Production for Profit Is Production for People, part 2

"In his capacity as a businessman a man is a servant of the consumers, bound to comply with their wishes. He cannot indulge in his own whims and fancies. But his customers’ whims and fancies are for him ultimate law, provided these customers are ready to pay for them. He is under the necessity of adjusting his conduct to the demand of the consumers. If the consumers, without a taste for the beautiful, prefer things ugly and vulgar, he must, contrary to his own convictions, supply them with such things. If consumers do not want to pay a higher price for domestic products than for those produced abroad, he must buy the foreign product, provided it is cheaper. An employer cannot grant favors at the expense of his customers. He cannot pay wage rates higher than those determined by the market if the buyers are not ready to pay proportionately higher prices for commodities produced in plants in which wage rates are higher than in other plants.

"It is different with man in his capacity as spender of his income. He is free to do what he likes best."

—Ludwig von Mises, Human Action

Production for Profit Is Production for People

"Profit and loss can be expressed in definite amounts of money. It is possible to ascertain in terms of money how much an individual has profited or lost. However, this is not a statement about this individual’s psychic profit or loss. It is a statement about a social phenomenon, about the individual’s contribution to the societal effort as it is appraised by the other members of society. It does not tell us anything about the individual’s increase or decrease in satisfaction or happiness. It merely reflects his fellow men’s evaluation of his contribution to social cooperation. This evaluation is ultimately determined by the efforts of every member of society to attain the highest possible psychic profit. It is the resultant of the composite effect of all these people’s subjective and personal value judgments as manifested in their conduct on the market."

—Ludwig von Mises, Human Action

Freedom and Competition

"The freedom of man under capitalism is an effect of competition. The worker does not depend on the good graces of an employer. If his employer discharges him, he finds another employer. The consumer is not at the mercy of the shopkeeper. He is free to patronize another shop if he likes. Nobody must kiss other people’s hands or fear their disfavor. Interpersonal relations are businesslike. the exchange of goods and services is mutual; it is not a favor to sell or to buy, it is a transaction dictated by selfishness on either side.

"It is true that in his capacity as a producer every man depends either directly—e.g., the entrepreneur—or indirectly—e.g., the hired worker—on the demands of the consumers. However, this dependence upon the supremacy of the consumers is not unlimited. If a man has a weighty reason for defying the sovereignty of the consumers, he can try it. There is in the range of the market a very substantial and effective right to resist oppression. Nobody is forced to go into the liquor industry or into a gun factory if his conscience objects. He may have to pay a price for his conviction; there are in this world no ends the attainment of which is gratuitous. But it is left to a man’s own decision to choose between a material advantage and the call of what he believes to be his duty. In the market economy the individual alone is the supreme arbiter in matters of his satisfaction."

—Ludwig von Mises, Human Action

Pseudo-Liberalism

"The detractors of liberty are in this sense right in calling it a 'bourgeois' issue and in blaming the rights guaranteeing liberty for being negative. In the realm of state and government, liberty means restraint imposed upon the exercise of the police power.

"There would be no need to dwell upon this obvious fact if the champions of the abolition of liberty had not purposely brought about a semantic confusion. They realized that it was hopeless for them to fight openly and sincerely for restraint and servitude. The notions liberty and freedom had such prestige that no propaganda could shake their popularity. Since time immemorial in the realm of Western civilization liberty has been considered as the most precious good. What gave to the West its eminence was precisely its concern about liberty, a social ideal foreign to the oriental peoples. The social philosophy of the Occident is essentially a philosophy of freedom. The main content of the history of Europe and the communities founded by European emigrants and their descendants in other parts of the world was the struggle for liberty. 'Rugged' individualism is the signature of our civilization. No open attack upon the freedom of the individual had any prospect of success.

"Thus the advocates of totalitarianism chose other tactics. They reversed the meaning of words. They call true or genuine liberty the condition of the individuals under a system in which they have no right other than to obey orders. In the United States, they call themselves true liberals because they strive after such a social order."

—Ludwig von Mises, Human Action

"Mature Capitalism" Ain't Capitalism

"It would be correct to describe this state of affairs in this way: Today many or some groups of business are no longer liberal; they do not advocate a pure market economy and free enterprise, but, on the contrary, are asking for various measures of government interference with business. But it is entirely misleading to say that the meaning of the concept of capitalism has changed and that 'mature capitalism'—as the American Institutionalists call it—or 'late 'capitalism'—as the Marxians call it—is characterized by restrictive policies to protect the vested interests of wage earners, farmers, shopkeepers, artisans, and sometimes also of capitalists and entrepreneurs. The concept of capitalism is as an economic concept immutable; if it means anything, it means the market economy. One deprives oneself of the semantic tools to deal adequately with the problems of contemporary history and economic policies if one acquiesces in a different terminology. This faulty nomenclature becomes understandable only if we realize that the pseudo-economists and the politicians who apply it want to prevent people from knowing what the market economy really is. They want to make people believe that all the repulsive manifestations of restrictive government policies are produced by 'capitalism.'”

—Ludwig von Mises, Human Action

TGIF: Social Cooperation Versus Violence

The chilling photo of a hooded man cold-bloodedly executing a health-insurance CEO on a busy New York City street should make any decent person pause and reflect. Anyone who even glimpses the role of social cooperation in making life better and longer felt sickened, or should have. Nothing can justify what the perpetrator did. That so many people see him as a vengeful hero acting in defense of the downtrodden is appalling. One can only hope they will soon come to their senses.

At the risk of taking our eye off the crime, it's worth pointing out that all departures from the market economy—laissez-faire capitalism—are steps toward social disintegration. That infamous, unsurpassingly ugly photo is the perfect image of anti-cooperation, anti-capitalism, and anti-human welfare.

The choice we face is between social cooperation and social disintegration. No person of goodwill harbors doubt about the right choice. The question is how to achieve social cooperation: the state, that is, aggressive force, or the market. The theoretical and historical evidence is unmistakable: the market economy is unequivocally the only way to achieve maximum social cooperation. The state destroys social cooperation.

The widely held belief that social cooperation through the market will not work with health care is balderdash for which no one has adduced evidence. Where markets are left significantly unmolested by politicians and bureaucrats, it achieves reasonable prices and supplies and—this is important—virtually universal coverage. Even those we call poor in this society have refrigerators, HVACs, automobiles, microwave ovens, mobile phones, flat-screen TVs, and so on. Why not affordable universal health services, including insurance?

The reason is that variously motivated politicians and bureaucrats—urged on by "Baptists and bootleggers"—have for over a hundred years tried to combine insurance and welfare in one system, despite their incompatibilities. When that happens, socially harmful results follow; perverse incentives proliferate. Government measures have suppressed supply and boosted demand, a volatile combination. Falsely proclaiming that health care is a right matter not a whit. That the resulting Rube Goldberg "system" of partly spontaneous disorder works as well as it does is a tribute to what's left of the entrepreneurial market and the profit motive. A little market goes a long way. (As they used to say about the Timex watch: 'It takes a licking and keeps on ticking.")

However, the distortions caused by interference with the practice of medicine and the provision of medical insurance have eroded social cooperation, imposed hardship, and created animosity. For that reason alone we need free markets for those services and products

Ludwig von Mises, the premier advocate of full classical liberalism in the 20th century, spent his life demonstrating the indispensability of private property and free trade—capitalism—to social cooperation. He almost titled his economics treatise, Human Action (1949), "Social Cooperation."

The social cooperation of the market economy is often used interchangeably with the term individualism. Isn't that a paradox? Mises resolved the paradox:

Individual man is born into a socially organized environment. In this sense alone we may accept the saying that society is--logically or historically--antecedent to the individual. In every other sense this dictum is either empty or nonsensical. The individual lives and acts within society. But society is nothing but the combination of individuals for cooperative effort. It exists nowhere else than in the actions of individual men. It is a delusion to search for it outside the actions of individuals. To speak of a society’s autonomous and independent existence, of its life, its soul, and its actions is a metaphor which can easily lead to crass errors.

The questions whether society or the individual is to be considered as the ultimate end, and whether the interests of society should be subordinated to those of the individuals or the interests of the individuals to those of society are fruitless. Action is always action of individual men....

The postliberals of "left" and "right"—the illiberals—who fret that in the market all relationships are reduced to cash get it wrong:

Within the frame of social cooperation there can emerge between members of society feelings of sympathy and friendship and a sense of belonging together. These feelings are the source of man’s most delightful and most sublime experiences. They are the most precious adornment of life; they lift the animal species man to the heights of a really human existence. However, they are not, as some have asserted, the agents that have brought about social relationships. They are fruits of social cooperation, they thrive only within its frame; they did not precede the establishment of social relations and are not the seed from which they spring.

Then what are the agents of social relationships?

The fundamental facts that brought about cooperation, society, and civilization and transformed the animal man into a human being are the facts that work performed under the division of labor is more productive than isolated work and that man’s reason is capable of recognizing this truth. But for these facts men would have forever remained deadly foes of one another, irreconcilable rivals in their endeavors to secure a portion of the scarce supply of means of sustenance provided by nature. Each man would have been forced to view all other men as his enemies; his craving for the satisfaction of his own appetites would have brought him into an implacable conflict with all his neighbors. No sympathy could possibly develop under such a state of affairs.

So we have the division of labor, increased productivity, and trade to thank for civilization. The postliberals are wrong. Very wrong. We should yearn for neither the Rousseauian state of nature nor the Hobbesian Leviathan. Mises:

Man appeared on the scene of earthly events as a social being. The isolated asocial man is a fictitious construction....

The idea that anybody would have fared better under an asocial state of mankind and is wronged by the very existence of society is absurd. Thanks to the higher productivity of social cooperation the human species has multiplied far beyond the margin of subsistence offered by the conditions prevailing in ages with a rudimentary degree of the division of labor. Each man enjoys a standard of living much higher than that of his savage ancestors. The natural condition of man is extreme poverty and insecurity. It is romantic nonsense to lament the passing of the happy days of primitive barbarism.

Mises laid out more clearly than anyone how the market process creates general prosperity. He wrote:

The market economy is the social system of the division of labor under private ownership of the means of production. Everybody acts on his own behalf; but everybody’s actions aim at the satisfaction of other people’s needs as well as at the satisfaction of his own. Everybody in acting serves his fellow citizens. Everybody, on the other hand, is served by his fellow citizens. Everybody is both a means and an end in himself, an ultimate end for himself and a means to other people in their endeavors to attain their own ends.

This system is steered by the market. The market directs the individual’s activities into those channels in which he best serves the wants of his fellow men. There is in the operation of the market no compulsion and coercion....

The market process is the adjustment of the individual actions of the various members of the market society to the requirements of mutual cooperation.

The dislocations and distortions we rightly criticize in the medical sector are produced by government interference with this market process rooted in social cooperation. But people widely attribute those distortions to the market itself. How could they make such a fundamental mistake? Part of the reason is that private property in the profit-and-loss environment has not been completely eradicated. Rather, it has been denatured; the shell has been maintained, but its essence has been changed almost beyond recognition. The politicians' and bureaucrats' fingerprints are over it.

Mises noted:

In searching for remedies against poverty, inequality, and insecurity, [the present-day welfare propagandists] come step by step to endorse all the fallacies of the older schools of socialism and interventionism. They become more and more entangled in contradictions and absurdities. Finally they cannot help catching at the straw at which all earlier “unorthodox” reformers tried to grasp—the superior wisdom of perfect rulers. Their last word is always state, government, society, or other cleverly designed synonyms for the superhuman dictator.

The welfare school ... [has] published many thousands of volumes stuffed with punctiliously documented information about unsatisfactory conditions. In their opinion the collected materials clearly illustrate the shortcomings of capitalism. In truth they merely illustrate the fact that human wants are practically unlimited and that there is an immense field open for further improvements. They certainly do not prove any of the statements of the welfare doctrine.

In Mises's day the socialialists and interventionists promised that their alternatives to the market would outperform a social system based on private property. However, that promise changed when the anti-market forces could no longer evade statism's obvious inferiority in delivering the goods. Undeterred, they discovered the "age of limits" and criticized "consumerism." Now statism's superiority lies in its lack of productivity. But as I say, Mises had to contend with the opposite claims.

There is no need to tell us that an ampler supply of various commodities would be welcome to all people. The question is whether there is any means of achieving a greater supply other than by increasing the productivity of human effort by the investment of additional capital. All the babble of the welfare propagandists aims only at one end, namely, obscuring this point, the point that alone matters.,,, Thus they are the harbingers of economic retrogression, preaching a philosophy of decay and social disintegration. A society arranged according to their precepts may appear to some people as fair from the point of view of an arbitrary standard of social justice. But it will certainly be a society of progressing poverty for all its members....

The truth is that capitalism has not only multiplied population figures but at the same time improved the people’s standard of living in an unprecedented way. Neither economic thinking nor historical experience suggest that any other social system could be as beneficial to the masses as capitalism. The results speak for themselves. The market economy needs no apologists and propagandists. It can apply to itself the words of Sir Christopher Wren’s epitaph in St. Paul’s: Si monumentum requiris, circumspice. [If you seek his monument, look around.]

Our very lives depend on reviving the public's understanding of what the free market has bestowed in so short a time.

Protecting Vested Interests

"There were and there will always be people whose selfish ambitions demand protection for vested interests and who hope to derive advantage from measures restricting competition. Entrepreneurs grown old and tired and the decadent heirs of people who succeeded in the past dislike the agile parvenus who challenge their wealth and their eminent social position. Whether or not their desire to make economic conditions rigid and to hinder improvements can be realized, depends on the climate of public opinion. The ideological structure of the nineteenth century, as fashioned by the prestige of the teachings of the liberal economists, rendered such wishes vain. When the technological improvements of the age of liberalism revolutionized the traditional methods of production, transportation, and marketing, those whose vested interests were hurt did not ask for protection because it would have been a hopeless venture. But today it is deemed a legitimate task of government to prevent an efficient man from competing with the less efficient. Public opinion sympathizes with the demands of powerful pressure groups to stop progress. The butter producers are with considerable success fighting against margarine and the musicians against recorded music. The labor unions are deadly foes of every new machine. It is not amazing that in such an environment less efficient businessmen aim at protection against more efficient competitors."

—Ludwig von Mises, Human Action

From Savagery to Civilization

"The market economy is a man-made mode of acting under the division of labor. But this does not imply that it is something accidental or artificial and could be replaced by another mode. The market economy is the product of a long evolutionary process. It is the outcome of man’s endeavors to adjust his action in the best possible way to the given conditions of his environment that he cannot alter. It is the strategy, as it were, by the application of which man has triumphantly progressed from savagery to civilization."

—Ludwig von Mises, Human Action

What Corporatism Actually Is

"The fundamental idea both of guild socialism and of corporativism is that every branch of business forms a monopolistic body, the guild or corporazione. This entity enjoys full autonomy; it is free to settle all its internal affairs without interference of external factors and of people who are not themselves members of the guild. The mutual relations between the various guilds are settled by direct bargaining from guild to guild or by the decisions of a general assembly of the delegates of all guilds. In the regular course of affairs the government does not interfere at all. Only in exceptional cases, when an agreement between the various guilds cannot be attained, is the state called in.

"[The guild socialists ... aimed at self-government of each branch of industry; they wanted, as the Webbs put it, “the right of self-determination for each vocation.”  ...[T]he guild alone should have jurisdiction over its internal affairs and the government should restrict its interference to those things which the guilds themselves cannot settle.

"However, within a system of social cooperation under the division of labor [i.e., the market economy] there are no such things as matters of concern only to those engaged in a special plant, enterprise, or branch of industry and of no concern to outsiders. There are no internal affairs of any guild or corporazione the arrangement of which does not affect the whole nation. A branch of business does not serve only those who are occupied in it; it serves everybody. If within any branch of business there is inefficiency, a squandering of scarce factors of production, or a reluctance to adopt the most appropriate methods of production, everybody’s material interests are hurt.... In the market economy the entrepreneur in making ... decisions is unconditionally subject to the law of the market. He is responsible to the consumers. If he were to defy the orders of the consumers, he would suffer losses and would very soon forfeit his entrepreneurial position. But the monopolistic guild does not need to fear competition. It enjoys the inalienable right of exclusively covering its field of production. It is, if left alone and autonomous, not the servant of the consumers, but their master. It is free to resort to practices which favor its members at the expense of the rest of the people."

—Ludwig von Mises, Human Action

Good Plan Means My Plan

"All this passionate praise of the supereminence of government action is but a poor disguise for the individual interventionist’s self-deification. The great god State is a great god only because it is expected to do exclusively what the individual advocate of interventionism wants to see achieved. Only that plan is genuine which the individual planner fully approves. All other plans are simply counterfeit. In saying 'plan' what the author of a book on the benefits of planning has in mind is, of course, his own plan alone. He does not take into account the possibility that the plan which the government puts into practice may differ from his own plan. The various planners agree only with regard to their rejection of laissez faire, i.e., the individuals’ discretion to choose and to act. They entirely disagree with regard to the choice of the unique plan to be adopted. To every exposure of the manifest and incontestable defects of interventionist policies the champions of interventionism react in the same way. These faults, they say, were the results of spurious interventionism; what we are advocating is good interventionism, not bad interventionism. And, of course, good interventionism is the professor’s own brand.

"Laissez faire means: Let the common man choose and act; do not force him to yield to a dictator."

—Ludwig von Mises, Human Action

Who Needs What?

"[I]t is evident ... that the man, who first made himself clothes and built himself a cabin, supplied himself with things which he did not much want, since he had lived without them till then; and why should he not have been able to support in his riper years, the same kind of life, which he had supported from his infancy?"

—Jean-Jacques Rousseau, Discourse on Equality

"Under laissez faire, says the planner, it is not those goods which people 'really' need that are produced, but those goods from the sale of which the highest returns are expected. It is the objective of planning to direct production toward the satisfaction of the 'true' needs. But who is to decide what the 'true' needs are?"

—Ludwig von Mises, Human Action

Whose Plan?

"The alternative is not plan or no plan. The question is whose planning? Should each member of society plan for himself, or should a benevolent government alone plan for them all? The issue is not automatism versus conscious action; it is autonomous action of each individual versus the exclusive action of the government. It is freedom versus government omnipotence.

"Laissez faire does not mean: Let soulless mechanical forces operate. It means: Let each individual choose how he wants to cooperate in the social division of labor; let the consumers determine what the entrepreneurs should produce. Planning means: Let the government alone choose and enforce its rulings by the apparatus of coercion and compulsion."

—Ludwig von Mises, Human Action

What Full Liberalism Is Not About

"Liberalism is a doctrine directed entirely towards the conduct of men in this world. In the last analysis, it has nothing else in view than the advancement of their outward, material welfare and does not concern itself directly with their inner, spiritual and metaphysical needs. It does not promise men happiness and contentment, but only the most abundant possible satisfaction of all those desires that can be satisfied by the things of the outer world."

"Liberalism has often been reproached for this purely external and materialistic attitude toward what is earthly and transitory. The life of man, it is said, does not consist in eating and drinking. There are higher and more important needs than food and drink, shelter and clothing. Even the greatest earthly riches cannot give man happiness; they leave his inner self, his soul, unsatisfied and empty. The most serious error of liberalism has been that it has had nothing to offer man’s deeper and nobler aspirations.

"But the critics who speak in this vein show only that they have a very imperfect and materialistic conception of these higher and nobler needs. Social policy, with the means that are at its disposal, can make men rich or poor, but it can never succeed in making them happy or in satisfying their inmost yearnings. Here all external expedients fail. All that social policy can do is to remove the outer causes of pain and suffering; it can further a system that feeds the hungry, clothes the naked, and houses the homeless. Happiness and contentment do not depend on food, clothing, and shelter, but, above all, on what a man cherishes within himself. It is not from a disdain of spiritual goods that liberalism concerns itself exclusively with man’s material well-being, but from a conviction that what is highest and deepest in man cannot be touched by any outward regulation. It seeks to produce only outer well-being because it knows that inner, spiritual riches cannot come to man from without, but only from within his own heart."

—Ludwig von Mises, Liberalism: The Classical Tradition

 

TGIF: The Unfortunately Forgotten Sumner

Some things haven't changed since 1883. In that year Yale University professor William Graham Sumner, the anti-imperialist laissez-faire liberal and pioneer of American sociology, noticed that "we are told every day that great social problems stand before us and demand a solution, and we are assailed by oracles, threats, and warnings in reference to those problems." Then, as now, self-styled progressives announced that the sky would fall unless the problem that had most recently caught their fancy was addressed once by the government. Adam Smith's observation that "there is a great deal of ruin in a nation" was too complacent for these world-savers.

In What Social Classes Owe to Each Other, Sumner continued his description: "There is a school of writers who are playing quite a rôle as the heralds of the coming duty and the coming woe. They assume to speak for a large, but vague and undefined, constituency, who set the task, exact a fulfilment, and threaten punishment for default." Sumner thought it was about time someone asked some penetrating questions:

After reading and listening to a great deal of this sort of assertion I find that the question forms itself with more and more distinctness in my mind: Who are those who assume to put hard questions to other people and to demand a solution of them? How did they acquire the right to demand that others should solve their world-problems for them? Who are they who are held to consider and solve all questions, and how did they fall under this duty?

Who indeed? What did his searches unearth?

So far as I can find out what the classes are who are respectively endowed with the rights and duties of posing and solving social problems, they are as follows: Those who are bound to solve the problems are the rich, comfortable, prosperous, virtuous, respectable, educated, and healthy; those whose right it is to set the problems are those who have been less fortunate or less successful in the struggle for existence. 

The Welfare-State Paradox

"Whether ... a system of social security is a good or a bad policy is essentially a political problem. One may try to justify it by declaring that the wage earners lack the insight and the moral strength to provide spontaneously for their own future. But then it is not easy to silence the voices of those who ask whether it is not paradoxical to entrust the nation’s welfare to the decisions of voters whom the law itself considers incapable of managing their own affairs; whether it is not absurd to make those people supreme in the conduct of government who are manifestly in need of a guardian to prevent them from spending their own income foolishly. Is it reasonable to assign to wards the right to elect their guardians? It is no accident that Germany, the country that inaugurated the social security system, was the cradle of both varieties of modern disparagement of democracy, the Marxian as well as the non-Marxian."

—Ludwig von Mises, Human Action

The Steady Rise in Living Standards

"The history of capitalism as it has operated in the last two hundred years in the realm of Western civilization is the record of a steady rise in the wage earners’ standard of living. The inherent mark of capitalism is that it is mass production for mass consumption directed by the most energetic and far-sighted individuals, unflaggingly aiming at improvement. Its driving force is the profit-motive the instrumentality of which forces the businessman constantly to provide the consumers with more, better, and cheaper amenities. An excess of profits over losses can appear only in a progressing economy and only to the extent to which the masses’ standard of living improves. Thus capitalism is the system under which the keenest and most agile minds are driven to promote to the best of their abilities the welfare of the laggard many."

—Ludwig von Mises, Human Action

Mises on Wages under Capitalism

"While daily experience taught impressively that under capitalism real wage rates and the wage earners’ standard of living were steadily rising, while it became from day to day more obvious that the traditional walls separating the various strata of the population could no longer be preserved because the social improvement in the conditions of the industrial workers demolished the vested ideas of social rank and dignity, ... doctrinaires announced that old customs and social convention determine the height of wage rates. Only people blinded by preconceived prejudices and party bias could resort to such an explanation in an age in which industry supplies the consumption of the masses again and again with new commodities hitherto unknown and makes accessible to the average worker satisfactions of which no king could dream in the past."

—Ludwig von Mises, Human Action

Economics Is about Individual Choice

"The light which the economic theorist can throw on an economic process, or on the outcome of such a process, is viewed as deriving from his ability to relate back the process to the individual acts of choice of which the process is made up. Through the theorist’s understanding of the decisions made by individuals, and of the way in which these decisions have mutual impact upon one another, and become mutually adjusted to one another, he is able to 'explain' the course of economic events, and to understand the probable results that will follow from given exogenous changes operating on the system." (Emphasis added.)

Israel M. Kirzner, An Essay on Capital, 1966

How Far We've Come

"The conditions under which modern man of the capitalist West must act are different from those under which his primitive ancestors lived and acted. As a result of the providential care of our forebears we have at our disposal an ample stock of intermediate products (capital goods or produced factors of production) and of consumers’ goods. Our activities are designed for a longer period of provision because we are the lucky heirs of a past which has lengthened, step by step, the period of provision and has bequeathed to us the means to expand the waiting period. In acting we are concerned with longer periods and are aiming at an even satisfaction in all parts of the period chosen as the period of provision. We are in a position to rely upon a continuing influx of consumers’ goods and have at our disposal not only stocks of goods ready for consumption but also stocks of producers’ goods out of which our continuous efforts again and again make new consumers’ goods mature."

—Ludwig von Mises, Human Action

The Vulnerable Capitalist

"Popular literature attributes enormous 'power' to the capitalist and considers his owning a mass of capital goods as of enormous significance, giving him a great advantage over other people in the economy. We see, however, that this is far from the case; indeed, the opposite may well be true. For the capitalist has already saved from possible consumption and hired the services of factors to produce his capital goods. The owners of these factors have the money already for which they otherwise would have had to save and wait (and bear uncertainty), while the capitalist has only a mass of capital goods, a mass that will prove worthless to him unless it can be further worked on and the product sold to the consumers....

"[C]apital goods are not independently productive. They are the imputable creatures of land and labor (and time). Therefore, capital goods generate no interest income. We have seen above, in keeping with this analysis, that no income accrues to the owners of capital goods as such."

--Murray N. Rothbard, Man, Economy, and State, Chap. 5, secs. 6 & 7, 1962