Dr. Watts is Director of Economic Education, Northwood Institute, a business-oriented college with campuses at Midland, Michigan; West Baden, Indiana; and Cedar Hill, Texas.
Capitalistic industry today stands before Judge Public Opinion charged with various high crimes and misdemeanors. Among the charges are (1) that it makes those who take part in it materialistic in tastes, interests, and ways of living; (2) that it standardizes people — turns them into robots, kills individualism; (3) that it concentrates "power" in the hands of a few who use this power with little regard for the welfare of others.
Those making the charges demand increasing government action to punish and prevent these alleged offenses against the common weal. Unfortunately, all too many Americans are ready to cast their ballots for the prosecution when they enter the polling booths on election days.
Yet, nearly all Americans show by their daily conduct that they really like what modern industry — big and little — does; and the vast majority of mankind look to the most industrialized, free-enterprise nation—the United States — as a Mecca which they would like most of all to visit and if possible make their permanent home.
Most people, worldwide, for example, like what modern industry produces. From chewing gum to cameras, from aspirin to automobiles, they buy machine-made goods. Moreover, they buy, often and abundantly, the products of the free-enterprise elite, that is, the products of the industrial giants; and they generally buy with confidence that they will get a fair deal. Similarly, where they can, millions of housewives go to the super-markets, chain stores, and big department stores for the necessaries of life, as well as for thousands of comforts, gadgets, and sundries from toothpaste to tissues, from soap to stockings, and from vitamins to vacuum cleaners. And when shoppers go to small stores, or dealers, they usually buy goods that big companies, in some way or other, have helped to make.
Millions of these customers also earn their wages and salaries in the employ of the biggest manufacturing, commercial, and financial firms where free-enterprise industrialism is supposedly doing most to turn them into dehumanized robots. Fully one-fourth of the working force of the United States prefer the wages, working conditions, and "fringe benefits" of the big employers; and I never met any of these who seemed ashamed of his employer. On the contrary, they generally appear proud to be associated with one of these outstanding enterprises.
More millions of Americans, including millions of employees and customers, also invest their savings in the stocks and bonds of these big companies. Or they put their money in banks, insurance companies, and other agencies which buy the securities of big companies in the belief that these are likely to be especially safe and profitable ways to invest the funds entrusted to them.
Big Businesses Foster Small Businesses
Millions of small businesses buy, sell, and service the products of the biggest industrial companies; and hundreds of thousands of small producers act as suppliers for the "big boys." For example, the United States Steel Co. buys from 50,000 small and medium-size concerns and sells to 100,000 more.
Thus, small and medium-size establishments do most of the business in the United States, the world’s most industrialized country. A firm with less than 500 employees is a small or medium-size business by U.S. standards. Such firms, together with farmers and the self-employed, account for two-thirds or more of the total work force outside of government service.
The fact is that big business gives rise to smaller businesses. So the "Big Four" in the automobile industry create opportunities for many thousands of dealers in cars and accessories, car "laundries," and garages, and the big oil producers and refineries create opportunities for more thousands of service stations. Furthermore, the growth of big business provides the jobs, income, and materials necessary for new enterprises to develop and market new products. Some of these may rise from a basement or garage to skyscraper status; but they all start small, and most of them remain small.
Without large-scale industrialism and big business, in fact, America would be still in the horse-and buggy age, and so too would be the rest of the world. The industrial giants — railroad companies, producers of steel, aluminum and copper, auto manufacturers, producers of farm machinery and chemicals — these built the foundations of our modern economy, and they are still maintaining our unprecedented affluence.
We should remember, too, that mass merchandising is essential for large-scale industry. The great selling organizations — mail-order houses, department stores, chain stores, and supermarkets — have brought down the costs of trade as the great industrial organizations have reduced costs of extraction, transportation, and processing. These "distributors" are as truly productive and as necessary for economic progress as the mines and factories. The same may be said for finance. Without large-scale banking, investment, insurance, and brokerage there would be neither large-scale merchandising nor large-scale output of goods to market.
But is this affluence provided by modern industry too costly in terms of the human spirit and individual dignity? Does mass production turn human beings into materialistic, standardized robots?
Mass Production Means Mass Prosperity
True, "mass production" means standardization of products and methods, and this mass production implies a mass market. It is production for "the masses." At first thought — without looking at the facts — this seems to mean standardization of people — turning them into faceless non-persons. Yet, this mass production by way of standardization is precisely what the communist rulers of Russia and China want for their subjects because it means mass prosperity.
What big concerns arise in freedom to serve only a wealthy few? In freedom, big business must produce mainly for factory workers, farmers, stenographers, school teachers, bookkeepers, sales clerks, mechanics, waiters, government employees, carpenters, and plumbers, along with other modestly paid producers and their dependents. These buy most of the products of industry because they get most of the total income of this nation.
And let us not forget that the pensioners and "reliefers" also have radios, TV sets, and drip-dry shirts, along with the necessaries of life. If any American goes barefoot, it is from choice, not necessity, for our mass production has made shoes so abundant that Americans commonly give away or throw into the trash cans better shoes than the shoddy new footwear the victims of Communist "planning" can buy in their dingy shops.
But besides an abundance of the necessaries and comforts of life, and besides the great variety of recreations and entertainments, free-enterprise industry and business provide the high purchasing power and leisure necessary for cultivation of the arts and literature, for schooling and research, for books and free lectures on every conceivable subject. They provide these on a scale never known before the advent of modern industrialism, and have made them available even to the poorest of our population.
The victims of communist rule covet these fruits of free-enterprise capitalism; and their rulers try hard to establish the same great industries and marketing organizations that we have in the United States. And they do get a certain bigness and large-scale industry. But their industries, big and little, lack efficiency; and lacking efficiency, they progress only at a painfully slow rate — and I do mean painfully. Consequently, communist countries lag behind the U.S., economically, as far as they did 30 or 40 years ago.
But we come back to the question: does mass production and mass prosperity produce a mechanized, standardized, collectivized, materialistic people?
Industry Fosters Personality
In the answer to this question we find a strange paradox. In freedom, mass production actually personalizes — individualizes — both consumer goods and the uses we make of them. It continually creates a greater variety of occupations and greater opportunity for individuals to choose the kind of work and working conditions which best fit their particular interests and abilities. It provides increasing opportunities for intellectual and artistic pursuits, for extending each person’s circle of friends, for increasing awareness and sensitivity, that is, for the development of personality. In short, modern free-enterprise industrialism reduces the amount of drudgery, the long hours of monotonous, mind-dulling toil, and the subsistence levels of poverty which held the vast majority of mankind at a near-animal level of mind and spirit for untold a eons of the past. It enables humans to become persons.
Furthermore, it is the opportunity for individuals to satisfy a vast variety of tastes and pursue countless individual interests — intellectual, artistic, literary and social, as well as recreational — that provides the drive and enterprise which in freedom gives rise to rapid economic progress, with its mass production and giant business organizations.
Look in on any typical American assemblage — a roomful of students, a concert audience, a crowd of diners — what do you see? Outside the ranks of the few militant revolutionaries, it is hard to find two persons dressed in any way alike. Similarly, if you ask Americans about their life experiences and expectations, their work and their leisure pursuits, you will find individual variations too numerous to list.
Where else but in highly industrialized America, the land where most of the giant businesses arose and flourish, will you find the variety of consumers’ goods offered for sale, the variety of jobs, the variety of leisure pursuits, the proportion of the population in colleges and universities, the amount and variety of scientific research, the wide circles of friends possessed by everyone who wants them, the amount of travel, and the widespread awareness of human problems and opportunities?
And, insofar as other nations permit freedom for private enterprise, they correspondingly provide opportunity for development of more humane and individualized personalities.
Communism Standardizes and Dehumanizes
This points to a seldom-noted paradox: When they gain power, as in Soviet Russia and Red China, socialist authorities impose on their people, by force, the very same mass production methods which they say make robots of workers in capitalistic countries. In fact, they often carry the standardization much further than in capitalistic countries and in more burdensome fashion, as, for example, in use of the manual labor of women street sweepers and construction workers. But despite thefts, loans and subsidies from capitalistic countries, and despite ruthless coercion to get labor and capital from their subjects, they fail to achieve the prosperity necessary for individualized living —except for a small minority of privileged bureaucrats and their favorites of the moment (ballet dancers, mistresses, champion athletes or chess players, and a few scientists).
The reason for the continued deprivations and standardized ways of living for the masses in communist countries should be obvious. Centralized planning, imposed by legal force, suppresses individual experimentation, reduces individual incentive, and denies individual responsibility. Indeed, suppressing individual freedom to experiment is precisely what socialists mean by "planned production."
Communists regard people as no more than complex machines to be manipulated by physical means as are inanimate tools. Or they look on the proletarian masses as rather dull-witted creatures to be fed, stalled and herded about as domesticated animals. Therefore, although communist governments impose on their subjects much standardization and some mechanization, they so dehumanize their people that they lose the individual enterprise necessary for mass prosperity and general economic progress. They have achieved a measure of technical ("material") progress; but they provide less opportunity for developing individual talent, personality, character, and intellect than prevailed three generations ago under czarist rule.
Despite the standardization of machines, materials, and gadgets, free-enterprise industrialism provides increasing opportunities for "the masses" to develop, individually, the highest human qualities. This freedom for individuation in these United States is precisely why we have so much big industry, big business, mass production, mass prosperity, and mass opportunity. It releases human energies and imagination which are the driving and directing factors in progress.
Why Communist Economies Are Backward
Under socialism and communism, on the other hand, the "planners" dictatorially restrict individuation of products and personal pursuits. As a result, they fail to develop the mass production and universal affluence which they so much covet and try to produce without regard for human life and human dignity. It is under socialism, or communism, therefore, that we find the actual concentration of power and rampant abuses of power. Only under socialism or communism can the few force the rise of great industries to serve their whims about what standardized goods their subjects should have, including the weapons for imperialism, war, and their own enslavement.
For these reasons, the victims of this concentrated power remain poor — drably dressed, badly housed, misinformed, restricted, standardized, materialistic and collectivized. As a consequence, their masters must maintain mine fields, great walls, and millions of armed guards to keep their people at home.
If we can understand these facts and the reasons for them, perhaps we can enlarge the freedom for enterprise which this and other "capitalistic" nations have so well demonstrated is necessary for all truly human ("humane") progress.
Freedom Depends on Understanding
I say we can "enlarge freedom" advisedly; and I mean that we can enlarge it everywhere that humans congregate.
Complete freedom is as unattainable as complete understanding. In fact, we gain in freedom —freedom from trespass, freedom from infringement of individual rights — only as we progress in understanding of human nature, human conduct, individual rights and individual responsibilities.
How many Americans, for example, understand that minimum-wage laws restrict the freedom of our young people and the less skilled adults? And how much thought do we give to the demoralizing effects of this tragic denial of opportunity to bear and discharge self-responsibility?
We know that "unemployment" — useless or destructive dissipation of human energies — demoralizes its victims. But how often do we hear or read of anyone relating the sudden rise in teen-age unemployment, especially among black teenagers, to the hikes in minimum-wage rates in the past 20 years in this country?
Yet, that relation is clear and obvious; and time and time again, research has verified it as well as any cause-and-effect relationship can be demonstrated in human affairs.
We hear and read that "welfare" is demoralizing millions of our fellow citizens. But how often do we stop to think that the confiscation of some two-thirds or more of business profits by taxes is restricting the freedom of every competent employer to offer jobs to unemployed job-seekers?
I repeat: in freedom, industrialism provides increasing opportunity for humans to develop morally, intellectually, physically, and esthetically; and this freedom is far from complete in these United States or anywhere else on earth. But although it is an unattainable ideal, it is imperative that man pursue it. For that pursuit requires of us the pursuit of understanding that is the very wellspring of all human progress.
Wisdom is the principal thing; therefore get wisdom; and with all thy getting get understanding.
And ye shall know the truth, and the truth shall make you free.