Can Capitalism Guarantee Right Answers; B. Schwartz

Barry J. Schwartz Can Capitalism Guarantee Right Answers? ARGUMENTS for government con trols often begin with a series of practical-sounding questions de signed to make freedom appear im practical and utopian in light of im pending crises. Prior to each new regulation by the state, questions are posed by professors, journalists, leg islators, and interest-group spokes men. "How can our free market sys tem solve this particular problem? Might not government action be more expedient in this case?" In essence, the interventionists seize upon a pressing problem for which there seems to be an obvious right answer, at least in the eyes of a vocal minority. For example, most reasonable people will agree that energy conservation is wise, that killing whales is inhumane, and that racial discrimination is illogical and cruel. And so we agree. Now, they say, the free market Dr. Schwartz is a psychologist, a freelance writer, and a teacher at Empire State College in White Plains, N.Y.

carries no guarantees of infallibil ity. Competition does not always give the correct answers, at least not as quickly as can be gotten by direct state action. While the government is not creative, it does offer one ad vantage: It is definite. The state has arrived at a good plan of action, rec ommended by experts, and backed by public consensus. Why must we leave this problem in the uncertain realm of the free market? To put the issue more broadly, take any problem where there exists some state plan, and you can ask: "Can the free market promise a better an swer, or even one that is correct?" The same applies to any scientific controversy where there are funds for research available from govern ment agencies. The challenge is: "Can capitalism solve problems well enough and soon enough?" There is no correct answer to this question, because the question itself is invalid. It does no service to the concept of 747 748 THE FREEMAN December freedom to argue that capitalism solves problems more efficiently than does socialism. The whole argument assumes a collectivist premise: that problems are solved by social sys tems rather than by individuals.

Discoveries and solutions to prob lems are accomplished by individu als, not by social systems. Political economic systems merely define the conditions under which creative in dividuals are either rewarded or brutalized for their efforts. Reason Is Released Capitalism is the economic expression of individual rights. When force is removed from the market place of ideas and production, the reasoning power of the individual is unchained. Since individual reason ing power is the only kind in exis tence, the result of establishing in dividual rights is an explosion of time-saving, life-saving inventions recognized later on as wealth. In any civilization, whether under primitive or advanced conditions, the power of reason belongs to the indi vidual, and the seeds of progress are planted in the privacy of a thinking mind. Progress has never worked by command, nor could it be predicted in detail. The great advances of the 19th and 20th centuries under near capitalism were made possible by scientists and industrialists in pur suit of their own interests. The Edi sons, Carnegies, Rockefellers, and Einsteins were not brought forth by government edict in recognition of pressing national problems. There was no way to predict, for example, prior to John D. Rockefeller, that the development of petroleum explora tion and refining would ultimately be the salvation of the remaining whale population; or that the inven tions of the transistor and computer would constitute a means of energy conservation, and contribute to an improvement in air quality by sav ing fuel and transportation costs.

Creative work requires tolerance for error and the chance to succeed in the competition of the new and untried against the old, the ac cepted, and the routine. It is no ac cident that America, the land of in dividual rights, is also the land of inventors and industrialists: crea tive and productive men from around the world who were Americans by choice. Consider the disproportion ate numbers of American Nobellau reates, men with surnames of every nationality, who are refugees or sec ond-or third-generation Americans. Capitalism Nourishes Genius Capitalism was not asked to solve the problems that interested these thinkers and producers. But, with the guarantee of individual rights, force was kept from interfering with their creativity. Capitalism does not solve problems. It nourishes genius. It doesn't take technological hind1983 CAN CAPITALISM GUARANTEE RIGHT ANSWERS? 749 sight to debunk the interventionists' mistrust of competition. The im pulse to turn to government author ities in defense of "right answers"

did not originate in the mixed econ omy of the 20th century. Thomas Jefferson saw the threat, and wrote about it with his accustomed clarity and fire, "The error seems not suffi ciently eradicated, that the opera tions of the mind, as well as the acts of the body, are subject to the coer cion of the laws."! Against the statists' mistrust of freedom in the realm of religious be liefs, J effers.on wrote: "Reason and free enquiry are the only effectual agents against error. Give a loose to them, they will support the true re ligion, by bringing every false one to their tribunal, to the test of their investigation." What Jefferson saw in the realm of personal philosophy he knew to apply to the realm of scientific con troversy: "Government is just as in fallible too when it fixes systems in physics. Galileo was sent to the in quisition for affirming that the earth was a sphere: the government had declared it to be as flat as a trencher, and Galileo was obliged to abjure his error. This error however at length prevailed, the earth became a globe, and Descartes declared it was whirled round its axis by a vortex.

1All quotes are from Jefferson's Notes on the State of Virginia, ·first published in 1787 (New York: W. W. Norton, Co. 1954). The government in which he lived was wise enough to see that this was no question of civil jurisdiction, or we should all have been involved by authority in vortices. In fact, the vortices have been exploded, and the Newtonian principle of gravitation is now more firmly established, on the basis of reason, than it would be were the government to step in and make it an article of necessary faith. Reason and experiment have been indulged, and error has fled before them." And, in one classic sentence, Jef ferson weighs force against reason: "It is error alone which needs the support of government. Truth can stand by itself." Confidence in the free competition of ideas is not blind faith about the ability of the market to solve any particular crisis. It is instead a cer tainty about the fundamental con ditions needed to protect creative and productive minds from brutality and confiscation.

HobbesFeared Freedom Far from being an expression of "scientific" social planning, the sta tists' mistrust of the marketplace is much more in the spirit of Thomas Hobbes, the 17th century statist, who feared that freedom would produce chaos. Hobbes recommended a social system which would invest a king with complete authority over the lives of the people, not because the 750 THE FREEMAN king would be wise, but because his actions would be definite and pre dictable. Hobbes, being a skeptic, did not believe that the "unaided power of reason" could function as a basis for individual action or for benevo lent cooperation. Mistrust of reason implied mistrust of the individual. Society was, for Hobbes, in the per son of the king, more reliable than the mass of individual people. Naturally, today's intervention ists would chafe at any comparison with Hobbes, the totalitarian and skeptic. They do not champion skep ticism, they advocate science. And they do not want to establish a king: they advocate only a mixed econ omy, with the greatest latitude pos sible for freedom. Each intervention by government is to be made only in those areas where they see the mar ketplace as having left a gap, in the form of an important and unsolved problem. It is only these gaps which the interventionists would fill with the expedient of government action.

The Consequences of Force A broader view would show them that all of the unsolved problems of man fit into these gaps. Once force is preferred to competition, the im plications are universal. The results are only a matter of time. It is logi cally inconsistent to advocate the use of force in one area of production and thought, and to demand that it be kept from other such areas. If government coercion can be justified in banking, why not in publishing? Those who favor the mixed econ omy are less consistent than their neo-Hobbesian contemporaries, who rule over today's totalitarian states. These modern-day kings regard the individual as inconsequential and unworthy in the grand scheme of state action. The idea that individ uals are made capable by the power of reason and cooperation is re garded a dangerous and fallacious bourgeois prejudice, to be eradicated by state censors. They must jeal ously guard all areas of thought against the intrusion of private ini tiative, especially in the presses and in the schools. They know, by expe rience, that there is no telling when one side of a free controversy will discover the idea of liberty.

Impatience with private competi tion of ideas in favor of government enforced solutions reveals a mis trust of reason and its sole propri etors: the individual citizens. If gov ernment controls are believed necessary to find answers to prob lems, then the individual's capacity of reason, persuasion, and competi tion has been judged to be incompe tent. Then, the government must become the caretaker to all. There is no middle ground in this contro versy: a mixture of freedom and statism is no more viable than a mixture of persuasion and coercion. Freedom is indivisible. i Percy L. Greaves, Jr. ON LABOR UNIONS UNEMPLOYMENT can be a dreadful condition. The inability to find a needed job is a heart-rending expe rience for anyone. For those with young children to feed and clothe, it is a terrifying predicament. It gnaws at and destroys the spirit and self confidence ofeven the strongest souls.