Defending the Ethical Enterpriser in an Anti-Business Climate

First Published: 2015-04-24

Executive Summary

(In this article) I argue that while capitalism may “deliver the goods,” but it remains the target for moral condemnation and distain. Reasonable and rational defenses of entrepreneurial enterprise and the free market, however, rarely are made by actual enterprisers in the world of business.

I suggest that there are several reasons for this. First, taking a stand in defense of capitalism is considered “bad for business.” It is better to remain quiet or join the bandwagon of anti-market fads and fashions.

Second, too many businessmen do not know how to persuasively articulate a defense of their own actions in bringing to market more, better, new and less expensive goods in an arena of peaceful competition and voluntary exchange.

Third there are, unfortunately, too many entrepreneurial immoralists, that is, those who intentionally wish to use government to advance their own business interests, while maybe consciously knowing that they only can do so by plundering others through subsidies and anti-competitive regulations.

Fourth, there are those who may be labeled the entrepreneurial amoralists. That is, those who have so long lived in the interventionist-welfare state that they have lost (or never had) a notion of a distinction between earning income through the free transactions of the marketplace versus through the redistributive tools of political power.

Fifth, there are those who might be called the entrepreneurial ethical pragmatists. That is, those who may not wish to be involved in the lobbying intrigues for power and privilege, but find themselves forced to as a “defensive” tactic, since if they do not gain a privilege or a special benefit, someone else will to their market position detriment.

Nonetheless, the case needs to be made for the ideal of the morality of the free market system under which there would be favors and privileges for none and, instead, equal individual rights to life, liberty, and honestly acquired property for all.

If one wishes have a glimpse of the entrepreneurial hero in a world of anti-business and anti-capitalist attitudes and policies, a good place to look is in the world of black market enterprise in parts of Asia, Africa, and Latin America. Enveloped in political systems of government power, privilege, plunder and corruption, these entrepreneurs operate “underground” at great risk to their freedom and fortunes, to bring to market the vast number of everyday goods and services without which daily life would often be intolerable for multitudes of ordinary people.

Guided by the self-interested profit motive, they are the innovators, marketers, and risk-takers who undermine and weaken the control and power of those determined to plunder others for the benefit of those closest to government authority.

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Defending the Ethical Enterpriser in an Anti-Business Climate

Richard Ebeling Ph.,D.

In spite of the great advances in reducing poverty and increasing the freedom and dignity of hundreds of millions of people around the world, the political and cultural climate virtually everywhere around the world is one of anti-business and anti-capitalism.

Yet, it is wherever the forces of free market capitalism have been set freest, along with a modicum of acceptance and even respect for business enterprise, that the most dramatic strides have been made in abolishing the worst and most squalid material conditions of mankind.

Businessmen Deliver the Goods, But are Morally Condemned

Profitable mass production has come from satisfying the needs, wants, and desires of the mass of humanity. If in past times the mass of people bond to the land were compelled to serve the wants of the few who through conquest and plunder lived as the lords of the manor, under free market capitalism those who take on the role of entrepreneur and enterpriser have no source of personal wealth other than their successful catering to the wants of the many – the large consuming general public.

One would have thought that an economic system that generates a situation in which the creative, industrious and innovative members of society would have incentives to apply their talents and abilities to improve the conditions of others, rather than to use their superior qualities to rob what they neighbors have produced, would be hailed as one of the greatest institutional arrangements ever come across by man.

Instead, the more that the creative and the industrious succeed in this peaceful and productive way, the more they are condemned and accused of some form of economic “crime against humanity” due to the profits they earn in improving the circumstances of all the others in society.

In such an environment, those who pursue leadership positions in business, who demonstrate entrepreneurial excellence in designing, directing and marketing better products, new products, and less expensive products, find themselves the targets of condemnation, ridicule, and even hatred from the ranks of those whose lives are made better due to their enterprising actions.

The intellectuals, the news pundits, and self-appointed “critics” of the existing human condition are always pointing the finger at the businessman as the source and cause of all of man’s miseries, frustrations, disappointments and dissatisfactions.

The intellectual and social elites among them dream dreams of “better worlds,” if only they were in charge of mankind’s social arrangements. Businessmen are, in their eyes, the “stumbling block” to societal reconstruction because the institutions of private property and private accumulation of wealth stand in the way of their having full access to using the material and other means of the earth to implement their conceptions of “utopia,” if only they were in charge of the desired social engineering projects.

Businessmen Fear Bad Publicity If They Defend Themselves

Rarely do members of the business community speak up in defense of their position and place in society. There are several reasons for this. First, it is considered “bad for business.” Taking political stances on public policy issues can place private enterprises in the crosshairs of the media and ideological interest groups who will proceed to vilify them. You don’t maintain or improve your “bottom line” by alienating your customers by publically defending people or positions with which the majority of opinion-makers may disagree or condemn.

And if public policy positions are explicitly or implicitly endorsed or advocated by businessmen, it’s considered better and safer to do so in ways that demonstrate your “social awareness” on those issues. This boils down to taking sides with the fashionable fads and fashions that the media and the “beautiful people” in the celebrity world have adopted as “consciousness raising” good causes.

Arouse the ire of these groups and financial ruin and governmental regulatory attention may come your way. Going along to get along is considered the path of least resistance in the business world no less than in other aspects of everyday social life.

Businessmen Lack Knowledge to Morally Defend Themselves

Second, those in the business world are no different than most of the rest of us, in that they have been educated and acculturated in the same social environment as everyone else. They have gone to the same public or private schools; they read or listen to the same mass media news outlets; they watch the same movies and are influenced by the same political, economic, social and cultural ideas and attitudes as all others in society.

In other words, they may work in business, they may be entrepreneurs and enterprisers who startup, guide and manage businesses, but they live in the same social milieu as us all and they, too, have absorbed and accepted many of the same prejudices and biases about “capitalism” as the rest.

As a consequence, they may pursue profits and entrepreneurial excellence, but if challenged or questioned about the justification or morality of how and what they do, they might say, “Well, that’s how business operates, that’s how I make a living.” However, few such individuals can articulate and demonstrate the “rightness” and goodness of their role as businessman in the division of labor.

Guilt, uncomfortableness, and embarrassment are likely to surround any attempted defense of their place in the economic system. “Well, of course, we need environmental regulations to prevent destruction of the planet.” “Certainly, its government’s role to reduce ‘excessive’ inequality.” “Its only ‘fair’ that the government gives a ‘helping hand’ to those who cannot make it in the ‘system’.”

The Sanction of the Victim

Long ago the individualist philosopher and novelist, Ayn Rand, referred to this type of stance and response by businessmen to such criticisms and attacks on them as, “The sanction of the victim.”

The victim whose only “crime” is working honestly and creatively, and whose actions help generate the wealth, ease and comfort that modern market society offers to the vast majority of its members is expected to apologize and ask forgiveness for the very qualities that centrally assist in the improvement in the circumstances of mankind.

The problem is, precisely, that many in the business community do not know how to defend their own actions and their outcomes because they accept the indictment made against capitalism, due to the fact that they have never been offered an alternative moral justification of how and what they do. They presume that the way they have chosen to earn a living inescapably is a “mortal sin” from which they cannot be saved other than to stop being who and what they are.

Few businessmen can articulate how and why it is a lack of defined and securely enforced property rights that cause virtually all of the negative spillover effects of pollution and wastage of scarce resources. Or why it is an equality of individual rights before the law that is essential for freedom and justice in society, not government attempts at politically manipulated equalities of income and social outcomes. And why it is that both humane and moral forms of benevolence to assist those who may be less fortunate can only come through voluntarism and competitive incentives among charitable organizations to use funds freely given in wise and effective ways.

Some Businessmen Turn to the State for Plunder and Privilege

There is a third reason for the failure of some businessmen to defend the market system and principles that underlay any successful ethics of entrepreneurship and enterprise. They often not only do not understand such an ethics of economic liberty. They do not believe in them. That is, there is a significant segment of the business community – frequently though certainly not exclusively in “big business” – that implicitly has the view that the state is to be used as a tool for plunder and privilege.

There are certainly some, who like common crooks and thieves, simply see the political process as the avenue to more greatly assure wealth and success. Just as one criminal when asked why he robbed banks replied that that is where the money is, there are those in private enterprise who run to the government to get what they want because that’s from where the privileges and plunder can come at taxpayers’ and others’ expense.

They are the entrepreneurial immoralists, since they may well know or understand that their economic gain through the political process is based on using government to pick other peoples’ pockets.

There are others whom I would suggest might be labeled the entrepreneurial amoralists because they have always lived under a political system in which it is taken for granted that one of the ways to obtain larger revenues and increased market share is using the tools of special interest lobbying to get government to act in ways favorable to your firm or industry. In other words, they don’t really see the difference between money made through voluntary exchange and government compulsory transfer.

A good number of years ago, I was invited to deliver a series of keynote addresses at several annual state-level Farm Bureau conventions. I found that when speaking to those who were, say, over 55 or 60 years of age, many of them felt uncomfortable about government agricultural subsidy programs and said that, in principle, if it were possible to get government out of the farming business they would be for it.

On the other hand, those in their 20s, 30s, or 40s, often could not understand why I was even asking about government’s role in farming. They had no living memory of a time when government was not paying farmers subsidies for various crops or even paying them to not grow anything at all.

For this younger group, making sales to consumers on the market was the same as being paid by the government. They frequently gave the impression of seeing no difference between a free market transaction and government redistribution of wealth. The latter was not seen or considered as “plunder.” They were not consciously immoral in taking a government handout; they just did not think it was a moral issue at all, anymore than deciding whether to have coffee in the morning instead of a cup of tea.

Intervention Draws Businessmen into Political Corruption

Finally, there are those who may be called the ethically pragmatic private enterprisers. They might think government should not be in the business of interfering with business, and they might dislike having to distract themselves and their investable funds into lobbying government. But they do so as a “defensive” strategy, since in the winner-take-all of governmental manipulation, if they don’t fend off the politicking of other special interest groups more “offensively” trying to use the state for their benefit, their own market position and financial viability might be undermined or destroyed.

As a result, far too many in the world of business are sucked into the maelstrom of governmental interventionist intrigue, corruption, and abuse. Like Odysseus in ancient Greek literature, some businessmen may try to tie themselves to the mast of market morality to not be tempted by the Siren’s call to political immorality, but too few understand know enough to try and fewer still are able to successfully resist being drawn into and drowned in the government’s sea of corruption.

Businessmen will not be able to escape from these traps and temptations on their own. Their primary attention and focus, if they are to be successful enterprisers and entrepreneurs, will be in pursuing their specialize market purposes in the context of the ideas and institutions in which they live and operate their businesses.

Defenders of Freedom in the Battle of Ideas

Changing the climate of opinion and the social and political surroundings in which businesses function falls upon free market-oriented economists and liberty-oriented philosophers and opinion-makers, I would suggest. First, in the division of labor that is part of their job. They are the handlers of ideas and ideologies. They are the ones who step back and ask young and old to think about the social system as a whole.

What is the nature of man and the natural and social circumstances in which he lives, works, and survives? Why is there no escaping from self-interested conduct, and therefore what are the outcomes from alternative institutional settings in which individuals attempt to better their personal situations? Why is it that voluntary market exchange under secure property rights not only delivers the goods, but also can be reasoned to foster and create a moral and good society with its abolition of force and violence from human relationships within a legal order based on individual rights?

Why is it, then, that the businessman who earns his living in such a free and ethical system is not a villain and a destroyer but a central partner in the shared human endeavor for the creation of a peaceful, prosperous, and polite society?

Ending Anti-Business Attitudes Requires Educating for Liberty

Both the general public and the community of business enterprisers need to be taught such things. Without it, the public conception of the always potential “dirtiness” of business will not be defeated as part of the drive to undermine and counter-act the collectivists’ portrayal of “capitalism” as the enemy of mankind.

Without this change in the climate of opinion, businessmen, themselves, will never have the understanding and through it the courage and motive to defend themselves and the honest rewards they earn from competitive, free market success.

Equally important, those in the business community who I suggested labeling the immoral or amoral private enterprises, who for either “offensive” or “defensive” reasons turn to the State for the political booty of government privilege and plunder, must be criticized and, indeed, shamed into rethinking their own conduct and behavior in the current interventionist welfare state.

How can the wider society be made to rethink their suspicions concerning the businessman’s motives, actions and outcomes, when too many of those who free marketers and classical liberals wish to defend commit many of the unethical acts of which the critics of capitalism accuse them?

Defending the Modern-Day “Smugglers” Who Serve the Market

At the same time, there are shackled and harassed businessmen who do attempt to operate outside of the spider’s web of regulations, controls and restrictions by trying to find ways to get around the interventionist state to earn their livings by better serving the consuming public. The economist and classical liberal opinion molders need to show the benefits and ethics of these acts as well.

The friends of free trade and competitive enterprise in the nineteenth century unhesitatingly defended smuggling – the “black market” – as the market’s method to get around socially harmful government controls that benefit some but harm many others.

The British free market liberal economist, Nassau Senior, for example, argued in the 1820s: “The smuggler is a radical and judicious reformer. The smuggler is essential to the well being of the whole nation. All external commerce depends on him.”

And the French economist, Jerome-Adolph Blanqui, in the 1840s, explained:

“It is in the nature of bad institutions never to be respected, and to give birth to protests that end in bringing about reform; smuggling was to the [mercantilist system of government controls] the constant and the most expressive of these protests . . .

“It is as exact in its deliveries as the most scrupulous merchant; it braves the seasons and defies the best-guarded lines of customhouses, to such a degree that assurance companies, which protect it, count upon fewer losses than any other.

“Smuggling is, in fact, the only means that remains to the various industries to procure for themselves the prohibited products whose use is indispensable for them . . .

“While savants discuss and commerce entreats, contrabandage acts and decides on the frontier; it presents itself with the irresistible power of actual facts, and freedom of trade has never won a victory for which smuggling has not prepared the way.”

Many Americans think of “black markets” as primarily concerned with the production, selling and buying of “sinful” or “immoral” goods and services: narcotics, sex transactions, gambling, etc.

Throughout large stretches of Asia, Africa, and Latin America, however, black markets are those arenas of trade in which many of the everyday items of daily life are bought and sold; everything from food and toilet paper, to clothes, shoes, and household items.

Government regulations, controls, restrictions, and prohibitions are so extensive and pervasive, that doing business honestly and openly is either impossible because it runs up against the monopoly friends of those in political power or the bribes, graft and corruption is so costly that it makes business survivability a tenuous and uncertain enterprise if attempted completely above board in the formal and legal market.

Businesses would not be opened and sustained, jobs would not created generating incomes for those who might otherwise starve or be forced into a real life of crime, and the mundane needs of the ordinary consumer in these societies would not be fulfilled, if not for a profit-motivated, risk-taking, entrepreneurial drive of multitudes of ordinary people who take on the mantle of illegal enterpriser and businessman.

The Free Enterprise Businessman as “Hero”

I recently talked to such an illegal entrepreneur who lives and works in Venezuela. Describing the financial difficulties and personal dangers he faces in his role of black marketeer in the manufacture and marketing of one of those ordinary consumer products of every life, I asked he why he did not just leave.

Given his business skills, why did he not move to even some other nearby Latin American country where, at least, he would not face the degree of danger from bribe-hungry government bureaucrats and violence-threatening agents of socialist Venezuela’s murderous secret police?

He said that as a Venezuelan and an advocate of liberty, he believed it was his duty to stay in his own country to do whatever he could to oppose the collectivist regime under which he and his fellow countrymen were living, working, and dying.

But equally, he said that he employed about a dozen women in his underground enterprise, who are the sole financial support for their respective families. If he were to give up, shut down his business, and leave the country, he had no idea how these families would make ends meet. He could not abandon those who loyally and hard-workingly did everything they could to help him stay in business and make a marketable product from which they all earned their means of livelihood.

Free market economists and classical liberals should hail these instances not only as examples of businessmen serving as “radical and judicious reformers” attempting to better serve the needs of the public in the face of economic protectionism for the anti-competitive and anti-market interests of some in society. But as heroes of liberty, integrity and benevolent loyalty to those whose incomes are dependent upon his success and ingenuity as an entrepreneur under hazardous and even life-threatening circumstances.

It should be praised as examples of what the market could have in store if all trade, commerce and industry were freed from the dead hand of government control. The businessman would be shown to be the heroic free enterpriser, innovator and champion of fulfilled freedom of choice for all in society.

Businessmen, themselves, would be educated to see how they should earn their living – through market-based production and not political-manipulated plunder – that would demonstrate the morality of all that they do, and would help provide the internal moral compasses to think twice before they give into the temptations of government largess.

This is the ethical avenue for defending ethical enterprisers in an anti-business world.

(The text is based upon a talk given at the Association for Private Enterprise Education conference, Cancun, Mexico, April 14, 2015)

First published at EPICTiMes, and posted here with the kind permission of the author


Dr. Richard M. Ebeling is the BB & T Professor of Ethics and Free Enterprise Leadership at The Citadel in Charleston, South Carolina, He was formerly professor of Economics at Northwood University. Was formerly president of The Foundation for Economic Education (FEE), was the Ludwig von Mises Professor of Economics at Hillsdale College in Hillsdale, Michigan, and served as president of academic affairs for The Future of Freedom Foundation (FFF).

 

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