Anti-business sentiments and the intellectual community

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Anti-Business S e n t i m e n t s a n d the I nte 11e c t u a 1 C o m m u n l "ty Editor, Harvey C. Bunke ] Managing Editor, Barbara Coffman / Business Manager, H. D. David ] Review Editor, Nevin Raber / Art, Michael LaBash, Joel Pett / Typesetting, Patsy Ek ] Graphic Art and Production, Mary Fandel / Subscriptions and Reprints, Nancy Wilson Business Horizons is published bimonthly by the Graduate School of Business, Indiana University, Bloomington, Indiana 47405. Copyright © 1981 by the Foundation for the School of Business located at Indiana University. Second class postage paid at Bloomington, Indiana and at additional mailing offices. Pub. No. 080560. ISSN: 0007-6813. Business Horizons is not responsible for the opinions expressed by its contributors. Rates: Single copy: $3. One-year subscription in United States: $15; Foreign: $19 in U.S. funds. Prices for reprints of articles available upon request. For change of address please send old mailing label and new address. Allow four weeks for change to become effective. Correspondence: Send all correspondence to Business Horizons, School of Business, Indiana University, Bloomington, Indiana 47405. Telephone: (812) 337-5507. Send manuscripts (two double-spaced copies) addressed to Harvey C. Bunke, Editor and book reviews to Nevin Raber, Review Editor. We cannot return unsolicited manuscripts unless sufficient postage is provided. Microfilm: Available from University Microfilms, 300 N. Zeeb Road, Ann Arbor, Mich. 48106. Microfiche: Volumes I-XV (1958-72) are $72.00 or $4.85 per volume. Volume XVI (1973) is available separately for $4.85. To order the microfiche, write to Johnson Associates, Inc., 175 Fifth Avenue, New York City, N.Y. 10010. Back Issues: Issues still in print are available at $3.00 per copy. Out-of-print issues can be duplicated at a price of $10.00 per copy. Shipments will be made by parcel post unless other means are requested. We are, however, unable to ship by United Parcel Service. For orders or for additional information, write: Back Issues, Business Horizons, Graduate School of Business, Indiana University, Bloomington, Indiana 47405.

here are,- on this planet of ours, a number of special places. Oxford, England surely is one of these. The city, with its medieval buildings, its quaint, winding, narrow streets, its many venerable and much-frequented pubs, its Victorian shops, and its monuments and shrines, offer a refuge for reflection and some serious stock-taking. It was my good fortune to be a visiting fellow at Oxford University for one term, long enough to develop a daily work routine even as I explored and came to love the beautiful Cotswold countryside. In the course of my work I came to know two of the town's landmarks particularly well. One, the new Bodleian library, is part of the celebrated a n d - t o the American visitors I talked w i t h - q u i t e incomprehensible complex known as Oxford University; the other, standing cheek-to-jowl with the library, is Blackwell's bookstore, a profitable private business enterprise of international reputation. A marvelous place, Blackwell's offers free access to seemingly endless rows and stacks of classical and contemporary works which beckon, like the candy store to the schoolboy, to b o o k lovers, urging them to explore, sample, experience, and purchase the joys of the printed word. After a day in the Bodleian, I found it almost impossible to pass up Blackwell's without stopping to browse, particularly in the social science section. One day, as I pondered the purchase of yet another b o o k , it suddenly struck me that a very large number of books on economics were devoted to Marx, Marxism, Communism, and the Soviet system. By comparison, the books on capitalism seemed few in number. At once I began to look for an a n s w e r - a theory. "Why," I asked myself, "all this interest in Marxism? What is its appeal? How can this socialistic magic survive in the shadows of Stalin, Mao, Tanzania, Gulag, and rampant bureaucracy?" Even as I posed these questions to m y English colleagues, a story broke in the press and on television that was to make m y questions most timely. Britain was rocked b y the revelation that a member of the Royal Court, the Queen's own art curator, Sir A n t h o n y Wedgewood Blunt, had betrayed his country as a Soviet espionage agent during World War II. Many Britishers joined me in speculating about why a man who was given a prestigious faculty appointment at Cambridge University in his early years and was later brought to Court and knighted would treacherously betray a people who had so honored and rewarded him. As it turned out, Blunt himself answered my questions, at least in part, when he said in essence that he was enchanted b y the idealism of Marxism with its promise of a pristine orderly world from which human misery would be banished and in which men would forever live in peace, harmony, and dignity.

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ince leaving Britain, I have often pondered why so many intellectuals joined Anthony Blunt in rejecting capitalism and turned with hope and faith to some form of Marxism, Why, when people from every

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continent and nation clamor to live in the U.S., do some of our highly educated people seem to find fault with our form of modified capitalism? Is the origin of their disaffection in the nature of our system, or is the fault "not in our stars b u t in ourselves?" Our economic system, of course, is not without faults. Moreover, it is not within the power of our capitalistic society to disguise or hide its defects. Indeed, a free enterprise system fosters a social climate which e n c o u r a g e s - n a y c o m p e l s - t h e public airing of flaws or deficiencies. Freedom of commerce, to buy, to sell, to make, to innovate, are the very heart of our economic system. Inextricably b o u n d to these freedoms is the unrestricted flow of information and ideas. Although the bourgeoisie may on occasion be enraged b y the exercise of free speech and the assaults of a free press, it cannot crush what it disapproves-certain i d e a s - w i t h o u t shackling what it does approve-trade. Inherent in the free market, without which the whole capitalistic drama is impossible, is the nearly unlimited right to criticize, to single out injustice, to demand change, to cry out for reform. Indeed, the free enterprise system helps to assure the climate necessary for the intellectual's very survival. Outside the capitalistic environment the contemporary free-swinging intellectual is an endangered species. In times past, intellectuals were dependent upon patrons w h o m they, quite understandably, were careful not to offend. Theirs was always a tenuous lot, altogether dependent on a patron and forever insecure lest their patron abandon them because of a stray word or a minor miscalculation. One did well then to place a close guard on one's tongue, for heresy of any kind was a serious matter, just as it is today in the Soviet Union where few seek the fate of "heretics." It was the bourgeois society which freed the intellectual from his patron. With the printing press he could talk to the world. Voltaire illustrates well the new-found independence and freedom bourgeois society offered the intellectual. His quick wit, his entertaining (if inaccurate) history, his popular poetry, and his malicious ridicule of the dominant institution--the church--would not be tolerated in any other kind of society. Another society would have branded him a heretic and quickly disposed of him, b u t he and his heresies sold in b o t h a spiritual and economic sense, making him one of the most influential men in the world. The middle class, even had they wanted to, could not destroy him or his ideas without destroying themselves. y and large the protection bourgeois society offers ideologues is not appreciated by the intellectual community. For intellectuals, while blissfully free from the responsibility for practical affairs, are b y nature and inclination incorrigible critics. And there i s n o better or more vulnerable target than the free society itself. Two general types of charges are directed at the free economy. One

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"Inherent in the free market, without which the whole capitalistic drama is impossible, is the nearly unlimited right to criticize, to single out injustice, to demand change, to cry out for freedom."

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"Moreover, the system, whatever its performance, can never quite measure up; there are always the poor, the underprivileged, the sick, the mentally disturbed, the lonely, and the desperately unhappy."

attacks its performance, the other its morality, o r - a s some would s a y - i t s lack of it. It is true that capitalism seems to be forever sick, or about to be sick. If it isn't in a state of feverish b o o m with its attendant waste and excesses, then it's likely to be on the verge of recession with all the ills that accompany rising u n e m p l o y m e n t and bankruptcies. Moreover, the system, whatever its performance, can never quite measure up; there are always the poor, the underprivileged, the sick, the mentally disturbed, the lonely, and the desperately unhappy. Always there is a shortage of resources. There is never enough to do everything. Always there is an abundance of examples to illustrate that priorities are distorted: crippled children who need more care, prisoners who require more extensive rehabilitation, lonely old people exiled in nursing homes who yearn for personal affection, drug addicts who need intense and prolonged social support, housewives turned alcoholics, children who cannot read because they are unable to learn in the environment of our public schools-the catalog of needs is endless. Doubtless the most effective instrument for dramatizing the numerous deficiencies of the free enterprise system is television. Television's treatment of inflation is a case in point. Most everyone is in agreement that inflation is an insidious evil, but identification and elaboration of the forces that make for inflation, including interest rates, productivity levels, government spending, wage levels, changes in the m o n e y supply, and taxation, do not lend themselves to easy understanding by intense young graduate students in economics, much less the general public; nor is an elaboration of inflationary forces likely to attract a large prime-time television audience. Hence, rather than focusing on the abstract logic of anti-inflationary policy, TV turns its eye on the concrete personal tragedies wrought by anti-inflation policy, such as a young couple deferring the purchase of a house because of rising interest rates, or the closing of a drug clinic for addicts because of reductions in governmental spending, or the response of a community faced with the loss of the town's chief industry. One TV program will highlight the cost to society of pollution from steel mills and then, when steel mills close down due to the high cost of reducing pollution (as happened in Youngstown, Ohio), another program concentrates on the personal tragedies wrought by unemployment. All focus on the concrete, the immediate, the m o m e n t , with emphasis on personal hardship, suffering, and unhappiness. Rarely is there any explanation of abstract forces which caused the immediate situation or what must be done to alleviate the problem on a systemwide basis. Often there is a clear implication that the free enterprise system is badly flawed because it tolerates, even fosters, injustice, misery, and suffering. And so capitalism is led on stage as a stumbling, inefficient, incompetent, and not-quite-honest performer, convicted of failing to meet the very human needs of the people it is supposed to serve.

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l'~ ut the performance, or lack of performance, is not what engenders t'~the deep-seated hatred directed at the business system. The source of their hatred is capitalistic m o r a l i t y - o r immorality; the system, as Nikita Kruschev charged, is based on greed. Indeed, the success or failure of the free e c o n o m y has no impact on ideologues. Periods of affluence, the transformation of the working class into the middle class, and the rise of the consumer society are as much the objects of derision and contempt as are the hard years of recession, unemployment, and inflation. Whether the fruit is scarce, sour, and dry, or abundant, sweet, and heavy with juice, it is in any case poisonous. In the Marxist scenario, capitalism is led on stage "sweating blood and mud from every pore." Its original and eternal sin is the "exploitation of man b y m a n " - a sin never to be purged because in the eyes of the Marxist it provides the very energy needed to drive the unfeeling capitalistic engine. In due course, critics charge, this sin corrupts all, subverting all human activity to profit, to money: the two demons of total depravity. Possessed by these two demons, capitalism needs not so much the services of the economist as those of the exorcist, of which there seems to be an abundance who are convinced that all would be well if only a stake were driven through the hearts of the twin demons, m o n e y and profit. Business, it is said, makes a virtue of traits that offend many dedicated to a "higher calling": competitiveness, success in the marketplace, accumulation of gains, a love of money, the apotheosizing of Mammon. No less distressing to the intellectual is the bourgeois society's lack of clearly defined routes to position and status. In more traditional societies well delineated routes were open to people who aspired to eminence: the church, the army, science, and (later) banking. If y o u paid your dues and kept your nose clean, y o u could follow a traditional path and be quite confident of achieving a position of respect, if not riches. The business civilization changed this. The way to success in the marketplace is ambiguous, often coarse, and worst of all, personally hazardous. Moreover, intellectuals who saw themselves as superior beings resented being dependent on a society dominated b y vulgar bourgeois. Being beholden to aristocrats was bad enough, b u t one could at least hope that an earl or bishop was cultured and therefore motivated b y the more noble aspects of human nature. But to be patronized b y a c o m m o n Philistine fresh from the counting h o u s e - w e l l , that was absolutely galling. Capitalism also offends the intellectual's sense of order. It seems at once to be an uneven mixture of plan and planlessness. So much sound and fury devoted to m o n e y making, so little attention given to the protection of the environment or alleviating the pervasive human wretchedness. Resting on the assumption that finite humans cannot begin to comprehend the implications and imponderables of our complex world, it teaches that detailed social planning does more harm than good and that, over time, everyone benefits if individuals are free to exercise

"In the Marxist scenario, capitalism is led on stage 'sweating blood and mud from every pore.' Its original and eternal sin is the 'exploitation of man by man' a sin never to be purged because it provides the very energy needed to drive the unfeeling capitalistic engine."

"According to capitalistic doctrine, when a man's livelihood is at stake, consciousness and passions are heightened; alertness and diligence enhanced; and effectiveness is maximized."

initiative in pursuing their separate self-interests. According to capitalistic doctrine, when a man's livelihood is at stake, consciousness and passions are heightened; alertness and diligence enhanced; and effectiveness is maximized. To many an intellectual all this seems quite wrong. Everyone rushing around promoting himself, no one thinking about the public good. It's all so untidy, so chaotic. How can any good come of it? Attracted to orderliness, the intellectual often is enchanted by the notion that society can somehow be logically organized around a central plan. Humanists by persuasion, they place their faith in the goodness of man, believing that human beings can and must plan and build an order which will create a new and perfect world, a stationary state, devoid of human trial and error. In their search for a more humane society and in their remoteness from the world of practical affairs, they are attracted by the splendor of a neatly ordered world from which the hurly-burly and rough and tumble of everyday existence is banished. Through reason and calculation the intellectuals are inclined to build a shield against economic risk. They would make an incorrigibly dynamic e c o n o m y static. They would take a society shaped by millions of individuals acting anonymously through infinite interplay and complexity in the endless flow of time and freeze it into the perfect state. In eliminating all risk, they also banish initiative, imagination, and the distinguishing feature and driving force of capitalism, the entrepreneur, who is a perennial source of disruption. Seeking certainty, intellectuals are in danger of living in the p a s t - a n d their policies, however liberal their litany, are likely to be r e a c t i o n a r y - f o r certain knowledge, to the extent that it is ever obtained, comes only after the m o m e n t of action is gone. For the investor who wants a "sure thing," the leader who demands a unity of opinion, and the entrepreneur who awaits a guaranteed market, the hour is n e v e r at hand. Finally, the anti-capitalistic intellectual sees the race going not to the good, but to the strong. The market rewards individual creativity, courage, leadership, intuition, and faith in the future. The cost of freedom is continual struggle; there is always another competitor, another product, and the consuming public is fickle. To succeed one must continually bear risks. The race goes to those who can live with uncertainty and competition. In the market, mediocrity is tolerated, failure punished; progress exacts pain. This picture of life as a continual struggle is less than attractive, particularly to intellectuals. Much more appealing is an abstract, comfortable promised land far removed from the world of practical affairs. ow let us once more go back to Oxford and m y speculations about why Blackwell's, an entrepreneurial organization in the fullest sense, carries such a large number of books on Marx and Marxism. The answer seems clear. All men, but particularly men attracted to the contemplative life, needs ideals. They want to "fight the good fight, run

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the good race, keep the faith." Men of action, I fear, are disposed to find people who make their living by working with i d e a s - i n t e l l e c t u a l s - r a t h e r tiresome and opaque. I would remind them of the words of the great economist J o h n Maynard K e y n e s - a man who had as much to do as anyone in shaping our contemporary w o r l d - w h e n he wrote: "The ideas of economists and political philosophers, b o t h when they are right and when they are wrong, are more powerful than is c o m m o n l y understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct e c o n o m i s t . . . I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas." Historically, capitalistic doctrine provided men of action with an ideal. They believed that the invisible hand would coordinate the efforts of self-seeking individuals and move society forward to a better world. For whatever reasons, we no longer seem to believe this, or if people of my generation do, we have failed to inculcate that belief in our young. Over the years I have asked graduate students enrolled in business school courses to prepare a brief paper on the rationale of business enterprise in contemporary society. It is not an assignment with which they are comfortable, and with rare exceptions, their efforts are distressing. In a rather halting and fumbling manner, students write about the business firm as an organization through which an individual may express his or her talents and through which an individual may fashion an identity. The more perceptive students may, in passing, mention that as the business firm prospers so does society, but what really comes across is that the objective of the firm is to make m o n e y - m o n e y so it can grow, money so it can pay dividends, m o n e y so it can pay higher wages, m o n e y so the people who manage can enjoy the feeling of success. There is virtually no hint of idealism in these papers, no suggestion that m o n e y making is only a way station on the road of hope, and there is no recognition of the fundamental capitalistic ideal that in creating a world free of want the business organization would help provide the raw matcrial needed to build a "city on the hill," Business students are eager to display their prowess in manipulating simple mathematical techniques to calculate present value, to discount cash flow, and to calculate hypothetical probabilities, but these same students seem unaware or are incapable of articulating the conviction that the free enterprise system rests on the highly idealistic doctrine of the perfectibility of man. Worse yet, they seem to have no notion of the spirit of capitalism as expressed by Keynes: "Enterprise only pretends to itself to be mainly actuated by the statements in its own prospectus, however candid and sincere. Only a little more than an expedition to the South Pole is it based on an exact calculation of benefits to come. Thus, if the animal spirits are dimmed and

"Historically, capitalistic doctrine provided m e n o f action with an ideal. T h e y believed that the invisible h a n d w o u l d coordinate the efforts o f self-seeking individuals and m o v e society forward to a better world. For whatever reasons, we no longer s e e m to believe this."

"This inability of a good part of the business community to articulate idealism is most distressing because in our contentious and litigious world, performance is often not enough. Legitimacy is needed, legitimacy rooted in the belief that the job being done is not only important but right."

the spontaneous optimism falters, leaving us t o depend on nothing but a mathematical expectation, enterprise will falter and die." No less disturbing is the response of practicing business executives. At all but the highest levels of leadership, the response of business people is about as insipid and bewildered as that of the students. This inability of a good part of the business c o m m u n i t y to articulate idealism is most distressing because in our contentious and litigious world, performance is often not enough. Legitimacy is needed, legitimacy rooted in the belief that t h e job being done is not only important but right. Given this situation, it is not surprising that business has, in recent years, been forced to submit to an ever more comprehensive and critical government. Nor should one anticipate much change unless there is a change in the climate of opinion. To the extent that business is depicted as an institution established for the "exploitation of man by m a n " (or, as m y students say, "for the maximization of profits") without an appreciation of the idealism on which capitalism is built, business can expect only further skepticism and even hostility from the public. The business world must realize that it is the ideas that finally count, the ideas which relate to the fundamental questions: the value of man, his purpose on earth, and the moral character of human action. Argument based solely on the efficiency of a free e c o n o m y simply will not do. Political criticism cannot be turned aside by purely rational arguments. As Cardinal Newman so aptly put it, "Men will die for a dogma who will not even stir for a conclusion." f---] - H a r v e y C. Bunke