Freedom to Shop Around; H. Buck

Canada, on the other hand, has needed no Point Four, no Colombo Plan, no United Nations, to get our oil and gas and iron ore developed. Nobody drafts plans for collecting other people's money in taxes for investment [284 ] here. People beyond our borders have furthered our development with their own money. These investors have favored us, the Canadian people, with that degree of confidence which has induced them to lend their own equipment for our economic progress. Our prosperity, therefore, must depend not on the re sources we inherit from our deceased benefactors, the bacteria, but on ourselves. For the moment, when talk of business readjustment fills the air, our standard of living must depend on our capacity to market our products. This means understand ing what our customers want, and producing it at a price they are not too sorry to pay. This applies to our cus tomers here in Canada, no less than abroad.

Convincing the Investo1~ For the longer pull, when we have overcome whatever readjustment awaits us, the maintenance and growth of our prosperity must depend on our capacity to market Canada as a going concern. This means convincing peo ple with spare money that here they will find it pays to invest it. This applies to investors both outside and in side Canada. These two requirements mean exactly the same thing, looked at from two standpoints. For we can hope for no new investment in a concern, without buyers for its product. Nor can we make the most of our market unless we can assure our customers that the product will go on being made, and improved, at a price within reach. [285 ] All this amounts to recognizing the consumer as the one whom the economic system is designed to serve. All people alike are interested in the most efficient economic system, as consumers. The principle which enables consumers to get the most of what they want is the principle of the free market. The heroine of the free market is the typical Queensway housewife who will go out of her way rejoicing to buy a box of detergent two cents cheaper. (Men may smile at such small-scale economies, but even they may find some satisfaction in paying $5.00 less for a suit, or $25 less for a television set.) Such an opportunity our heroine is glad to discover by shopping around. She would most vocally resent any restriction on her freedom to shop around. Without this vital freedom, all other freedoms-worship, speech, press, assembly, and so on-are shadowy if not impossible.

Principles of Prosperity Because we are human beings and not animals, we have at our command two principles whose realization secures us an immensely better living than animals can ever get for themselves. In the first place, two people can work to produce more than twice as many valuable things as one can. In the second place, two people, simply by exchanging things they have, can each end up with more of the things they want. Through these two principles, we can produce and [286 ] enjoy immeasurably more as members of an economy than we could as so many Robinson Crusoes or even Swiss Families Robinson. Through a third principle freedom to shop-we can make the most of the economy we ·live in, and produce for our enjoyment more than ever. This embraces not only the housewife's freedom to shop for her detergent where she need pay least for it but also the producer's freedom to shop for his materials where he can get them cheapest; the investor's freedom to· shop for the biggest return for his money; the em pIoyer's freedom to shop for the kind of help that will give him the biggest production for what he pays; and the worker's freedom to shop for the job that pays him best.

Competition Equals Freedom Competition is nothing but freedom looked at upside down. In a market where buyers are free to shop around, sellers must outdo each other to get and keep customers. Through competition there is produced the maximum of goods and services that the public wants most. Competi tion· does not mean "dog eat dog." Instead, it is the necessary preface to cooperation. Competition helps us to decide with whom· we can best cooperate in produc tion. The driving force behind the free market is· the enter prise of the businessman. He is the man who sees a chance to turn unused resources to account, and pro[287 ] duce something out of them which the public will want. He buys materials, secures tools, hires helpers, and sells his product in the hope of recovering all his costs; in cluding the cost of his own time and the cost of any tools that may be his. Perhaps he does not recover his costs, which means that some better use could have been made of all the resources involved, so that everybody loses all round. Or else he may be lucky, and recover all his costs plus something extra. The extra is profit, and nothing else is.

On the free market, his costs will tend up, and his prices will tend down, through the pressure of competi tion. They will so adjust themselves in time that the businessman will earn no more than he could get by rent ing his tools to some other businessman and going to work for him. When that happens, he has no profit any more. Pronts are the businessman's return for trying something new and desirable. When it is no longer new, profits stop. Profits are temporary only, but the gain to consumers, investors, and workers is permanent. Everybody a Businessman Most of us think of the businessman as distinct from the investor or the worker; we think of him instead as the operator of a going business. So typically he is; never theless, every investor is a businessman when he invests his money in hopes of a bigger return some day· than his investment brings him now; and, most important, every worker takes on the character of a businessman when he [288] fits himself for one line of work rather than another, in hopes of turning his own capacities to the best account possible in the end. You might say, therefore, that all of them are speculators, and so they are. Enterprise is speculation, and speculation is enterprise. Both of them mean anticipating in advance what other people will want, and facing the possibility that they won't want it.

Under the free market everyone is free to anticipate and speculate. As businessmen and speculators-even if we are in vestors or workers-we may feel handicapped, not by our own freedom to shop around, but by other people's; and so we may try to stop them, or to get the government to do it for us. We may succeed; this involves controlling the supply of some factor of production, and turning out at our own price a smaller product than the customers would take if we didn't control the supply. But if we do, we may find that the pressure of competition makes us pay extra for the factors of production whose supply we don't control. As monopolists, therefore, we may find our selves no better off than if we had no monopoly. The public, on the other hand, loses the goods that the mo nopoly keeps them from getting. Under the free market, therefore, some people may get speCial benefits temporarily, but everybody benefits permanently. Under a market that is not free, some people may get special benefits for a time, but everybody loses permanently. It is never under the free market that some. people benefit at other people's expense. This re sults, instead, from interference with the free market.

[289 ] FalseIdeas People are not convinced of this nowadays, to the same extent as was the case once. Many people feel that the Dirty Thirties and the Fighting Forties have discredited the free market for good. Since the thirties a great many ideas, contrary to the idea of freedom to shop, have em bedded themselves in everybody~s subconsciousness. These ideas, if· we leave them there, can only handicap the development of our country~s economy and the ex pansion of our standard of living. For example, we are accustomed to hear, perhaps even to say, that the problem of production has been solved. It hasn't. It will never be solved until everything people want has been made as cheap as the air we breathe. Until then, businessmen wiIl have opportunities galore for finding cheaper and more efficient ways of making things. And out of two and one-half billion people on this globe, two billions would be glad of the chance to make for them selves all sorts of things that the most fortunate half billion of us take for granted.

Weare used to thinking of various groups of people as necessarily opposed in their economic interests; in par ticular, that the interest of employees is in natural conflict with that of investors and businessmen. It~s not. The economic system is a means whereby people get together to produce things for themselves. The investor is the man who lends us the tools we work with. The businessman leads us through the productive process. [290 ] Under the free market, all of us alike have the same in terest in bigger and bigger production. There is no· con flict of interests unless the market is not free. We are disposed to think of employees as unfortunate underdogs, whom only enlightened laws now save from such ill-treatment and overwork and underpayment as they used to suHer at the hands of businessmen a century ago. They didn~t~ The reason why people worked long hours for a low standard of living in the early factories and coal mines was that there were not enough tools to enable them to tum out enough of a product to earn them a better living in shorter hours. The reason why children of nine can stay in school, instead of working in cotton mills and coal mines as they did in nineteenth-century England, is that we have enough equipment to produce all the coal and cloth we need without putting children to work; and therefore are well enough off to keep them from starving, without falling back on what they can earn. In fact, neither public enlightenment, nor legislation, but only tools and equipment, have improved the living standards of all of us. Workers in this eqUipment-rich country are not underdogs. They are Canadians.

We have got the idea that there are natural limits to what a man is entitled to earn, either from his services or from the use of equipment that he owns; beyond which limits, his income can only arise at the expense of the toiling masses. There aren't. It is only in a market where everybody is not perfectly free to shop around that anybody can gain anything at [291 ] the expense of anyone else. Under a free market, if one man earns more than another, it can only be because he performs more service to the toiling masses. (By the way, they seldom let the incomes of movie queens, television stars, and hockey heroes bother them, even if these per sonages produce no more than most businessmen do, and get paid more than most businessmen for doing it.) We are accustomed to think of an economy more or less government-controlled as preferable to the free market, and to disagree mainly over the extent of control desirable, on the ground that only government action can prevent some people from earning too much and others too little, and on the further ground that only government action can save us from business readjustments, reces sion, and depression. It can't.

The Free Market Solution Only the free market can prevent people from earning too much or too little, and only the free market can save us from the business cycle. We get readjustments and worse things because we have enjoyed the intoxicating overprosperity of a boom. We can only have a boom because businessmen have been fooled into overexpan sion by cheap credit. We can only have cheap credit because governments have given in to the everlasting temptation to make money easier to get than goods are to make. The readjustment comes when businessmen find that there isn't enough equipment in existence to carry out all their carefully-laid plans. Because of the lack of [292 ] equipment, they find they cannot afford to sell their out put at a low enough price for the public to take it all. They cannot afford this because they owe too much. The expansion of cheap credit has been nothing but an ex pansion of debt. The business cycle results from too much debt, and from nothing else.

Source of Capital Yet we are accustomed to the idea that saving is of doubtful value to the economy as compared with spend ing for consumption. It isn't. Material progress depends on the growth of capital, and on nothing else. Production results from the utiliza tion of energy by means of equipment directed by man power. The equipment is capital. We can only build up capital by producing equipment. We can only produce equipment by consuming less than we can consume and making equipment instead of consumer goods. This we can do only by spending for immediate use something less than our total income. On the free market, anything saved and not consumed goes into the purchase of equip ment, whereby workers are enabled to produce more and more goods every hour they work. We are used to being told that debt, especially govern ment debt, promotes lasting prosperity. It doesn't. As has just been pointed out, it is nothing but the growth of debt that causes the upswings, and failure to meet it that causes the downswings of the business cycle.

Sound banking and finance depend on keeping debt [293 ] down, keeping it on a short-term basis, and keeping it secured by valuable goods. Only under a market free from interference by government have banking and finance a chance to remain sound. We are used to the thought that governments can overcome the downswings of the business cycle by run ning deficits and relying on "built-in stabilizers" to main tain purchasing power. They can't. At best, they can make the recession less severe and less short. "Built-in stabilizers" can only provide some people with purchasing power· taken from other people. They can only keep people consuming, while continuing to produce unwanted goods, or else producing nothing. "Built-in stabilizers" may keep people spending, but keep them spending out of the country's capital. In brief, we are accustomed to thinking of the free market as an antique institution which has outlived its usefulness; and of the government-controlled economy as the up-and-coming thing which holds the promise of the future. It isn't.

The government-controlled economy is a superseded institution that holds the miseries of past ages. It is the free economy, centered on the idea of liberty to shop around, that has been new for the last couple of centuries only. What is new is the idea of using the economy to provide the goods the customers want most, rather than the goods that custom or authority dictates that they should have. Under the free market the government has one all 'important function: to protect· the free public in their [294 ] choice of goods to consume, investments to place their funds in, work to do. The government's job is to secure the people against violence and fraud, whether from out side the country's borders or within, and this is a man sized job for any government to undertake. The benefits of safety from force and deceit are so general that the cost of providing them cannot accurately be assessed against individual citizens. Accordingly, the costs of gov ernment can only be assessed against the citizens in some more or less arbitrary way; the most usual method is to presume that they benefit most who prosper most~ and in that way, impose some sort of tax scheme adjusted to income.

What About the Distressed? There is little, however, in the way of ~ocial welfare which governments can do which under the free market cannot be done better otherwise. With everybody free to shop around, everybody will find the best-paid joh he is capable of; if therefore there is any distress left in the economy, it will be only among those who cannot work and have no assets. In the nature of the free-market economy as it develops, there should be fewer and. fewer people left without assets. This shrinking load of distress can best be cared for by the churches, the Lions Clubs~ and similar voluntary groups of interested people. And as the economy expands, they should have more and more funds at their command for their good works. Opponents of freedom to shop are not slow to find [295 ] nasty names for the ways of life that are founded on it. Such names may be innocent enough in their. origin, but the enemies of free enterprise know how· to make them sound nasty. Names such as capitalism or laissez faire are such as few advocates of freedom to shop are anxious to use nowadays to describe their way of think ing. Without a name to call their system by, its advocates hesitate to describe it at all; and so they tend to let the case against it go by default, instead of arguing it in detail and on its merits.

Path to Progress Capitalism, after all, only emphasizes the central im portance of tools and equipment in the provision of people's wants, and the usefulness of allowing individuals to own tools or an interest in them, to use or to rent to other users, so that people's wants may be best served. The important thing is not who owns the tools and equipment, but that they should be there. Under a de veloping free market, all the people should end up by being capitalists. Meantime, let us believe in capitalism, and believe in it hard. It won't kill us. On the contrary, it is the one economic system that can be counted upon to improve the material conditions of all classes of peo ple, by delivering the maximum of goods to go around. This is the one and only thing that can be claimed for capitalism, and this is in itself enough to claim for any economic order. The other day a man said in Niagara Falls, "Laissez [296 ] faire is dead. It should have been given a decent funeral or it should have been stuffed, mounted, and properly labeled and given a respectable place in a museum.~~ Presumably this personage thought that laissez faire means "let things slide." It doesn~t.

It means exactly what it says: Let goods be made; let things be done; let there be production. Anything which interferes with people's freedom to shop around can only cause fewer goods to be made and fewer things to be done, and can only interfere with production. If we be lieve in an expanding economy of Canadians free to shop around, our slogan ought to be: Forward to Laissez Faire. l297 ] OYSTERS OR EAGLES? tg J~nnellt W. Soflill ~ THE OYSTER is endowed with a ready-made house to live in. All he has to do is to open the doors of his house to take in his food and close them again to keep out his enemies. He has perfect social security. Yet he is the easiest fish in the world to catch, crush, and cook. He always ends up in the soup. So what does his vaunted security really amount to? The eagle, on the other hand, is peculiar among cre .ated things in another respect. When a severe storm strikes, all other birds either hide from the storm or try to fight it as long as their strength holds out. The eagle neither fights nor runs away. He simply sets his wings so the fury of the storm itself lifts him above the storm where the sun is shining, and there he remains, "free as a bird," until the storm is over. And only a fool would pity the eagle because he isn't an oyster.