| OCR Text |
Show AEiBSilH ISSUESTORUM America's Business is Business Editor's Note: This Is the sixth in a serL., of 18 articles exploring issues of the American Ameri-can Issues Forum. This series has been written especially for the second segment of the Bicentennial program of Courses Cour-ses by Newspaper. This week, Nobel Pri.ewinnlng economist Paul A. Samuclson begins a four-week discussion of "The Business of America..." with a look at the American system of free enterprise. COURSES BY NEWSPAPER NEWSPAP-ER was developed by the University of California Extension, Exten-sion, San Diego, and funded by a grant from the National Endowment for the Humanities. Humani-ties. Copyright c 1976 . by the Regents of the University of California. By Paul A. Samuclson "The business of America is business." This much criticized criti-cized statement of President Calvin Coolidge was written during the .roaring 1920s, when people in Main Street were speculating frantically in Wall Street in the hope of becoming rich. Yet there is a germ of truth in its half truth. American society lias been from its very beginning a dollar-oriented civilization. "Money talks" has been our watchword. It takes generations in l he older cultures of Europe for a low-born person to move into the uppercrust. Not in a hundred years could the brilliant but poor scientist, Michael Faraday, become a Duke in Victorian England. But the wife of Cornelius Vandcrbill could, in that same period, buy her way into high society and even into a commanding position. The U.S. economy still relies today predominantly on the markclplace-on the push and pull of supply and demand, on the signaling device of high or low prices and wages--to determine what goods will be produced, how they are to be produced, and how they are to be distributed among the rich, poor, and middle classes. Edwin Land invented the polaroid instant-developing camera and thereby attained wealth in the hundreds of millions of dollars. No one decided this: no planning committee, no panel of scientist, scien-tist, no act of Congress. Patty Hearst's great-grandfather, William Randolph Hearst, could control a chain of newspapers and stock his castle at San Simeon, California Californ-ia with the art treasures of all the world. The great philosopher and psychologist William James and the no less great novelist brother. Henry James, were able to acquire their unusual educations because their grandfather, a poor immigrant from Ireland, became so successful in the construction trade that he could die a millionaire and this in the early nintcenlh century when a million meant pretty much what a score of millions would mean today. Not everyone picks a lucky number in the ruthless lottery of historic capitalism. In the sweepstakes of monetary success, suc-cess, the biblical precept applies. Many are called but few are chosen. Abraham Lincoln put it well when he said: "God must have loved the common man, he made so many of them." Yet in America the lot of the common man seemed measurably measur-ably better than in the countries our immigrants left behind. Not a few came to our shores looking for freedom. But most came here looking for bread, for a belter economic life. And on this vast and well-endowed continent they generally did find a higher standard of living. Our strcels were not paved with gold, but American prairies and factories did turn out almost from the beginning the world's highest level of per capital real income. It is harder for a camel to pass through the eye of a needle nee-dle than a rich man to enter into in-to heaven-or to be humble. Complacency and boasting were mentioned as characteristic character-istic American trails by foreign visitors from earliest days, and the affluent frontiersman who boasted, "1 am a self-made man," never noticed thai his twin brother back in the old country worked as hard and intelligently but for less. Blessed Ble-ssed with much land per family, with bountiful mines and favorable climatic conditionsand condi-tionsand blessed also, it must be conceded, with a set of brand new institutions that liberated the "Yankee Ingenuity" Ingen-uity" of Mayflower descendants descen-dants and of their Irish. German, Scandinavian, Polish, Pol-ish, and Italian contemporarieseach contemporar-ieseach person had to be only reasonable diligent on this continent in order to earn more than his parents and grandparents grand-parents had done or than his fellow humans abroad ever could. Free Enterprise: Legend and Myth Wc Americans were complacent com-placent not only about our personal excellences; we also grew up knowing lhal our so-called "free enterprise system" sys-tem" was the doggone best system that had been devised anywhere in the world. It "produced the goods" namely name-ly a widely shared material well-beirtg. Almost as soon as we could read, we learned that Captain John Smith had tried (he route of socialism in the 1609 Virginia Colony. It just had not worked. Only when Captain Smith pragmatically scrapped Utopia and declared, "He who will not work shall not eat," did the wilderness flower and man's lot improve. In the social sciences where the controlled laboratory experiments experi-ments of Ihe natural sciences cannot be practiced, hearsay myths like this take on the semblance of truth and harden into dogma. Yet up until the year 1929 one can fairly say that the pure capitalistic ethic was dominant in American life. As a boy 1 read in the Saturday Evening Postand in the American Magazine, and what could be more American than that? about heroes. Who were these heroes? They were Henry Ford, Alva Edison, Harvey Firestone, John Wanamaker, the Americanized Dutch immigrant, immi-grant, Edward Bok, Judge Gary of U.S. Steel. If 1 saved my pennies, changed my underclothes, and wailed for ihe main chance, 1 too might be a success. Indeed, with a Utile luck, I might engineer a corner in wheat on the Chicago Board of Trade and be embalmed in a muckraker's novel. Or like John D. Rockefeller. I could in Ihe last phase of my life hire a public relations expert, like Ivy Lee, who would show me how to improve my image while distributing dimes to country club caddies, any one of whom might hope to become a millionaire. (And like John D. Rockefeller, 1 could also use "God's gold" to found a great university on the Chicago Midway and to endow a foundation whose largesse would help develop hybrid , wheat and rice strains to create a veritable "green revolution" for the starving Asians.) It is easy, only too easy, to find fault with Ihe market as the organizer of economic life. At the heyday of Victorian Capitalism, potato fungus in Ireland caused harvest failure. Looking back from the vantage point of history, we can agree that acts of God and of the Queen's enemy will always happen, but it seems that only under unadulterated capitalism capital-ism are the acts of God permitted to result in millions of deaths from starvation in lands as prosperous as those of Western Eurpoe and North America. As Americans, we can truly say, "We're the greatest!" Even our depressions are on Ihe heroic scale. The "great depression" of the late 1830s undid Ihe hopes of the fl Democrat Martin Van Buren just as the "great depression" C of the 1930s was to undo ihe . $ hopes of the Republic- A Herbert Hoover. And it Was" ' during the "great depression" of post-Civil War decades that ' 'f Mary Elizabeth Lease could harangue Kansans to "raise less corn and more Hell." . if' Balance Sheet of Accomplishment The science of political economy cannot be based on anecdotes, however colorful or lurid. What in 1929 could., fairminded analyst conclude from a dispassionate survey of American experience with a century and a half of largely unfettered market capitalism? On the assest side he could tally up this: 1. The world's highest average standard of economic life in the U.S. Continued on A3 Continued from A2 2. Despite skewed divergences divergen-ces between rich, poor, and middle classes, the careful statistician would find a bit more equality of income distribution distri-bution in the new continent of North America than in the old lands of Europe and Asia. 3. Dynamic rale of material progress as population and industrial productivity seemed dislincd to grow forever. On the liability side the diligent historian would have to record: 1. Periodic business cycles and the highest average rate of unemployment of any of the leading countries of the world. 2. Definite signs of social stratification appearing, as fewer and fewer farm boys traversed the route of the Horatio Alger, Jr. plucky heroes in their rendezvous with affluence and industrial power. 3. An uneasy tension between be-tween the forces of competition competi-tion and monopoly. The Sherman Anit-Trust Acts, and other acts designed to fend off the turn-of-lhe-century movement move-ment toward cartels, pools, trusts, and oligopolies, seemed seem-ed to languish in the post-World-War-I "normalcy." Under Un-der the purloined name of the "American Plan," the chambers cham-bers of commerce of Southern . California fought ruthlessly against the weak pre-1929 labor unions. 4. Most people dying broke. All loo many of them also lived out their years of retirement without private pensions or for that matter public pensions, and this long after Bismark and Gladstone had iniated social secutiy systems in Germany and Britian. ' 5. Worst of all. although the keenest analyst would be forgiven for not realizing it in the 1929 high-noon of capitalism, capital-ism, devastating world depression de-pression was just around the corner. This depression would undermine un-dermine democracies abroad, breeding dictatorships and a terrible war. It would, once and for all, terminate America's Ameri-ca's innocent belief in the beneficence of unfettered and undiluted free enterprise. |
