Free Enterprise: a Definition

Mr. Zarbin is an assistant city editor at the Arizona Republic in Phoenix, Arizona.

My belief as a newspaperman is that freedom of the press, along with all of the other freedoms we are supposed to enjoy, cannot exist permanently in anything other than a society whose economic system is based on freedom. This means I support free enterprise.

But what is free enterprise?

Webster’s Seventh New Collegiate Dictionary says free enterprise is "freedom of private business to organize and operate for profit in a competitive system without interference by government beyond regulation necessary to protect public interest and keep the national economy in balance." I disagree with the definition. It says that private business should be regulated for two reasons. The first of these is "to protect public interest" and the second is to keep "the national economy in balance."

What is meant by the "public interest"? If the public interest means that government should make its presence known so that robbers, thieves, burglars, and other cheats won’t interfere with the peaceful activities of people as they go about their business, then I’m all for government. If the public interest means that government should bring about the peaceful settlement of contractual disputes in a court system, again I’m for government.

But if it means, as it has come to mean, that government should determine the wages that should be paid workers, that government should determine the prices of goods and services, that government should set profits, that government should create and enforce special favors for certain businesses, industries, and other groups, then I’m totally opposed to government involvement in the "public interest." Yet, that’s what the public interest has come to mean today.

The public interest now means whatever the men in power and authority want it to mean. One day in January it was in the public interest to regulate almost all wages, prices, and profits; the next day it was in the public interest to abandon almost all of these controls. Who can say what the politicians in Washington will decide is in the public interest tomorrow? And four years from now, if the Democratic Party succeeds to the presidency, will the public interest be different than it is with a president from the Republican Party?

The Freedom to Choose

You’ll notice, I hope, that the things I believe are in the public interest — protecting people from any who would steal from them and resolving disagreements in the courts — are intended to preserve the freedom of everyone to act peaceably in his own behalf.

On the other hand, the things of which I disapprove — government regulation of wages, prices, and profits — interfere with the freedom of peaceful people to decide their own business. Individual choices and judgments have been replaced by people in government who think they are better able to make such decisions. Of course, I reject such notions, because no one is better able to decide what is best for each of us than is the individual himself.

The second reason why private business should be regulated, according to Webster’s definition, is to "keep the national economy in balance." By what authority was the Federal government given the job of keeping the national economy in balance? Is there some statement to this effect in the Constitution? Of course not. And what does "balance" mean? If the economy is in balance today, will it not be in balance tomorrow when a new set of politicians come to power?

Government has no more moral or legal authority to "keep the national economy in balance" than it has to act in the "public interest," beyond protecting life, liberty, and property. Keeping the national economy in balance and determining the public interest, beyond protecting peaceable citizens, are assumptions of authority never intended for the Federal government by the men who founded this nation.

So far as I am concerned, the intention of the Founding Fathers was to provide an opportunity for maximum individual freedom and enterprise through protecting life, liberty, and property. It was left to each person to decide for himself how he was to use his freedom, the sole restraint being that he not harm anyone else. That, I assume, includes not polluting the air we breathe, the water we drink, or the food we eat.

In a Competitive System?

Now let’s take a look at the first part of Webster’s definition, that part which says that free enterprise is "freedom of private business to organize and operate for profit in a competitive system…"

I don’t like the way that is stated. The use of the word "in" — ‘in a competitive system’ — suggests to me that someone specifically designed "a competitive system" in which everyone must operate. It can be said that the writers of the Constitution did establish "a competitive system" by their failure to give government a role in the organization of production and the distribution of goods and services. But what I think the Constitution does, instead, is to establish the conditions for personal freedom — which includes economic freedom.

The Constitution does not decree the manner in which business is to be conducted. The Constitution does not decree a competitive system as such. Rather, the Constitution allows the people to make their own choices about how they will employ their labor. And a competitive system evolved out of their freedom of choice to compete with one another.

If the people wanted, it would have been their right, as it is today, to organize their agricultural and industrial activities on a communal basis. They need not have engaged in competition at all. They might have decided that being their brother’s keeper — that dividing what they produced into equal shares for all, regardless of their efforts — is what they wanted. Some few of them even tried this, just as we have some few trying it today. But they tried it in freedom. They tried it as a matter of the right to decide for themselves. Those who decided against the communal existence had to accept the challenge of the only available alternative: competing in the market place against all others who go there.

That’s why I can’t accept that free enterprise is "freedom of private business to organize and operate for profit in a competitive system…" If the people, in their freedom, had chosen not to compete, they didn’t have to. If the people, in their freedom, had chosen to divide equally what they produced, the word profit might convey a meaning different than it does today. If the people, in their freedom, had chosen not to compete, we might think today more in terms of communal business than of private business.

Forced into Socialism

Perhaps there are exceptions, but for most people I doubt that they voluntarily go into communal or socialist businesses. In countries like Russia, China, Cuba, and Czechoslovakia, the people are forced into socialist enterprises by their governments. If these peoples were given their freedom, I have no doubt that they would quickly return to private business and that the productivity of their nations would quicken. They would return to private business and competition, because this is the way of human nature. Given their freedom, people will work to improve their personal situations. In doing this, so long as what they do is peaceful, they cannot help at the same time improving the conditions of everyone else.

Competition, or a competitive system, is the result of freedom; no government has to decree it. It evolves of its own accord in the nature of men and women and what they do when they feel secure in their lives, their liberty, and their property.

Now I am ready to offer my own definition of free enterprise. I believe free enterprise is the name given to an economic system that developed naturally out of the freedom of individuals to decide for themselves how to use their time and resources. In that economic system, the means of financing, designing, producing, exchanging, delivering, and servicing products are always subject to change, with the character of any change depending solely upon the ingenuity of the owners of the means of production. In free enterprise, government’s role should be limited to policing the market place. Entry into the market place should be unrestricted. Government should not be in the business of granting favors to anyone, such as tax breaks, subsidies, tariffs, franchises, and monopolies.

A Hodgepodge of Intervention

From what I have said, it should be very plain that we do not have free enterprise in these United States. Our economic system is a hodgepodge of government rules and regulations which benefit some people at the expense of others.

If government regulates our economic life, there is nothing to prevent it from regulating every other area of our existence. Economic activity, basically, consists of the things that people do to stay alive. Economic freedom means the right that each of us should have to decide how he is going to earn his daily bread. The only restriction, as I said before, is that one not interfere with the rights of others.

If our economic system is not based on freedom, if we are restrained in our economic activities to what government directs or permits us to do, then we are not free. If we criticize, government might one day cut off our job, or we might be sent to a mental institution for rehabilitation, or we might be sentenced to a slave labor camp.

In these United States government has come to control, through the passage of laws and through the decrees of various regulatory bodies, the economic decisions that should be left to the owners of private property. Besides this, through the power to tax, government can destroy any business or enterprise.

The Press Is Vulnerable

Freedom of the press is especially vulnerable. No publisher can exist unless he is a successful businessman, or unless someone is subsidizing him. In either case, he can publish only as long as he pleases the people paying the bills. Free speech is more difficult to destroy or deny, because speech is just that. But press freedom depends upon the printed word, which means paper, ink, and printing presses. All of these are products of economic activity and, as a consequence, so is freedom of the press.

If our economic system were based on freedom, which means free enterprise, we could be certain that we always would have freedom of the press. But if we persist in making government our master, the day will come when government will control us in everything except our private thoughts.

 

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James Madison

Measures are too often decided, not according to the rules of justice and the rights of the minor party, but by the superior force of an interested and overbearing majority.

From The Federalist Papers #10 

Further Reading

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