The Law of Variation
The genius of Capitalism is not merely that it satisfies the desires and needs of mankind generally, but it responds to the factor of variation as between individuals. It allows each man to do anything he wishes so long as he can survive at it. Therefore each man continually surveys the field of economic opportunity and gradually tries to push him into that phase of work which best satisfies him.
This is one of the greatest blessings of free enterprise Capitalism. To a remarkable extent it allows a man to do just about whatever he wants to do. Laborers are not conscripted nor told they cannot strike; nor are they ordered to remain in certain occupations as tends to be the case in socialized and communized countries.
Under Capitalism Everyone Can Gain
A study of human nature reveals that “value” is psychological rather than real. Whether a thing is “worth” a certain amount depends entirely on the mental value attached to it. Capitalism has proven to be a dynamic economy in which everyone participating in a transaction can increase the value of what he has, or, in other words, make a profit. This can be true of both the buyer and the seller. For example, take a man who wants to buy a used car. He has a certain amount of money or credit. When he offers this money to the dealer it means that he would rather have the car than that amount of money—the “value” of the car is greater to him than the “value” of the money. If the dealer agrees it means that the dealer would rather have the money than the car. In fact, he won’t sell the car unless the price he gets is of greater value to him than the value of the car. As the car is driven away, both men have made a profit. Both men feel they have improved their position as a result of the transaction.
This is a strong contributing factor to the success of Capitalistic free enterprise. It allows everyone to win, either by making a profit or by improving his position as the result of an honest transaction.
The Meaning of a Free Economy
Capitalism thrives best in a free economy but freedom is a much misunderstood subject. For example, there is no such thing as total, unrestricted freedom. Freedom means simply the chance to choose. Therefore freedom can only relate itself to specific choices such as the freedom to speak or not to speak, the freedom to believe or not believe, the freedom to buy or not to buy, and so forth. Furthermore, freedom can move in only one direction at a time. If a man has ten dollars and chooses to spend it on a night of celebration he has thereby lost the freedom to spend that same ten dollars on some new clothes. Once the choice is made, a person is not free to avoid the consequences of that choice. That is why we say there is no such thing as unrestricted freedom, or freedom in general. Freedom is always restricted to some specific choice and freedom is always restricted to choosing one direction at a time.
It is for this reason that a free economy requires a continuous education of its people so that they will exercise their “freedom to choose” in such a way that it will sustain sound moral principles and build a dynamic economy with a strong social structure to preserve it. In making such choices, the people must sense what is best for both the individual and the community. They must be well informed. They must know enough about each problem so they can anticipate what the result will be when they have made their choice.
There are many notable examples in both modern and ancient history to illustrate what happens when people are only casually concerned with their right to make a choice or exercise their freedom. Free peoples require alert, aggressive leadership and a socially and politically conscious citizenry. This is not easily maintained, but it is the price of freedom. Sometimes the streak of natural laziness in people makes them wish that a commission, a dictator or a king would make all the decisions and force the people to do what is good for them. But this is the road to ruin for a free economy. The people must retain the sovereign right to choose, for that is all freedom is.
Now we come to the four great freedoms which must always exist in a truly free economy.
First—Freedom to Try
One of the most essential ingredients in a healthy economy is the freedom to try. This is really the freedom to achieve and it is based on the principle that “the genius of one or a few men cannot begin to compare in the aggregate to the genius of all the people.”
Therefore, in a free country a man can develop a new kind of shorthand, a different kind of screwdriver, a new breed of cattle, or an improved type of mousetrap. When he is through, no one may wish to buy the new product or service, but at least he is free to invent it and try to sell it if he can. This is an in indispensable characteristic of Capitalism—the freedom to try.
One of the reasons atomic energy was shared with the people for peacetime development was because Americans have been educated to believe that this is the best way to harness atomic power for a vast multitude of domestic services. With many thousands of scientists working on ways and means to exploit atomic power—instead of using just a few hundred—the results should be correspondingly greater. This is particularly true where each of the scientists is free to try anything his inventive genius may dictate.
This was precisely the way we developed radio, television, the prevention of polio, the wonders of the modern automobile and the sound-barrier-breaking speed of the propeller-less jets. By way of contrast, it is interesting to note that the providing of an adequate road system was reserved to the State and Federal Governments. Notice that this monopolized program has never come up to the public needs at any time in our history. It is interesting to consider what might have happened if highways had been left in the open market where businessmen could compete for the opportunity of serving the public with adequate systems of highway facilities. In fact, during recent years there have been several places where toll roads have been built by private capital with the permission of state legislatures because the people were so dissatisfied with the inefficiency of government supervised thoroughfares.
Second—Freedom to Sell
If men are to be left free to try their skill and inventive genius they must also be protected in their freedom to sell their product for a profit. Of course, some new product might make a whole industry obsolete, temporarily throw thousands out of work and require numerous economic, social and political readjustments. But this is one of the keys to success in free enterprise economy. It must not be curbed except in the case of products or procedures which involve an immoral or criminal aspect, such as narcotics, pornographic literature, quack medicines, fake stocks, and so forth.
Freedom to sell also implies the freedom to make a profit even if the price of a product is set at a level which wipes out the profit of a competitor. At first glance this may seem to be a cold, heartless system of economics, but if an American travels abroad through Communist or Socialist countries he begins to appreciate that “Freedom to Sell” is really the opportunity to survive. This means that a competitor must exert his faculties to produce more efficiently and reduce his price, or improve the quality of his product, so that the public will pay the difference to Set it. In either case, the public benefits, and newly improved forms of material wealth are created for the use of the public simply because two or more companies are competing briskly in order to survive.