All Commentary
Sunday, February 1, 1976

The Businessman and Free Enterprise

Dr. Rogge is Distinguished Professor of Political Economy of Wabash College. This article is from a speech of September 16, 1975, before the Indianapolis Rotary Club.

The question before this house is not whether the survival of capitalism is in doubt (this is admitted). The question for us, as it was for Lenin at an earlier time, is What To Do? His concern was how best to hasten the collapse of capitalism; our concern is how to postpone or ward off that collapse.

Frankly, I feel more at ease as the diagnostician than as the therapist. Cancer is still easier to idenify than to cure, and so is overexpanded government. Admittedly, diagnosis must usually precede therapy. After a lengthy diagnostic examination, the doctor looks up at the patient in some puzzlement and asks, “Have you had this before?” To this the patient replies, “Yes,” and the doctor says, “Well, you’ve got it again.” Quite obviously something more than this is needed. Proper therapy usually rests upon diagnosis of the specific problem, including some notion of how the patient got into his fix, whatever it might be.

I begin then with the question “What is our problem?” In an earlier sentence, I identified the problem as that of over-expanded government. This is not really correct for the purposes of therapy. Over-expanded government is, in fact, but the most noticeable, objectively-evident symptom of our problem. Our problem is in the form of a set of ideas whose implementation calls for the use of force and government in that agency of society given a monopoly of the right to use force. For so long as those ideas are dominant in society, Behemoth will continue to grow. Nor is it useful for those who hold and espouse those ideas to publicly regret the associated growth in government and all its instrumentalities. Thus Senator Edward Kennedy has said recently that “one of the greatest dangers of government is bureaucracy,” and Senator Gaylord Nelson has said that, “The federal bureaucracy is just an impossible monstrosity.” All well and good but that growth in bureaucracy which they so rightly lament is the necessary and inevitable outcome of the ideas that these two (and others) have so well and so convincingly espoused.

Man and Superman

What are these ideas that produce bureaus as larvae do moths? They can be expressed in various ways but their essence is to be found in the following related propositions :

There exist individuals and groups in society who know not only what is best for them but what is best for others as well ; and

This wisdom, when combined with the coercive power of the state, produces “the good society.” An accurate verbalization of these ideas is to be found in the statement of Newton Minow, who said as chairman of the agency controlling television in this country, “What is wrong with the television industry in this country is that it is giving the viewers what they (the viewers) want.”

Compare this, for example, with these words from Adam Smith’s Wealth of Nations:

What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.

Some of you may see in other idea-systems (such as economic determinism, or relativism or envy or what have you) the real source of our malignancy. God, my wife, my children and all of you know that I am fallible and perhaps I have chosen poorly in this case.

What I am prepared to argue in a more strenuous way is my conviction that our struggle is at the level of ideas and not that of men or institutions.

In the words of the celebrated John Maynard Keynes :

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is generally understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.

My first point then is that we are involved in a war of ideas. My second is that our target is not the masses but those men and women in society who deal in ideas and who shape the thinking of the masses. In the words of one of the great idea men of this century, the late Ludwig von Mises :

The masses, the hosts of common men, do not conceive any ideas, sound or unsound. They only choose between the ideologies developed by the intellectual leaders of mankind. But their choice is final and determines the course of events. If they prefer bad doctrines, nothing can prevent disaster.

My third point is that the ideasthat finally count are those that relate to such fundamental questions as the nature of man, his purpose here on earth and the moral character of human action. Arguments on the basis of economic efficiency are not alone capable of saving capitalism.

According to Joseph Schumpeter : “. . . it is an error to believe that political attack [of capitalism] arises primarily from grievance and that it can be turned by justification. Political criticism cannot be met by rational argument. Utilitarian reason is in any case weak as a prime mover of group action. In no case is it a match for the extra-rational determinants of conduct. The stock exchange is a poor substitute for the Holy Grail.”

Ideas Shape Society

I have now enumerated my assumptions as to the nature of the task in which we are involved. I have argued that we are really involved in a struggle for the souls of men, that in that struggle it is ideas that count and that the questions that are relevant are largely ethical in nature. Moreover, I have argued that our target is not the masses but those who live by the spoken and written word and who thus largely shape opinion in society.

If these assumptions be even

roughly valid, what then is implied as to the role of the businessman in the fight to save capitalism? Before attempting an answer to that question, let me consider one that seems to precede it. Should the businessman as businessman even get involved in the struggle?

A number of factors would seem to indicate a negative answer to that question. To begin with, the businessman is not typically hired by the stockholders to carry on programs of social reforms; he is hired to add to the net worth of the company. Admittedly the net worth of the company may be adversely affected by particular acts of government, and the stockholders would surely approve of management action in opposition to those specific threats to profits -for so long as the potential gain exceeds the cost. At the same time, the company may often stand to gain through specific acts of government, including actions that work against the principles of capitalism. Is it a tariff against foreign steel producers? or an export subsidy that would increase the demand for the company’s products? or a government-enforced price or interest rate that adds to the profits of the company? How now the businessman? How can the President of the Mobil Oil Company be a convincing spokes-man for free enterprise when his job seems to require that he oppose immediate decontrol of oil prices? How can the President of General Electric stand four-square for capitalism, yet support export subsidies for many of the products sold by his firm?

The Businessman’s Dilemma

The fact is that there is hardly a businessman in this country who is not receiving favors from government in one way or another. The fact that this is true of most other elements in the society, including his critics in the ranks of the intellectuals, does not really change the nature of the businessman’s dilemma. His job may seem to require of him that he support specific government intervention in the economy of precisely the kind that, in the fight for men’s souls, he must condemn as general practice. Knowledge of Kant’s Categorical Imperative – do only that which you would be willing to see done by all – may get you an A in a college course in philosophy but may get you fired if you attempt to practice it as a businessman.

In other words, his very position may seem to require of the businessman that, in the struggle against government intervention, he be as often a part of the problem as of the solution. Moreover, how can he face those he is attempting to persuade to hold the capitalist faith when his own hands are so obviously unclean?

This is not a plea for the businessman to abjure all government assistance, even at the cost of dollars and perhaps survival. With Adam Smith, I assume that businessmen (as all others) are rarely prompted by general benevolence. In fact, with Adam Smith, I would urge us to “examine any proposal which comes from this order of men (the businessman) not only with the most scrupulous but with the most suspicious attention.”

A second reason for a possible negative answer to the question of whether the businessman should get into the fight to save capitalism is that he is usually an amateur in the practice of the arts required by that struggle. The art required is not that of making or selling men’s suits or aircraft motors; the art is that of the dealer in abstract ideas, including particularly systems of ethical judgment. Don’t misunderstand me ; it is not that the businessman is unintelligent. I yield to no one in my respect for the great practical and theoretical intelligence required for effective entrepreneurship. It is simply that his intelligence is not applied, day in and day out, to the kinds of questions and considerations that are at the center ofthe argument. This is not his turf, nor is he usually adept at the word games played on it.

What I am saying in essence is that here, as in most of life, the prizes (in this case, the souls of men) will go largely to those who are specialists in the arts involved. Admittedly there are some such (I could name you a dozen or so) from the ranks of the businessmen, but their skills in the arena of ideas and words are not a product of their business experience but of what they have done on their own initiative to improve their own understanding of the ideas involved here and their skills in communicating those ideas.

Who Stands Most to Lose?

Where then does this leave us? Can the typical businessman do nothing but deplore the growth of government and go on about his task – which may have been made easier in some ways and more difficult in other ways by that selfsame expansion of government involvement in economic life? I believe that the answer to that question is “no” – but I have some real sympathy with those businessmen (and this will be the great majority) who by their inaction say “yes”. After all, as Henry David Thoreau put it, “I came into this world, not chiefly to make this a good place to live in, but to live in it, be it good or bad.” Nor, as I have argued elsewhere, is it the administrator-businessman who has the most to lose from the passing of capitalism. Most of them will end up as administrators of socialist enterprises if and when full socialism arrives. It is the masses who have the most to lose – and who also have the least understanding of that fact.

But for those of you who are interested in doing something as business and professional people to counter the drift to collectivism, here is what I would suggest that might be both useful and consistent with the profit-oriented role for which you draw your pay.

Work with your own staff members and employees. A work force that has some understanding of the market place and of where its own goodies come from may (and it is only a may) be a less troublesome, more effective force over time. Any number of such programs, of varying effectiveness, are now in operation and available for general use.

Work with the appropriate audiences in the communities where you have operations. Here again, there may be some pay-off in terms of a better political environment in which to function. Again, there are a number of such programs now in operation.

Anything more? Frankly, I amnot much impressed by the usefulness of business attempts to reach nation-wide audiences with free-enterprise propaganda.

What else? The “else” is what the businessman shouldn’t do rather than what he should do. Moreover, it requires that the individuals involved must have done their own homework.

In fact, let me say right now that even the first two steps I have identified can do more harm than good if the people selecting and authorizing the operations have not themselves taken the time and effort to decide exactly what it is they believe and why. There is nothing about being a successful businessman (even a very successful businessman) that automatically endows one with an understanding of or an attachment to the principles of freedom – a statement I could support with a hundred examples, if time permitted. In fact, some of the great fortunes of America have been made by those who have learned how to use government intervention to their own advantage.

Examine Your Principles

I cannot emphasize too strongly that the very first thing each of you who wishes to be a truly effective part of this struggle must do is to do your own homework. This requires reading, thinking and, yes, writing. I challenge each of you to go home tonight and put down in brief form your guiding principles in life and their applications in this area of the relationship of the individual to his government. You might also find it interesting to follow that with a list of those things which you and/or your company or group are now doing that are clear or possible violations of those principles.

Am I asking you to immediately cease all ideological wrongdoing? to cut yourself off completely from all areas of government involvement? Were you to do so, there would be literally no way you could eat or move about or keep warm or survive – such is the extent of government’s involvement in our lives. Each of you, in your professional role must decide for yourself the limits of your compromise with the apparent demands of the moment.

Summation and Concluding Suggestions

(1) I am arguing that the first and indispensable step for any person who wishes to be a part of the effort to save capitalism is a determination of precisely what he believes and why. This will usually involve, not just putting down the already-determined, but active study, reflection and discussion. This is your intellectual and philosophical armor and without it you are not only vulnerable but as likely to be a handicap as a help in the struggle as well.

Try as best you can in this imperfect world to live by those principles.

In using your professional role or your company in the struggle, do only those things that seem consistent with the long-run interests of those whose money you are using. Remember, not all stockholders will wish to have their money used in this or any other crusade.

If you wish to play a personal role, apart from your company or professional connection, then you must dig even deeper into what you believe and why ; you must know even more fully the arguments and values of those with whom you disagree; you must continually seek to improve your skill in expressing your ideas and in demonstrating the errors in contrary positions. My guess is that only a few of you will carry through to this level of participation – but it is not a numbers game anyway ; it is a game in which it is the quality of the few that finally counts.

I spoke earlier of the things that you should not do but didn’t specify them. What are they?

Don’t make a pest of yourself by trying to force your free-enterprise ideas down the throat of every passerby – whether in your home, your office or at the cocktail party. In the words of Leonard Read, founder and President of the Foundation for Economic Education, who has taught me everything I know on this and many other questions, “Go only where called – but do your damndest to get good enough to be called.”

You may not be able to avoid involvement in departures from principle but at least don’t lend your voice or your money to the support of those departures. You may have to pay into Social Security or submit to a system of wage-price controls but you don’t have to join committees or groups who support such programs.

In a hundred different ways and forms, the American businessman is aiding and abetting the enemy by continuing his involvement in organizations and programs that are as likely to propose as to oppose extensions of government. Don’t let this reciprocity game you people of substance play with each other or your desire to be a goodguy or what have you lead you to give your money or your name (and hence, by implication, your support) to activities or organizations that are working the other side of the freedom street.

To return to Thoreau:

It is not a man’s duty, as a matter of course, to devote himself to the eradication of any, even the most enormous wrong; he may still properly have other concerns to engage him ; but it is his duty, at least, to wash his hands of it, and, if he gives it no longer thought, not to give it practically his support.

Forgive me if I seem to blaspheme, but even your church and your college should be examined with some care before you bless them with your dollars and your support. You don’t have to prove you are a nice, broad-minded guy by providing the devil with the coal for your burning.

Again to be specific, you needn’t insist that every professor on your old campus think exactly as you do but I believe it completely appropriate for you to find out if the general idea system that you believe to be best is well and ably represented in the ranks of the faculty.

I close this sermon with these words: Avoid anger, recriminations and personal attack. Those with whom you are angry are probably (taken by and large) at least as filled with or as empty of virtue as you. Moreover, they are the very ones you might wish later to welcome as your allies.

Avoid panic and despair ; be of good cheer. If you’re working in freedom’s vineyard to the best of your ability, the rest is in the hands of a higher authority anyway. If you can see no humor in what’s going on (and even at times in your own behavior) you’ll soon lose that sense of balance so important to effective and reasoned thought and action.

Finally, take comfort in the thought that the cause of freedom can never be lost, precisely because it can never be won. Given man’s nature, freedom will always be in jeopardy and the only question that need concern each of us is if and how well we took our stand in its defense during that short period of time when we were potentially a part of the struggle.

  • Benjamin A. Rogge (1920-1980) was Distinguished Professor of Political Economy at Wabash College, Crawfordsville, Indiana. He held degrees from Hastings College (A.B.), the University of Nebraska (M.A.), and Northwestern University (Ph.D.), and was a member of both the American Economic Association and the Mont Pelerin Society. He had a gift for rendering into clear English the vital principles of economics, all with a touch of unforgettable humor. He opposed compulsory, state-funded education and sought market alternatives. Among his intellectual mentors was Nobel laureate F. A. Hayek.