Do Americans really believe in free enterprise?
Since the end of the cold war, prominent American economists and financial specialists have been advising the governments of Eastern Europe and the former Soviet Union on the creation and virtues of a free-enterprise system.
The US-government-financed National Endowment for Democracy is busy doing the same on a daily basis in numerous corners of the world.
The US-controlled World Bank and International Monetary Fund will not bestow their financial blessings upon any country that does not aggressively pursue a market economy.
The United States refuses to remove its embargo and end all its other punishments of Cuba unless the Cubans terminate their socialist experiment and jump on the capitalist bandwagon.
Before Washington would sanction and make possible his return to Haiti in 1994, Haitian President Jean-Bertrand Aristide had to guarantee the White House that he would shed his socialist inclinations and embrace the free market.
It would, consequently, come as a shock to the peoples of many countries to realize that, in actuality, most Americans do not believe in the free-enterprise system. It would, as well, come as a shock to most Americans.
To be sure, a poll asking something like: “Do you believe that our capitalist system should become more socialist?” would be met with a resounding “No!”
But, going above and beyond the buzz words, is that how Americans really feel?
Supply and demand
Following the disastrous 1994 earthquake in Los Angeles came the cry from many quarters: Stores should not be raising prices so much for basic necessities like water, batteries, and diapers. Stores should not be raising their prices at all at such a time, it was insisted. It’s not the California way and it’s not the American way, said Senator Dianne Feinstein. More grievances arose because landlords were raising rents on vacant apartments after many dwellings in the city had been rendered uninhabitable. How dare they do that? people wailed. The California Assembly then proceeded to make it a crime for merchants to increase prices for vital goods and services by more than ten percent after a natural disaster. 1
A similar tale followed the destruction caused by Hurricane Isabel in September 2003. In the Washington, DC area and points south, exorbitant prices were being demanded for generators, batteries, gasoline, ice, water pumps, tree-removal services, etc. The governor and attorney general of Virginia called on the legislature to pass the state’s first anti-price-gouging law after receiving about 100 complaints from residents. North Carolina had enacted an anti-gouging law just shortly before. 2
In the face of all this, one must wonder: Hadn’t any of these people taken even a high-school course in economics? Hadn’t they learned at all about the Law of Supply and Demand? Did they think the law had been repealed? Did they think it should be?
Even members of congress don’t seem to quite trust the workings of the system. They regularly consider measures to contain soaring drug and health-care costs and the possible regulation of the ticket distribution industry because of alleged price abuses. 3 Why don’t our legislators simply allow “the magic of the marketplace” to do its magic?
The profit motive
President Calvin Coolidge left Americans these stirring words to ponder: “Civilization and profits go hand in hand.” Hillary Clinton, however, while the First Lady, lashed out at the medical and insurance industries for putting their profits ahead of the public’s health. “The market,” she declared, “knows the price of everything but the value of nothing.” 4
Labor unions regularly attack companies for skimping on worker health and safety in their pursuit of higher profit.
Environmentalists never tire of condemning industry for putting profits before the environment.
According to a survey in 2005, 70 percent of Americans think that the pharmaceutical companies are more concerned “about making profits” than developing new drugs. 5
Judges frequently impose lighter sentences upon lawbreakers if they haven’t actually profited monetarily from their acts. And they forbid others from making a profit from their crimes by selling book or film rights, or interviews. The California Senate enshrined this into law in 1994, one which directs that any such income of criminals convicted of serious crimes be placed into a trust fund for the benefit of the victims of their crimes. 6
President George H. W. Bush, in pardoning individuals involved in the Iran-Contra scandal, stated: “First, the common denominator of their motivation – whether their actions were right or wrong – was patriotism. Second they did not profit or seek to profit from their conduct.” 7
No less a champion of free enterprise than former senator Robert Dole said, in an attack upon the entertainment industry during his 1996 presidential campaign, that he wanted “to point out to corporate executives there ought to be some limit on profits. … We must hold Hollywood accountable for putting profit ahead of common decency.” 8
That same year, the mayor of Philadelphia, Ed Rendell, bemoaning the corporations move to the suburbs – for what he admitted were “perfectly rational” reasons – declared: “If we let the free market operate unconstrained, cities will die.” 9
Finally, we have a congressional debate in May 1998 about imposing sanctions against countries that allow religious persecution. The sanctions were opposed by US business interests, prompting Rep. Tom Coburn (R-Okla.) to declare: “We’ve got to figure out what we believe in our country. Do we believe in capitalism and money or do we believe in human rights?” 10
But how can the system conceivably function as it was designed to without the diligent pursuit of profit? Not merely profit, but the optimization of profit. Surely an attorney like Hillary Clinton knows that corporate officers can be sued by stockholders for ignoring this dictum. Yet she and so many others proceed to blast away at one of the pillars of the capitalist temple.
Private entrepreneurship and ownership
The American Medical Association has taken aim at another of the temple’s honored pillars – patents, that shrine to the quintessential entrepreneur, the inventor. The AMA issued a blistering condemnation of the increasingly popular practice of patenting new surgical and medical procedures, saying it was unethical and would retard medical progress. 11 Is Thomas Edison rolling over in his grave?
In 1996, the people of Cleveland felt very hurt and betrayed by the owner of the Browns moving his football team to Baltimore. But is it not the very essence of private ownership that the owner has the right to use the thing he owns in a manner conducive to earning greater profit? Nonetheless, Senator John Glenn and Representative Louis Stokes of Ohio announced their plan to introduce legislation to curb such franchise relocation. 12
Competition and choice
And where is the appreciation for America’s supposedly cherished ideal of greater “choice”? How many citizens welcome all the junk mail filling their mailboxes, all the email spam they have to wade through each day, or having their senses pursued and surrounded by omnipresent advertisements and commercials? People moan the arrival in their neighborhood of the national chain that smothers and drives out their favorite friendly bookstore, pharmacist, or coffee shop, squawking about how “unfair” it is that this “predator” has marched in with hobnail boots and the club of “discount prices”. But is this not a textbook case of how free, unfettered competition should operate? Why hasn’t the public taken to heart what they’re all taught – that in the long run competition benefits everyone?
Ironically, the national chains, like other corporate giants supposedly in competition, are sometimes caught in price-fixing and other acts of collusion, bringing to mind John Kenneth Galbraith’s observation that no one really likes the market except the economists and the Federal Trade Commission.
The non-profit alternative
The citizenry may have drifted even further away from the system than all this indicates, for American society seems to have more trust and respect for “non-profit” organizations than for the profit-seeking kind. Would the public be so generous with disaster relief if the Red Cross were a regular profit-making business? Would the Internal Revenue Service allow it to be tax-exempt? Why does the Post Office give cheaper rates to non-profits and lower rates for books and magazines which don’t contain advertising? For an AIDS test, do people feel more confident going to the Public Health Service or to a commercial laboratory? Why does “educational” or “public” television not have regular commercials? What would Americans think of peace-corps volunteers, elementary-school teachers, clergy, nurses, and social workers who demanded in excess of $100 thousand per year? Would the public like to see churches competing with each other, complete with ad campaigns selling a New and Improved God?
Pervading all these attitudes, and frequently voiced, is a strong disapproval of greed and selfishness, in glaring contradiction to the reality that greed and selfishness form the official and ideological basis of our system.
It’s almost as if no one remembers how the system is supposed to work any more, or they prefer not to dwell on it. Where is all this leading to? Are the Eastern European reformers going to wind up as the last true believers in capitalism?
It would appear that, at least on a gut level, Americans have had it up to here with free enterprise; indeed, the type of examples given above can be found in the media very regularly. The great irony of it all is that the mass of the American people are not aware that their sundry attitudes constitute an anti-free enterprise philosophy, and thus tend to go on believing the conventional wisdom that government is the problem, that big government is the biggest problem, and that their salvation cometh from the private sector, thereby feeding directly into pro-free enterprise ideology.
Thus it is that those activists for social change who believe that American society is faced with problems so daunting that no corporation or entrepreneur is ever going to solve them at a profit carry the burden of convincing the American people that they don’t really believe what they think they believe; and that the public’s complementary mindset – that the government is no match for the private sector in efficiently getting large and important things done – is equally fallacious, for the government has built up an incredible military machine (ignoring for the moment, what it’s used for), landed men on the moon, created great dams, marvelous national parks, an interstate highway system, the peace corps, student loans, social security, insurance for bank deposits, protection of pension funds against corporate misuse, the Environmental Protection Agency, the National Institutes of Health, the Smithsonian, the G.I. Bill, and much, much more. In short, the government has been quite good at doing what it wanted to do, or what labor and other movements have made it do, like establishing worker health and safety standards and requiring food manufacturers to list detailed information about ingredients.
Activists have to remind the American people of what they’ve already learned but seem to have forgotten: that they don’t want more government, or less government; they don’t want big government, or small government; they want government on their side.
None of the above, of course, will deter The World’s Only Superpower from continuing its jihad to impose capitalist fundamentalism upon the world.
A couple of more reasons why the jihad may have tough going
Nearly half of adult Americans surveyed by the Hearst Corporation in 1987 believed Karl Marx’s aphorism: “From each according to his ability, to each according to his need” was to be found in the US Constitution. 13
Mark Brzezinski, son of Zbigniew, was a post-Cold War Fulbright Scholar in Warsaw: “I asked my students to define democracy. Expecting a discussion on individual liberties and authentically elected institutions, I was surprised to hear my students respond that to them, democracy means a government obligation to maintain a certain standard of living and to provide health care, education and housing for all. In other words, socialism.” 14
- Los Angeles Times, January 2, 1995, Assembly Bills 36X and 57X
- Washington Post, September 24, 2003
- Los Angeles Times, September 29, 1994; Washington Post, December 26, 1999, p.16
- Speech in Austin, Texas, April 1993, unveiling her health-care campaign.
- Washington Post, February 26, 2005
- Los Angeles Times, January 2, 1995, Senate Bill 1330
- New York Times, December 25, 1992
- Washington Post, June 11, 1995
- Ibid., July 5, 1996, column by E.J. Dionne Jr.
- Ibid., May 15, 1998, p.9
- Ibid., June 20, 1995
- Ibid., November 30, 1995
- New York Times, June 7, 1987, Section 11CN (“Connecticut Weekly Desk”), p.36
- Los Angeles Times, September 2, 1994
This is a chapter from Rogue State: A Guide to the World’s Only Superpower by William Blum.