The Roots of the Free Market; W. E. Douglas

There are many problems afflict ing the black communities housing, education, health care, crime and unemployment-but no real effort has been made to resolve them apart from the programs of government. In fact, it would be ex tremely difficult to find many blacks willing to undertake the effort, on their own and without financial as sistance from outside their commu nity. The Ubootstrap" concept, where the disadvantaged were to be pro vided the means to resolve their problems has been replaced with the feeling that the means now consti tute the end. Consequently, the pro grams of the state, all of them, are now viewed by most blacks as the THE ROOTS OF THE FREE MARKET 233 ultimate end. Additionally, of course, such an attitude provides for the perpetuation of the programs. Conditioned to State Help The reason for this black attitude of resignation, where such programs are concerned, is that many blacks have been conditioned by their lead ership and the state to seek all of their answers from the state. That such reasoning tends to create de pendence, rather than the indepen dence ostensibly sought, is a situa tion to which a few blacks are be ginning to awaken.

This fact was brought home to me through an acquaintance, formerly a left winger, a black, who preached the gospel of liberalism and gov ernment solutions to black ills. As a ranking member of the liberal ele ment of a major political party, he had worked at a salary of $10,000 a year. "When a job opening in the private sector at double his existing salary was offered to him, he did not hesitate to accept it, gleefully an nouncing his good fortune to all within his hearing. Several months later we hap pened to meet and his apparent lack of spirit prompted my asking why he seemed so downcast. His response was a lecture on the merits of fiscal conservatism. After advising me that his 100 per cent increase in salary had only provided him with a few extra dollars in spendable income, he launched into a vicious attack on the system of taxation, the idiocy of social security and a con demnation of a government that would make the productive pay for the upkeep of the unproductive. My acquaintance had become one of the middle class victims of the welfare state.

It is noteworthy, therefore, that the black economic middle class is expanding at an unprecedented rate, while unemployment of the black lower class is in a correspond ing upward spiral. More and more blacks are attaining higher paying positions in government, while af firmative action programs are open ing (if that be the correct definition) many middle management positions to blacks. Whatever their route to that economic middle class, the fact is that a larger percentage of blacks are beginning to learn the price they must pay for those of their race who do not produce what is essential to their own survival. Consequently, many of the black economic middle class are more adamantly opposed to social welfarism than some mem bers of other ethnic groups. Learning about the real travails of taxation, the retrogressive effect of government intervention in their lives, and how both act as barriers to the long sought dignity and inde pendence, is not the kind of knowl edge dispensed in public schools.

Thus, for the great majority of 234 THE FREEMAN April blacks, there is an element lacking in their learning experience. Where, for example, does a product of the black ghetto go to acquire truthful information about the free market system or, for that matter, the American economic system? There may be some versions of it available at a few of the black colleges and universities, but it is usually editorialized rather than a truthful presentation of what the system is all about. It is all too easy to thus categorize that black ghetto inhabitant as ((disadvantaged," because such knowledge is not available in the ghetto, but then we are inadver tently suggesting that another gov ernment program be inaugurated for the purpose of promoting such knowledge. However, to equate being disadvantaged with failure to reach out for knowledge essential to one's own survival, is to contend that logic is an enemy of reason.

Technology Highly Prized Recent events reveal some in teresting. developments concerning capitalism and the free market. American technology is probably the most sought after product on earth, even more so than the oil from its bowels. Some nations desire to purchase it, while others contend that it should be given them in com pliance with their uhuman rights." Such is the hue and cry of the economic Third and Fourth World. Yet the difference between those so-called disadvantaged nations and the industrialized nations, in terms of the standard of living of their inhabitants, can only be attributed to a technology that is an outgrowth of a free market. The reason for that result, however,. is to be found in quite another direction. The foundation for the free mar ket may justly be defined as entre preneurial freedom. But, the market and entrepreneurial freedom are dependent on what must be de scribed as order-a societal order, which is born out of discipline.

This fact is brought into focus by Japan and Germany, our two pri mary military enemies dwing World War II. The huge financial invest ment by America in those two na tions, following the war, has paid handsome dividends to both the in vestors and recipients. Race, the principal theme of this thesis, can not be truthfully cited as a factor in that investment, because Japan is a nation of non-whites. Prior to their military defeat both of those nations had attained significant military strength, with enviable break throughs in new technology. In fact, America utilized the Germans' ad vancement in atomic fission to ulti mately defeat the Japanese. Of more importance, however, than the ability of those two nations to wage war and devise new 1979 THE ROOTS OF THE FREE MARKET 235 methods and weapons in the process is the order to be found in their respective societies. Again, an order born out of discipline. Order, there fore, is the most important prerequi site to the proper functioning of the free market system. Disorder or cha.os is not conducive to production and trade.

Inadvertently, therefore, we have not only attained an answer as to why the ghetto remains a ghetto and why many nations of the world can not respond to the abundance of wealth available to them and their peoples. We also have the basis for the selectivity of the investor. For isn't it the stable, orderly organiza tion of business, within an orderly nation, that is sought by the inves tor? Dependability and Responsibility It can be reasoned, therefore, that dependabili ty and responsibility, two byproducts of discipline, are far more important in the scheme of things than are those ((human rights" presented in lieu thereof by the state. Pointing out the differences in the order and stability of blacks in com parison to others may win no friends, but it is essential to an ex posure to the truth. Germany and Japan, as examples; have among the lowest crime rates of any nations on earth. Jointly, although their com bined population is seven times that of black America, their incidence of crime is one-seventh that of black America.

And when we examine those na tions of the world most mired in poverty, we discover the same phenomenon of crime and disorder, with the unemployment rates of those nations in parallel with the black communities of America. But who will invest in disorder and chaos except government? No think ing traders in the free market would gamble their money in such a fash ion, or place the money of their in vestors in jeopardy as does our gov ernment with the proceeds of its taxpayers. Since 1954 all governments of America, federal, state and local, have invested (if that not be a pros titution of the term) over 1 trillion dollars in social programs of one kind or another. It is significant that this sum exceeds the total private and public post war investment by Americans in both Germany and Japan. The question then arises, and one which should be directed to the lib eral black and white leadership of this nation, why did not America invest in its 18 million plus black Americans, instead of in foreign na tions, formerly our military enemies? Once again, the pertina cious factors of order and discipline are thrust to the forefront.

Without endeavoring to plumb 236 THE FREEMAN April the ideological aspects of President Carter's opening of diplomatic rela tions with the People's Republic of China, the move does raise several important issues concerning our free market system. First, and foremost, the establishment of diplomatic re lations opens to the American busi ness community the single largest body of potential consumers on earth. But why, when it is classified as communist, possessing the ideologi cal traits intimated by its official designation, would that nation seek the modernization inherent to Western technology? The answer is rather obvious, for the industrial West and Japan have proven the free market system to be superior to all others in providing the quality of lifestyle sought by all peoples of this earth. Red China, then, gazes at its neighbor, Japan, with unquestioned envy. Chinese Interest in Capitalism China has openly solicited the wares of the free market, admitting in the process its desire for our technology, thus turning away from the commune style of existence under communism and seeking a logical route out of its dilemma of poverty. What this move should point out to the adherents of socialism and Marxism, regardless of their ethnic persuasion, is most evident.

If the most populous nation on earth with four and one half times the population of the U.S., brings into question the concept of the state controlling the means of production by openly flaunting their desire for the technology of the free market system, then it is certainly time for many Americans to reconsider their thoughtless journey away from the system which has made its partici pants the envy of the world. The here and now must be consid ered the most opportune in the his tory of humankind for black Ameri cans to learn an appreciation for, and to participate in, the greatest system ever devised for rewarding human achievement. The world is now the marketplace for American ingenuity, technological know-how and productive ability, with the out look never brighter for those willing to submit to the order and discipline essential for participation in that system. It cannot be concluded, however, that black Americans will automat ically disengage themselves from civil, legal and human rights in favor of dignity through individual independence. Before the change there must come an understanding of the merits of those freedoms in herent in the free market.

The Earning of Freedom To elucidate, providing an excel lent example of freedoms where black Americans are concerned, is to 1979 THE ROOTS OF THE FREE MARKET 237 cite a historical fact that is even shunned by many historians. Eman cipation and manumission have been regarded, even by Webster, as synonymous. They are not. Emanci pation was a proclamation of gov ernment' a legal mandate resulting from the military defeat of the South in a war. The first act of that gov ernment was the establishment of the Freedman's Bureau (not its offi cial designation) to provide the kind of paternalism which has been the curse of black Americans since the close of that war. Manumission, on the other hand, which was covered by state law in most of the states of the Old Confed eracy, stipulated that the slave so freed was free to take care of his own needs, and make those decisions within the law essential to his own welfare; in other words, to enjoy the freedom of independence from the paternalism of his former slavemas ter. It is significant that the benefi ciaries of manumission for the most part earned that freedom by pur chasing it.

The purpose of this comparison is to cite the need for true indepen dence as compared to that proposed by government, the kind without responsibility. For while true inde pendence prepares one for entry to the free market as a participant, the other does not. Entry to the Market To disclose the merits of freedom to a black American, whose views of freedom are primarily centered around ((doing his own thing," it is first necessary to define that ~~thing." The most formidable bar rier to true freedom for black Americans is their failure to under stand what such freedom is all about. Not only what it means, but what it requires in terms of personal responsibility to maintain true free dom. Thus, while education, in general terms at least, has soared in black America, with more blacks now graduating from institutions of higher learning than at any time in history, little of that education, from the elementary type forward, deals with true freedom of the free market.

The fact is that most blacks live in America without fully appreciating the America in which they live. The primary reason is lack of educa tional exposure to the true concept of freedom-an entry to the free market system in a meaningful way, which makes all the rest possible, plus an understanding that the order of discipline is essential to the maintenance of that system. And the primary lesson to be learned by all peoples of the world is that race plays no significant role in the es tablishment of order. @ Donald B. Billings IN MAy of 1974 the General Assem bly of the United Nations adopted a monumental Declaration and Action Programme on the Establishment of a New International Economic Or der. The great majority of the voting members of the United Nations solemnly proclaimCed) our united deter mination to work urgently for the estab lishment of a new international economic .order based on equi ty , sovereign equality, interdependence, common interest and cooperation among all states, irrespective of their economic and social systems which shall correct inequalities and redress existing injus tices, make it possible to eliminate the widening gap between the developed and the developing countries and ensure steadily accelerating economic and social development and peace and justice for present and future generations. 1 Professor BIllings Is In the Department of Econom Ics, SChool of Business, at Boise State University In Idaho.