What is Free Enterprise?

An excerpt from The Road to Freedom by Arthur C. Brooks.

WHAT IS FREE ENTERPRISE? It is the system of values and laws that respects private property and limits government, encourages competition and industry, celebrates achievement based on merit, and creates individual opportunity. Under free enterprise, people can pursue their own ends, and they reap the rewards and consequences, positive and negative, of their own actions. 7 Free enterprise requires trust in markets to produce the most desirable outcomes for society.

The opposite of free enterprise is statism, which is the belief that the government is generally the best, fairest, and most trustworthy entity to distribute resources and coordinate our economic lives.

(A system and theory that has been proven absolutely incorrect time after time in dozens of nations over the last 200 years). 

At first glance, moving America back toward free enterprise should be simple. Two years ago, Arthur Brooks published a book showing that about 70 percent of Americans say they love free enterprise. They favor it over all other alternatives and are proud of the fact that the nation is based on this ideal. Large majorities say they want less government than we currently have. 8 (Arthur Brooks, The Battle: How the Fight Between Free Enterprise and Big Government Will Shape America’s Future; Basic Books, 2010).

But if that’s true, why is the government today so bloated, so powerful, and so imperious? Why do Americans acquiesce to almost every expansion of government—beyond the boundaries of what the Founders intended, and beyond what they say they actually want? For example, the Obama administration’s health-care reforms are unpopular with a majority of citizens, yet in a poll fielded by CBS News/New York Times in 2010, 64 percent of people said they thought that government should provide health insurance for everyone. 9

This is a paradox, but not a mystery. On the one hand, citizens say they love free enterprise. On the other hand, they sure wouldn’t mind a new government-funded rec center and maybe a few free prescription drugs, and politicians gladly oblige to win votes. Most people hardly have the time to consider the inconsistency between these things.

In America, the road to serfdom doesn’t come from a knock in the night and a jackbooted thug. It comes from making one little compromise to the free enterprise system after another. Each sounds sort of appealing. No single one is enough to bring down the system. But add them all up, and here we are: 81 percent of our citizen's dissatisfied.

So what’s the solution? How do we help Americans understand that unless they actively choose free enterprise and eschew big government, they will ultimately only get the latter? Some say Americans need to hear a more forceful argument than ever before about the economic superiority of free enterprise over the alternatives. In other words, capitalism’s advocates need to yell louder that free enterprise makes us richer than statism. Master the numbers, make some charts, and show Americans the evidence. Arthur C. Brooks, President of American Enterprise Institute says he wishes that strategy were correct. “Nothing would make my job easier”, says Arthur Brooks. But that strategy isn’t correct. Materialistic arguments for free enterprise have been tried again and again. They have failed to stem the tide of big government. There’s only one kind of argument that will shake people awake: a moral one. Free enterprise advocates need to build the moral case to remind Americans why the future of the nation is worth more to each of us than a few short-term government benefits. To get off the path to social democracy or long-term austerity, all of us who love freedom must be able to express what is written on our hearts about what our Founders struggled to give us, what the culture of free enterprise has brought to our lives, and about the opportunity society we want to leave our children.

A LOT OF PEOPLE are reluctant to talk about morals or make a moral case for anything in politics and policy. We’re willing to talk about principles, perhaps. Values, maybe. But morals? Especially among conservatives, morality evokes unpleasant memories of the “culture wars” of the 1990s, which focused on schismatic issues like abortion and homosexuality. As a result, many who believe in free enterprise steer clear of all public moral arguments. This is a mistake and a missed opportunity. A great deal of research shows that people from all walks of life demand a system that is morally legitimate, not just efficient. 10 The moral legitimacy of free enterprise depends largely on how the system enables people to flourish, whether the system is fair, and how the system treats the least fortunate in society. Privately, free enterprise’s champions talk about these things incessantly. While they generally believe in the need for a safety net, they celebrate capitalism because they believe that succeeding on merit, doing something meaningful, seeing the poor rise by their hard work and virtue, and having control over life are essential to happiness and fulfillment. But in public debate, they often fall back on capitalism’s superiority to other systems just in terms of productivity and economic efficiency. 

What moves them is the story of their immigrant grandparents who came to America to be free; but what they talk about is the most efficacious way to achieve a balanced budget. The dogged reliance on materialistic arguments is a gift to statists. It allows them to paint free enterprise advocates as selfish and motivated only by money. Those who would expand the government have successfully appropriated the language of morality for their own political ends; redistributionist policies, they have claimed to great effect, are fairer, kinder, and more virtuous. 11 Too frequently, the rejoinder to these moral claims has been either dumbfounded silence or even more data on economic growth and fiscal consolidation. Average Americans are thus too often left with two lousy choices in the current policy debates: the moral left versus the materialistic right. The public hears a heartfelt redistributionist argument from the left that leads to the type of failed public policies all around us today. But sometimes it feels as if the alternative comes from morally bereft conservatives who were raised by wolves and don’t understand basic moral principles. No wonder the general public is paralyzed into inaction, even when dissatisfaction with government is at an all-time high. There just doesn’t seem to be a good alternative to the “statist quo,” and as a consequence, the country is slipping toward a system that few people actually like.

AMERICANS HAVE actually forgot what the Founders knew well. They understood the need to make the moral argument for freedom, and they were not afraid to do so. In fact, they put a moral promise front and center in the Declaration of Independence:  We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. 12

I contend that the American Free Enterprise System – a system that has existed since our nation’s founding; is precisely the ideal vehicle for our citizens to continue and achieve ‘The Pursuit of Happiness’!

More to come.

Sources / Resources

Brooks, Arthur C. (2012-05-08). The Road to Freedom: How to Win the Fight for Free Enterprise.

7 See Michael Novak, The Spirit of Democratic Capitalism (Madison Books, 1991); and Charles Murray, “The Happiness of the People,” Irving Kristol Lecture, American Enterprise Institute, 2009.

8 Arthur Brooks, The Battle: How the Fight Between Free Enterprise and Big Government Will Shape America’s Future (Basic Books, 2010).

9 Joel Roberts, “Poll: The Politics of Healthcare,” CBS News/New York Times, June 14, 2010, http://www.cbsnews.com/stories/2007/03/01/opinion/polls/main2528357.shtml According to a 2011 CBS news poll 51 percent of Americans said that they disapproved of the healthcare law, versus 35 percent who approved of it. See http://www.american.com/archive/datapoint-entries/healthcare-update

10 Jonathan Haidt, “The New Synthesis in Moral Psychology,” Science 316, no. 5827 (May 18, 2007): 998–1002.

11 George Lakoff, Don’t Think of an Elephant! (Chelsea Green Publishing, 2004). Another reason why statists win the moral debates about our system is that they have figured out better than the right how to “frame” the arguments. The master of political argument framing is George Lakoff, a linguist at the University of California, Berkeley. In his 2004 bestseller Don’t Think of an Elephant!, Lakoff argues that when it comes to successful politics, those who control the moral language get to frame the debate and win the hearts of voters. In progressive framing, free enterprise advocates are rigid and selfish, and their inability to make a strong moral case for freedom has only reinforced this view.

12 Declaration of Independence, July 4, 1776.