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Limited Government and Individual Enterprise and the Profit Motive--Soundness Ethically, Morally,
Socially and Otherwise
The traditional American philosophy and system of limited government require strict limitation of the power
of the Federal government, in the economic field, to regulation in the particulars specified in the Constitution--excluding
any control by government of the people's economic activities, according to the controlling intent of those who framed
and adopted the Constitution in 1787-1788 and thereafter each of its amendments. This economic aspect of the philosophy and
system is entirely in harmony with the other aspects--notably the related ethical, moral and social aspects in their broadest
and most inclusive connotations. Brief consideration of this view is of particular significance and value at this point.
Individual Enterprise, as contemplated and featured by the traditional American philosophy and system, means
private, competitive, individual enterprise or activity concerning things economic. The soundness of this philosophy and system
as a whole--ethically, morally, socially and otherwise--necessarily characterizes each and every one of their constituent
parts, including Individual Enterprise.
The fight to enjoy the freedom of Individual Enterprise, for private profit, together with the intimately
related right to private property, constitute the main elements of Man's economic liberty. This right to economic liberty
is the inseparable and indispensable economic aspect of the indivisible whole of Individual Liberty. As Jefferson stated in
his first annual Message to Congress in 1801:
"Agriculture, manufactures, commerce, and navigation, the four pillars of our prosperity,
are the most thriving when left most free to individual enterprise."
Jefferson's statement holds true equally as to all other parts of the economic realm, according to
the American philosophy. Benjamin Franklin expressed a similar view (perhaps about 1766) in his "Remarks on the Plan for Regulating
the Indian Affairs" as follows:
"It seems contrary to the Nature of Commerce, for Government to interfere in the Prices of Commodities .
. . It therefore seems to me, that Trade will best find and make its own Rates; and that Government cannot well interfere,
unless it would take the whole Trade into its own hands (as in some Colonies it does), and manage it by its own Servants,
at its own Risque."
During the colonial period, the British government exercised full control over major aspects of the empire's
economy and manipulated trade to Britain's benefit at the expense of the economy of the colonies. Some of the ethical, moral
and social aspects of this part of economic Liberty--the Individual Enterprise part of Man's Freedom in the economic realm--as
viewed by the traditional American philosophy, will now be considered.
First, Individuals must deal with each other by free choice, by mutual and voluntary arrangement, so that
the result can be mutual trade for mutual benefit in the light of rational self-interest, with due respect by each for the
other's equal rights.
Second, the gain permitted by the private-profit feature of the Individual Enterprise system is The Individual's
reward for giving superior service, or superior benefits (of the product purchased), to those with whom he deals--offering
them what they prefer to buy in the face of competition with all other offerings. The more the sales and resulting profit
he makes, due to the greater value he offers, and the more firmly his superior service becomes established through "repeat"
sales to well-satisfied customers, the greater the proof of the value of his services to them as well as to society, to the
general welfare, in various ways. This special service, in some instances, takes the form of making various standard items
offered more conveniently available to the customer, as in the case of the neighborhood drug-store; the special convenience
is the special service. The seller's successful demonstration of sound practices and superior standards helps to influence
others to emulate his example and thereby to raise the level of performance by other sellers. This gradually improves the
material environment of the people generally, directly and indirectly in a number of ways, while giving evidence of the soundness
of the system and making its foundations more secure economically and in the minds of the people, which helps to form beneficent
customs and traditions.
Third, Man's freedom in the economic realm--that is, freedom from Government-over-Man--including the freedom
of the "free market" economy operating on the basis of the private-profit motive, presupposes the existence of an ethical
environment. Such an environment is created by the multiple, beneficent influences within any group, neighborhood, community
and society stemming from all of the sound and constructive aspects of life. These influences include, for example, the religious,
ethical, moral, social, educational, civic, fraternal, political, as well as the material. An additional and most compelling
factor is self-interest based on the desire of The Individual to be known and accepted as an honorable, dependable and entirely
worthy participant in the activities of the society--including mutual-trade transactions. In the background always is fear
of society's potential disciplinary measure--fear by an offender of being driven out of business by group and community ostracism
due to any dishonest or unfair treatment of others, including grossly avaricious conduct.
The potency of the foregoing elements combined, contributing to self-discipline among traders in the "free
market," can be readily understood by any one familiar with neighborhood and community life in any locality in America, viewed
traditionally. It needs to be kept in mind that any large community, even a city, is merely an aggregation of a number of
such neighborhoods. For instance, even in a huge section of a big city such as the "Wall Street" financial community in New
York City, nothing is more valuable than a man's reputation for probity ("his word is as good as his bond") and nothing is
more disastrous for him in business than publicity of his violating an agreement; and all the more true the smaller the community.
A man's reputation for honest dealing is not only a big asset in economic life but so vitally important to
profit-making over the years that the number of these who offend seriously against community or trade-group standards are
relatively few indeed. The percentage of such offenders is probably quite similar to the percentage of those who prove themselves
unworthy and unacceptable in other ways and in other walks of life. Any instance of an exception, for some special reason
peculiar to a particular period or trade or locality, only serves to prove the general rule.
In America the traditional philosophy and system of government--designed primarily to make secure each Individual's
unalienable rights against infringement by other Individuals, as well as by government--safeguards against evils in the economic
realm such as monopolies through which a person or group might try to disrupt, or eliminate, the freedom of action of others
and the free play of the "free market" economy with regard to some commodity or type of business. The worst type of monopoly,
government monopoly, through either government control or government ownership, is of course barred above all else under the
traditional American philosophy and system. The correctness of the foregoing statements is not affected by the fact that it
took time to evolve effective measures to combat the proneness of some men to seek monopolistic control in this or that part
of the national economy; nor by the fact that violators are occasionally discovered and punished--their relative fewness being
proof of the main point here.
Under the traditional American philosophy and system, the resulting ethical environment in the economic realm
helps greatly to give reasonable assurance of ethical conduct by Individuals. This applies to Individuals acting singly, in
groups and in organizations such as associations and corporations. This makes the surrounding atmosphere of the "free market"
economy in general anything but sordid, evil or degrading to Man. On the contrary, this helps to make it sound, constructive
and enduringly fruitful, judged by longtime records of the traditional American system. It has proved to be the most beneficent
system of economic operation by a people--from the standpoint of the people in general through the generations--ever devised
in human history to serve the supreme end and goal, which are to make fruitful and secure Man's Liberty against Government-over-Man.
This means to make secure Man's unalienable rights in general, through the effective operation of his economic liberty as
an inseparable part and the material mainstay of the indivisible whole of Individual Liberty. Any exceptions from time to
time have only served to prove the rule.
Fourth, as proved by life in any American community, the property (including money) accumulated by Individuals,
through operation of the Individual Enterprise system stimulated by the private-profit motive, is generally used soundly.
This means constructively and even beneficently in the main. It is used by most Individuals not only for the support of self
and of all of his dependents, so they can enjoy continued physical existence (the minimum meaning of life), but also for that
supremely important purpose: the support of their unalienable rights in general. By this course, The Individual sets a good
example for all others. This encourages all Individuals in the community and in the larger society to stand up for their equal
rights, especially the right to Freedom from Government-over-Man, while demonstrating how this can be done successfully. This
creates a salutary "climate" conducive to the well-being of Free Man in the neighborhood and in the entire country.
This indicates the impregnable foundation, the firm basis, for the sound ethics of rational self-interest
for each Individual. Multiplied by the number of people involved--for the whole country--this contributes to a strong, constructive,
enduring community of Free Men operating normally on a reasonably high plane, morally and governmentally, in a manner always
consistent with the duty factor of Individual Liberty-Responsibility and with the primary meaning of Individual Liberty--Freedom
of Man from Government-over-Man. Again, any relatively few violators of this standard constitute merely the exceptions which
help to prove the general rule.
Fifth, as Man operates successfully on the basis of the private-profit motive, he accumulates property beyond
the requirements of his and his dependents' necessities and normal life in general, judged by neighborhood and community standards.
This generally results in most Individuals making financial and other contributions to betterment of group, neighborhood,
community and society at large--to the higher things of life, to be shared by self and others, embraced by the all-inclusive
words: "Life, Liberty and the pursuit of Happiness." Such contributions, varying in form and frequency, are made moreover
on the voluntary basis of the freedom of choice of Man, free in mind and spirit--much of the time on his own initiative, without
request by others. Contributions by way of personal service in infinitely varied ways are commonly made by a multitude of
persons daily in the communities of America. This helps greatly to create and maintain the previously-mentioned ethical environment.
The average American community has over the generations proved this to be true in such remarkable degree as to cause this
aspect of life, in the traditionally "free economy" civilization in America, to constitute a high goal to which other peoples
have long looked with amazement and most with admiration and longing. The fact that an Individual's service to community often
leads to material benefits to him--for instance, the additional rewards through increased employment by the public in his
work or profession due to prominence gained in serving the community--as well as to inner fulfillment, does not alter the
Soundness of such service or the integrity of The Individual's motivation in this connection.
The mixture of direct self-interest with indirect self-interest through community service, traditionally
so typical of the American scene, is potent proof of the efficacy of the private-profit motive (within an ethical environment)
in serving the higher things of life for The Individual and for society--for the "general welfare." This reflects the truth
that society's ethical level is but the sum of that of all Individuals, on the average, whether considered from the standpoint
of neighborhood, community, region, or country as a whole. (Note especially the Dickinson quotation on page 74, ante.)
Sixth, Man's indulging the demands of rational self-interest, through operating on the basis of the private-profit
motive, is in harmony with the "self" factors of self-governing, genuine Free Man. These factors are major elements of Individual
Liberty-Responsibility. They are as follows--the spiritual: self-respect; the economic: self-reliance; and the
political-social: self-discipline. (See pages 88-90, ante.)
Effective self-discipline by Individuals, in making the "free market" economy function soundly, contributes
to the reality of the surrounding ethical environment which is essential to its enduring success. This forestalls and precludes
any real, or pretended, excuse for discipline being imposed by the government. In last analysis, this is the best safeguard
against Government-over-Man. Self-discipline is a main element of Individual Liberty-Responsibility. It is the alternative
to being disciplined, just as self-government is the alternative to being governed.
The foregoing six considerations are, of course, only a part of those embraced by the subject as a whole.
They help to clarify the fundamental value of economic liberty--including Individual Enterprise and the related private-profit
motive--as an inseparable part of the indivisible whole of Individual Liberty-Responsibility.
A point needs noting here to clarify thinking. It is that the frequently heard term "free enterprise" is
not accurately descriptive and involves some misleading connotations. It is an inadequate translation of the French phrase:
laissez faire et laissez passer; which, roughly translated, means leave me alone and let me work. This phrase became
popular in France generations ago as a protest against the strict and infinitely-detailed government controls of the people's
economic activities, such as manufacturing. The term "free enterprise" is often misinterpreted as meaning free in the sense
of license--not in the true sense of Free Man operating in an ethical environment and with due respect for the equal rights
of others and, of great importance, with freedom from Government-over-Man, as discussed above. The term should, therefore,
be avoided in favor of the more soundly and accurately descriptive phrase: "Individual Enterprise"--meaning individual, private,
competitive enterprise within an ethical environment, as exemplified by the American scene traditionally, operating always
with due respect for the equal rights of others. The foregoing assumes, of course, showing in practice due regard for just
laws which are expressive of "just powers" (to use the term of the Declaration of Independence) and designed to protect the
equal rights of all Individuals through proper government regulation--as authorized by the Constitution--but not government
control, or ownership.
The conclusion, as to this aspect of Man's Freedom, is that on the basis of the foregoing considerations
alone--though merely a brief and partial commentary--it must be conceded that the morality and sound ethics of rational self-interest
of The Individual are readily apparent and soundly founded. Even this brief discussion proves the point here: that the private-profit
motive is sound, constructive and an essential element of the economic system required for the preservation and support of
The Individual's God-given, unalienable rights--chief of all Liberty against Government-over-Man.
Any human activities, like human nature, have their weaknesses and imperfections. Though true with regard
to the American people's activities in the economic aspect of life, this has to be judged comparatively--in contrast to the
infinitely greater imperfections of any alternative, economic system ever devised by Man, especially any other system which
could ever be conceived but would lack the prime requisite: Freedom of Man from Goverument-over-Man, which is of the essence
of the traditional American system. The American philosophy condemns this lack and rests secure in its comparative virtue--its
infinitely greater value to Free Man. The unsoundness of any unfavorable comparison of this American system with some theoretically
perfect system, which has never existed anywhere in the world in all history--a tactic resorted to only by critics who are
either themselves confused or seek to confuse others--is so self-evident as to need mere mention in passing and not any discussion.
The Two Revolutions of 1776--for Individual Liberty and for Independence
The key goals in America in 1776--for which the colonists had been gradually prepared
to fight by their generations-long strivings governmentally and spiritually--were expressed in that period's popular slogan:
"Liberty and Independence." This meant Individual Liberty--Freedom from Government-over-Man--and Independence from foreign
rule. This slogan was later adopted as the motto on the seal of the State of Delaware.
In the pre-1776 years, the primary goal of most Americans was Individual Liberty--that is, Freedom of Man
from Government-over-Man--not by occasional favor of King or Parliament but assured governmentally. They were determined,
if possible, to attain this goal within the framework of the existing system--within the British Empire--but, if necessary,
through America's Independence from foreign rule. Being thus determined to attain Liberty in any event, they were equally
determined to attain it at all cost--if need be, in last resort, through gaining Independence by revolting against tyrannical
rule by King and Parliament. Such exercise by an oppressed people of the right of revolution against tyrants would be, they
were convinced, in keeping with the sound philosophy of government--the philosophy long propagated in America and, for some
decades prior to 1776, most emphatically by leaders among the New England clergy.
The above-noted priority, of Liberty over Independence, in the minds of the American people and their leaders
prior to 1776 was expressed in the closing words of an Address (to the American people) submitted to the Continental Congress
on February 13, 1776 by James Wilson as follows: "That the Colonies may continue connected, as they have been, with Britain,
is our second Wish: Our first is--THAT AMERICA MAY BE FREE." (Emphasis Wilson's.)
This determination of most Americans, prior to 1776, to gain Individual Liberty at all cost needs to be kept
in mind whenever attention is given to the fact that relatively few Americans were in this period openly devoting their activities
to seeking revolution against British rule. Yet some leaders, notably those in Boston such as Samuel Adams, had long realized
that Liberty could and would be gained in no way other than through revolution and America's Independence. It was not until
late 1775 that a great many Americans, and not until early 1776 that a multitude of them, were compelled by events to give
up hope of peaceable achievement of the goal of assured Liberty and became convinced of the need of, openly committed to,
Revolution: the remedy of last resort. This is entirely understandable because of the dreadful risks involved not only for
each Individual--including risk of Life and all else held dear--but also for the great Cause, due to the then poor prospect
of ultimate victory against the massive armaments of the powerful British Empire. Some of the leaders argued up to the last
moment for more time in which to work for a peaceable achievement of the desired goal.
The Declaration's principles meant that there was another revolt in 1776, in addition to the one against rule over America by Great Britain;
that is, a revolt by Man against being governed and in favor of being self-governing. This was what might be called the Twin
Revolution of 1776, though this formal date had been preceded by several years of steadily widening rebellion by the American
people against royal tyranny--even by some actual fighting against the tyrant king's troops.
The core-concept of the philosophy of the American revolutionaries in 1776 was the product of the long and bitter experience,
of the endless debating and thinking, of the American people in general as well as of their leaders. This core-concept was
that there need not be, that in fact there is not, any Controlling Authority on earth to whom the people are justly answerable.
That no such Authority exists, and no such pretended Authority should be tolerated, was their firm conviction. This was of
the essence of the 1776 Declaration.
This fundamental truth--a basic element of the traditional American philosophy--was phrased by James Wilson
during the debates in the Pennsylvania Ratifying Convention as follows (his emphasis):
"The truth is, that, in our governments, the supreme, absolute, and uncontrollable power remains in
the people. As our constitutions are superior to our legislatures, so the people are superior to our constitutions."
Otherwise stated, from the standpoint of the Natural Law upon which the American philosophy rests, according
to the thinking of The Founders: the pretense that an absolute, irresistible, despotic power exists in every government somewhere,
is incompatible with the first principle of Natural Right. (Note again J. Q. Adams' quotation page 74, ante.) It was merely a sound rephrasing of this traditional, American principle which was included in the Bill of Rights of
the 1850 Constitution of Kentucky in words reminiscent of 1776:
"Sec. 2. That absolute, arbitrary power over the lives, liberty, and property of freemen exists nowhere in a republic,
not even in the largest majority."
The proclamation of the unprecedented principles in 1776, as the basis of the American people's philosophy
and system of self-government, was the greatest act of faith in Man's spirit and mind in all history. It shocked and shook
the world and continues to do so to this day. Witness the current upheavals globally among peoples, whose surge toward freedom
from colonialism's chains--always so degrading and oppressive, however disguised and however allegedly beneficial or superficially
"benevolent"--has convulsed the mid-20th century.
Understanding the American Heritage
If they fail to comprehend the profound significance of the foregoing points--of the
fundamental difference between the philosophy and system of Great Britain, featuring Government-over-Man and The Majority
Omnipotent, on the one hand, and, on the other hand, the American philosophy and system of Man-over-Government featuring constitutionally
limited government designed primarily for the protection of Man's God-given, unalienable rights--the American people can have
no adequate conception of the Twin Revolution of 1776 or of their heritage. Without such comprehension and steadfast loyalty
to the traditional American principles and values involved, they cannot fulfill their duty as temporary trustees--of the American
heritage--for America's youth today and Posterity.
The spirit of Free Men such as Patrick Henry and Samuel Adams, the pioneering Daniel Boone and other frontiersmen,
for example, is expressive of the true spirit of traditional America. To those benighted souls who cry for "security"--either
that of the subjects of a benevolent king, or of a paternalistic system of Government-over-Man with its government-provided
economic "security" accompanied inescapably by only a limited degree of Liberty, namely a system of Man subservient to Authority--The
American Spirit replies.
Better Liberty with the challenge
And dangers of the untried, unknown,
Than Servitude's deadly certainty
Of economic security.
The principles stated in the Declaration of Independence were truly expressive of the deep-rooted convictions in 1776 not only of its signers and other American leaders but of the
people in general. As its chief draftsman, Jefferson wrote later that in it he sought to express no new ideas but only those
commonly prevailing throughout the country. As he put it in 1825 (letter to Henry Lee), the Declaration was designed not to
present new principles, or arguments, but "to place before mankind the common sense of the subject, . . . intended to be an
expression of the American mind . . ." In the same year (letter to Dr. James Mease) he stated that the Declaration was ".
. . the genuine effusion of the soul of our country at that time." The same sentiments, in substance, were expressed in 1822
by John Adams--one of the drafting committee's members and chiefly responsible for insisting that Jefferson do the actual,
initial drafting--(letter to Timothy Pickering) stating:
"As you justly observe, there is not an idea in it but what had been hackneyed in Congress for two years
before. The substance of it is contained in the declaration of rights and the violation of those rights, in the Journals of
Congress, in 1774. Indeed, the essence of it is contained in a pamphlet, voted and printed by the town of Boston, before the
first Congress met . . ."
As noted in the Introduction to this study-guide, a somewhat similar observation had been made by John Adams in a letter to Samuel Chase in July, 1776.
The records fully bear out these concurring statements by Jefferson and John Adams. The sentiments expressed in the Declaration
of Independence were, indeed, those of the American people in general--loyal to the aims of the two Revolutions of 1776: the
Revolution for Independence and the Twin Revolution in support of Individual Liberty: Freedom of Man from Government-over-Man.
The deep-seated and long-developing nature of "the common sense of the subject"---of the thinking of the
American people expressed in the Declaration--is illustrated by the striking fact that a book published over half a century
earlier by one of the New England clergy, Reverend John Wise, expounded and espoused with remarkable clarity and great assurance,
born of firm conviction, most of the principal ideas, or principles, presented in this 1776 document. The idea of Equality
was discussed--for instance, there is a "natural equality of men amongst men," which must be "favored" (respected). The fundamental
rights: "life, liberty, estate" (property) were commented on. The fact that the primary role and aim of Government is the
protection of these rights and to serve the common good, as well as the topic of Man's relationship to Government, were also
discussed. For instance, he noted that Man delegates power to government--(part of) his "original liberty" is "resigned"--not
unconditionally but "under due restrictions" (namely, permitting government to possess only limited powers) and that Man's
reserved rights "ought to be cherished in all wise Governments; or otherwise a man in making himself a subject, he alters
himself from a freeman, into a slave, which to do is repugnant to the law of nature." Here he noted, in effect, not only the
limited-power nature of Government, by grant of power under "restrictions" by the people, but also the fact that its granted
powers should be such as to be consistent with a Freeman's Liberty. He also emphasized the "Compact" theory: that Men enter
into Society, form their governments, by contract freely entered into and "not of divine institution" (not in keeping with
the rejected theory of the Divine Right of Kings), and that government "is the produce of mans reason, of human and rational
combinations . . ." Furthermore, this book stressed the fundamental, political tenet of the 1776 Declaration: that the source
of Government's power "is the People."
All of this advanced and forward-looking political thought, and much more, is found in this Ipswich, Massachusetts,
clergyman's 1717 book, A Vindication of the Government of New-England Churches. It is unexcelled among all such writings
of the Colonial period. Although he did not discuss that other great political idea of the 1776 Declaration: the people's
right to revolt against tyrannical government, yet he observed that "the prince who strives to subvert the fundamental laws
of the society, is the traytor and the rebel"--that is, public officials who act outside of their granted authority and violate
its limits as prescribed by the people under the fundamental law are the traitors and rebels and not the people who resist
their tyranny. It is also noteworthy that this clergyman was in the lead of the revolt of the Town of Ipswich in 1687 against
Royal Governor Andros and his tax levied without consent of the popular legislative body--a revolt based upon the principle
of popular sovereignty as to taxation; the Town-meeting refused to authorize collection of the tax and, for his refusal to
pay the tax, Clergyman Wise was tried, fined and suspended from the Ministry--also jailed during the proceedings. This is
commemorated by the inscription on the town's official seal: "The Birthplace of American Independence, 1687."
This 1717 book of Reverend Wise emphasized the relationship of Man to the Law of Nature and his capacity
to understand it through use of his faculty of reason; the Law of Nature is "the dictate of right reason." Note also the statement
in an oration on July 4, 1787 by Joel Barlow at Hartford, Connecticut, in celebration of the anniversary of the proclamation
of the Declaration of Independence, that:
"The present is an age of philosophy, and America the empire of reason. Here, neither the pageantry of courts,
nor the glooms of superstition, have dazzled or beclouded the mind. Our duty calls us to act worthy of the age and the country
that gave us birth. Though inexperience may have betrayed us into errors--yet they have not been fatal: and our own discernment
will point us to their proper remedy."
This "discernment"--the capacity to reason--was considered by The Founders and their fellow leaders of that
period, as well as those like Reverend Wise of earlier generations, to be self-governing Man's salvation, if soundly exercised.
His 1717 book makes it clear that this "age of philosophy" and this "empire of reason" in America did not originate in the
1776 period but was in bud, if not in flower in remarkable degree, in Wise's day--based of course upon much older roots in
American thinking and experience in government, with the benefit of wide reading of Old World writings.
The steadily developing American character of this early thinking, of these precepts, stemmed from the fact
that the American people were applying them in practice, living by them, in increasing degree; though some abstract ideas,
or ways of expressing them, were selectively adapted from theoretical writings of foreign authors. Ideas applied governmentally
became uniquely American principles.
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