Monday, January 9, 2012

Free Enterprise, Private Enterprise and Government

The campaign is on and the devotees of an unfettered free market system are intent on getting government out of the way.  
Wherever did the idea come from that we have, or ever have had, a free market system, fettered or unfettered?  What we have is a private market system that exists within the political context of a democratic republic.  It’s a good system, but it’s an amoral system and cannot be trusted for the commonweal on it’s own.    
I was struck by an editorial article by Rodney Clapp in the January 11 edition of Christian Century in which he discussed the limitations of private enterprise as a supplier of goods and services.  It led me to write down these thoughts that have been rumbling about in my head for some time.  


The private market system, operating within reasonable constraints that assure public health, safety and honesty in the market place, works very well when there are many suppliers, many buyers and the ability of each to make informed decisions.  It doesn’t work so well when the numbers don’t add up to many, or when many is counterproductive.  
The private market system also lacks internal incentives to consider the public, or external, costs of doing business.  The costs to society of pollution, unsafe products and practices, withholding of essential services to the poor, etc., are not natural calculations for private enterprises.  They need to be imposed, in appropriate measure, by the society itself.
Then there is the knee jerk assumption that anything government does can be done better and cheaper by private industry.   Contracting out public services is not the same thing as allowing the advantages of private sector competition to do the job better.  One might, for instance, contract out police services to a private enterprise, but a community would not open up the town to a multitude of competing police services selling themselves to individuals or groups.  Well, I take it back.  A town could do that.  Chicago did, in a sense, during prohibition, and ended up with gang wars as each competed for territory in which they sold “protection.”  
The point is this: what I hear being argued in the GOP debates, and among my conservative friends, is that private enterprise is a moral system of moral agents, and is best equipped to do all things for all people.  That’s naive at best.  The private enterprise system is a very efficient system for the production and sales of goods and services.  Given the right competitive environment, it cannot be beat for the generation of new ideas growing into new and improved goods and services.  But it is an amoral system.  Whatever morality it has is injected into it from the society it serves acting through its governments.

2 comments:

Country Parson said...

As an aside: In our city there is a constant debate about outsourcing city services, such as garbage collection, on the assumption, ipso facto, that private collection is more efficient than collection by public employees. I think the primary evidence for that is the song from Annie Get Your Gun with the line “Anything you can do I can do better.” The point that is missed is that, one way or another, it is a function of the community, and if a private hauler gets the contract, he or she is simply performing a governmental function. Nantucket Island is an unusual case in that regard. As far as I know they have neither municipal garbage removal nor municipal contracts with private haulers. Competing licensed haulers vie for contracts from each resident and business. But it’s far from “free” enterprise. The regulations are very strict and tightly enforced.

Anonymous said...

Good points. One thing that really makes one nervous about the extreme Libertarian position of Ron Paul that is so appealing now to both younger voters and some older ones who should know better: its extreme simplicity-remove all government regulations and most services to allow the "free market" to function instead. Your example of Nantucket is instructive. I have lived briefly at times in two Texas cities that followed that very philosophy of free enterprise for most services and low, low taxes: Marshall and Texarkana. Little zoning, if any, few municipal services, many unpaved streets (!), especially in the African-American neighborhoods, minimum trash collection, etc. Rick Perry would be proud of those Texas cities! I am reminded of a statement once made by Supreme Court Justice Oliver Wendell Holmes, Jr.: "I don't mind paying taxes; with taxes I buy civilization." Dr B