POLITICAL AND ECONOMIC FREEDOMS INSEPARABLE
By ERIC A. JOHNSTON, President of Chamber of Commerce of the United States
Before the Chamber's War Council and Thirty-first Annual Meeting Waldorf-Astoria Hotel, New York City, April 27, 1943
Vital Speeches of the Day, Vol. IX, pp. 521-525.
THE most momentous year in all our nation's eventful history has passed since last we met. Those were dark days a year ago for all Americans, on battlefields and at home. Bataan had fallen early in the month. Brave as our fighting men were they could not eat courage nor fire it in a gun. And, so, a week after our last annual meeting, Corregidor had succumbed, and the enemy had further extended his hold on the soil of American territory.
Everywhere the enemy was attacking. The forces of the United Nations were on the defensive. We had just begunto train our fighting men. We were just organizing our war production, without assurance that American industry could accomplish what was to be demanded of it. Production requirements were about to bring a supreme test of the strength of the system of free capitalism.
Those were bleak days indeed for the cause of freedom. But history has marked the passing of a year tremendous in its effort and amazing in its achievements. From the defenseat Corregidor to the offense at Tunisia is a long, long way, but we have smashed all records in covering the distance.
American Troops, American airmen and seamen are at grips with the enemy on every continent and every ocean. American production of guns and planes and ships has soared to heights which we considered impossible a year ago. Slowly, but with rising momentum, the world-wide tide of battle is turning, and it is not too optimistic to hope that when next we convene in annual meeting the back of the Axis will be snapped.
Once again I gaze out upon many familiar faces before me. You and other American men of business, with your incomparable genius for management and mass production, have executed the manufacture of the weapons which are now striking deadly hammer blows at the Axis. Those of you not engaged in actual war production have nonetheless worked in the service of your country. You have performed the many duties necessary to the maintenance of a strong home front and a high national morale.
You have placed patriotism above profit. You have subordinated self to country in its time of peril. You have asked for no special privilege of your fellows citizens. You have only begged to produce the tools of victory of a quality and quantity to surpass our enemies. It is with pardonable pride and real emotion that I greet you.
Duty to Nation
In making this annual report to you I have no hesitancy in saying that the work of your organization has been conducted on a high level of social awareness. It has been permeated by a sense of responsibility—not merely to our own members but to the whole American people. We have sought to speak not alone for business, but for the nation—because we recognize that no group in American life has any meaning except in terms of its relations to all other groups.
The life of a complex society such as ours forms an intricate pattern. No matter how clear and balanced any phase of it may seem, it is irrelevant unless it fits into the larger mosaic of forces and interests and obligations. The great mistake that many organizations have made in the past has been to plan solely for themselves. Such planning is foredoomed to futility, even if it is good and high-minded. A program of principles and of action which may seem perfect from the vantage point of labor or management or agriculture or government—is useless unless it can stand the test of scrutiny from all other points of view.
I am the last to criticize those who think and act from motives of self-interest. On the contrary, I believe that enlightened self-interest, whether in the behavior of an individual or a nation is the most reliable basis for action. It's the dynamo that propels the machine of human enterprise. But we have learned from tragic experience that the machine will go dead unless full allowances are made for competing and conflicting self-interests. We have learned that we cannot have a healthy farm or factory, or a healthy business or trade-union, unless the country as a whole is in vigorous and healthy condition.
Selfishness is not merely morally wrong—eventually, it destroys those who practice it. Whatever immediate advantages any element in the population may grab, must be paid for a hundredfold ultimately in imbalance and chaos. Intelligent self-interest demands that the well-being of the whole American people be made the sole and the final criterion ofaction. We may even broaden the idea to include the whole world, by asserting, as I have done on previous occasions, that a reasonably peaceful and prosperous world is essential to a peaceful and prosperous America.
I believe that something of this spirit is actuating all of the operations of the Chamber of Commerce of the United States. Without doubt, we make our human quota of mistakes and contribute our share of exaggerations. As soon as any body of men claims infallibility and a monopoly on wisdom, it merely confesses to hardening of its mental arteries. Whether we are right in our attitude on this or that public issue is important, of course. But far more important is whether the philosophy behind these expressions and actions is right. It will avail us nothing to have better business unless we have a better America. It will avail us nothing to have a stronger Chamber of Commerce unless it is geared to contribute something of enduring value to a stronger America.
It is to these over-all purposes that I want to direct myself. In our every thought and our every act we must leave no margin for doubt that we aim to contribute to the greatness of our country, and to the welfare and happiness of our entire people. Concretely, that means that we must dedicate ourselves to two supreme objectives.
Goals for Business
The first, of course, is the winning of the war. This is so clear and so obvious that it requires no emphasis. As individuals and as an organization, in little things and in big things alike, we must let nothing deflect us from that primary goal. We should drop the talk—and the psychology—of making sacrifices. In giving every last ounce of energy, devotion and substance to achieving a speedy, clear-cut and enduring victory we are not making sacrifices but are exercising a proud privilege. We are free men, fighting to preserve our free society against the most barbarous and odious onslaught that has ever afflicted human civilization.
The first purpose, I repeat, is to win the war. The second is to win the peace.
We won the first world war, but lost the fitful peace that followed. We all have the solemn obligation to see to it this time that our children inherit the kind of America their fathers fought and died for. Not an ersatz America polluted by the very tyranny over which we have scored a victory, but an America faithful to its own unique way of life. An America suited for free men, not robots. An America which rejects the bogus equality enforced from above by some superstate; but cherishes the true equality that derives from equal opportunity. An America that seeks diligently to remove unfair handicaps and protects those who fall by the wayside; but does not call off the race. An America that refuses to yield to the totalitarian contagions of this epoch; but adheres resolutely to its faith in the individual and its preference for high striving and full-blooded adventure.
Experiment in Freedom
We must recognize, of course, that the role of government must keep pace with change—the game has become so complicated that government in its legitimate character of umpire has vastly more to do. The responsibility of society as a whole for the welfare and security of the individual must of necessity be recognized. Yet, we must never forget that two principles are fundamental to America. One is a deep faith in the importance and dignity of the individualcitizen. The other is a deep distrust of too much government. These two principles, in truth, are the two faces of the same American medal. They were not invented in America, having been implicit in the hopes and dreams of humankind through the ages. But here in America these principles have found their most thorough and most successful application. That is why it behooves us, as trustees, to remain true to the great experiment in human freedom.
In the field of government, this has taken the form of political democracy, marked by constant expansion of the franchise, judicial safeguards against encroachment of government on the right of the individual, and jealous defense of the Bill of Rights.
In the field of economy, it has taken the form of a free capitalist society.
The development of the two things side by side is not an historical accident. On the contrary, political freedom and economic freedom have proved to be integrated and inseparable. Wherever one was impaired, the other has been impaired in the same measure. Those of our planners who honestly believe they can curtail or abolish one without curtailing or abolishing the other are deluding themselves. They need only look at similar attempts in Europe to learn the towering truth that destruction of the free-enterprise system brings hideous political tyranny in its wake. Their assumption that it will be different in America—that somehow we alone can put our post-war economy into a strait-jacket without paralyzing political freedom is a delusion.
Political and economic systems cannot be put into separate compartments. Government cannot assume the job of dictating to business—or of running business—without arming itself with the arbitrary powers necessary for such a gigantic undertaking. Government cannot absorb the functions normally exercised by thousands of separate private enterprises without producing a fantastically swollen bureaucracy. And that bureaucracy—if only in the interests of efficiency—will tend to perpetuate itself until it becomes a ruling class apart from and above the people.
There are honest men in our midst who believe that democratic capitalism is played out, that it has run its course, and must give way to a super-state. Whether they know it or not, such people are singing tunes from the score written by Goebbels and other propagandists of the totalitarian way of life. Those tunes are false to the point of being grotesque. Far from being played out, free economy in our country is only getting into full stride. The horizons of opportunity being opened up by new industrial techniques, new materials, new products and new capacities for consumption are larger than ever before. Under capitalism, for the first time in history, we have developed the physical foundations for true abundance.
I say to those honest men who have been infected by the poisons of despair:
"Stop fooling yourselves and us with promises of a totalitarian economy which retains political liberty. The two things are simply incompatible. Ordinary decency demands that you drop this double-talk and offer your plans for your new order under frankly-anti-democratic slogans."
The world has had the chance to observe three types of politico-economic systems:
The first is known as Fascism, or National Socialism.
We have watched its enfoldment in different forms in Italy under Mussolini and in Germany under Adolf Hitler. Private business remains in form, but its control is taken over increasingly by the government.
We do not need to judge this system theoretically. We know it as a grim fact. We know that its main consequences are complete political tyranny, vast concentration camps, the erasure of every vestige of human rights and private dignity. In the name of economic security it stamps out human decency and outlaws the human conscience, and in the end, ironically, does not even make good on its promise of economic security.
We know, too, that in order to justify such terrible monopoly of power in the hands of its rulers, this system requires scapegoats and consequently proceeds to single out helpless groups of the population—minority races or minority classes—for official persecution. And as a final result, under the pressure of cumulative economic disaster at home, such a system must seek adventures abroad in aggressions against its neighbors.
The second politico-economic system does not resort to the pretense of controlling private enterprise. Instead, it boldly outlaws it as a crime and condemns it as a perversion.
Call it Communism, or Collectivism, or State Capitalism, the consequences are the same. The frontiers for personal initiative are closed off, except in the field of politics which, in fact, becomes the main outlet for ambition. Whatever the professed idealistic objectives with which such a super-state starts its career, the logic of excessive power and the need for ever more of that power are too strong to be evaded. Dictatorship in its most extreme forms becomes inevitable. The ruthless crushing not only of opposition but of mild differences of opinion become no less inevitable. Every popular institution—including labor unions, or farm organizations—becomes a helpless appendage of the state. And a new ruling class emerges: an elite of bureaucrats and police officials and favored technicians and managers. It is a class which tends to draw to itself the special privileges of a controlled economy without assuming any of the risks which private ownership involves.
We wish to join wholeheartedly in our gratitude to the Russian people for their heroism and their sacrifice against a common enemy at the European end of our global war. We in America will continue to give every help possible to the Russian people, fighting for their homeland. But, we do so without any hypocritical pretense that we want their social set-up introduced within our own country. The Russian leaders, who pride themselves on being realists, will readily understand this straightforward attitude. They will no more expect us to conceal our views on their collectivist economy than we would expect them to conceal their opinions on our democratic capitalism.
The third politico-economic system is competitive capitalism under a representative democracy. It is the American design—because it has found its fullest expression in our own country.
There was a time, not so long ago, when we uttered the word "capitalism" softly and apologetically, and there are still a few who search in the dictionary for euphemisms and evasions. But I believe capitalism has no need for mealy-mouthed apologetics. Despite all of its faults, all of its frailties and all of its failures, it glows with the colors ofperfection when compared with the other two systems. Our system of private enterprise has lived through crises—and emerged with new vitality. It has won for America a standard of life, a standard of popular education, a degree of self-government, a widespread relish and enjoyment not merely of the necessities but the luxuries of existence, without equal anywhere now or in past centuries.
The Test for Capitalism
In the critical months since Pearl Harbor our American system of economy has met a supreme test—and passed it with flying colors. Everyone speaks of the miracle of American war productions: not every one remembers that it is a miracle made possible by individual initiative, using the mechanisms and the driving force generated by capitalism. And let me make one thing clear. When I speak of capitalism I have in mind not only the financiers and the owners and the managers of business, but farmers and foremen and ordinary workers. Each of them has contributed his full share to that miracle of our war production. Each of them has his particular stake in the survival, fortification and the improvement of the system which achieved the miracle.
Totalitarian states have boasted of their productive capacities. Germany, for instance, built a vast and terrible machine of destruction in only seven years. Many of us were impressed by that industrial feat, though we know that it was accomplished by giving up butter for cannon, by enslaving capital and labor alike, by driving an entire nation with the flaming whips of terror and propaganda. There were even some who were so overcome by the spectacle of totalitarian achievement that they raised doubts about our own way of life. Yet today, only sixteen months after our entry into the war, we can look down on the Nazi accomplishment from the heights of our own truly amazing production records. In a single year our private economy has attained a tempo of output that dwarfs that of the Germans and all their satellites combined. What is more, we have done this without resorting to blood-letting, concentration camps, persecutions and the rest of the horrors which they require.
No, we have no reason to apologize for our competitive capitalism. It may be taken as a sign of the times that many of those who seek to displace it with some variation of the super-state now feel it necessary to offer lip service to private initiative and the competitive principle. It is becoming fashionable to present totalitarian schemes for government domination of economic life neatly packaged in private-enterprise slogans.
The pride that we take in the American capitalist system, however, does not imply that we fail to acknowledge shortcomings or that we demand uncritical acceptance of the philosophy of American business. On the contrary, we regard the flexibility of our economic set-up, its capacity for evolving new methods to meet new conditions, as an important source of its strength. Unlike the other two systems, it is not a rigid and unchanging pattern, but a living process, dynamic, constantly evolving, learning by trial and error, seeking and finding adjustments.
Fountainheads of Strength
However, it will remain alive and dynamic only as long as we make sure that the fountainheads of its strength are not blocked or polluted. What are those fountainheads?
They are, in the first place, the right and the opportunity for every individual to take the risks and reap the rewards of individual initiative. In the measure that government domination or private monopoly hampers or punishes individual initiative it is vitiating American economic vitality at the source. In the second place, those fountainheads are the right to free and open competition between individuals and between groups under strict rules of fair play. And they imply, finally, the right of every member of the economic community to function without artificial interference and petty persecution—the right of management to manage, of labor to dispose of its working power, or capital to seek wholesome and useful outlets.
As long as these basic elements in the free-enterprise system remain unchanged, we shall continue to enjoy our economy of adventure. Someone has said that in America every capitalist has a proletarian background and every worker looks forward to a capitalist future. Obviously not everyone can get to the top—but we must defend, with our fortunes and our lives, his privilege of trying and we must remove all artificial barriers from his path.
The Art of Distribution
We have mastered the art of mass production. It now remains for us to master the art of mass distribution, so that the products of our magnificent industrial machine may be ever more widely spread among all our people. This is no longer a pious wish. It is a concrete necessity. We are geared for unprecedented output of the essentials of life as well as the refinements of living. Some of these are known and a great many others now incubating in our research laboratories. To absorb that tremendous output, business and labor and agriculture must cooperate to maintain full employment, high wages, and maximum purchasing power.
Too many of us talk of capitalism as if it were an absolute—the same today as it was yesterday and as it will be tomorrow. Too many of us talk of competition as if it were an absolute, without degrees and shadings. Nothing could be more misleading and harmful. Along with our spirited defense of the basic free-enterprise concepts must go an intelligent appreciation of this continuous evolution.
Only the wilfully blind can fail to see that the old-style capitalism of a primitive freebooting period is gone forever. The capitalism of complete laissez-faire, which thrived on low wages and maximum profits for minimum turnover, which rejected collective bargaining and fought against justified public regulation of the competitive process, is a thing of the past. Those who would turn back the clock of history in this respect are as unrealistic in their way as the addle-brained paper planners of our economic salvation.
The New Capitalism
American economy is constantly evolving and expanding. We have all suffered acute growing pains in these last few decades. Today it is gearing itself for low profits on a great turnover. The fair distribution of the products and the wealth flowing from the industrial process cannot be left wholly to chance, but must be made one of the essential objectives of industrial planning. American economy cannot reject responsibility for the employment and well-being of the men and women who take a part in it: those who supply the raw materials, those who do the manual labor, those who do the brain work, those who manage enterprise. It must accept this responsibility as an intrinsic part of its function.
The new capitalism, as I prefer to call it, is shedding the last traces of its nostalgic memory of unbridled individualism. It acknowledges that the severe economic and social dislocations accompanying war and depression during the last quarter of a century have caused government to assume responsibilities which necessarily tend to burden and hamper the capitalistic mechanism. Such new functions as are justified in the public interest will require an extra effort by private enterprise. It has a right to insist that so far as possible the government limit itself to formulating the rules of the game and supervising their enforcement. More than that, it insists that the rules be so devised that they stimulate rather than suppress the immense motive power of individual initiative and ambition.
In the new capitalism, labor's role is becoming more clearly defined. The recognition is growing the labor organizations, when formed and administered with a sense of public responsibility, can be a useful cooperative element in making the nation's productive machine more efficient. Labor, in a sense, is going through the same process of growth and adjustment through which management has passed, and can learn a lesson from our experience. Labor need only observe what happened to management whenever its mistakes and excesses have collided with the larger public good to be forewarned against mistakes and excesses on its own part. Like every other segment in the mosaic of American society, labor surely will live up to the social responsibilities that come with growth and power.
Management and labor must come to understand that they can't have freedom of action without accepting the obligations that freedom entails. The survival of a free society within which both have their being and their chance of progress is at stake in such an understanding.
In the present crisis of war-time and in the decisive years that will follow the inevitable victory, we of the Chamberof Commerce have a vital part to play and a duty to perform. Attacks on the looming dangers of superstatism are so much futile flailing of water unless it is matched in full measure by constructive effort to meet the social problems of our time. Fortunately we are likely to have a breathing spell for intelligent planning. In the years immediately after the victory, America is likely to have a period of relative prosperity—by reason of immense accumulated purchasing power and an immense backlog of unsatisfied demand for goods. We must prepare now to utilize that interval to improve the mechanism of competitive capitalism.
It has been a fateful year in many ways. Perhaps we will remember this year as the turning point in the life of our nation. We have suffered heart-breaking defeats. We have rejoiced in victories—victories which will continue to mount. On fighting fronts Americans have demonstrated the courage and the strength of free men. Here at home American business and the American people have more than met the acid test of war. We have given the world unforgettable proof of freedom's power.
We can well be proud of our progress, but we cannot rest on our achievements. Still other hard, grim months loom ahead. Our efforts must be rekindled in the fires of freedom. In the hour glass of victory, no single, precious minute must be wasted. We are united for victory, and as a united people we will concentrate our strength with increasingly furious power against a tyrannical enemy.
The American ideal—life, liberty and the pursuit of happiness—is no idle phrase nor empty promise. It is a living reality. It is you and me and the men on the war fronts and the families at home. It means equality of opportunity, it means liberty and the self-respect of the individual. It means adventure, reward and security.
That ideal has always been our beacon in dark and stormy times. When peace at last is ours, it will be the inextinguishable torch which will light the world.