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Limited Government and Individual Enterprise and the Profit Motive

Soundness Ethically, Morally, Socially and Otherwise

The traditional American philosophy and system of limited government require strict limitation of the power of the Federal government, in the economic field, to regulation in the particulars specified in the Constitution--excluding any control by government of the people's economic activities, according to the controlling intent of those who framed and adopted the Constitution in 1787-1788 and thereafter each of its amendments. This economic aspect of the philosophy and system is entirely in harmony with the other aspects--notably the related ethical, moral and social aspects in their broadest and most inclusive connotations. Brief consideration of this view is of particular significance and value at this point.

Individual Enterprise, as contemplated and featured by the traditional American philosophy and system, means private, competitive, individual enterprise or activity concerning things economic. The soundness of this philosophy and system as a whole--ethically, morally, socially and otherwise--necessarily characterizes each and every one of their constituent parts, including Individual Enterprise.

The fight to enjoy the freedom of Individual Enterprise, for private profit, together with the intimately related right to private property, constitute the main elements of Man's economic liberty. This right to economic liberty is the inseparable and indispensable economic aspect of the indivisible whole of Individual Liberty. As Jefferson stated in his first annual Message to Congress in 1801:

"Agriculture, manufactures, commerce, and navigation, the four pillars of our prosperity, are the most thriving when left most free to individual enterprise."

Jefferson's statement holds true equally as to all other parts of the economic realm, according to the American philosophy. Benjamin Franklin expressed a similar view (perhaps about 1766) in his "Remarks on the Plan for Regulating the Indian Affairs" as follows:

"It seems contrary to the Nature of Commerce, for Government to interfere in the Prices of Commodities . . . It therefore seems to me, that Trade will best find and make its own Rates; and that Government cannot well interfere, unless it would take the whole Trade into its own hands (as in some Colonies it does), and manage it by its own Servants, at its own Risque."

During the colonial period, the British government exercised full control over major aspects of the empire's economy and manipulated trade to Britain's benefit at the expense of the economy of the colonies. Some of the ethical, moral and social aspects of this part of economic Liberty--the Individual Enterprise part of Man's Freedom in the economic realm--as viewed by the traditional American philosophy, will now be considered.

First, Individuals must deal with each other by free choice, by mutual and voluntary arrangement, so that the result can be mutual trade for mutual benefit in the light of rational self-interest, with due respect by each for the other's equal rights.

Second, the gain permitted by the private-profit feature of the Individual Enterprise system is The Individual's reward for giving superior service, or superior benefits (of the product purchased), to those with whom he deals--offering them what they prefer to buy in the face of competition with all other offerings. The more the sales and resulting profit he makes, due to the greater value he offers, and the more firmly his superior service becomes established through "repeat" sales to well-satisfied customers, the greater the proof of the value of his services to them as well as to society, to the general welfare, in various ways. This special service, in some instances, takes the form of making various standard items offered more conveniently available to the customer, as in the case of the neighborhood drug-store; the special convenience is the special service. The seller's successful demonstration of sound practices and superior standards helps to influence others to emulate his example and thereby to raise the level of performance by other sellers. This gradually improves the material environment of the people generally, directly and indirectly in a number of ways, while giving evidence of the soundness of the system and making its foundations more secure economically and in the minds of the people, which helps to form beneficent customs and traditions.

Third, Man's freedom in the economic realm--that is, freedom from Government-over-Man--including the freedom of the "free market" economy operating on the basis of the private-profit motive, presupposes the existence of an ethical environment. Such an environment is created by the multiple, beneficent influences within any group, neighborhood, community and society stemming from all of the sound and constructive aspects of life. These influences include, for example, the religious, ethical, moral, social, educational, civic, fraternal, political, as well as the material. An additional and most compelling factor is self-interest based on the desire of The Individual to be known and accepted as an honorable, dependable and entirely worthy participant in the activities of the society--including mutual-trade transactions. In the background always is fear of society's potential disciplinary measure--fear by an offender of being driven out of business by group and community ostracism due to any dishonest or unfair treatment of others, including grossly avaricious conduct.

The potency of the foregoing elements combined, contributing to self-discipline among traders in the "free market," can be readily understood by any one familiar with neighborhood and community life in any locality in America, viewed traditionally. It needs to be kept in mind that any large community, even a city, is merely an aggregation of a number of such neighborhoods. For instance, even in a huge section of a big city such as the "Wall Street" financial community in New York City, nothing is more valuable than a man's reputation for probity ("his word is as good as his bond") and nothing is more disastrous for him in business than publicity of his violating an agreement; and all the more true the smaller the community.

A man's reputation for honest dealing is not only a big asset in economic life but so vitally important to profit-making over the years that the number of these who offend seriously against community or trade-group standards are relatively few indeed. The percentage of such offenders is probably quite similar to the percentage of those who prove themselves unworthy and unacceptable in other ways and in other walks of life. Any instance of an exception, for some special reason peculiar to a particular period or trade or locality, only serves to prove the general rule.

In America the traditional philosophy and system of government--designed primarily to make secure each Individual's unalienable rights against infringement by other Individuals, as well as by government--safeguards against evils in the economic realm such as monopolies through which a person or group might try to disrupt, or eliminate, the freedom of action of others and the free play of the "free market" economy with regard to some commodity or type of business. The worst type of monopoly, government monopoly, through either government control or government ownership, is of course barred above all else under the traditional American philosophy and system. The correctness of the foregoing statements is not affected by the fact that it took time to evolve effective measures to combat the proneness of some men to seek monopolistic control in this or that part of the national economy; nor by the fact that violators are occasionally discovered and punished--their relative fewness being proof of the main point here.

Under the traditional American philosophy and system, the resulting ethical environment in the economic realm helps greatly to give reasonable assurance of ethical conduct by Individuals. This applies to Individuals acting singly, in groups and in organizations such as associations and corporations. This makes the surrounding atmosphere of the "free market" economy in general anything but sordid, evil or degrading to Man. On the contrary, this helps to make it sound, constructive and enduringly fruitful, judged by longtime records of the traditional American system. It has proved to be the most beneficent system of economic operation by a people--from the standpoint of the people in general through the generations--ever devised in human history to serve the supreme end and goal, which are to make fruitful and secure Man's Liberty against Government-over-Man. This means to make secure Man's unalienable rights in general, through the effective operation of his economic liberty as an inseparable part and the material mainstay of the indivisible whole of Individual Liberty. Any exceptions from time to time have only served to prove the rule.

Fourth, as proved by life in any American community, the property (including money) accumulated by Individuals, through operation of the Individual Enterprise system stimulated by the private-profit motive, is generally used soundly. This means constructively and even beneficently in the main. It is used by most Individuals not only for the support of self and of all of his dependents, so they can enjoy continued physical existence (the minimum meaning of life), but also for that supremely important purpose: the support of their unalienable rights in general. By this course, The Individual sets a good example for all others. This encourages all Individuals in the community and in the larger society to stand up for their equal rights, especially the right to Freedom from Government-over-Man, while demonstrating how this can be done successfully. This creates a salutary "climate" conducive to the well-being of Free Man in the neighborhood and in the entire country.

This indicates the impregnable foundation, the firm basis, for the sound ethics of rational self-interest for each Individual. Multiplied by the number of people involved--for the whole country--this contributes to a strong, constructive, enduring community of Free Men operating normally on a reasonably high plane, morally and governmentally, in a manner always consistent with the duty factor of Individual Liberty-Responsibility and with the primary meaning of Individual Liberty--Freedom of Man from Government-over-Man. Again, any relatively few violators of this standard constitute merely the exceptions which help to prove the general rule.

Fifth, as Man operates successfully on the basis of the private-profit motive, he accumulates property beyond the requirements of his and his dependents' necessities and normal life in general, judged by neighborhood and community standards. This generally results in most Individuals making financial and other contributions to betterment of group, neighborhood, community and society at large--to the higher things of life, to be shared by self and others, embraced by the all-inclusive words: "Life, Liberty and the pursuit of Happiness." Such contributions, varying in form and frequency, are made moreover on the voluntary basis of the freedom of choice of Man, free in mind and spirit--much of the time on his own initiative, without request by others. Contributions by way of personal service in infinitely varied ways are commonly made by a multitude of persons daily in the communities of America. This helps greatly to create and maintain the previously-mentioned ethical environment. The average American community has over the generations proved this to be true in such remarkable degree as to cause this aspect of life, in the traditionally "free economy" civilization in America, to constitute a high goal to which other peoples have long looked with amazement and most with admiration and longing. The fact that an Individual's service to community often leads to material benefits to him--for instance, the additional rewards through increased employment by the public in his work or profession due to prominence gained in serving the community--as well as to inner fulfillment, does not alter the Soundness of such service or the integrity of The Individual's motivation in this connection.

The mixture of direct self-interest with indirect self-interest through community service, traditionally so typical of the American scene, is potent proof of the efficacy of the private-profit motive (within an ethical environment) in serving the higher things of life for The Individual and for society--for the "general welfare." This reflects the truth that society's ethical level is but the sum of that of all Individuals, on the average, whether considered from the standpoint of neighborhood, community, region, or country as a whole. (Note especially the Dickinson quotation on page 74, ante.)

Sixth, Man's indulging the demands of rational self-interest, through operating on the basis of the private-profit motive, is in harmony with the "self" factors of self-governing, genuine Free Man. These factors are major elements of Individual Liberty-Responsibility. They are as follows--the spiritual: self-respect; the economic: self-reliance; and the political-social: self-discipline. (See pages 88-90, ante.)

Effective self-discipline by Individuals, in making the "free market" economy function soundly, contributes to the reality of the surrounding ethical environment which is essential to its enduring success. This forestalls and precludes any real, or pretended, excuse for discipline being imposed by the government. In last analysis, this is the best safeguard against Government-over-Man. Self-discipline is a main element of Individual Liberty-Responsibility. It is the alternative to being disciplined, just as self-government is the alternative to being governed.

The foregoing six considerations are, of course, only a part of those embraced by the subject as a whole. They help to clarify the fundamental value of economic liberty--including Individual Enterprise and the related private-profit motive--as an inseparable part of the indivisible whole of Individual Liberty-Responsibility.

A point needs noting here to clarify thinking. It is that the frequently heard term "free enterprise" is not accurately descriptive and involves some misleading connotations. It is an inadequate translation of the French phrase: laissez faire et laissez passer; which, roughly translated, means leave me alone and let me work. This phrase became popular in France generations ago as a protest against the strict and infinitely-detailed government controls of the people's economic activities, such as manufacturing. The term "free enterprise" is often misinterpreted as meaning free in the sense of license--not in the true sense of Free Man operating in an ethical environment and with due respect for the equal rights of others and, of great importance, with freedom from Government-over-Man, as discussed above. The term should, therefore, be avoided in favor of the more soundly and accurately descriptive phrase: "Individual Enterprise"--meaning individual, private, competitive enterprise within an ethical environment, as exemplified by the American scene traditionally, operating always with due respect for the equal rights of others. The foregoing assumes, of course, showing in practice due regard for just laws which are expressive of "just powers" (to use the term of the Declaration of Independence) and designed to protect the equal rights of all Individuals through proper government regulation--as authorized by the Constitution--but not government control, or ownership.

The conclusion, as to this aspect of Man's Freedom, is that on the basis of the foregoing considerations alone--though merely a brief and partial commentary--it must be conceded that the morality and sound ethics of rational self-interest of The Individual are readily apparent and soundly founded. Even this brief discussion proves the point here: that the private-profit motive is sound, constructive and an essential element of the economic system required for the preservation and support of The Individual's God-given, unalienable rights--chief of all Liberty against Government-over-Man.

Any human activities, like human nature, have their weaknesses and imperfections. Though true with regard to the American people's activities in the economic aspect of life, this has to be judged comparatively--in contrast to the infinitely greater imperfections of any alternative, economic system ever devised by Man, especially any other system which could ever be conceived but would lack the prime requisite: Freedom of Man from Government-over-Man, which is of the essence of the traditional American system. The American philosophy condemns this lack and rests secure in its comparative virtue--its infinitely greater value to Free Man. The unsoundness of any unfavorable comparison of this American system with some theoretically perfect system, which has never existed anywhere in the world in all history--a tactic resorted to only by critics who are either themselves confused or seek to confuse others--is so self-evident as to need mere mention in passing and not any discussion.

Audio Stream Bastiat's The Law

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