Essentials of Freedom; 3; Economic Freedom

Here on the campus of Kenyan College, we are investigating the proposition that a continual examination of liberty is a necessary step to its revival, renewal, and growth. Garden Keith Chalmers, president of Kenyan from 1937 to 1956, believed in freedom as the central value of human existence, and, like thoughtful men everywhere, he knew that freedom can be attained only through constant effort. To this campus, as living testimony of this idea, have come leaders of thought from all walks of life, devoted to the liberal education of free men, which is the development of the responsible critical human being.

This series of programs, based on the Kenyan College Conference, is dedicated to men and women who realize that unexamined freedom, like the unexamined life, is not worth having. Here to explore the essentials of freedom is Lewis M. Lyons, curator of the Harvard University Neiman Foundation. This is Kenyan College in Gambier, Ohio. Here a conference has been called on the essentials of freedom. And leaders in American thought are gathered here to consider the meaning of liberty in our time. On this program, we shall be talking with Mr. Clarence Randall, retired chairman of the board of England Steel Company, and advisor to the president of the United States on foreign economic policy, author also of a creed for private enterprise.

And with Mr. August Hexer, former chief editorial writer of the New York Federal Tribune, and now director of the 20th Century Front. In a moment, we will be discussing economic freedom. Economic freedom is the third in a series of programs on the essentials of freedom, produced for the Educational Television and Radio Center by WOSU-TV in cooperation with the Department of Photography of the Ohio State University. And now Mr. Lyons. Well, gentlemen, we're talking about economic freedom, and that's mighty important to all our freedoms, I'm sure. Mr. Randall, in your little book of creed for free enterprise, you've said that free enterprise is at the very core of a free society. I think it would start us off interestingly if you'd spell that out a little.

Well, of course, I hold a very deep conviction that the American system of production under private initiative, which we call for one of a better name, the system of free enterprise, is the very fullest embodiment of freedom. In fact, I think freedom is an integral thing. There aren't plural freedoms, or just one freedom, as I don't need to point out that free enterprise can only exist within a society that is fully free. Now, the purpose of freedom, as I see it, is to give the individual the opportunity to develop the full talent that God has given to him in his own way. Well, I know that Mr. Hexer has been in his books very much concerned about this individual that you mentioned. Would you say a word for us, Mr. Hexer, is to how you feel the individual in his freedoms fairs in our organization corporate line? Well, I would like to say, first of all, Mr. Lyons, that I agree, of course, of Mr. Randall, that private enterprises we've developed in this country, is the basis of all our freedoms and is inseparably connected with them.

And nevertheless, I do feel that we've got to watch very closely some of the points at which our free economic system impinges on the individual. In the 19th century, we used to worry about insecurity much more than we knew now about unemployment, about all these fringe injustices and inequalities. Today, I think the problem is a little bit different. We have to worry, I think, as to whether or not the individual is being submerged in the great corporation, whether he is losing some of the entrepreneurial freedom which you value so highly as I do. And I think we ought to discuss that a little bit, Mr. Randall, as we go along. Not too fast, Mr. Hexer. I get to that in just a moment. Let me, if I may, recount for you some of the manifestations of freedom for the individual as I see it. First of all, every man is free to choose his own job. He is free to quit his job. He is free to make repetitive choices of a job, which, for example, in Europe is very difficult to find.

Many countries over there, the craftsman is born into the craft of his father. And it's very difficult for him to change what in our country a man can try a dozen times. A senior in college can select a job when he leaves, doesn't like it, take another job. Freedom of the employer to hire whom he wishes is important. It must be pretty difficult in Russia for a plant manager. To have to try to lead a group of people who don't want to work for him at all and but utterly detest him. And you have the freedom of the citizen to save or to spend if he decides to spend then consumer goods flourish. If he decides to save then capital production flourishes. And then you have the freedom of the marketplace. You have the right of the individual citizen to buy or not to buy. You have the great advertising fraternity trying to persuade the people to buy in general or specific products.

You have the investment banker trying to persuade them not to buy, but to save. And all of these factors blend together on the one hand to preserve freedom and on the other hand to control the processes of production by the wisdom of the many. I wonder whether I could explore with you some of these freedoms in more detail. You spoke for example of the freedom of the college student to try many jobs. I do think that is vital to the free life. But isn't there a tendency today for the college student to be solicited while he's still on the campus by the representatives of the various great corporations to be lured in with the promises of pensions and security and promotions. Isn't there a tendency then for that man to spend his whole life in one job and not have the mobility which he used to have in the old days. You're pressing me very hard, Mr. Lecturer. That's what I mean. It happened to be greatly concerned about that problem and the competition for brains is now very acute, particularly of so in the technical institutions and not in the fine liberal arts colleges like Kenya.

I said the other day that the pace for engineers is getting so hot that they not only offer the senior of salary equal to that of the best professor in his institution, but they throw in a Cadillac usually if you'll come and work for them. Now I do think that's a little bit overheated, but with the liberal arts student, he does have he has the choice of a profession. He has the choice of bringing the doorbell and getting a job or he has very wide selections that are open to him as I say. He can make him two or three times over. This is not the fall of business in any way, but I think the tendency of college students to marry at an early age, often while they're in college, to have children almost immediately and to settle down does, but also a burden on them, so they are not able to adventure and to try various roads as they once did. So we'll go on to a second point of yours, though, as one of the series you mentioned, and that is the freedom of the consumer to buy or not to buy.

One of the things that sometimes seems worrying to me is the enormous pressure that is placed on the consumer to spend and to spend often beyond his means to buy on the installment plan and through other devices. Often when he doesn't really want the goods and often when he feels that it's almost an act of loyalty to the whole private enterprise system to keep it going by turning in his car last year and buying one this year. Does that worry you? It bothers me, but of course that's a function and it's a problem in all aspects of freedom. The line between freedom and the abuse of freedom is a very delicate one, and it takes a mature society to be worthy of freedom. Freedom develops character and the only answer to the problem that you suggest is education, self-restraint, by no means should society endeavor to substitute its judgment as they do in the totalitarian countries and tell the individual when to buy or what to buy. But Mr. Randall doesn't this mature society, like ours, at least in the time when the government budget has to go more and half for defense, have to intervene to somewhat and even to modify what we can buy.

That is the taxes they take, have something to do with it, and the pressures on heavy machine defense goods do make some schesities and other lines. Isn't this inevitable? We are at the very core of the freedom problem, which is on what occasions does the welfare of society as a whole require to impinge upon and restrain the freedom of absolute freedom of the individual. And certainly one would say that the top priority in the welfare of society is the continuation of society by provision for its military security. You wouldn't feel that that inevitably applies at some time as the necessities of the farmers or some other group that society may always have to intervene. Some extent more or less. You do have a way of picking the most difficult things to talk about. The problem of agriculture is acute in every land.

The farmer says today, to me, we really haven't a pre-economy because there is a floor under wages. There is collective bargaining by powerful unions that create a phase-in of certain economic factors so that we're not altogether free. That's the difficult argument of the farmers to answer. It certainly is true that our economic system has developed so far since the 19th century ideas of laissez faire. We have put so many floors under enterprise that we are not a laissez faire enterprise in the old system at all, and I think the farmers do represent in many ways a special case. But to go back to something that concerns us all, I wonder whether you feel, Mr. Randall, that the level at which the taxes have now reached, our liberties, our basic liberties to save and to consume and to buy the choices on which our freedom depends have been seriously impaired. I would say that the year 1956 is the answer to that. There we had a very heavy tax burden, a federal budget of $70 billion, and yet it was a year of tremendous production and great economic prosperity.

You don't think there's any definite point 25% or anything of that kind in which the tax load becomes an impairment of initiative and of enterprise. I'm satisfied it is the opinion of the council of economic advisors to the president that the present tax level can be born by the nation without serious impairment of its economic activity. Mr. Randall, let me ask you, to what extent you feel that government intervention in the economy can be born by a free enterprise without really undermining it. I think of the present necessity as the government sees it, apparently, for the Federal Reserve Board to worry enough about inflation so they try to intervene. We're always going to have in relation to the ups and downs some necessity for the government to intervene. How much can your free enterprise concept take of this intervention?

Well, of course everybody would be agreed that under a free enterprise system of production, we should have the maximum of private deciding, private initiative and the minimum of government planning and control. Now it is true that the tight money policy today which stems from the Federal Reserve Board and which I believe is having a very salutary effect upon the economy is to a certain extent an impingement of freedom. But it really is merely establishing the rules of the game. Nobody tells anybody what they must do. But it does seem to act in a way that produces the choices of some young men to build houses or some communities to build school houses. But it's an indirect control and not a direct control and within the funds available there there is complete freedom. People compete for the available capital just as other people compete for goods.

The important dynamic quality about our economy as a whole is the marketplace. Their government does not intervene. I often think of the product manager let's say of a big Russian plant. He has to decide in his own infinite wisdom how many automobiles to make in a year of what kind. And he's bound to be wrong. No man is that wise. Now in the United States we carry on an enormous voting contest every day on that subject. The people buy their decision to buy cars or not to buy or to buy one car instead of another car. And carry on a daily ballot as to how many automobiles and product automobiles shall be produced. And the wisdom of the men in my judgment is more reliable than the wisdom of the few. Well in the newspaper game we felt a little bit like politicians who every day had to go before their constituency and to receive their vote.

I imagine you would agree Mr. Randall that the government has a responsibility for seeing that the economic system as a whole maintains a certain level of prosperity and doesn't go into a depression or a decline. There must be of course a basic respect for the human decencies of life and the minimum standards of living and what not government does have and overall responsibility to the human aspects of our economy and the government must fulfill that. But they must do it in the most indirect possible manner always seeking to maintain freedom of choice to the maximum extent possible in the individual system. If I would try to distinguish let's say the recent administration from some that have gone before I would say that the recent administration has allowed a much greater flexibility within the economy as a whole as allowed sectors of it to find their own level rather than feeling that the whole economy must be kept at a tight level all the time. I would say that was quite true and that's part of their philosophy I think right. I'm sure it's part of their philosophy Mr. Hexha but I wonder to what extent the ability to do that is part of this sort of luxury margin that our economy has.

I'm thinking of our allies and the countries that Mr. Randall has visited for the president as to whether we're all against planning in the totalitarian sense. Whether they're greater pressure some of these countries have required them to modify a free enterprise system more than we so far must. It is an extraordinarily difficult thing to transplant the American concept of free enterprise into a new and undeveloped country. Often their whole tradition and history is against many times they don't know really what we're talking about we talk about private enterprise. In the first place mostly the brains of the country is found in the government there is no management class there is no entrepreneur class there is no tradition of pooling of the savings of many people under the common management of a private individual. And I would be the first to recognize that the new countries must inevitably pass through a transition period in the development of their forms of production.

But I would hope that always by example present never by compulsion we seek to lead and not to drive these new countries towards free enterprise. When you're in one of these countries and talking with the leaders there do you find that the phrase free enterprise is an appealing phrase to them as it is to us even as a goal and as an ultimate objective after they pass through this period of transition. I've seldom heard the phrase past their lips they do speak in most countries of the government sector and the private sector in business. And in some countries they'll have cement plants that are operated by the government and at the same time permit cement plants to be built and operated by private enterprise. Quite often the leaders in the new countries who may be dedicated men in terms of devotion to their country are not men who have had experience in business and quite often with only the most rudimentary understanding of the simplest problems of economics. For example many of these countries are totally on the custom to the formation of corporations.

Their laws are not such as we have for that bringing into play what we call the equity form of ownership. There are most countries there isn't a single certified public account for example. I remember you wrote an article about your experience in Turkey in which you mentioned that lack of recognition of the equity form. That's one of the problems in that great country of Turkey. I think it is a country with a tremendous future that came only but recently out of the Middle Ages. I have the greatest admiration for what they have achieved. Privately I happen to think they've tried to do too much a little too fast. And when that happens it is difficult to maintain so many new projects all at once out of the earnings of their exports. But you would hope and expect that these countries which are now private sector and government sectors they become more organized would go more to the price. That's my permanent hope.

I think we should do all we can to further that. There is of course one obvious factor that complicates this problem of the growth of industry in the underdeveloped countries and that is the rivalry of Russia. So many as I'm sure you would agree with me Mr. Randall had looked upon the forced growth of Russia under brutal and authoritarian controls but had nevertheless seen a development there from the economic and industrial point of view which had been quite amazing in a very short period of time. They do tend to question therefore whether perhaps the Russian pattern might not be more effective for their uses than for hours. That worries me a good deal. It worries me too that sometimes as a result of this rivalry we are being compelled to develop the underdeveloped countries more rapidly than is perhaps good for themselves. You spoke about Turkey trying to do too much too fast and that is a general danger it seems to me. You have the most discriminating and penetrating judgment on these matters. That problem of the Soviet trade penetration of the new countries is one that is very little appreciated and evaluated by the American business community at the present time. I think it should be pointed out first that Russia occupies a unique trading position.

She is long uncapable goods and short on foods and fibers. Now the new country just entering world commerce has little to export except the fruits of the soil, foods and fibers. Well that happens to be the thing the United States is long on. Pretty hard for us to trade with the country it's got what we've got whereas it's natural for the new countries to trade with Russia. And then the Russian type of equipment is better suited in any ways to their needs than ours. The Probeda automobile has very high clearance a regular gear shift. You can't put a Ford Thunderbird over a back road in Indonesia and the Probeda is tough competition. I still say however that the resourcefulness, the ingenuity, the creativeness of the American enterprise system can solve that problem and can beat the Russians at any game.

One of the things that is worried us sometimes is finding a name that would be more appealing than free enterprise which as you say doesn't get a course into the non-Western world. Some people have suggested people's capitalism as a way out of it. I don't think though that that means a great deal to people who haven't lived under it and haven't known what it means. It's a pretty attractive slogan as slogans go but I'm much more interested in the substance than I am the name and I will say this to you. The best missionary for free enterprise is free enterprise. The American firms that go abroad and introduce at the same time good business methods that the American standard of living are doing more. But any other factor take Venezuela, the oil companies and the steel companies that can simply transform that tropical nation into a modern country by the example of their leadership. Well then Mr. Randall I suppose the primary example they would give would be their operation at home which is in the limelight of the world.

Having taken this very interesting look around the world perhaps we should finally come back and candidly look at our own operation. Now some of the critics of private enterprise and of our business mind say that our corporations tend to stifle the civic side of the businessman that he doesn't like to get involved in controversial issues in quotation lines. Well you must have encountered that as much as anybody. I hear that that a great deal. I haven't to have had a rather loud smile which has been open for quite a long time and I have been a controversial figure at times. I have always believed that a corporation is not a legal entity. It's an organization of people and it can only make its opinions felt true people. And I think that the corporate executive should take part in every discussion that goes on in his community and that it's quite unfair if his company is prejudiced because he's exercising the full opportunity of a citizen. I think that's terribly important to establish that people are not connected or are not responsible for in every way the groups to which they belong and which they're associated with.

As a newspaper editor for example I was often struck by the difficulty of getting letters to the editor and one reason for that of course is that each person when he sits down to write the editor thinks well maybe I'm not writing for myself maybe this is going to hit my business or maybe it's going to hit my church or something else. And to reestablish this sense of individual personal responsibility for what a man says is I think very important today one of the bases of a freedom in an industrial society. I have to be a republican and I've never asked a young man his politics when I hired him and I've always had associates who were active on the other side of political campaigns in which I was interested. I may say so I think it's terribly important to say that people at the top like yourself set this pattern you really can't expect the burden of courage to be born entirely by people at the bottom who are sticking their necks out but if the man at the top says what's on his mind it sets up a spirit that runs through a whole organization. You suggest Mr. Hexer that this makes for vitality within the organization as well as in the community to which they participate.

Well I would think that any the vitality as you say of any organization would depend upon each man in it feeling free and up to the level of his fullest self. I've always tended to promote the men that stuck their necks out. Well Mr. Randall I'd like to come back to a point that Mr. Hexer made very early and that is to what extent is this virtue of risk taking that you associate with the support of sticking the neck out. To what extent is that whittled down in the built-in security that corporation life tends to offer young people now as the talent scouts come around to the colleges. Well I can say this. Security is an awfully important thing to a man past 50. It just has no influence that I can see in the life of a young man about to leave college. You mean it shouldn't? It doesn't. You try to hire a senior from Kenning College to come with a big company and telling me should come because of the pension system you want to listen to him. He wants no part in the pension system. He wants no one he's going to be a vice president. And unhappily boys and I think they're wrong.

I think the great opportunity lies in the small companies and not in the large. They're afraid they're not going to get ahead whereas they're watched every minute. But I don't think security influences his young men at all today and I think risk taking an adventure and the daring spirit is prevalent among them. Well and I think if I may sort of speak for the younger generation a lot of the younger generation look forward to the time when they have gotten over this time of bringing up their children and educating them. They say then we'll be free and we'll be able to take chances and we'll be able to go around the world and pick up adventures as we go. Now we've got to buckle down and take what is given us and do the job. But the point you make is we must do each one of us all that we can to perpetuate the enterprise system, to strengthen it, to eliminate each weaknesses and demonstrate to the world that our sense of social responsibility under free enterprise excels that of socialism at its best. Well you have certainly been a vital demonstration of that Mr. Randall. Thank you.

We've been developing here some of the strengths of our free enterprise system and also trying to face up candidly to some of the problems it faces in the modern world. You have been watching the third in a series of six programs on the Essentials of Freedom, produced at the Kenyan College Conference. Participating in this program were Lewis M. Lyons, Clarence B. Randall and August Hexcher. This has been a W.O.S.U. TV production in cooperation with the Department of Photography of the Ohio State University. The Essentials of Freedom is produced for the Educational, Television and Radio Center.

This is National Educational Television.