 political affairs. It was an idea derived from the books of the ancient authors, the study of which was then the sum and substance of higher education. In the eyes of these Greek and Roman writers, freedom was not something that had to be granted to all men. It was a privilege of a minority to be withheld from the majority. What the Greeks called the democracy was in the light of present-day terminology, not what Lincoln called government by the people, but oligarchy, the sovereignty of the full-right citizens in a community in which the majority were metakes or slaves. Even this rather limited freedom after the fourth century before Christ was not dealt with by the philosophers, historians and orators as a practicable constitutional institution. As they saw it, it was a feature of the past lost forever. They bemoaned the passing of this golden age, but they didn't know of any method of returning to it. The second notion of liberty was no less oligarchic, although it was not inspired by any literary reminiscences. It was the ambition of the landic aristocracy and sometimes also of urban patricians to preserve their privilege against the rising power of royal absurdism. In most parts of continental Europe, the princes remained victorious in these conflicts. Only in England and in the Netherlands did the gentry and the patricians succeed in defeating the dynasties. But what they won was not freedom for all, but only freedom for an elite, for a minority of people. We must not condemn as hypocrites the men who in those ages praised liberty while they preserved the legal disabilities of the many, even served them in slavery. They were faced with the problem which they did not know how to solve satisfactorily. The traditional system of production was too narrow for a continually rising population. The number of people for whom there was in the full sense of the term no room left by the pre-capitalistic methods of agriculture and artisanship was increasing. These supernumeraries were starving popes. They were a menace to the preservation of the existing order of society. And for a long time nobody could think of another order, a state of affairs that would feed also these poor wretches. There could not be any question of granting them full civil rights, still less of giving them a share in the conduct of affairs of state. The only expedient the rulers knew was to keep them quiet by resorting to force. The pre-capitalistic system of production was restrictive. The historical basis was military conquest. The victorious kings had given the land to their paladins. These aristocrats were lords in the literal sense of the word as they did not depend on the patronage of consumers buying or abstaining from buying on a market. On the other hand, they themselves were the main customers of the processing industries, which under the guild system were organized on a cooperative basis. This scheme was opposed to innovation. It forbade deviation from the traditional methods of production. The number of people for whom there were jobs either in agriculture or in the arts and crafts was strictly limited. Under these conditions, many men, to use the words of mortars, had to discover that at nature's mighty feast there is no vacant cover for him and that nature tells him to be gone. But some of these outcasts nevertheless managed to survive, begot children and made the number of the destitute war hopelessly more and more. But then came capitalism. It is customary to see the radical innovation that capitalism brought about in the substitution of the mechanical factory for the more primitive and less efficient methods of the artisan's shops. This is a rather superficial view. The characteristic feature of capitalism that distinguishes it from pre-capitalistic methods of production was its new principle of marketing. Capitalism is not simply mass production, but mass production to satisfy the needs of the masses. The arts and crafts of the good old days had catered almost exclusively to the wants of the world to do. But the factories produced cheap goods for the many. All that the early factories turned out was designed to serve the masses, the same strata that worked in the factories. They served them either by supplying them directly or indirectly by exporting and just providing for them foreign food and foreign raw materials. This principle of marketing was the signature of early capitalism as it is of present day capitalism. The employees are themselves the customers consuming the much greater part of all goods produced. They are the sovereign customers who are always right. Their buying or abstention from buying determines what has to be produced in what quantity and of what quality. In buying what suits them best they make some enterprises profit and expand and make other enterprises lose money and shrink. Thereby they are continually shifting control of the factors of production into the hands of those businessmen who are most successful in filling their wants. Under capitalism private property of the factors of production is a social function. The entrepreneurs, capitalists and landowners are mandatory as it were of the consumers and their mandate is revocable. In order to be rich it is not sufficient to have one safe and accumulated capital. It is necessary to invest it again and again in those lines in which it best fills the wants of the consumers. The market process is a daily repeated plebiscite and it ejects inevitably from the ranks of the property people those who do not employ their property according to the orders given by the public. Big business the target of fanatical hatred on the part of all contemporary governments and self-styled intellectuals acquired and preserves business only because it works for the masses. The plans that cater to the luxuries of the few never attain big size. The shortcoming of 19th century historians and politicians was that they failed to realize that the workers were the main consumers of the products of industry. In their view the wage earner was a man toiling for the sole benefit of the parasitic leisure class. They labored under the delusion that the factories had impaired the lot of the manual workers. If they had paid any attention to statistics they would have easily discovered the fallaciousness of their opinion. Infant mortality dropped, the average length of life was prolonged, population multiplied and the average common man enjoyed amenities or which even the wealth to do of earlier ages did not dream. However this unprecedented enrichment of the masses was merely a byproduct of the industrial revolution. Its main achievement was the transfer of economic supremacy from the owners of land to the totality of the population. The common man was no longer a dutch who had to be satisfied with the crumbs that fell from the tables of the rich. The three pious castes which were characteristic of the pre-capitalistic ages, the slaves, the serfs and those people whom patristic and scholastic authors as well as British legislation from the 16th to the 19th century referred to as the poor disappeared. Their science became in the new setting of business not only free workers but also customers. This radical change was reflected in the emphasis laid by business on markets. What business needs first of all, they repeated again and again, is markets and again markets. This was the watchword of capitalistic enterprise. Markets that means patrons, buyers, consumers. There is under capitalism only one way to wealth to serve the consumers better and cheaper than other people do. Within the shop and the factory the owner or in corporations the representative of the shareholders, the president is the boss. But the mastership is merely apparent and conditional. He is subject to the supremacy of the consumers. The consumer is king, is the real boss and the manufacturer is done for if he does not outstrip his competitors in best serving the consumers. It was this great economic transformations that changed the face of the world. It very soon transferred political power from the hands of a privileged minority into the hands of the people. Adult franchise fall out in the wake of industrial enfranchisement. The common men to whom the market process had given the power to choose the entrepreneurs and capitalists acquired the analogous power in the field of government. He became a voter. It has been observed by eminent economists, I think first by the late Frank Fetter from Princeton, that the market is a democracy in which every penny gives a right to vote. It would be more correct to say that representative government by the people is an attempt to arrange constitutional affairs according to the model of the market, but that this design can never be fully achieved. In the political field it is always the will of the majority that prevails and the minorities must yield to it. But business caters not only to the desires of the majority. It serves also minorities provided they are not so insignificant in numbers as to become negligible. The government industry produces clothes not only for normal people, but also for the stout. And the publishing trade publishes not only westerns and detective stories for the crowd, but also books for discriminating readers. There is a second important difference. In the political sphere there is no means for an individual or a small group of individuals to disobey the will of the majority. But in the intellectual field private property makes rebellion possible. The rebel has to pay a price for his independence. There are in this universe no prizes that can be won without sacrifices. But if a man is prepared to pay the price he is free to deviate from the ruling orthodoxy or neo-anorthodoxy. What would conditions have been in socialist commonwealths for heretics like Kierkegaard, Schopenhauer, Weblen or Freud? For Monet, Courbet, Walt Whitman, Rilke or Kafka. In all ages pioneers of new ways of thinking and acting could work only because private property made to some extent contempt of the majority's ways possible. Only a few of these separatists were themselves economically independent enough to defy the government and the opinions of the majority. But they found in the climate of the free economy among the public people prepared to aid and support them. What would Marx have done without his patron the manufacturer and exploiter Friedrich Engels? What this year's entirely socialist economic critique of capitalism is their failure to grasp the sovereignty of the consumers and the market economy. They see only the hierarchical organization of the various enterprises and plants and are at a loss to realize that the profit system forces business to serve the consumers. In their dealings with the employers the unions proceed as if only malice and greed were to prevent what they call management from paying higher wage rates. Their short-sightedness does not see anything beyond the doors of the factory. They and their henchmen talk about concentration of economic power and do not realize that economic power is ultimately vested in the hands of the buying public of which the employees themselves form the immense majority. The inability to comprehend things as they are reflected in such inappropriate metaphors as industrial kingdoms and dukedoms. They are too dull to see the difference between a sovereign king or duke who could be dispossessed only by a more powerful conqueror and a chocolate king who fulfills his kingdom as soon as the customers prefer to patronize another supplier. This distortion is at the bottom of all socialist plans. If any of the socialist chiefs that tried to earn his living by selling hot dogs he would have learned something about the sovereignty of the consumers. But they were professional revolutionaries and their only job was to kindle civil war. Lenin's ideal was to build a nation's production effort according to the model of the post office, an outfit that does not depend on the consumers because its deficits are covered by the compulsory collection of taxes. The whole of society, he said, was to become one office and one factory. He did not see that the very character of the office and the factory is entirely changed when it is alone in the world and no longer grants to people the opportunity to choose among the products and services of various enterprises. Because his blindness made it impossible for him to see the role the market and the consumers play under capitalism he could not see the difference between freedom and slavery. Because in his eyes the workers were only workers and not also customers he believed that they were already slaves under capitalism as that one did not change their status by nationalizing all plants and shops. Socialism substitutes the sovereignty of a dictator or a committee of dictators for the sovereignty of the consumers. Along with the economic sovereignty of the citizens disappears also their political sovereignty. To the unique production plan that annulces any planning on the part of the consumers corresponds in the constitutional sphere to one party principle that deprives the citizens of any opportunity to plan the course of public affairs. Freedom is indivisible. He who has not the faculty to choose among various brands of canned food or soap is also deprived of the power to choose between various political parties and programs and to elect the office holders. He is no longer a man he becomes a pawn in the hands of the supreme social engineer. Even his freedom to wear progeny will be taken away by eugenics. Of course the socialist leaders occasionally assure us that dictatorial tyranny is to last only for the period of transition from capitalism and representative government to the socialist millennium in which everybody wants and wishes will be fully satisfied. Once the socialist regime is sufficiently secure to risk capitalism, Ms. Joan Robinson, the eminent representative of the British Neo-Cambridge school is kind enough to promise us even independent philharmonic societies will be allowed to exist. Thus the liquidation of all these centers is the condition that will bring us what the communists call freedom. From this point of view we may also understand what another distinguished Englishman, Mr. Kroth, had in mind when he praised inquisition as beneficial to science when it protects a rising class. The meaning of all this is clear when all people neatly bow to the dictator there will no longer be any dissenters left for liquidation. Caligula, talk the mother and Rob Speer would have agreed with this solution. The socialists have engineered a semantic revolution in converting the meaning of terms into the opposite. And the vocabulary of their new speech as George Orwell called it, there is a term the one party principle. Now etymologically parties derive from the noun part. A brotherless part is no longer different from its antonym to whole. It is identical with it. A brotherless party is not a party and the one party principle is in fact a no party principle is the suppression of any kind of opposition. Freedom implies the right to choose between ascent and dissent. But in new speak it means the duty to ascent unconditionally and a strict interdiction of dissent. This reversal of the traditional connotation of all words of the political terminology is not merely a peculiarity of the language of the Russian communists and their fascist and Nazi disciples. A social order that in abolishing private property deprives the consumers of their autonomy and independence and thereby subjects every man to the arbitrary discretion of the central planning board could not win the support of the masses if it were not to camouflage its main character. The socialists would have never duped the voters if they had openly told them that their ultimate end is to pass them into bondage. For exoteric use they were forced to pay lip service to the traditional appreciation of liberty. It was different in the esoteric discussions among the inner circles of the great conspiracy. They initiated did not disemble their intentions concerning liberty. Liberty was in their opinion certainly a good feature in the past, in the frame of bourgeois society because it provided same with the opportunity to embark upon their schemes. But once socialism has triumphed there is no longer any need for free thought and autonomous action on the part of individuals. Any further change can only be a deviation from the perfect state that mankind has attained in reaching the bliss of socialism. Under such conditions it would be simply lunacy to tolerate dissent. The admirer of the Soviet system tells us again and again that freedom is not the supreme good. It is not worth having if it implies poverty. To sacrifice it in order to attain wealth for the masses is in their eyes fully justified. But for a few unruly individualists who cannot adjust themselves to the base of regular fellows all people in Russia are perfectly happy. We may leave it undecided whether this happiness was also shared by the millions of Ukrainian peasants who died from starvation but the inmates of the forced labor camps and by the Marxian leaders who were purged. But we cannot pass over the fact that the average standard of living is incomparably higher in the three countries of the West than in the Communities. In giving away liberty as the price to be paid for the acquisition of prosperity the Russians made a poor bargain. They now have neither one nor the other. Romantic philosophy labored under the illusion that in the early ages of history the individual was free and that the course of historic revolution had deprived him of his primordial innate liberty. As Jean-Jacques Rousseau saw it, nature accorded men freedom and society and safety. In fact, primeval men was at the mercy of every fellow who was stronger and therefore could snatch away from him the scarce means of subsistence. There is in nature nothing that can be called liberty. The concept of freedom always refers to social relations between men. True, society cannot realize the illusory concept of the individual's absolute independence. Within society everyone depends on what other people are prepared to contribute to his well-being in return for his own contributions to their well-being. Society is essentially the mutual exchange of services. As far as the individuals have the opportunity to choose, they are free. If they are forced by violence or threat of violence to surrender to the terms of an exchange, no matter how they feel about it, they lack freedom. The slave is unfree precisely because the master assigns him his tasks and determines what he has to receive if he fulfills it. As regards the social apparatus of repression and coercion, the government, there cannot be any question of freedom. Government is essentially the negation of liberty. It is the recourse to violence or the threat of violence in order to make all people obey the orders of the government whether they like it or not. As far as the government's jurisdiction extends, there is coercion and not freedom. Government is a necessary institution. There means to make the social system of cooperation work smoothly without being disturbed by violent acts on the part of gangsters whether of domestic or of foreign origin. Government is not, as some people like to say, a necessary evil. It is not an evil, but it means the only means available to make peaceful human coexistence possible. But it is the opposite of liberty. It is beating, imprisoning, hanging. Whatever a government does is ultimately supported by the actions of armed constables. If the government operates a school or a hospital, the funds required are collected by taxes that is by payments exacted from the citizens. If we take into account the fact that as human nature is, there can neither be civilization or peace without the functioning of the government apparatus of violent action, we may call government the most beneficial human institution. But the fact remains that government is repression and not freedom. Freedom is to be found only in the sphere in which government does not interfere. Liberty is always freedom from the government. It's the restriction of the government's interference. It prevails only in the fields in which the citizens have the opportunity to choose the way in which they want to proceed. Civil rights are the statutes that precisely circumscribe the sphere in which the men conducting their affairs of state are permitted to restrict the individual's freedom to act. The ultimate end that men aim at by establishing government is to make possible the operation of a definite system of social cooperation under the principle of the division of labor. If the social system which people want to have is socialism, communism, planning, there is no sphere of freedom left. All citizens are in every regard subject to the orders of the government. The state is a total state. The regime is totalitarian. The government alone plans and forces everybody to behave in accordance with this unique plan. In the market economy, the individuals are free to choose the way in which they want to integrate themselves into the frame of social cooperation. As far as the sphere of market exchange extends, there is spontaneous action on the part of individuals. Under this system that is called laissez-faire and which Ferdinand Lassalle dealt as the night watchman state, there is freedom because there is a field in which the individuals are free to plan for themselves. The socialists must admit that there cannot be any freedom under a socialist system. But they try to obliterate the difference between the state of unfreedom and economic freedom by denying that there is any freedom in the mutual exchange of commodities and services on the market. Every market exchange is, in the words of a school of pro-socialist lawyers, a coercion over other people's liberty. There is in their eyes no difference what mentioning between a man spaying a tax or a fine imposed by a magistrate or his buying a newspaper or admission to a movie. In each of these cases, the man is subject to governing power. He is not free for, as Professor Hale says, a man's freedom means the absence of any obstacle to his use of material goods. This means I am not free because a woman who had knitted a sweater where it is a birthday present for her husband puts an obstacle to my use of it. I myself am restricting all other people's freedom because I object to their using my toothbrush. In doing this, I am according to this doctrine exercising private governing power, which is analogous to public government power, the power that the government exercises in imprisoning a man in sink sink. Those expounding this amazing doctrine consistently conclude that liberty is nowhere to be found. They assert that what they call economic pressures do not essentially differ from the pressures the master's practice with regard to their slaves. They reject what they call private governmental power, but they do not object to restriction of liberty by public governmental power. They want to concentrate all that they call restrictions of liberty in the hands of the government. They attacked the institution of private property and the laws that, as they say, stand ready to enforce property rights, that is to deny liberty to anyone to act in a way which violates them to beat the property rights. A generation ago, all housewives prepared soup by proceeding in accordance with the recipes that they had worked from their mothers or from a cookbook. Today, many housewives prefer to buy a canned soup to warm it and to serve it to their family. Let's say our learned doctors, the Kenny Corporation is in a position to restrict the housewife's freedom because in asking a price for this thinking, it puts an obstacle to her use of it. People who did not enjoy the great privilege of being tutored by these eminent teachers of law would say that the canned product was turned out by the canary and that the corporation in producing it removed the greatest obstacle to a consumer's getting and using a can to win its nonexistence. The mere essence of the product cannot gratify anybody without its existence. But they are wrong, say the doctors. The corporation dominates the housewife. It destroys by its excessive concentrated power her individual freedom. And it is the duty of the government to prevent such a gross offense. Corporation says that the auspices of the Ford Foundation and other of this group of lawyers, Professor Birley, must be subject to the control of the government. Why does our housewife buy the canned product rather than cling to the methods of her mother and grandmother? No doubt because she thinks that this way of acting is more advantageous for her than the traditional question. Nobody forced this lady. There were people, they are mostly called jobbers, promoters, capitalists, speculators, stock exchange gamblers, who had the idea of satisfying a latent wish of millions of housewives by investing in the canary industry. And there are other equally selfish capitalists who in many hundreds of other corporations provide to consumers with many hundreds of other things. The better corporation serves the public, the more customers it gets, the bigger it grows. Go into the home of the average American family and you will see for whom the wheels of the machines are turning. In a free country nobody is prevented from acquiring riches by serving the consumers better than they are served already. What he needs is only brains and hard work. Modern civilization, nearly all civilization, said Edwin Tannen, the last of the long line of eminent British economists, is based on the principle of making things pleasant for those who please the market and unpleasant for those who fail to do so. All this talk about the concentration of economic power is weighing. The bigger the corporation is, the more people it serves, the more does it depend on pleasing the consumers, the many, the masses. Economic power is in the market economy and the hands of the consumers. Capitalistic business is not continuation in the once attained state of production. It is rather ceaseless innovation, daily repeated attempts to improve the provision of the consumers by new, better and cheaper products. Any actual state of production activities is merely transitory. There prevails incessantly the tendency to supplant what is already achieved by something that serves the consumers better. There is consequently under capitalism a continuous circulation of this elite. What characterizes the men whom one calls the captains of industry is their ability to contrive new ideas and to put them to work. However big a corporation may be, it is doomed as soon as it does not succeed in adjusting itself daily and new to the best possible methods of serving the consumers. But the politicians and other would be reformers see only the structure of industry as it exists today. They think that they themselves are clever enough to snatch from business control of the plants as they are today and to manage them by sticking to the already established routine. While the ambitious newcomer who will be the tycoon of tomorrow is already preparing plants for things unheard of before, all they have in mind is to conduct affairs along tracks already beaten. There is no record of an industrial innovation contrived and put into practice by bureaucrats. If one does not want to plunge into stagnation, a free hand must be left to those today unknown men who have the ingenuity to lead mankind forward on the way to a more and more satisfactory conditions. This is the main problem of a nation's economic organization. Private property of the material factors of production is not a restriction of the freedom of all other people to choose what suits them best. It is on the contrary the means that assigns to the common man in his capacity as a buyer supremacy in all economic affairs. It is the means to stimulate a nation's most enterprising men to exert themselves to the best of their abilities in the service of all of the people. The distinctive principle of western social philosophy is individualism. It aims at the creation of a sphere in which the individual is free to think, to choose and to act without being restrained by the interference of the social apparatus of coercion and oppression the state. All the spiritual and material achievements of western civilization were the result of the operation of this idea of liberty. The doctrine and the policies of individualism and of capitalism, its application to economic matters, do not need any apologists or propagandists. The achievements speak for themselves. The case for capitalism and private property rests apart from other considerations also open to incomparably efficiency of its productive effort. It is this efficiency that makes it possible for capitalistic business to support a rapidly increasing population at a continually improving standard of living. The resulting progressive prosperity of the masses creates a social environment in which the exceptionally gifted individuals are free to give to their fellow citizens all they are able to give. The social system of private property and limited government is the only system that tends to barbarize all those who have the innate capacity to acquire personal culture. It is a gratuitous pastime to belittle the material achievements of capitalism by observing that there are things that are more essential for mankind than bigger and speedier motor cars and homes equipped with central heating, air conditioning, refrigerators, washing machines and television sets. There certainly are such higher-end nobler pursuits, but they are higher-end nobler precisely because they cannot be aspired to by any external effort but require the individual's personal determination and exertion. Those levelling this reproach against capitalism display a rather crude and materialistic view in assuming that moral and spiritual culture could be built either by the government or by the organization of production activities. All that these external factors can achieve in this regard is to bring about an environment and the competence which offered the individuals the opportunity to work at their own personal perfection and edification. It is not the fault of capitalism that the masses prefer a boxing match to a performance of software-less antagonism, just music to Beethoven's symphonies and comics to poetry. But it is certain that while pre-capitalistic conditions as they still prevail in the much greater part of the world, make these good things accessible only to a small minority of people, capitalism gives to the many a favorable chance of striving after them. From whatever angle we may look upon capitalism, there is no reason to lament the passing of the allegedly good old days. Still less is it justified to look for the totalitarian utopias whether of the Nazi or of the Soviet type. We are inaugurating tonight the Ninth Meet de Montpelerin Society. It is fitting to remember on this occasion that meetings of this kind, in which opinions opposed to those of the majority of our contemporaries and to those of their governments are advanced, are possible only in the climate of liberty and freedom that is the most precious mark of western civilization. Let us hope that this right to dissent will never disappear.