Our 19th-century American ancestors created the most unusual society in history. No income taxation. No Social Security. No Medicare. No Medicaid. No welfare. No public housing. No Meals on Wheels. No occupational licensure. No economic regulations. No immigration controls. Except for slavery and many relatively minor subsidies and regulations, our ancestors were the freest people in history.
Why did our ancestors refuse to have a welfare-state, regulated-economy way of life similar to that which 20th-century Americans have chosen? There were moral reasons. They believed that it was wrong to steal, even when the stealing was done through the political process. They knew that an evil and immoral act could not be converted into a moral one by making it legal. If it was individually wrong to take someone else’s money against his will — even with good intentions — it was equally wrong to do so collectively through taxation and welfare.
Moreover, they believed that individuals had the God-given right to live their lives the way they chose, as long as their conduct was peaceful. That is, since God had entrusted man with the gift of free will, no man or group of men, even those in a government, had the rightful authority to take that gift away. Our ancestors knew that the concept of free will entailed the right to choose wrongly. If a person was free to choose only the “right” or approved course of action, then he could not truly be considered free.
What was the result of this strange way of life? Well, there are two different interpretations: that of modern-day American statists and that of American libertarians. Let us take the former first and then the latter.
From the first grade in government-approved schools in America — and then continuously thereafter — schoolchildren are taught that the Industrial Revolution was a horrible experience for the American people. Government-approved schoolteachers, using government-approved textbooks, are required to teach the official, government-approved line: Life in 19th-century America was a terrible ordeal for the poor, the children, and the average person in general; people lived in squalid conditions, had to work long hours in the factories, and forced their children to work in dangerous working conditions.
In a sense, the government-approved schoolteachers are right. For if we compare the standard of living of the American people in the 19th century with that of 20th-century Americans, there is no doubt that the latter have it much better than the former.
But herein lies the fatal fallacy. For the correct analysis lies not in comparing the 19th century with the 20th century. Rather, it lies in comparing the standard of living in the 19th century with what came before it. For if the 19th century, as bad as it was, was significantly better than that which preceded it — that is, if the Industrial Revolution significantly improved and saved people’s lives — then the criticisms of our modern-day public schoolteachers ring hollow.
In her book The New Left (1971), Ayn Rand put the matter succinctly:
“In Western Europe, in the preindustrial Middle Ages, man’s life expectancy was 30 years. In the nineteenth century, Europe’s population grew by 300 percent — which is the best proof of the fact that for the first time in human history, industry gave the great masses of people a chance to survive.”
Here is how Ludwig von Mises explained it in a series of lectures he delivered in Argentina in 1959 (printed in Economic Policy ):
“Of course — from our viewpoint, the workers’ standard of living was extremely low; conditions under early capitalism were absolutely shocking, but not because the newly developed capitalistic industries had harmed the workers. The people hired to work in factories had already been existing at a virtually subhuman level. . . .
“The mothers who worked in the factories had nothing to cook with; they did not leave their homes and their kitchens to go into the factories, they went into factories because they had no kitchens, and if they had a kitchen they had no food to cook in those kitchens. And the children did not come from comfortable nurseries. They were starving and dying. And all the talk about the so-called unspeakable horror of early capitalism can be refuted by a single statistic: precisely in the age called the Industrial Revolution in England, in the years from 1760 to 1830, precisely in those years the population of England doubled, which means that hundreds or thousands of children — who would have died in preceding times — survived and grew to become men and women.”
In his book The Spirit of Democratic Capitalism (1982), Michael Novak described the consequences of the Industrial Revolution:
“The invention of the market economy in Great Britain and the United States more profoundly revolutionized the world between 1800 and the present than any other single force. After five millennia of blundering, human beings finally figured out how wealth may be produced in a sustained, systematic way. In Great Britain, real wages doubled between 1800 and 1850, and doubled again between 1850 and 1900. Since the population of Great Britain quadrupled in size, this represented a 1600 percent increase within one century. The gains in personal choice — in a more varied diet, new beverages, new skills, new vocations — increased accordingly.”
Before the Industrial Revolution, the average person lived a miserably short life. Death came often from famine, disease, illness, malnutrition, and starvation. And there was no way out. In The Wealth of Nations , Adam Smith observed that a mother would have to bear twenty children in the hopes that one or two would survive into adulthood. In an essay entitled “The Environment Since the Industrial Revolution” by Harry Lee Smith, published by the Cato Institute in 1991 (reprinted in the September 1993 issue of Freedom Daily ), Mr. Smith wrote:
“Life expectancy in the United States has effectively doubled during the past 200 years. In the 19th century it increased by 15 years, and it has increased by another 25 years since 1900. . . . Birth rates did not increase during the Industrial Revolution, but improved diet, housing, clothing, and sanitation reduced the death rate and population soared.”
Also, see Capitalism and the Historians (1954), edited by F.A. Hayek.
When people were free to accumulate wealth, they saved large portions of it. And they learned that the key to ever-growing standards of living lay in the accumulation of capital, not in taxation and consumption. As F.A. Harper pointed out in his brilliant book Why Wages Rise (1957), the only way that wages can rise generally in a society is through the accumulation of capital. In Economic Policy , Mises put it this way:
“We must realize, however, that this higher standard of living depends on the supply of capital. This explains the difference between conditions in the United States and conditions in India; modern methods of fighting diseases have been introduced in India — at least, to some extent — and the effect has been an unprecedented increase in population but, since this increase in population has not been accompanied by a corresponding increase in the amount of capital invested, the result has been an increase in poverty. A country becomes more prosperous in proportion to the rise in the invested capital per unit of its population.”
Our ancestors’ standard of living soared because man was free — for the first time in history — to accumulate unlimited amounts of wealth. But the reason is even more profound. When man was free to engage in enterprise without regulation and restriction, the result was ingenious inventions as well as the phenomenon of mass production of goods and services for the average person. See, for example, The Mainspring of Human Progress by Henry Grady Weaver (1947) and Entrepreneurs vs. the State by Burt Folsom (1987).
Contrary to everything students are taught in public schools and other government-approved schools, never had the poor benefited more than they did during the Industrial Revolution. Did this mean that everyone hoarded and saved all his wealth? No. When men were free to accumulate wealth, they used that wealth to build the libraries, the universities, the museums, the opera houses, the soup kitchens — and all on a voluntary basis — and not for an income-tax deduction, for there was no income taxation. They did it because they wanted to do it. In his book The American Tradition (1964) Clarence Carson wrote:
“European visitors to America in the nineteenth century usually remarked the great number and variety of associations and organizations. For example, Captain Frederick Marryat, an Englishman who visited America in the 1830’s, declared that “the Americans are society mad.” He listed 22 of the most prominent benevolent societies in 1834 . . . but found it necessary to add that there “are many others. . . .”
See also The Tragedy of American Compassion (1992) by Marvin Olasky.
How did the American people achieve such a remarkable society? They put the Declaration of Independence into action. Since man has been endowed by his Creator with certain unalienable rights, then no government, not even an American government, should be permitted to interfere with such rights. These rights include living your life the way you choose; engaging in business without governmental restriction; accumulating unlimited amounts of wealth; and deciding what to do with that wealth.
Our ancestors expressly rejected the way of life that modern-day Americans have chosen. Government was not given the power to implement a welfare-state, regulated-economy way of life. And government was not permitted to wage the types of wars that have been waged against the American people in the 20th century — the war on poverty, the war on drugs, the war on illiteracy through public schooling; and the war on guns. Our ancestors’ deep sense of morality and profound devotion to liberty and limited government prevented them from supporting the type of political and economic system now favored by most Americans.
American statists today continue to condemn and castigate our American ancestors. The indoctrination is subtle: Employers were evil because they exploited factory workers. Parents were malevolent because they sent their children into the factories. Big business was bad because it created monopolies. Government officials were good and caring because they saved people from the misery of capitalism.
The indoctrination is necessary because it is the most effective way to prevent modern-day Americans from questioning and challenging the statist revolutions that have taken place in 20th-century America — the revolution in 1913 and the revolution in the 1930s.