|Montréal, 3 mars 2001 / No 78||
by Edward W.Younkins
A sense of suspicion and grudging tolerance looms over business. America is culturally prejudiced against commerce. Anticapitalist ideas have had a dramatic impact in this country. Business and businessmen have been maligned as dishonest, unfair, greedy, insensitive, underhanded, evil, and morally deficient. Negative images have been promulgated for centuries by intellectuals, the Church, socialists, popular culture, storytellers, aristocrats, Supreme Court justices, historians and others. The focus of business on profit and its preoccupation with prosperity and earthly happiness have been declaimed as immoral.
than its image
Certainly, there are bad businessmen just as there are bad men in other walks of life. Businessmen don't always act virtuously. Capitalism is simply a socio-economic mechanism that permits individuals to act morally or immorally. Capitalism is, without doubt, much better than its image. Its economic freedom is consistent with underlying moral principles of life itself. Capitalism relies on a system of rewards and punishments that minimize coercion, prejudice, and irrationality in human relations. Business in a free society rewards businessmen who are honest, trustworthy, understanding, self-reliant, rational and hard working. While practices such as lying, deception, fraud, and theft might lead to short-term gains, such practices would certainly lead to ruin in the long run.
By nature, society refers to voluntary interactions among consenting human beings. The market is a process of social cooperation, employing a division of labor, where people specialize in a variety of tasks in expectation of demand for the goods and services they produce. The business realm is thus a cooperative system of value-seeking individuals who produce and trade for mutual advantage.
Businessmen must be committed to reality. After scientists and engineers uncover new knowledge, it is the task of the businessman to determine how to use that knowledge. Rational thinking is the cause of wealth production. The businessman searches for opportunities and combines land, labor, and capital to create wealth. The market creates benefits in the form of new and better products and lower prices. A businessman only benefits by offering goods and services that others are willing to buy. If he does not cater to the desires of others, he will not prosper. He enables others to attain what they want and to pursue their visions of happiness. The businessman is an appropriate symbol of a free society. Capitalism inspires business behavior that is prudent, diligent, prescient, innovative, imaginative, and virtuous. The successful businessman must be a risk-taking man of ideas and moral action.
The role of Business
Free enterprise is the natural, voluntary collaboration of individuals exchanging the products of their minds, creativity, abilities, and energy. Free enterprise thus involves all of us. It is what unobstructed individuals do to maintain their lives. As long as activity is peaceful it should be permitted. It follows that, from this perspective, every person is as much a businessman as individuals usually identified as such. Every individual who engages in gainful employment in exchange for pay participates in business. He trades his time, energy, and efforts in order to receive remuneration which he can use to attain his needs and desires.
Business is the way people in a free society organize their economic activities by producing and marketing goods and services in response to the voluntary actions of people in the marketplace who either purchase or abstain from purchasing. Commerce makes it possible for people to pursue their desires and achieve prosperity through trade with others. Business is the method by which a man can voluntarily offer to exchange what he possesses for what he desires. It is the most effective means by which a person can pursue his vision of happiness in accordance with the natural law principle of natural rights. It follows that a legitimate businessman does not profit through force, fraud, deception, or other immoral means.
Each person values things subjectively in accordance with his unique attributes and individual judgments. Businesses develop to meet the diverse and numerous wants of distinct persons. In a free society, a business endures only as long as it pleases enough individual customers. A businessman thus earns his wealth and serves himself only when he first addresses the well being of others. The free market coordinates the skills and activities of disparate individuals with varying goals and diverse values. The successful businessman serves others as those others want to be served and not as he thinks they should want to be served.
Business involves everyone who engages in trading what he creates and owns (i.e., his ideas, goods, and services) to others who consider what they have to be less desirable than the exchange items offered in return. People only part with what they value less for what they value more. It is a myth that in an exchange, what one gains the other party must lose. In a voluntary exchange, both participants must expect to gain or no exchange will take place.
The road to success
To be successful, a businessman must objectively perceive reality and rationally process and evaluate information. He must detect information gaps between consumer wants and needs and the potential of a new but as yet undeveloped product or service to meet those wants and needs. The businessman must anticipate new markets and consumers' future wants and needs, learn from competitors' successes and failures, accumulate capital for his projects, acquire the needed resources, coordinate numerous activities and employee skills, and take risks by trading present and known values for resources that only promise a potential future value for him. Profit is payment for the businessman's thought, vision, initiative, determination, and efficiency.
Businessmen aim to produce a profit by selling at the highest price the market will permit while buying at the lowest prices the market will yield. They profit by doing the best they can in creating goods and services that consumers desire. The role of business is to produce the best possible goods, services, and ideas at the lowest possible cost so as to maximize the firm's profits. The businessman earns profits by using as little as possible to provide customers with as much as possible. Profit is made by creating wealth and trading with others.
Human flourishing involves the creation, acquisition, and use of wealth in fulfilling activities. It is the practical insights and reason of individual human beings as producers and consumers that are needed, not only in the production and attainment of wealth, but also in the pursuit of each person's unique vision of his happiness.
Business, as a calling, is related to the flourishing of the individual. Innumerable individuals have satisfied their needs, actualized their potentialities, and attained their goals in the realm of business. It follows that the businessman's activities are morally proper and worthy goals.
The intellectual and moral virtue of prudence is concerned with the intelligent living of one's life. If a person is to be prudent about his life, he must attend to his total well-being. Prudence thus involves the intelligent pursuit of profit, prosperity, and commercial success. Business can be viewed as the social product of human concern with prudence – advancing one's own essential well-being and of his loved ones. To be prudent is to apply intelligence to changing circumstances by acting in the right manner, at the right time, and for the right reasons.
Commerce is a proper, morally justified area of human action in which businessmen are concerned with obtaining economic well-being. Businessmen transform potential wealth into physical products and services by combining human innovations and discoveries with human labor and natural resources. Through the use of intelligence, businessmen make possible physical goods, services, and enjoyment of life. In a way, businessmen are specialists in the virtue of prudence. They provide people with power over their lives by supplying goods and services that can reduce their labor and increase the time available to pursue other chosen activities. Businessmen help their fellow men pursue their unique visions of happiness.
The core of business is wealth creation. Its essential nature involves the production of value for trade. Professional businessmen are specialists in voluntary exchange. In a firm, managers are employed to add to the net worth of the company. They are not typically hired to carry on programs of social reform. The businessman provides business competence for a price. People normally invest to increase their wealth and the businessman furnishes the skills to meet this goal.
Enters the State
Business qua business serves those who wish to trade and does not make use of coercion. It is the entry of the state into the business realm that leads to coercive monopolies and unfair advantages. Unlike business, the state relies on coercive power rather than on voluntary agreement. When a failed or faltering business is rescued by a government handout, it is no longer a business. Likewise, when a businessman obtains his results outside the market framework by receiving special privileges (e.g., subsidies or monopolistic advantages) granted by the government, he forfeits his status as a businessman.
A firm's economic power is derived from its ability to produce material values and offer them for sale. Unlike political power, which depends on physical force, economic power relies on voluntary choices. A company is powerless when it fails to provide things that people want to purchase. The only leverage the businessman has is the quality of his products and his ability to persuade.
Sometimes businesses lobby government for special privileges such as bailouts, price-supports, subsidized loans, trade protection, resource privileges, grants of monopoly, etc. A moral business would succeed or fail on its own without any government assistance. If a moral businessman makes a mistake, he is prepared to suffer the consequences. If he fails, he takes the loss. A moral businessman only profits if he satisfies the needs of people by offering better products or services or at a lower price than do others. When practiced properly, business is a noble and virtuous pursuit.
The free market supplies the individual with a host of competing decentralized alternatives. Competition, a moral expression of freedom, permits people to make choices and act upon them and leads to new and better products and services, higher wages, more jobs, and a higher standard of living. Competition is a natural phenomenon through which firms strive to efficiently use resources and vie to satisfy human wants. Competitors succeed when they offer goods and services that consumers value and are willing to buy. Fortunately, when competitors fail under a free market, this does not mean that we also have a failed economy. Unsuccessful businesses simply have to make way for the successful ones and for new competitors willing to enter the market. The free market rewards businessmen unequally but equitably according to consumers' evaluations of their products and services.
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