I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.- Thomas Jefferson.

debt clock

Wednesday, October 26, 2011

Private Enterprise Compared with Free Enterprise

Another interesting comparison of the situations affecting the decisions of Lincoln and Roosevelt is that economic interests of an elite few played a major role in the decisions of both presidents to instigate a war. It is doubtful that either Lincoln or Roosevelt would have wanted to disclose the influence of these economic interests to the public in a congressional hearing where the question of war was to be decided upon. The study of the history of wars indicates that economic factors have always played a major role in starting wars, but rarely are these economic factors disclosed to the public as the reasons.
Many businessmen and bankers believe in private enterprise but do not believe in free enterprise. In Lincoln's case, the private-enterprise capitalists wanted Lincoln to have a war in order to prevent the South from establishing a free-trade zone with a low tariff. They wanted Lincoln to protect their special interests by keeping the tariff high, while still forcing the South to remain in the Union to pay the tax.
These types of people want a partnership between private enterprise and the government, which is the essence of fascism and the cause of many wars. In the case of Roosevelt, he was greatly influenced, even controlled at times, by the Anglo-American establishment, which was composed of prominent businessmen and bankers who owned or represented large economic interests, both domestically and globally. They also wanted a partnership with government to protect their private businesses and economic interests, especially from formidable industrial and commercial competitors like Germany and Japan. Today the economic establishment in America is much larger than just the Morgan and Rockefeller interests but is just as active in trying to influence government, especially the foreign policy — primarily through the president to further their economic interests.
Ludwig von Mises made a clear distinction between private enterprise and free enterprise. Mises wanted a complete separation of the economy from the government, just like separation of church and state, which meant no regulation or control by the government but also no partnership with or help from the government, either economically or militarily. In the free-enterprise system, if any business or any bank wants to transact business globally, it must do so at its own risk and without the help of the government.
There would be no foreign aid, especially no aid to prop up dictators in order for them to do business with any particular economic interests. There would be no war in order to create a devastated area like Bosnia or Yugoslavia that needs to be rebuilt by American businesses who have the political influence to get these foreign contracts. Mises thought that separation of the economy from the government was necessary in order to produce peace rather than war.
A major contribution of Mises and the Austrian School of economics is to show that government intervention and regulation of the economy is the actual cause of the boom-and-bust cycles, while a free market is very stable and self-correcting in a short period of time. Furthermore, Mises showed that coercive monopolies are created by government and not by the free market. Therefore, the economy does not need government regulation or control to stabilize it and will function better by being completely separated.
Mises's other recommendation, seen in the following statement, is to reduce the size and power of the central government in general in order to protect individual liberty:
Durable peace is only possible under perfect capitalism, hitherto never and nowhere completely tried or achieved. In such a Jeffersonian world of unhampered market economy the scope of government activities is limited to the protection of the lives, health and property of individuals against violence or fraudulent aggression.[9]
Mises goes on to state that
All the oratory of the advocates of government omnipotence cannot annul the fact that there is but one system that makes for durable peace: a free market economy. Government control leads to economic nationalism and thus results in conflict.[10]
This complete separation of the economy and the government is what Mises meant by "perfect capitalism," which promotes peace and prosperity rather than war and welfare.

No comments:

Post a Comment