The Freeman 1972 - The Ludwig von Mises Institute

178 THE FREEMAN Marchthat at a particular point in thefuture the currencies of the worldwill trade at certain fixed parities.Let the violent intervention of thestate compel men on both sides ofany border to accept each other'scurrencies at a legal rate, and youhave turned the economic affairsassociated with international tradeover to the bureaucrats. The entrepreneurs,by allowing state officialsto bear the responsibilityfor certain aspects of internationaltrade, thereby.give to thestate a great power over theirbusinesses. Thus, citizens in everycountry lose their personal freedomto that extent.Why is it that private entrepreneursinvolved in internationaltrade want the government to takeover the responsibility for organizingthe terms of the monetaryexchanges which govern the operationof their businesses? This isa familiar tale. It is the old respectedargument of the vast majorityof people: let my suppliersc0Ill:pete, keep my competitors outof the market. Let others bear theburden of predicting the future.Subsidize me. I'm the importantone. And governments do it. Theytake profits away from one group- international currency speculators- and guarantee the price offoreign exchange - almost. Unlessthere is a devaluation, of course.And then it is every man for himselfand any port in a storm. (Theport is usually Switzerland.)Counting the Costs of InterventionA key rule was' laid down byJesus to his disciples: count thecost (Luke 14 :27-30). He wasspeaking of spiritual matters, butas he so often did, he explainedthem in terms of familiar economicaffairs. That principle hasbeen the economic foundation ofWestern civilization, and especiallyof capitalism. It is, specifically, theinability of socialist economies tocount the costs of anything thatconstitutes the most patent economicfailure of socialism. 19 It isthe genius of the free market thatit allows voluntary, flexible pricingof scarce economic resources.Apart from this free pricingmechanism, there can be no freemarket economy, by definition, andno economic calculation.When a state inflates itsmonopolisticallycontrolled domestic currency- which it could not do if itdid not hold the monopoly - itcreates many problems for theeconomy. It makes forecastingmore difficult. This leads to thedemand for more controls over theeconomy - to mitigate the effectsproduced by the very policies ofmonetary inflation. These controlsare an attempt by bureaucrats todisguise these effects. The effectsare called rising prices. The con-