COMPETITION MUST BE PRESERVED
By DONALD R. RICH BERG, Lawyer
Delivered before Sales Executives Club of New York, February 1, 1944
Vital Speeches of the Day, Vol. X, pp. 364-367.
IF you want to mink straight politically today, the first thing to do is to forget about the Democratic and Republican parties. Thomas Jefferson wouldn't recognize one and Abraham Lincoln would disown the other. Without being unfair to either I can say that each party machine is essentially an office-seeking organization animated by no recognizable principles.
There art three political divisions which are natural and persistent—conservatives, liberals and radicals.
The conservatives are satisfied with the existing order—or would "rather bear those ills we have than .fly to others that we know not of."
The radicals are so dissatisfied, mentally or materially, that they want a fundamental change.
The liberals see weaknesses and evils in current conditions and want to reform the existing order but also to preserve its values.
This is a period of revolutionary change throughout theworld. The radicals of two extremes, fascism and communism, led successful revolutions. The fascist radicals sought to gain support from conservatives who incline toward the illusion of "master men." In the world struggle they allied themselves with the most backward government among the world powers—Japan. The communist radicals found themselves eventually allied with all the liberal governments. As a result, straight thinking has become exceedingly difficult for liberals in the United Nations—and particularly in the United States.
When Mr. Churchill avows his intention to preserve the British Empire, our radical enemies sneer at our war aims and our radical friends join them in criticizing our conservative ally. When Mr. Roosevelt advocates the four freedoms of the Atlantic charter, our conservative enemies and friends question our aims and the sincerity of their support" by our radical ally. Liberal Americans may well wonder whether liberalism can survive and whether we may not be forced to choose between new world orders of either reactionary individualism or radical socialism.
There can be little doubt, however, that the vast majority of the American people—or, let us say, of the English speaking people—are liberal-minded individualists. They want to preserve all the values of a democratic way of living, of self-government and free enterprise that have brought increasing comfort, economic security and happiness to many generations of free men and women.
It may be that throughout the world a large majority of the people in all civilized nations have the same yearning for peaceful progress in a democratic order. But here in America, our first question is: How are we going to establish our freedom from outside aggression and domestic disorder so that we may carry on, without revolutionary change, the great American adventure?
Obviously, the immediate need of the present time is to understand what we are fighting for. Primarily we are fighting for our existence—fighting to maintain our ability as a nation to live and work peacefully for our advancement individually and as a people. But unless we have a general understanding of how we want to live and work together, we may defeat our enemies and then, when the war is ended, we may find ourselves involved in a new struggle with forces at home and abroad that are fundamentally antagonistic to our ideals and aspirations.
And so, in the effort to inaugurate a course of straight thinking, I suppose at the outset to analyze the real meaning of those words which are commonly used to express our national aims. We say that we believe in Freedom, in Free Enterprise, in Free Competition, in Democracy. But what are these ideas in which we believe? There is no such thing as absolute freedom, or complete self-government. To what extent must our freedom be limited and by whom?
Let me first point out, and then elaborate four paradoxes:
1. Freedom can only be maintained by restraints on freedom.
2. Free competition can only be maintained by limiting competition.
3. Free enterprise can only be maintained by governmental control.
4. Democracy can only be maintained by an aristocracy, not an hereditary nobility, but an aristocracy of brains.
These paradoxical statements will be found upon careful examination to be, not wisecracks, but sound axioms of political science.
1. The freedom of a civilized man is not the anarchy of jungle life. Men can only live and work together in large numbers peacefully when a great many freedoms are restrained. My home, my property, my physical freedom, can only be preserved by restraints on all others which prevent them from interfering with me.
2. Free competition must be "fair"—and obviously fraud, theft, and monopoly must be prevented.
3. Free enterprise—must be subject to health regulation, monopoly controls, corporation rules, taxation, and regulations of domestic and foreign commerce. Also some restraints on labor and management are needed to avoid civil warfare or abuse of economic power.
4. Self-government is not spontaneous. It requires a machinery of law-making and enforcement. It can only be carried on by representatives of the people, who must be trained to know more about governing than the ordinary citizen and be able and willing to use scientific advisers and helpers. These men must be worthy of and able to retain public support regardless of transient public opinion. If the public service is not an aristocracy, in the true sense of the word, the government will be too weak to sustain the national interest in the stresses of the modern world.
If businessmen are to be influential in post-war leadership, they must be able to exercise political leadership. They cannot continue to be simply critics of government. During more than ten years of worldwide revolutionary change, the spokesmen of business have mainly criticized, denounced and deplored the efforts of politicians to solve the problems of government. When they were invited into the N.R.A., big and little business alike fought against and eventually destroyed their opportunity to establish self-government of industry, because they were unwilling to submit to restraints necessary to protect the labor interest and the public interest. They offered no constructive solution of the farm problem, but shouted against curtailing agricultural production while busily engaged themselves in curtailing industrial production. They opposed labor organization long after it was plain that modern industries could not be operated efficiently and peacefully except through the willing cooperation of organized employees.
Let it be assumed, however unjustly, that every political effort to solve the problems of this revolutionary era has been poorly devised and executed. What contribution to a better solution has been brought forward by the leaders of business? It is true that many business executives have played a manful part in trying to work with and not against political leadership. But it must be conceded that these men have been handicapped by representing only a minority of a multitude of businessmen who have been unwilling—and also unable—to formulate a political program worthy of the support of millions of workers in the cities and on the farms, who prefer to vote for public officials who at least promise to govern the nation for the greater good of the greater number of the people.
It is not enough for businessmen to argue that they would make the country prosperous if the government would stop interfering with the freedom of private enterprise. The masses of people don't believe this; and it isn't true. On the other hand, the masses of our people do believe in private enterprise. They believe in a free economy. They don't want to be wage slaves or serfs of the soil, working under the orders of public officials. But they want to be sure that private business can provide them with employment and they want to be free workers who have a voice in fixing the terms and conditions of their employment. They want also to be free citizens of a government that is able to make private business subordinate the pursuit of private gain to the need for protecting the public welfare.
It is unfortunate that many businessmen remember only part of the record that was written by business management in the past. It was a record of great achievements; but also a record of unjustifiable profit-making by a few at the expense of distressing poverty for a great many. It was a record oi booms and depressions, culminating in a period of vast unemployment and untold misery for millions.
The progressive movement in politics was in full swing for twenty years up to the first world war. Idealism was overthrown and a reaction to what was called "normalcy" came in 1920. By 1932, the United States and many other great nations were ready and indeed compelled to go ahead again. The people were demanding, and politicians were ready to give them something different. It had to be something really different. Russia had firmly adopted a program of radical socialism. Italy was trying a fascist socialism. Germany was getting ready for super-fascist socialism. So far as American business was doing any thinking it was usually playing with fascist ideas, with the naive curiosity of a schoolboy who has found a machine gun.
Yet American businessmen have never been fascists at heart any more than they have been communists. With rare exceptions, even the heads of business empires in America have been democrats at heart—men proud of American traditions and ideals. Now that the second world war has revealed the hollowness and the baseness of fascist thinking and fascist programs, we may reasonably hope that fascism in America survives largely in the minds of extremists of the reactionary right or the revolutionary left, who are small but very noisy elements of American society.
But there is a real issue before all Americans: To what extent must business be socialized and subjected to any overall planning and control? If any such control is inevitable in the post-war period, most businessmen are convinced that business management should be in the driver's seat and that labor leaders and labor-conscious politicians should not run the business machine. Most of these men now seem to think that the way to prevent labor-political control is to clamor night and day for free enterprise.
But if we are going to think straight about this matter, let us realize that in free enterprise there must be not only free managers, but also free workers, and free customers. The businessman who champions free enterprise should understand the extent to which the maintenance of labor organizations and free markets must be protected by government as a necessary part of preserving the freedom of private enterprise. It is well to remember and to apply the principle that the freedom of one man can be assured only by restraints imposed upon other men. He who seeks freedom for himself must be prepared to accept those restraints upon his own conduct which are necessary to protect the equally important freedom of others. Economic freedom is not travel on a one-way street, nor on an express highway. Freedom of everyone to travel in all directions along the roads of commerce can only be maintained by traffic controls that require travelers sometimes to stop and sometimes to slow down. Everyone cannot possibly be granted freedom to go ahead at full speed, at all times.
A necessary part of any program to protect the freedom of business management and to restore free enterprise in the post-war period, must be such governmental control of labor relations as will insure the freedom of labor and management; and also such governmental control of production and price policies as will insure the freedom of competition and the preservation of free markets for the protection of consumers. This does not mean that the government should favor one type of labor organization or support a labor control of business management. This does not mean that the government should fix the amount and quality and prices of industrial products. It simply means that the government should make sure that the economic powers of organized money or organized labor are exercised to promote, and not to impede, a peaceful cooperation among, and a free competition between, workers, managers, and capitalists to advance their private interests by serving the public interests. That is an effort in a few words to condense the philosophy of the relations of "Government and Business Tomorrow " which I have found it necessary to write a book to explain.
But, in the brief space of this present talk, let me try to make this philosophy a little more clear by giving a short outline of what may be called a "labor-peace program" and a "free competition program." Let me emphasize that without peaceful labor relations between managers and workers, and without free competition to serve consumers, the maintenance of a system of private enterprise is impossible.
The labor-peace program which I have been advocating, being designed particularly to meet the needs of wartime, is founded on the establishment of two legal obligations: First, the duty of every citizen to make his service available whenever and wherever most needed. This should not be continued as a legal duty in times of peace. The second obligation is the duty of every citizen to utilize all available means for the peaceful and prompt settlement of economic disputes. This duty should be continued as a legal duty in times of peace, in order to maintain an orderly society and to eliminate the uncivilized method of deciding conflicts of economic interests by the primitive method of trial by combat. We cannot establish domestic peace and effectively promote international peace until as a nation we no longer tolerate the use of civil warfare to decide our internal economic conflicts.
On the basis of a legal duty imposed on management and labor, we should require by law the peaceful maintenance and revision of labor contracts between the freely-chosen representatives of labor and management, aided by government mediators, with all parties obligated to submit unsettled disputes to impartial arbitration under government supervision whenever the public interest is involved in the continuous production of essential goods or services.
We should affirm and protect by law the freedom of the individual worker to choose his own livelihood and his employer, free from the coercion of any monopolies of employment by organizations of management or labor.
We should preserve and protect the right of collective bargaining and, for justifiable causes, the right to strike, subject to such government controls as will prevent abuses of power by labor organizations which either restrict the right of managers to exercise the essential freedom of management, or deny the essential freedom of labor, or do serious injury to the public welfare.
It will be at once evident that these proposals might be distorted by partisans of labor or management into undue restraints upon either party; or both might join in denouncing them as threats to subject free enterprise to socialistic controls by government. But, fairly interpreted as intended, they are only proposals that the government extend over labor relations the same requirements for the peaceful settlement of controversies that are now imposed upon commercial relations and domestic relations.
Our laws of property, contract, tort, agency, marriage, and divorce, all restrict the freedom of men and women to do as they please and to settle conflicts of interests with a club. It is true that men continue to rob and cheat and kill one another. But the government does not stand idly by and sanction the use of violence and coercion. The government provides a machinery for peaceful settlement, and punishes those who resort to private force. Why should labor disputes remain a surviving field of combat in which economic or physical force is organized to win battles that spread hate and suffering among men who must in the end find a way to work together for the common good?
Let me turn now to the need for a free competition program. Here, as in the field of labor law, we have a confusedmess of inconsistent, vague and largely unenforceable laws enacted by the States and by the Nation. The only consistent philosophy of business management has been expressed in the demand that there should be the assurance of unrestrained competition among those from whom a businessman buys his goods or services and the privilege of limiting competition in the sale of his products.
As the result of this contradictory philosophy, we find businessmen generally antagonistic to the enforcement of laws which restrict them and antagonistic to the revision of laws which aid them, and fearful that any sweeping revision of all the laws to express a consistent intention would hurt them more than help them. Business has therefore no coherent or constructive program for the preservation of competition. Yet unless competition can be preserved, as the automatic regulator of prices and production, it is inevitable that there will be more and more political regulation and that the maintenance of free enterprise will become more and more impractical.
We need constructive regulation of competitive practices in order to prevent—
1. Fraud and coercion.
2. Monopoly controls of prices, production, or wages.
3. Unfair competition in labor conditions.
We need constructive regulation of competitive practices order to permit—
1. Socially desirable cooperation between competitors.
2. Long-range planning by industrial managers with the aid of government.
Today the vigor and freedom of competition is sapped by the inevitable effort of business managers to promote economic security by a multitude of unwritten agreements, devious practices, and complicated devices to reduce the rigors and dangers of unrestricted, ruthless competition, despite the overhanging threat of the impractical requirements and unfair penalties of vague and unintelligible laws.
On the other hand, there is a great deal of needlessly vicious and injurious competition which is encouraged and protected by laws which deny to business managers a desirable freedom to cooperate with competitors in civilizing trade practices.
So it happens that free competition, as the automatic regulator of prices, production, and wages, is steadily becoming less effective, through increasing governmental controls of industry, through illegitimate private controls, and through the lack of a consistent policy of government and business to outlaw unfair and destructive competition, and thus to preserve a fair and free competition which is essential to the maintenance of free enterprise. The future of private enterprise is threatened primarily by the lack of vision among businessmen, secondarily by the irresponsible use of their economic power by many labor organizations, thirdly by the readiness with which politicians respond to self-serving pressure groups, and only in a small way by the political theorists who advocate state socialism.
There are many businessmen who, after following the seductive gods of special privilege, monopoly control, and political favoritism, have finally got religion. They have become possessed by a genuine faith in democracy. They really believe in free enterprise. These men should begin their missionary work at home, and then, when they have well established their faith among their brethren, they may undertake with a better chance of success to convert the labor leaders and politicians whom they now denounce for worshipping the false gods before, whom so many businessmen have so long bowed down in adoration.