The suicidal impulse of the business community - Adam Smith Address

Business Economics, Jan, 1990 by Milton Friedman

I have recently been expressing this in what I call a welfare-state syllogism based on three propositions that are clearly part of the conventional wisdom. Major premise: socialism is a failure. Everybody agrees with that proposition about Russia, China, the United Kingdom. Minor premise: private enterprise capitalism is the only system that has been able to combine prosperity with human freedom. Again, there is wide agreement with that proposition. Conclusion: the U.S. needs more socialism! The conclusion is a clear logical fallacy yet I am sure that you will agree that it is conventional wisdom. Whatever problem you talk about -- child care, drugs, health, oil spills, earthquakes, schooling, productivity, volatility in the stock market -- the only solution generally regarded as possible is more government intervention, throwing more money at it, passing more laws, more regulations. Like the rest of us, the business community in general has been exposed all their lives to that climate of opinion. They are graduates of colleges and business schools in which the crucial -- and implicitly beneficent -- role of government is taken for granted. They are busy running the businesses that they own or that employ them. You cannot expect them to be philosophers and independent thinkers in the social area as well. Though there are some notable exceptions, most of them simply accept the common view. As a result, when any problem arises, their immediate answer is, "Let's go to the government and get it solved." I believed that is probably a major part of the explanation for the suicidal impulses of the business community. But I am far from confident that it is the whole answer.

You people are in a first-hand position to observe the phenomenon I have been discussing. I hope some of you will be induced to investigate it further. It is of the utmost importance for the future of our free society to understand what is happening and why it is happening. Perhaps then, something effective can be done to prevent the business community from fouling its own nest. Even better, perhaps it would be possible to harness the undoubted influence of the business community to shoring up the foundations of a free market economy instead of contributing to their destruction.

FOOTNOTES

(1)See in particular the publications of the Capital Research Center (1612 K Street, N.W., Suite 704, Washington, D. C. 20006). (2)Francis A. Walker, Political Economy (New York: Henry Holt & Co., 1887), pp. 29-30. (3)4th ed. (London: Allen & Unwin, Ltd., 1952), p. 410.

Milton Friedman is a Senior Fellow, The Hoover Institution, Stanford, CA.