About the Speech

With the fall of communism and the repudiation of socialism throughout the world, the prospects for free market economies should be bright. Yet serious questions have been raised about their potential success. Does free enterprise—with its concepts of economic liberty, individualism, self-interested decision-making and private property—contribute to cultural and moral decline or does it offer a remedy?

Today there are many forces in our society that take a dim view of enterprise and of the business community. Some writers have said that many people educated in the humanities and social sciences are uncritically anti-capitalistic. They think of business as vulgar, philistine, and morally suspect. Popular culture often treats business as its favorite villain, and sees no ethical dimension inherent in business activities.

Studies by the Media Research Institute show that entertainment television’s first choice for a criminal, or someone hurting society, is a businessman. Businessmen comprised 24% of main characters, but 43% of the criminals and 36% of the murderers. Even mobsters and convicts only accounted for 10% of the murderers on television.

Robert Lichter said that viewers rarely witness the Horatio Alger stories of business success as the fulfillment of the American Dream.  But the history of business success in the United States is replete with accounts of individual entrepreneurs who start with a novel idea or a product, and as a result build large organizations through their personal dedication and hard work. The long-term interests of a company and its continuing relationship with its employees are important factors in achieving success. Businesses that concern themselves with the skills, health, safety, and productivity of their workers, perform better than businesses that neglect these particular issues.

Michael Novak, a scholar at the American Enterprise Institute, holds that there are several internal moral requirements that have to be followed if a business is going to succeed. One is to satisfy customers with a product of real value. Furthermore, the business must make a reasonable return on the funds entrusted to the corporation by its investors. Businesses must also create new wealth, to expand the pie rather than cutting it into smaller pieces. Novak also realizes that businesses defeat envy by generating upward mobility, and rewarding hard work and talent. The business world is filled with examples of corporations, individual proprietorships, partnerships and other entities performing the things that Novak talks about.

We need government, therefore, only for what businesses or individuals cannot do by themselves. Government should protect citizens and business entities from physical danger and harm. Government should protect us from theft and fraud. Government needs to protect us from damage that is caused by design, malice, and negligence or recklessness.

But what government should not do is to burden businesses unnecessarily by uncompensated social costs. The government should not compete in the business arena. Moreover, government should not pick winners and losers, or engage in so-called industrial policy. As John Hood notes, the history of government research and development efforts is one of false starts, misallocation of resources, and manipulation of markets by governmentally granted monopolies. Governments have an extremely poor track record of recognizing true innovation and rewarding it. One of the reasons is that governments have no bottom line, so failure is not punished. And because there is an egalitarian influence on most government entities, good work is not rewarded.

This then is how capitalism relates to a civil society. Fortunately, for our country and for each of us, those who developed the political and economic systems of the United States had an extensive knowledge of philosophy and history. Their commitment to liberty permeated the institutions that they built and provided the parameters for our society. The legacy of the founding fathers is as relevant today as it was 200 years ago. Continuing to fulfill the enormous potential of this legacy remains a challenge for our generation as well as for generations to come.