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of it worth a mere 500 dollars?" Of course, this is a completely irrelevant question: the encyclopedia producer is not entitled to a commission on the uses and benefits the customer might have from reading the volumes any more than the publishers owe a commission to Gutenberg for using his innovation: anymore than the lawyer is entitled to a commission on someone's compensation for a broken leg, unless the lawyer breaks a toe in the process.

A true laissez faire economy has built-in safeguards against this type of usury. Technical development and increased productivity and efficiency are accompanied by a process of diminishing rates of profits of which even pre-Marxian economists were acutely aware. A truly free competition is not confined to the relationship between producers and marketers on the one side and consumers on the other side: it also goes on among the producers themselves and. in rewarding the lowest cost production, offers protection to the consumer. It is the perversion of this basic mechanism of laissez fairism that enables our producers and marketers to establish markups that often exceed by far the cost of production.

THE PERIMETER OF PERVERSION

One need not guess at the pervasiveness of these malpractices of our entire economy. Prosecuted by the Justice Department, nineteen leading electrical manufacturers recently pleaded guilty to a wide range of these frauds. They victimized the citizen in more than one way. First, they victimized him in his consumer capacity. Secondly, they victimized him as a tax payer since the conspiracies that artificially and against all rules of laissez faire raised the prices were entered into against the consumers as well as against governmental agencies. The full extent of the fraud can hardly be ascertained since it has unavoidably contributed to a rise in prices of other industries and trades.

(It would be misleading to conclude that the prosecution of the electrical manufacturers testifies to the Federal Government's being a conscientious guardian of the public interest. This case constituted the exception rather than the rule. The courage the Justice Department displayed against a powerful lobby was prompted by the astronomic losses directly caused to the Government itself. But it is rather doubtful whether even this alone would have sufficed to insist upon obedience to the law by our economic tycoons. Usually, such actions on the part of the Government result from the pressure of another, competing lobby whose influence is stronger than that of the party against whom the prosecution has been incited. It would, therefore, not be surprising were we one day to read in someone's diary what ulterior motives and behind-the-scenes intrigues were involved in making the Government enforce the law in the case of the electrical manufacturers. As a matter of fact unadulterated Government interest in combating fraud and usury, even to the completely inadequate degree to which frauds and usury are outlawed by our statutes, is absolutely unthinkable and impossible within the prevailing political structure of America, because this would involve challenging virtually the entire economy of the country, practically all of its manufacturers and traders and their economic practices.)

As widespread as price fixing conspiracies are, not all of them are necessarily explicit. Competition is as often squelched through tacit price fixing agreements as through explicit ones. Even when the rate of profits on a given product is still subject to competition among individual manufacturers, this does not necessarily preserve the consumer protecting economic checks of laissez faire.

Protection of this kind is offered only when the entire price of a product is open to competition. Only such total competition can encourage the manufacturer's interest in searching for less expensive, more effective and more satisfactory production and marketing procedures. This, however, is not the situation that prevails even in those sectors of our economy that cannot be accused of explicit price fixing conspiracies. Because it is a fact that the American manufacturer takes for granted that he must have a return for his investment. No matter how wasteful his production cost, no matter how disproportionate his promotion program (and the weaker its merits the greater the promotion), no matter how unsatisfactory his product, he is not dissuaded from producing and marketing it, knowing full well that his "competitors" follow the same procedures.

Normally, in a free economy the manufacturer attempts to work on a cost plus basis. He computes all costs involved in the manufacture of his product, adds to it a margin of desired profit and attempts to market it at that price. However, neither his investment nor his profit are completely safe. When his product reaches the market, it will have to compete with the products of other manufacturers. If they have employed a more efficient and economic process of production, or if they have attained a higher product quality, he may not only make no profit but even lose his investment. Ultimately, therefore, his product will not be paid for on a cost plus basis but according to the interplay of supply and demand.

Yet there are no laws in this country to protect laissez fairism against the tacit conspiracies of price fixing which are as damaging and perverting as the explicit conspiracies-and even more universal.

EXPLOSION OF THE INFLATED BALLOON

The unrelatedness between investment and profit reaches new heights as a result of general attempts to circumvent the spirit if not necessarily the letter of tax legislation. The manufacturer's (and not only the manufacturer's) price was arrived at by turning the tax pyramid upside down. First he considered how great a profit he must make out of his business pursuit. If his ambition is, let's say, to wind up with an annual profit of 50.000 dollars, a consultation with his accountant will quickly tell him what his gross profit must be in order for him to retain a 50.000 dollar net profit. The taxes he is expected to pay will thus be passed on to the customer as if they were not a part of his profit but of his actual production cost. The universality of this calculation accords complete protection to all participants and the profit-for-taxes part of the price is thereby armored against all competition. In consequence, while on the surface the businessman may be paying very high taxes. in actuality they do not compromise his own personal net profit one bit.

Of course, it was the intention of the tax legislation to collect a part of his profit, but this was circumvented by him. Ask a frank businessman, even a professional man, on what merits he claims a rather disproportionate and exorbitant rate of profit and he will tell you that in order for him to retain a single dollar after taxes, he must earn several dollars. As if it were the intention of tax legislation to tax not his profits but only the customer and the patient. In the next step, however, he forgets that he has increased his ratio of profits out of all proportion as a means of protecting his desired income against taxation: now he refuses to act as the middleman between the customer and the Internal Revenue. He starts conceiving of all the gross profit, including the part that was intended to cushion him against taxes, as his potential net profit were it not for the tax collector. His complaints against high taxes are least of all inhibited by the fact that in actuality his own profit is well armored.

Since the perversion is almost universal very few people benefit from it: the exorbitant profits their usury brings them are absorbed by the usury to which they are subjected in turn. Occasionally, there are great discrepancies between the degree of usury one exercises and the degree he is subjected to. They still offer opportunities for quick, astronomic enrichment. Its low beneficiaries reach the summit of wealth at a fantastic cost to the entire nation whose astronomically inflated prices confront, on the international market, the prices of economies in which markup is in a reasonable proportion to production cost. When this encounter becomes too unbearable to the foreign trade of America, there is only one solution: military defeat of the competing national economies. Pre-World War II Japan provides the most classical if tragic case in point.

THE HUMAN DAMAGE

Even more serious in the human damage caused to the mechanic, his employer, his landlord, physician, lawyer, druggist, in a word to the entire society. The price my mechanic paid in human values by charging 13½ times his actual earning was devastating. It consisted of a refutation of man's joy in creating. It buried his pride in seeing the fruit of his labor. It deprived him of the encouraging knowledge that what he made enriched the lives of other people. It took away the true purpose of his 8 hours in a temple of creation. All this has been replaced by nothing but a mechanism of cheating, an undiscriminating means of laying one's hands upon money. And even this was an illusion, an empty, economically meaningless illusion, because the money so gained will be so spent. He is not the only cheat around: rather he is cheating merely to keep pace with others. What a poor, deprived soul he carried away with him after the work day was over! How little human sensitivity was left within him now to go home and make the most of his relationship with his wife and child! How will his mind, for sight hours focused on nothing but "getting money", suddenly reverse itself and in his after-work hours open itself to new vistas of thought enrichment and beauty absorption?! He will come home neither an enviable husband, nor an enviable father, nor an enviable neighbor. He will try hard in all his relationships to be on the receiving side, unaware of how tragically he keeps shortchanging himself. He may slowly if frustratingly be gaining in his material standard of living but his culture will essentially remain a tooth brush culture. Neither the shinier shoe, nor the more modern furniture in his house will be accompanied by a concomitant refinement of the mind and soul. His achievements will be exhibitionary, not inward. And, to top it all. he will become a modern neurotic, angry at the world and all the people around him that engage him in such a never ending and never resolved struggle. Soon he will be reflected in our national statistics as one among the multitude of mentally maladjusted, neurotic and psychotic people.

Of course, such mechanics can be found everywhere, but not everywhere will his type be representative of almost all mechanics. Furthermore, in our society he is as representative of his peers as his psychological twins are representative of their fields of endeavor.