What is America?

Gary Wolfram
Issue CCXLIII - April 7, 2010
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Last Monday and Tuesday I was part of a two day Hillsdale College forum, entitled “What is America?” The program was held in Del Mar, California, and drew more than 250 people for two days of lectures by four Hillsdale College faculty: an economist (yours truly), an historian, an English professor, and a political scientist. Each of us spoke about the characteristics of his discipline that define America. Hayek, in the Constitution of Liberty, wrote that a society becomes civilized, not by giving itself laws, but by agreeing to a common code of conduct. This common code of conduct is what is known as the culture of a country, and our task was to present to our audience the basic foundations of the culture that defines America.

Hayek also points out that not all cultures are equal. In both the Constitution of Liberty and The Fatal Conceit, Hayek articulates the theory of social evolution, that some ways of organizing society are more successful at producing wealth than are others. Over time, the social structures that outperform others will eventually be adopted in the same way that biological evolution predicts for the animal and plant kingdom. If we are not aware of what makes up America’s culture and why the particular aspects of America’s culture are important, then we may head down Hayek’s Road to Serfdom as other cultures move past us as they adopt the market capitalist system and move towards a free society and we give up freedom in the false hope that government can provide us security.

My task was to explain that one of the defining characteristics of America is the economic system of market capitalism. This is a system of voluntary exchange. No one is exploited in market capitalism as he or she must volunteer to buy any good they purchase, or must be willing to work at the wage offered. As a consequence producers must pay the owners of any resource the opportunity cost of the resource -- the value of the resource in its next best alternative. If the steel purchased by an auto maker was worth more in another use, then the auto maker would not have been able to bid it away. And finally, producers must make a product with these resources that consumers value more than what was paid for the resources or go out of business. This system must make the most efficient use of resources.

Unfortunately, we are in a state where we are turning over vast swaths of our economy to the central planners in Washington, who cannot possibly know what the most valued use of resources are, and who do not have the incentives to do allocate resources efficiently even if they could somehow know what consumers valued most. Leonard Read’s famous paper, “I Pencil,” clearly demonstrates the impossibility of central planning to even provide pencils, much less health care. This has come about because the limits on our Congress that are put up by the Constitution to protect us from arbitrary power have been ignored. The only defense we have is to restore America through educating people about what it is that made America a wealthy nation of free people. Hayek put it best:

"If old truths are to retain their hold on men’s minds, they must be restated in the language and concepts of successive generations…It has been a long time since that ideal of freedom which inspired modern western civilization, and whose partial realization made possible the achievement of that civilization was effectively restated."

 If we are to succeed in the great struggle of ideas that is under way, we must first of all know what we believe; we must also become clear in our minds as to what it is that we want to preserve if we are to keep ourselves from drifting.

It was heartening to see such a large and enthusiastic audience spent two days learning about “that ideal of freedom which inspired modern western civilization.” Perhaps there is hope that we may once again find that liberty is what defines America and keeps us prosperous.

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