business
We hear much these days about the sins of the marketplace. We hear much about the sins of market-makers: their greed, their lack of integrity, their misconduct. No doubt some of what we hear is true and that is most unfortunate. We must be vigilant in our efforts to do better. But these regrettable sins of the free marketplace do not represent the whole story, nor do they even represent a significant portion of the story. For lost in all this negative rhetoric is something so fundamentally important about free markets, something so priceless, something so valuable, that lest we occasionally stop to remind ourselves, we might allow irreparable injury to occur. We might someday, in a thoughtless moment of sanctimonious folly, allow someone or something to take from us the most precious gift we possess: the markets of America and the unyielding force on behalf of human rights that these markets represent.
In Free to Choose, Nobel Laureate Milton Friedman asserts that the United States is the result of two separate but interdependent miracles: an economic miracle and a political miracle. He explains that each miracle resulted from the implementation of a separate set of revolutionary ideas and that both sets of ideas—by a curious coincidence—were formulated in documents published in the same year, 1776.
One set of ideas was embodied in Adam Smith's The Wealth of Nations, a masterpiece of economic thought. It established that an economic system could succeed only in an environment that permits individuals to freely pursue their own objectives for purely personal gain. As a consequence of such pursuits, the individual, when taken in mass, will be led by an invisible hand to promote an overall social good.
The second set of ideas, drafted by Thomas Jefferson, was embodied in The Declaration of Independence. It proclaimed a new nation—the first in history to be established based on a set of self-evident truths: that all men are created equal, that they are endowed by their Creator with certain unalienable Rights; that among these are Life, Liberty, and the pursuit of Happiness.
The success of our nation, asserts Friedman, is a consequence of the combination of these two basic ideals: economic freedom coupled with political freedom. The ideals are inexorably intertwined. One without the other cannot work.
History is replete with examples of sovereign powers that ignored these truths. Indeed, we need only be mindful of the desperate events unfolding today in the Soviet Union to bear witness to the unmitigated failure of Communism—a dictatorial political system imbedded in an economic structure based on government central planning. As Friedman suggests, the Soviet experiment not only proves that economic freedom is an essential requisite for political freedom, it is unequivocal proof of the opposite as well: the combination of economic and political power in the same hands is a sure road to tyranny.
When we move from the macro-economic stage to the practical arena of everyday life, we find that there is yet another dimension to Adam Smith's free market postulates [next page]