LIBERTARIAN REVIEW AUGUST 1978 VDL7 $1.25 Em; ,4]er LIBERTARIAN I STRATEGIES FOR TODAY [Wilton Mueller Bil] Evers MurrayRothbard Charles Koch Leonard Liggio Ed Crane i David Theroux he majority of businessmen today are not sup- porters of free enterprise capitalism. Instead they prefer ?political capitalism," a system in which government guarantees business profits while business itself faces both less competition and more security for itself. As California Governor Jerry Brown puts it, ?Sometimes businessmen almost operate as though they'd feel more comfortable in a Marxist state where they could just deal with a few who would tell them what the production goals were, what quota they had. . . . I am really concerned that many businessmen are growing weary of the rigors of the free market.? New York Times columnist William Saflre agrees with this sobering analysis: ?The secret desire of so many top-level managers for controls and regulated monopoly is never openly stated. . . . But today managerial trend is not toward accepting risk. It is toward getting government oid risk.? helipvzhaIl-?lenry Ford II has pointed out that ?it's not just liberal do-gooders, Democrats, unions, consumerists and ronmentalists who are responsible-for the growth of ment. It's also conservative who favor defense programs, especially 1f the money 1s eir own districts. It?s bankers and transporters urers who want protection from envi govern increase nt in 21:31 retailers and manufact competitors. bumper and air bag . claims costs. It's even, 1f yo want state government to protect It's insurance companies that lobby for regulations that might lower then u'll forgive me, car dealers who them from the factory or 30 from new dealers in their territory," But that is only the tip of the iceberg. It was support from a large portion of the business community, including the Chamber of Commerce and the National Association of Manufacturers, which enabled Nixon to impose wage and price controls in 1971. Much earlier, bankers suc- ceeded in pushing through legal prohibitions on the pay- ment of interest on demand deposits. Moreover, the steel industry has just caused the government to set minimum prices on imported steel. Businesses often fight bitterly against deregulation, as well as urging new controls. Despite support by both liberals and conservatives in Congress, deregulation of the airline industry has bogged down under heavy pressure from the airlines themselves. Deregulation of the trucking industry has buckled under pressure from the American Trucking Association. My own industry, oil, is no different. Over the past five years our company has participated in dozens of hearings on regulatory matters before the Federal Energy Ad- ministration and the Department of Energy. At virtually all of these hearings, most oil companies have come down on the side of state regulation. Secretary of Energy James Schlesinger summed it up: ?The oil industry loves regula- tion and has been in love with it for many years." Precisely so. Businessmen have always been anxious to convince a gullible public and an opportunistic Congress that the free market cannot work efficiently in their industry, that some Libertarian Ravine overnrnental planning and regulations would be in the ?public interest.? Indeed, much of the government regula- tign which plagues us today has come only after businesses have bagged and lobbied for it. Nearly every maj?r piece 0f interventionist leglslatlon s1nce 1887 has been supported by important segments of the community. This old business strategy of accommodation with gov? ernment paid off in the past to some extent, perhaps, but t?day it falls on its face. Business now suffers as much as the rest of society from the adverse consequences of its own interventionism?the exhaust1on of the "reserve fund? predicted by the great economist Ludwig von Mises. Passed at the behest of business, regulations boomerang, A refiner may procure price controls on his purchased crude 011, yet later he experiences shortages and even may find price controls slapped on his own gasoline to capture his politically derived ?excess? profits. Oil pipeline companies invite the DOE in to study regional pipeline needs, hoping that their particular project will be favored. But in the future, Washington may well make all pipeline decisions, probable fate. Businessmen are also be? coming justifiably concerned with the rapidly growing anti- business sentiment in this country. Recent public opin- ion polls show that a large portion of intellectuals and the general public believe that REVOLU uumulu sinners busmess?especially big busl- ness?has undue political power, which it uses to stifle and smash competition and to control prices. The liberation of business But business can free itself from this predicament, if only it will. As the Wall Street Journal recently noted, ?Despite the blows they have suffered in the political arena [businessmen] still have the capacity to be highly influen- TOWARD tial in the political sphere. But they will not bring about and even build all pipelines. Businessmen should realize that the more regulated an in- dustry becomes, the less it can cope with changing conditions in the world. It is no coin- cidence that the four lowest ranking industries in return on capital today (airlines, rail? roads, natural gas utilities, and electric utilities) are also the most highly regulated. . The final stage of political capitalism is even worse. Richard Ferris, president of United Airlines (an exception in his industry) predicts, Continued governmental It is no coincidence that the tour lowest ranking industries in return on capital today (air, .rail, natural gas, and electric utilities) are also the most highly regulated. such a reversal unless they are able to put aside short?term concepts in favor of those longer-term considerationsreaching the point where American busi? nessmen will have to decide whether they really believe in the market system. If they don't, it is hard to see who will muster the political forces to defend it against its very real and often intensely committed enemies.? In spite of business's sullied record in defending free enterprise, there are large numbers of businessmen who want nothing more from gov? Control will mean airline ser- - - vice as you know it today will be seriously jeopardized. And, as service and equipment deteriorate, you will stand as the threat of nationalization becomes real- 11?! the electric utility industry, a number of states have already Drganized agencies to take over from private util- unable to finance needed additional generating capacd 1y 5:11 business?s dwindling successes in achieving precise? uturel'?gulatory scheme by them do not guarantee lust the opposite often occurs. Politically Special i fuchts for business cause hardships for other ato erest groups, who apply pressure on the reg- rs t? turn the rogulatory weapon around. Moraliathe business community is growing more and an [flora-a? of the shortcomings of this strategy as: more pat Etie sc?rms directly suffer the aftereffects of! the1r own SEW-teams Ititties. Moreover, examples of the ultimate con- railroad in: Interventlomsm, especially the of the in Great 3 Fairy 1n the United States and major industries man, are awakening businessmen to their own August 1973 L. - ernment than to be left alone. And these numbers are growing quickly today. To survive, business must develop a new strategy. The great free?market and Nobel Laureate economist FA. Hayek has prepared a guide for us: Almost everywhere the groups which pretend to oppose social- ism at the same time support policies which, if the principles on which they are based were generalized, would no less lead to socialism than the avowedly socialist policies. There is some justification at least in the taunt that many of the pretending defenders of ?free enterprise" are in fact defenders of privileges and advocates of government activity in their favor, rather than opponents of all privilege. In principle the industrial protec- tionism and government-supported cartels and the agricultural policies of the conservative groups are not different from the pro- posals for a more far-reaching direction of economic life spon- sored by the socialists. It is an illusion when the more conser- vative interventionists believe that they will be able to confine these government controls to the particular kinds of which they approve. In a democratic society, at any rate, once the principle is admitted that the government undertakes responsibility for the 31 status and position of particular groups, it is inevitable that this control will be extended to satisfy the aspirations and WEI-?dices ?t the great masses. There is no hope of a return to a freer until the leaders of the movement against state control are PrEpared first to impose upon themselves that discipline of t1 WmPEtltive market which they ask the masses to accept. The hopelessness of the prospect for the near future indeed is due 31131111? to the fact that no organized political group is in favor of a truly free system. . Before businessmen can serve as effective defenders of individual liberty and the free enterprise system, it is first necessary for them to learn precisely what free enterprise is and what it is not. We must do our homework; we must comprehend ?the philosophic foundations of a free soci- ety. Only then will we have the necessary resolve to carry out the difficult task ahead. Armed with understanding, businessmen can confident- ly proceed with the new strategy, which is composed of three parts: businesstr government relations, education, and political action 1. Business? Government Relations?~The first require- ment is to practice what we preach. People see our in- consistencies and?quite justifiably?simply don?t believe businessmen anymore. How discrediting it is for us to re?- quest welfare for ourselves while attacking welfare for the poor. Our critics rightfully claim that we want socialism only for the rich. Our credibility cannot be regained if we continue to file, - hat in hand, to Washington while mouthing empty, in- sincere platitudes about free enterprise. We cannot con- tinue to have it both ways. Government will not keep granting us favors on the one hand, while allowing us to run our own businesses as we see fit, on the other. We must stop defending existing interventions and demanding new ones. This might well diminish the impetus for new regulations and win new allies for us among intellectuals, legislators, and the general public. . Then we should advocate the repeal of existing regula- tions in our industries, as well. Never ask for tighter regulation of a competitor even if he has the advantage of being less regulated than you are. This starts the suicidal cycle which ends in the destruction of both. Instead we should concentrate on loosening our own regulations. We should defend our own right to be free of unjust regulations, and not try to-shackle com? petitors. Strategically, the critical point is to fight to eliminate, rather than continue, all those that provide short?term profits. Only by rigidly adhering to this policy can we begin the step-by?rstep pro- cess of freeing ourselves. . Taxes are particularly troublesome, especially Slnce market businessmen believe that tax exemptions lent to subsidies. Yet morally and-strategically, tax exemptions are the opposite of subsidies. Moral-1y, lowering taxes is simply defending property rights; seeking a subsidy is asking the government to steal someone else property for your benefit. _Strategically, lowering taxes cg- ducgg ggeemment; subsidies Increase goyernment. Nor is it valid to say that reducing your taxes simply shifts your many are equiva 32 ?fair share? of the tax burden to som?oneteli: Tile? is no ?fair? Share_ Our goal is not to rea oca ?Iden of . al is to roll back government, government. UHF 3?3 If should consistently work to re uce a axes, our chat and others. thill:dilly, we should not cave in the moment a regulatl?lr sets foot on our doorstep. Put into practice Henry Mama's recommendation that ?the business community Utilize available techniques of legal adversary to an- nounce publicly and vigorously, both as individual Cons panies and through associations, that they will not cooperate with the government beyond?the legally mm. pelled minimum in developing or complying-with any Con- trol programs.? As he urges, ?publicize as widely as 1313551: ble the inevitable inefficiencies, mistakes, and human miseries that will develop with these controls . . . help the public understand that morality, in the case of arrogant, intrusive, totalitarian laws, lies in the barest possible cube- dience and in refusal to cooperate willingly beyond the let- ter of the law.? Do not cooperate voluntarily; instead, resist wherever and to whatever extent you legally can, And do so in the name of justice. 2. Education?Business's educational strategy has been guided more by concern with short-term ?respectability" and acceptance by the establishment than with long-term survival. We have voluntarily supported universities and founda- tions who are philosophically dedicated to the destruction of our businesses and of what remains of the free market. - This must stop. We must stop financing our own destruc- tion. Period. Even when business has supported ?free enterprise" education, it has been ineffectual because businessmen have had little understanding of the underlying philosophy or of a meaningful strategy. Businessmen have spent their money on disasters such as buying a ?free enterprise" chair at their alma mater and watching in dismay as the holder teaches everything but free enterprise. Also largely wasted has been the money contributed to those private colleges who make free enterprise noises, but have failed to produce competent graduates dedicated to egtallplishing the free enterprise system. There are too many ese. The development of talent is, or should be, the major point of all these efforts. By talent, I mean those rare, ex- ceptionally capable scholars or communicators willing to dedicate their lives to the cause of individual liberty. To be effective, this talent must have the knowledge, skill, and sophistication to meet statist adversaries and their arguments head on, and to defeat them. They must have the desire and commitment to unceasingly advance the cause of liberty. Statists have succeeded while we floundered because they've had their talent, their cadre, to develop and sell their programs. During the 15 years I have been actively investing my time and money in reestab- lishing our free society, our biggest problem has been the shortage of talent. When conscientious, dedicated scholars or communicators worked on a project, we were effective; when they weren't available, we failed. Libertarian Ravine . u?u?mn-?u-h . I a err?Thus, business must concentrate its support on those few institutes and university departments that have effec- tivE program5 for producmg a libertarian cadre. Our awn direct defense of business, particularly our media advertising, has been either bungling and pitifully ineffectual, or else downright destructive. We have substituted intellectual bromides for a principled exposi- tiun of a point of view. We have taken a conciliatory at-? titude. Our ads have applogized for profits. We have accepted the fallacious concept that the corpo- ration has a broad ?social responsibility? beyond its duty to its shareholders. We have been made to feel ashamed of private ownership and profits, and have been hoodwinked characterizing government regulation as ?virtuous? and in the ?public interest.? As a typical example, the Adver- tising Council, backed by most of the major US. corpora? tions, goes so far as to describe regulation as, ?the promo? tion of fair economic competition and the protection of public health and safety.? What simple?minded nonsense! Instead of this bankrupt approach, we need to go on the an essential part of any na- tional urban strategy,? busi- ness should withdraw its sup- port. It should do the same if the Chamber of Commerce continues to promote govern- ment intervention under the philosophy espoused by a former president: ?It's not House possible or desirable to re? FORMAT move all the regulations.? New business organizations should be set up which refrain from asking for state protection and subsidies, and which, going further, criticize, expose and lobby against instances of political capitalism, of ?the partnership between busi- ness and government.? Only such organizations can help business regain the respect of the American people. In fact. a group of us is launching just such an organization, The Council fora Competitive Economy. Such an organization will help businessmen avoid blune TOWARD ESECOND AMERICAN offensive. We need to cast . aside our desire to be popular with our colleagues and the establishment intellectuals, to cast aside our fears of reprisals by government. We need to advertise that the market sys? tem is not only the most effi? cient, it is also the only moral system in history. We need to attack government regulation for wreaking havoc on those it is allegedly designed to help?- those least able to fend for themselves. We need to stig- matize interventionism as be- Ilng intrinsically unjust because 1t deprives individuals of their natural right to use their lives - We need to cast aside our- desire to be popular with our colleagues and with the establishment intellectuals, to cast aside our fears of reprisals by the government. ders similar to the Wichita Chamber of Commerce when . it heavily promoted a one?- billion-dollar coal gasification plant, which would have been partially owned by Wichita and subsidized by Washing- ton. The people of Wichita re- jected Chamber propaganda that the plant would not cost them anything and voted it down. Again, such an organ? - ization will help prevent blunders such as the business community in California op- posing Proposition 13. These blunders create an image of business in cahoots with Emil Pr?perty as they see fit. We need to defend the right of Capitalist acts between consenting adults,? in the words of Robert Nozick. demonstration of the need for arguments be- Court dB standard one_of efficiency is the recent Supreme id in egision upholding a Maryland law (passed at the Moduli; a station dealers: association) barring oil Court ?eflners from operating service stations. The "mm; of th at, regardless of the ultimate economic ef- at it bearE statute, we have no hesitancy in concluding Purpose ins a reasonable relation to the state?s legitimate Th gontrollmg the gasoline retail market. . . . effic' business willf rest not in . Iency, at In ar uments rom . an? that the state has the right t: ?control the arket?ls tot alitarian nons must ense. ?rganizalti?rlsiegrgand 'tjhe same principled behavior of our en, for Exam five ho of ourselves and our companies. ment advocat lie, for Economic Develop- ES that Pubhc-prlvate partnerships must be Augmt 1973 -- government to tax and exploit the people. Milton Friedman describes this as business following ?its unerring instinct for self-destruction." Business should also stop shackling the free-market posi? tion with antilibertarian stands such as hostility to civil liberties and an interventionist foreign policy. What a spectacle it is for the same people who preach freedom in voluntary economic activities to call for the full force of the law against voluntary sexual or other personal ac- tivities! What else can the public conclude but that the free-market rhetoric is a sham?that business only cares about freedom for itself, and doesn't give a damn about freedom for the individual? The public reacts at least as negatively to business calls for still further foreign adventurism. What other feelings can we expect from people taxed and conscripted to save our foreign investments or to enlarge our foreign profits? We should take our own risks abroad, and not expect them to be borne by the American people. Businessmen have been the first to support any sort of foreign adventurism, if only it is sold under the rubric of 33 natienal Secu . . Itf business really wants a free system it must resist gevern- entiens as well as its demestic in- ually exclusive. Our classical liberal nd whe struggled fer free trade and this?the peace mevement and the nt are ene and the same. ?nu?usinessmen sheuld be invelved in a] actien?frem lecal tax revelts te cam- ss and the presidency. But we sheuld 3113' Fly the same standards ef understanding and principled :fhav??r as the ?the? Parts ef eur strategy. We must scar eur lesser-ef?evils appreach te pelitics. This has reught ?nly-the centinued grewth ef gevernment. Many bu51nessmen whe tie see the need fer a new strategy istill held eut hepe that the Republican Party will becerne The Liberty Party,? that this is its ?philesephical heritage.? If this is eur ?1113? h?pe then we are deemed. The Republican Party i5 the party ef ?business? in the meme sense?in the sense ef business accemmedatien and part- nership with gevernment. Histerically. it is the party ef wage and price centrels. ef high pretective tariffs. ef cartelizatien. ef subsidies. ef special privileges te business. And werse. the Republican Party is and has been a party {if fereign interventienism and adventurism. This is scarce- ly the heritage upen which te build a ?Liberty Party!? It is the embediment ef the bid strategy which has failed se miserabl . Otheryfree enterprise businessmen. grasping the futility in attempting te change the Republican Party. have eschewed pelitical actien altegether. They have cencluded instead that. since ideas determine actiens. we sheuld limit eur strategy te develeping and spreading ideas. It is undeniable that ideas de determine actiens and that we sh?uld refine and apply our ideas. But ideas de net spread by themselves; they spread enlr peeple. Which means we need a mevement. Only a m?vement can we build an effective ferce fer secial change. Our mevement sheuld have as its geal the fulfillment of the ideal ?f the free and independent entrepreneur. Te ac- cemplish this. eur mevementmust destrey the prevalent statist paradigm and erect. in its stead. a new Paradigm ?f liberty fer nil peeple. Qur mevement must aveid the faulty strategy ef censervatives. whese acceptance ef statist premises has caused their prepesals te be simply m?derate versiens ef the eriginal 'St?lilst schemes: Onr mevement must struggle fer the realizatien ef the princ1ple ef the free market rather than settle fer immediately ebtainable referms. Fer. as Aileen Kr-aditer writes. Te criticize the (radical) agitater fer net trimming his demands te the im- mediately 13. f?l? net acting as a peliti- cian?is te miss the P?lnt mere ExtrEmE demand ef the agitater makes the peli?i?an demand seem acceptable and perhaps desirabllt; the adversary may Prefer it). give up ha a ?a ?a a? the nhmle. Alse. f::ebears_ in Engla ssez-faire realize free trade meveme 3. Pelitical Acti pelitics and pelitic paigns fer Cengre 34 the agitater tie-1135 define thg?aluehthe Principle! fe the pelitician bargains.l et ica] Values vari?u? pessible p?llth? C?urSEiI-l PHI: thEre ted 1' asitatm?? W?rki?lg. the p? ?3 ?Pimen thea?l?rby pelitical pessibilities. . SuCh a mevement already exists. the libertarian merit. Libertarianism effers the enly SYEtEmatie w? mm]B that supperts the ideal ef the free and independent nessma?. It enly remains fer businessmen te Suppe bllEi. mevement. Hew eachbusmessman can bEst Suppertri this pends en his ewn abilities and reseurcee it [ls Businessmen sheuld [net enly suppert the mev educatienal and single-issue activist arms. We Shes?emi suppert?with time *and meney-Z?the Libertarian Pale? the mevement?s pelitical. mass actien arm. The Lites?? Party is a vital ergan ef the libertarian mUVEment? were. it never elects anyene te 'ma1er effice. It Exp?ses 1111} numbers ef peeple. whese interest in questiens (if g?vagtt ment interventien is limited te electien time. t? Efrem In. ideas. And. when we de get a significant number at fer a libertarian candidate er en a libertarian aSWith Prepesitien 13. peeple de listen. The Party Causes litre. tarians te apply their philesephy te tepical pelitical 1551125 and te net. In sum. the Party transferms liberta?anis?'l frem purely a pelitical philesephy te a mnvement. t?a . ferce fer radical secial change. Business can survive. but it rennet survive without the help ef businessmen. By fighting against interventisne hewever prefitable. by advecating a principled. phile- sephical defense ef the free enterprise system. and by beceming a part ef the libertarian mevement. businessmen i can. with pride. be a vital ferce in restering our free see- a TD datE. businessmen have net seen fit is Eli] es. Whether businessmen de se in the future may determine whether business. indeed. has a future. Or deserves ts. .j afket Cherries G. Keith is chairmen ef Ketch Industries. Rothbard (centintted frem page 24) libertarianism in many new and unexpected places i5 31?? evitably respense te the perceived renditi??t? reality. Given free will. ne ene can Pradictwl I ceitalnty that the grewing libertarian meed in Amenca will Salidify in a brief Peried ef time. and press fem Wlth?ut faltering te the success ef the entire libertarian, . pr?gram. But certainly. beth theery and analYSis Bl {tulle 5 Tent histerical cenditiens lead te the cenclusi?n that current PI'OSpects fer lib - ert the sh?ft ru cellent indeed. y. even in