The Businessman - Hero or Villain? W. Peterson

Copies of the 240-page anniversary edition, in English, at $1.50 each, may be ordered direct from Farmand, Roald Amundsensgt. 1, Oslo 1, Norw'ay. 52 • ITEM: "The hero," said Thom as Carlyle to a L.ondon audience in 1840, "can be poet, prophet, king, priest, or what you will, according to the kind of world he finds him self born into."l Significantly, in the midst of the Industrial Revo lution, in the midst of probably the greatest single - and still on going - surge of material well-be ing for the ordinary citizen, Car lyle did not mention the business man among his possible heroes. • ITEM: In the 1880's social. phi losophers Herbert Spencer in Eng land and William Graham Sum ner in America viewed the busi nessman as a most creative and vital member of society. In the same period Horatio Alger's rags to-riches novels, largely on success ful businessman heroes, reached their zenith in popularity.

• ITEM : Each of the 450 freshmen at Antioch College in 1964 was asked to name his personal hero i. e., any twentieth century person whom he most admired. The top ten he-roes of 104 named were Mo handas Gandhi, John F. Kennedy, Winston Churchill, Franklin D. Roosevelt, Martin Luther King, Albert Schweitzer, Bertrand Rus sell, Eleanor Roosevelt, Albert Ein stein, and Woodrow Wilson. Yet 1 On Heroes, Hero-Worship and the Heroic in History (London, 1871), p. 78. not a single one of the 104 turned out to be a Carnegie, Ford, Mc Cormick, Nobel, Rothschild, Rocke feller, Morgan, or any other indus trialist or financier. In other words, no Antioch freshman viewed any businessman as his hero although, probably, many fathers of the freshmen are businessmen. So, even though the business man has had his ups as well as downs in public esteem since 1840, his image at this hour of history still appears less than wholesome and constructive. For example, Amherst College reports 48 per cent of its alumni are business men, but fewer than 20 per cent of recent graduates have been en tering business. Again, Harvard University reports only 14 per cent of its class of 1964 planned business careers, down from 39 per cent five years earlier, al though part of this decline may be attributed to the growing popu larity of working for advanced de grees. Said, in a typical vein, Arth ur Lyon Dahl, a June 1964 graduate of Stanford University, of his classmates: "I know of al most no one who even considered a business career."2 This situation seems to betray an ambivalent business image and does not bode well for the prospects of freedom 2 The Wall Street Journal, November 10, 1964.

53 54 THE FREEMAN July and free enterprise. Images are important; they reveal our think ing, our creeds, our inner con flicts; they influence our actions. Now, if the word on the campus is that business is for the birds, if the word elsewhere is that the businessman is to be regarded as a suspicious creature who must be publicly controlled if he is to be privately tolerated, it follows that the climate for business will hardly be conducive to the full flowering of trade and investment or, more importantly, of individual values and human liberty. Hence, saint or sinner, oracle or ogre, hero or hellion; what is the proper image of the businessman in a free society? The inquiry is fraught with some complication. The Anticapitalistic Si'as Among Intellectuals For one, I think his image varies with the era, its values, and especially its intellectuals. Intel lectuals are crucial in the art of image-making. And as a rule the intellectual, from Plato and Aris totle on, has rarely turned a kindly eye on the businessman, as may be inferred, for example, from the ancient and medieval·castigations against usury and trade. In a typi cal vein, Cicero wrote in his De Officiis: "Those who buy to sell again as soon as they can are to be accounted as vulgar; for they can make no profit except by a certain amount of falsehood, and nothing is meaner than falsehood."3 Similarly, from that durable milieu of what von Mises calls "the anticapitalistic mentality,"

one should note the introduction to the Modern .Library edition (1937) of Adam Smith's Wealth of Nations. For in this most popu lar edition in the United States and Canada, an edition read by countless college students, the in trod uction is made by Max Lerner, who does not hide his dis-sympathy with the business system, notwith· standing the fact that the Adam Smith work is a classic in defense of capitalism. Lerner labels Smith as "an unconscious mercenary in the service of the rising capitalist class," holds that Smith gave "a new dignity to greed and a new sanctification to the predatory im pulses," maintains that the father of modern economics developed his essentially labor theory of value awkwardly and hence, "it remained for Marx to refine it, convert it into an instrument of analysis, and extract from it the revolutionary implications that were inherent in it from the start."4 Keynes, giant of economic 3 Quoted by Lewis H. Haney, History of Economic Thought, 4th edition (New York, 1949), p. 79.

4 p. x.

1966 THE BUSINESSMAN - HERO OR VILLAIN? 55 theory in this century and image maker extraordinary, also seemed to have had little love for the businessman. Free private invest ment, he held, swings on "the nerves and hysteria and even the digestions" of private investors, on "whim or sentiment or chance"; and "enterprise only pretends to itself to be mainly actuated by the statements in its own prospectus." Well, if businessmen are so whim sical, nervous, hysterical, preten tious, and untrustworthy to invest for the general welfare, what then? Keynes gives his prophetic answer: "I expect to see the State, which is in a position to calculate the marginal efficiency of capital goods on long views and on the basis of the general social advan tage, taking an ever greater re sponsibility for directly organiz ing investment."5 Plainly, then, to many thinking people, especially intellectuals and college and university students, business does not come across as a preferred institution among other social institutions in a free so ciety. Plainly the businessman is not always regarded as a construc tive, forward-looking member of the community. Apparently the typical college student prefers to enter teaching, social work, scien5 The General Theory of Employme.nt, Interest and Money (London, 1936) p.

164. tific research, government work, the Peace Corps, or the profes sions of medicine, law, architec ture, etc. Apparently many a stu dent - and professor -looks upon business as little more than a dog eat-dog world, dominated by the law of the jungle, corrupted by the drive for profit, and blind to almost every decent human value; and many other students and pro fessors view business as a world of superficiality and conformity, a treadmill on which the individ ual gets nowhere and says noth ing. Productivity, Purpose, and Incentive to Save Yet a big rub with such views of business and, indeed, with the whole problem of the image of the businessman, boils down to this: Precisely, what is a businessman? For business is an extre·mely pro tean and equivocal term and what people commonly assume to be a "businessman" may be altogether \ too arbitrary and too narrow a view. So much so that perhaps with a clearer understanding of just what a businessman is and what he is trying to do, the pub lic may, hopefully, adopt a better image of him. But realistic, mean ingful, and-broadly applicable; defi~-nitions of business - a word de rived from "busy" - are hard to come by (as are, by the way, 56 THE FREEMAN July definitions for work and labor. 6 ) For example, the editors of the four-volume World of Business (1962)-editor Edward C. Bursk of the Harvard Business Review, librarian Donald T. Clark, and business professor Ralph W. Hidy, all members of the Harvard fac ulty - concede that business is not easy to define and· wind up not defining it. Similarly, Beard sley Ruml in his Tomorrow"s Busi ness (1945) also admits that de fining business raises problems.

Fot example, he is not sure whether farmers and professional people can be properly classed as businessmen. Still, his definition appears broad enough to include them, viz: "This is the business of business: first, to get things ready for use; second, to provide people with purposeful activity; and third, to give people a way to save productively a part of what they earn."7 In my judgment, the only work able definition of a businessman is necessarily a broad one, in that it should cover executives and entre preneurs, bankers and sole pro prietors, merchants and indus trialists, professional men and 6 For a searching analysis of this problem, see Roger M. Blough, "Work and the Individual in the Modern World," in The One and the Many by John Brooks and others (New York, 1962) pp. 173-208. 1 p. 32. newspapermen. Indeed, who in this advanced age of division of labor doesn't "profess" some spe cialization, some marketable skill?

Hence, a more satisfactory defini tion of a businessman would ap pear to be simply that of a person who is continuously engaged in voluntary trade or exchange of goods or services, including his own, for profit. The two key words here are "voluntary" and "prof it." Voluntary involves choice for both the buyer and the seller, and means free, without coercion, and would be inapplicable to individual economic action under socialism. Profit - the term derives from the Latin profectus, me,aning an im provemen t or ad vance - means benefit or gain, not necessarily pecuniary gain, and as a goal rec ognizes that human action is mo tivated directly or indirectly by profit, including psychic profit, or conversely, by the' avoidance of loss, including psychic loss. So cially, profit is a means of con trol and a measure of usefulness. The successful corporation is a demonstration of social worthi ness; the unsuccessful corporation is a demonstration of social un worthiness. So through profit-and loss signals the public rewards success, penalizes inefficiency and controls investment-and business men-providing them with strong incentives to adjust to society's 1966 THE BUSINESSMAN - HERO OR VILLAIN? 57 wishes. Thus do private incentives and business policy strongly tend to reflect the public interest.

To Each His Own Business Under a broad definition of bus i nessman, then, everyone from the street vendor to the head of Gen eral Motors or American Tele phone and Telegraph is a business man. And so, at least in some de gree, is the accountant, actor, architect, artist, carpenter, doctor, engineer, musician, newspaper man, plumber, and, ironically, the intellectual-the writer, scientist, professor, playwright, etc. Each of these craftsmen sells his labor in the open market and buys goods and services on his own account. Frequently the motivation in these buying and selling activities is pecuniary. But even if not - and money, it must be remembered, is not an end in itself - it is still profit-oriented. The professor seeks gain in the form of the ad vancement of knowledge and the spread of education; the musician profits from musical enjoyment by himself and others; the phy sician derives psychic income from making sick people well; and so on.

Thus, as businessman Donald C. Cook of the American Electric Power Company observed in his "Intellect and Business: the Dia logue and the Challenge," the seventh annual Business Leadership Lecture at the University of Mich igan in 1964,8 every intellectual is in some degree a profit-oriented businessman and lives in a world shaped by business. Equally, every businessman worthy of his calling is in part an intellectual and is moved by the great ideas of his time. Each-intellectual and busi nessman - helps to create condi tions to which the other responds; each is the customer of the other, giving and taking, buying and selling, and sharing generally. At any rate, under a broad def inition of the businessman, many in a free economy who do not consider themselves businessmen are actually already very much in business. Perhaps recognition of this broader definition could bring about an updated version of Mo liere's gentleman who discovered that he had been talking in prose all of his life. In other words, the public, hopefully, could come to the realization that practically everyone, male and female, young and old, rich and poor, is in busi ness in one way or another, that in the words of Shakespeare, "every man has business and de sire, such as it is." Even the housewife is in business for, when you think about it, the average American family currently earns and largely spends some $8,000 8 Michigan Business Review, July 1964.

58 THE FREEMAN July annually which, if multiplied by 45 years of employment, comes to better than one-third of a million dollars - and that's· quite a busi ness. Thus, every "worker," through his labor and the power of his purse, is at once a producer and consumer, a buyer and seller, an employee and employe·r, a cus tomer and supplier. Consumer Sovereignty The point is that if everybody is to some significant extent in business, is a part of business and must carry out business functions in his daily life, it follows that he is part businessman, that a widely-held negative image of the businessman is incongruous and not a little masochistic. Can one logically find fault with a seg ment of society for doing what the whole of society is at least in part already doing and, indeed, must do? Too, the easy identification of the businessman as the boss does not seem to be overly logical with far-reaching division of labor and social cooperation. For, in the final analysis, every free agent from office boy to chairman of the board works for the same boss the consumer. To be sure, the office boy may report to the office manager and the chairman of the board to the board of directors and the stockholders, but all - ineluding the "independent" busi nessman, the man who says he is his own boss - take their ulti mate orders from the customer, the quite sovereign consumer.

The customer, as merchant John Wanamaker noted, is always right, ever the final court of appeal. It was Grandfather who, in effect, put the buggy whip manufacturer out of business when he bought a Model T. It was the consumer who made Henry Ford big, who did in the Stanley Steamer and the Stutz Bearcat. It was Mother who did in, economically, the ice man when she bought a refrig erator. It is today's consumer who makes board rooms quake through his purchases and non purchases. It is through this power of purchase and nonpurchase that democratically the consumer in effect directs business, hires and fires people, and generally puts the nation's resources to work. Of course, consumer sovereignty as a concept has not been widely accepted by the intellectual who, for that matter, frequently does not also seem to be especially aware of the highly pervasive' na ture of business. Still the intel lectual's criticism of business and businessmen has served at times to correct abuses, to redress needful balances and to maintain human istic and esthetic values. Unfor tunately, the criticism has, on 1966 THE BUSINESSMAN - HERO OR VILLAIN? 59 occasion, also induced so-called "reforms" which have been harm ful to the business syste-m - and to the consumer. To take an ex treme example, intellectual Karl Marx, who regarded businessmen a.s inhuman exploiters in the nine teenth century, helped to bring about the Communist Revolution in the twentieth century. On the othe'r hand, in the eighteenth cen tury, intellectual Adam Smith saw the businessman as a creative and vitally necessary member of so ciety, and helped to establish the Industrial Revolution and the capitalistic order which still pre vails in the Western world today.

A Businessman Serves Self by Serving Others I agree with the Smith view and hold the correct image of the businessman is neither that of he-ro nor villain. Businessmen can be good; they can be bad. They run the gamut of the moral spectrum. Businessmen have founded muse ums, universities, hospitals, chari ties, foundations, etc., while serv ing in their main social function of promoting, organizing, and manag ing production to cre-ate goods and jobs. Some black sheep busi nessmen, to be sure, have indeed engaged in coercion, theft, and misrepresen tation. So a generalized hero or villain image of the businessman is not, in my judgment, tenable. A good image is tenable, however, because in the construct of the business system it is clearly in the interest of the businessman to give his best to his customers - i. e., to society - or else his competitors will, or his profits will fall. As Adam Smith pointed out, we do not speak to the butcher and the brewer of our need but rather of their advantage.

In any event, I belie've the proper image of the businessman is neither that of knave nor knight, villain nor hero. He has a job to do - directly for himself, indirectly for society - and he does it. He is under the social discipline of profit and loss, under the iron rule of the consumer. And he should think well of his calling. For as Alfred North Whitehead spoke of the Great So ciety before that phrase became fashionable: "A great society is a society in which its men of busi ness think greatly of their func tions."9 It follows, then, that with a better understanding of the businessman, everybody should have a better image of him - and of business. ~ 9 Adventures of Ideas (New York, 1933) p. 124.