Mises on Business
March 1, 1999
America's Masochistic Business Class
by William H. Peterson
The aim of politics, H.L. Mencken observed, "is to keep the populace alarmed - and hence clamorous to be led to safety - by menacing it with an endless series of hobgoblins, all of them imaginary." One popular hobgoblin is the businessman.
Item: "It's a terrible thing," said Dick Mabry, a Mobil refinery night manager in Beaumont, Texas, on the proposed Exxon-Mobil Oil merger. "It's a revival of the Standard Oil Company. It's going to put 20,000 or 30,000 people out of work. I think the Justice Department should stop it."
Item: George Washington University researchers Linda Lichter, S. Robert Lichter and Stanley Rothman reported their findings on watching eight weeks of TV dramas and sitcoms in 1983. They counted 226 fictionalized businessmen and women. Sixty percent were cast as villains. Of those, one out of three was an out-and-out criminal.
Item: The bulk of high school and college history textbooks treat l9th century entrepreneurs such as John D. Rockefeller and Andrew Carnegie as "robber barons." The role of profit gets skewed, too, with textbook authors often equating it with greed.
The common thread here betrays a profound public misperception of business and government. In those aforementioned history books, it's government that wins praise for fighting poverty, allaying recession, regulating business, providing welfare, saving the environment and so on.
Business, the true font of our wealth and tax revenues, the source of 85% of our jobs, the secret of America's success story, gets short shrift.
It gets worse. In high places and low, business is viewed far too narrowly and too negatively, conjuring an image of mass masochism. It was this situation that moved Ludwig von Mises to pen a book in l956,The Anti-Capitalist Mentality.
Mises argued that, broadly defined, every producer is a consumer and every consumer is a producer - or businessperson - each the very same person, if in different modes. Shoppers may sense this when retailers thank them for their "business."
An English maxim, "mind your own business," also points to the universality of business. The Anglo-Saxon root stems from the simple word "busy," as in "busy-ness."
We are also indebted to Mises for his idea of "praxeology," or the science of human action.
Mises said that man never acts against his own interest, as he sees it -hence the need of a moral code. The basis of every human action, mercenary or altruistic, including acts of love and charity, or predation and violence, is profit-motivated: action aimed at advantage, betterment, gain.
Action includes universal cost-cutting. No householder is immune from adopting labor-saving devices such as an automatic dishwasher.
Of course, action always has a trade-off - an inevitable cost in denying the benefit of an alternative action. No gain without pain. No free lunch.
Moreover, the businessperson-everyone in the marketplace-is a kind of servant. As a producer, from the entry-level worker to the CEO, he must serve the consumer directly or indirectly, producing more for less whether in price or quality. Or else.
Yet businessmen and capitalists are widely viewed as "greedy," "anti-social," "tycoons," "robber barons," depicted as fat and smug cartoon caricatures, puffing cigars, standing astride Wall Street.
But capital - especially corporate capital - has long been privately democratizing via Wall Street.
Economist Larry Kudlow of American Skandia puts the investor class at 43%. Today's investor class, direct and indirect, could total as many as 125 million people--equivalent to virtually the entire working population. Karl Marx is rolling over in his grave.
In any event, the trend of investor-class growth continues, and Kudlow welcomes it for its growing political power.
Business spans the whole population. Every man and woman is a businessperson. True, business is not a perfect institution. Con artists lurk everywhere. But to impugn business, tie it up in regulatory knots, undermine its basis in private property rights and engage in a false dichotomy of "us vs. them," is to essentially attack oneself.
The result? Americans lapse into mass masochism.
The cure? It is, to play on the real estate agent's motto: Educate, educate, educate.
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William H. Peterson is an adjunct scholar of the Mises Institute and the Heritage Foundation, and Distinguished Lundy Professor Emeritus of Business Philosophy at Campbell University in North Carolina.