A former editor of Barron’s and Fortune, Mr. Davenport is author of The U.S. Economy and a frequent lecturer on political economy.

Ever since Lewis Franklin Powell, Jr., now a Justice of the Supreme Court, wrote his famous memorandum on the dangers in which the private enterprise system finds itself, businessmen and their acolytes have been bestirring themselves to improve their public image. As public opinion polls still show, however, these efforts have not been overly successful. And as Irving Kristol has pointed out, one has the uneasy feeling that while defenders of enterprise have been winning the battles they have bit by bit been losing the war. One reason offered by Kristol is that champions of capitalism have all too often tended to think in terms of economic efficiency, whereas modern and younger critics of capitalism have pitched their attack on its political and ethical defects. Capitalism, in short, still lacks a comprehensive and comprehensible moral philosophy.

In this situation it is news, and good news of the first order, that there is a rising generation of young academic thinkers who understand that capitalism is something more than an "incredible bread machine," important as that is, and who have the wit and learning to articulate a deeper faith.

Confirmation of this new and immensely hopeful development is to be found in a slim volume of essays titled Free Enterprise—An Imperative, published in 1975.¹ As might be expected, the book received little notice from the Liberal press, but it should be on the desk of every businessman who has been suffering under the barbs of his Galbraithian, Naderite, and Marxist critics. For it contains the work of nine young authors who have obviously taken the measures of the detractors of the free market, and have in their different ways shown that capitalism, whatever its defects, does have philosophic credentials of the first order.

A Vulnerable Doctrine

In explicating these credentials it is noteworthy that only one of the young essayists relies heavily on the venerable but highly vulnerable doctrine of Utilitarianism as developed by Jeremy Bentham and other neo-classical economists. For it is precisely the association of capitalism with utility and material progress which has turned off a whole generation of youth from perceiving the free market’s deeper contribution to our civilization. Its basic contribution is that it promotes and buttresses freedom or personal self-determination, which as pointed out by Verna Harrison, a student of philosophy and theology at The University of Oxford, "is a precondition for any morality whatever." This is true from the point of view of orthodox Christianity, which allows man to choose between good and evil, or from a Kantian perspective which makes the free will central to its ethical system.

In viewing freedom both as a value in itself, and as a precondition of realizing other ends and values, the essayists are careful to guard against claiming too much or too little for capitalism. As Alan Stockman, a twenty-five-year-old graduate of Ohio State University, puts it: "No economic system can automatically guarantee a good society [meaning that individuals will necessarily choose the right ends], but some may have effects on people’s values and behaviors which make the achievement of a desirable society more difficult."

Where government owns the means of production or "plans" all economic activity, it is obvious that freedom is constricted, and that coercion by the state flourishes. By contrast the market system of economy expands the options of man, the consumer, and man, the bread-winner and producer, since in effect each has a role in voting as to what shall be produced and in what quantities—a vote that is denied under any system of collectivism. Similarly, private ownership of the means of production, and the sanctity of private property, reinforce, and indeed are the preconditions of the maintenance of higher political liberties, including freedom of the press and freedom of inquiry. This does not insure that all of man’s choices will be good. The point is that without freedom of choice, and the diminution so far as possible of coercion, the good can never be realized.

The second test of an economic system is how far it engenders order and social collaboration, and here the detractors of capitalism have obviously sought to confuse discourse. The doctrine of laissez faire is equated to dog-eat-dog or to just plain chaos, whereas the fact is that by definition the market requires collaboration. As pointed out by most of the essayists, it is impossible to earn a living in a market economy without producing in the form of goods or work something which another person wants. Seller and buyer are thus bound together in a collaborative effort as are workers who, each seeking his own reward, collaborate in the output of a farm or factory. This is the underlying wisdom of Adam Smith’s doctrine of the "invisible hand" which leads man "to promote an end which was no part of his intention," but which may be of benefit to society as a whole.

The Wisdom of the Market

The doctrine, much vilified in our day by the critics of enterprise, is in fact highly relevant precisely because the modern world is so complex, and because the knowledge ofany one man is by definition limited. The socialist planner assumes that the government bureaucrat is not only omnipotent but omniscient. In fact such omniscience does not exist. Indeed a third and potent argument for the enterprise system lies precisely in recognition of this fact. As Roger Michener, a young instructor at The University of Chicago, puts it: "It is because every individual knows so little, and, in particular, because we know hardly ever who knows best, that we trust to independent and competitive efforts for the emergence of what we shall want when we see it." So the market economy is grounded in certain facts and requirements of human nature itself. But is it a just system? Here the argument is more complicated precisely because such an economy distributes its rewards and emoluments not according to the needs or merits of individual workers but according to the needs and requirements of consumers and employers who bid directly or indirectly for the worker’s services. The wages paid to a ditch digger are relatively low because the potential supply of ditch diggers is large, whereas demand for this kind of work may be relatively small. The reward of a doctor or lawyer is high because there are relatively few men of such specialized training in relation to demand.

Granted that the law of supply and demand leads to increased and efficient production and use of available resources, does this really create a fair and a just distribution of income and satisfactions in the body politic? Or, as Marxians claim, does it lead to the exploitation of the masses by the classes—the men and women of superior ability?

It is the merit of the young essayists of this symposium that they do not attempt to shove this oldest question of philosophy and ethics under the rug but to meet it head on. In the process, as might be expected, they come up with different answers.

Equality and Justice

Justice, according to Plato, is the "giving to each man his due." Taking off from this definition of justice, essayist Karl Keating points out that the just society will always be in opposition to an egalitarian society since men are obviously endowed by nature (and inheritance) with widely different capacities. "Enforced equality," he writes, "means a violation of the dignity of men, for when we try to enforce something that is incapable of fruition, we necessarily violate nature and do violence to ourselves." Having disposed of egalitarianism, he then argues that capitalism produces justice because it takes account of man’s true nature and condition since it allows each man to use his talents and his property as he sees fit and hence "allows him to follow his own inclinations in attempting to become a more humane man."

Others in the symposium are not quite so sure of the justness of the market’s decisions. John H. Beck, who holds degrees in both economics and mathematics, emphasizes that income distribution in a market economy may or may not accord with merit and skills, and that in some cases entrepreneurial profits may come from just plain luck. Still, he shrewdly points out that incomes are the resultant of prices. Prices in their turn are the essential means of communication between consumer and producer as to what is wanted and what should be produced. If we tamper with the price system we shall be left without guide or rudder as to how production and hence incomes should flow.

In a brilliant essay, David Kelley, assistant professor of philosophy at Vassar College, carries this essentiality of the market one step further in examining Marx’s famous proposal of "from each according to his ability, to each according to his need." For how does the Marxian really determine need? In posing this question Kelley points out that in his early writings at least Marx made the egregious mistake of completely separating the "spiritual value" of work from the hard business of earning a living by producing what other people want. On this assumption, man works or should work only to satisfy his inner ego or Self. But, writes Kelley, this injunction really boils down to the mindless injunction of "Do your own thing" —the battle cry, it should be noted, of the New Left as it emerged in America in the late sixties. Such subjectivism will not do. Critical to man’s happiness is "a sense of self-esteem," and one source of self-esteem lies precisely in entering into the productive process of a society. (Note the difference in attitude of a boy who gets his first job as compared to one who remains unemployed or only works for fun!)

Sums up Kelley: "The best way to alienate man would be to force him to live in a perfect communist society, where he can have no idea whose efforts are holding him in existence, while he tries vainly to express a self he has had no way of acquiring."

This is a difficult thought but nevertheless a profound one which makes hash of those who deride the market system as inhumane on grounds that it disregards the higher nature of man. The truth of the matter is that while the market-profit economy may not render perfect justice, however such justice be defined, it comes closer than any alternative system for allowing men to be just in their dealings with one another. It cannot, as noted in the beginning, produce good men, but it can by fostering freedom allow men to be good. And in an imperfect world, that is quite an accomplishment.

It is also quite an accomplishment that the young authors, whose writings are here under review, have been able to see through the pretenses of those who would write off capitalism as a defunct economic system in favor of leading us into some Utopia of their own choosing. The best in this case, as in many others, is the enemy of the good.

The distinction of Free Enterprise—An Imperative is that its authors have winnowed the chaff from the wheat in our political thinking, that in stressing the virtues of capitalism they have not neglected its shortcomings, and that they have in one small volume brought philosophy to bear in its ultimate defense. What more can one want of serious academics? What more can one want of the coming generation?

¹ Available at $².00 from the Herbert Hoover Presidential Library Association, Box ³59, West Branch, Iowa 5²³58.