Essay Introduction

In "Two Kinds of Exchange," Leonard E. Read distills the economic conflict between Libertarians and Socialists into a fundamental distinction: willing exchange versus unwilling exchange. Read argues that while few people are 100 percent Socialist or Libertarian, the Socialist philosophy relies on organized force—government—to compel unwilling exchanges through subsidies and controls, based on the rationale that society has a first lien on individual labor. In contrast, the Libertarian advocate presses for desocialization and a government limited strictly to defensive functions, placing trust in free men and voluntary market interactions. Read concludes that the Libertarian faith lies in the moral rightness and potential accomplishments of willing exchange, rejecting the authoritarian urge to control the creative activities of others.

Two Kinds of Exchange

by Leonard E. Read

BOILED down to its essence, the economic issue between the Libertarians and the Socialists is one of willing exchange versus unwilling exchange.

The Libertarians stand for free trade or voluntary or willing exchange. The Socialists stand for compulsory or unwilling exchange.

There are not many 100 per cent Socialists. Even if they could, no more than a few would socialize or communize or collectivize all human activities. The meaning of the socialistic position becomes apparent to nearly everyone if socializing is carried to its ultimate and logical conclusion.

In the practical politics of our day, the Socialist presses for socializing (sometimes called "nationalizing") the more important means of production. He insists that all of us, regardless of interest, must give of our substance to aid "classes" or "categories" of the citizenry—

THE METHOD: subsidies and controls. THE RATIONALE: society has a first lien on the fruits of everyone's labor. THE DEVICE: the agency of organized force—government.

There are not many 100 per cent Libertarians. Few persons, even if they could, would go so far as to relegate government's part in the market to the suppression of fraud, misrepresentation, predatory practices, and violence—to the use of repellent or defensive, as distinguished from initiated or coercive, force. In short, there are few persons who believe that government can properly have no rights not possessed by individuals. The person who really believes that others can control their creative activities better than he can control them is rare indeed.

In the practical politics of our day, the 100 per cent Libertarian presses toward desocialization. He looks to conditions and the time when government will grant no special privileges; when government will defend the life and livelihood of all citizens equally; when anyone can do precisely as he pleases as long as he does no injury to others; when the fruit of one's labor is one's own to use, to give away, or to exchange.

Socialists—believers in organized force as a means of directing creative activities of citizens—are believers in unwilling exchange. As examples: Regardless of my unwillingness, they believe that I should be forced to exchange some of my earnings for the "prosperity" of Tennessee Valley residents; or for a government promise of benefit payments in my old age; or for the rehabilitation of alcoholics in Washington, D. C.; or for "free" wheat to India and Pakistan; or for the public ownership of butter, in order that the dairymen's price may be sustained; or for—the list is beyond comprehension. These unwilling exchanges run into the hundreds of millions annually.

Their number could be tabulated only if all government "benefits" and "services" were put on a shelf, so to speak, as in a grocery store, and then a count made of the ones not bought. What an inventory there would be!

Two persons are involved in every exchange. If it is to be willing exchange, obviously each party to the exchange must be a willing participant. This is the kind of exchange Libertarians favor.

The Socialist seems to look upon government as an end in itself, while the Libertarian looks upon government merely as the means to counteract the evil of anyone's practicing violence, fraud, and so forth. The Socialist tends to look upon government as the major source of "the common good." The Libertarian distrusts government and watches it closely at all times to make sure that it does not itself become predatory under the guise of defending the life, liberty, and property of the citizens.

The Socialist puts his trust in the force of government. The Libertarian puts his trust in himself and other free men who meet in a market place where no person has the power to force any other person to conform to his viewpoint or desires in any respect except "Don't aggress against me."

Socialists believe that if services and goods were exchanged only if and when mutual willingness prevailed, society would suffer; that people, by and large, would not attend to their own interests; that they would not make the "right" decisions. Socialists are fallible folks, even as you and I. But in spite of that obvious fact, Socialists believe that society is improved when their wills are imposed on the rest of us; that society is menaced if you and I and others go without controls over our affairs. They believe they can direct my life in ever so many areas "better" than I can direct my life myself. Socialists have little faith in what free men can and would accomplish.

Libertarian beliefs are quite the opposite. They have faith in the potential accomplishments and the moral rightness of willing exchange. Indeed, a Libertarian cannot be an authoritarian. He limits his own belief in force to repellent or defensive force against those who aggress against him. And he believes in a government limited to the use of this same force, administered equally and justly for all. The Libertarian leaves all else to private initiative and to willing exchange.

About the Author

Leonard E. Read, former manager of the Los Angeles Chamber of Commerce and vice-president of National Industrial Conference Board, organized the Foundation for Economic Education in 1946 and has been its president since that time. "Combating Statism" is a condensed version of an address delivered before the Pacific Coast Gas Association at San Francisco, September 10, 1953, and was published by the Foundation later that year. "Two Ways to Stop Strikes," "Two Kinds of Exchange," and "Victims of Social Leveling" were also published by the Foundation in 1953.

Attribution

Read, Leonard E. "Two Kinds of Exchange." In Essays on Liberty, Vol. 2, 376-379. Irvington-on-Hudson, NY: The Foundation for Economic Education, Inc., 1954.