and take an honest job.
The rest must be told they are not managers, investors, entrepreneurs, tycoons or business social workers — they are policemen, arbiters and referees.
With very few exceptions, they have no business whatsoever in dictating what should or should not be in a contract. Their only role in the economy is to catch and punish thieves and con-men, and to ensure that contracting parties fulfil their promises.
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