Enterprise requires a free society

At the base of the capitalist system is not greed or consumption, but intuition, imagination, and creation. “I find out what the world needs,” Thomas Edison said, “then I proceed to invent it.” 

In fact, free enterprise requires a whole host of virtues. Before entrepreneurs can invest capital, for instance, they must accumulate it. So unlike gluttons and hedonists, entrepreneurs set aside rather than consume much of their wealth. Unlike misers and cowards, however, they risk rather than hoard what they have saved, providing stability for those employed by their endeavors. Unlike skeptics, they have faith in their neighbors, their partners, their society, their employees, “in the compensatory logic of the cosmos.” Unlike the self-absorbed, they anticipate the needs of others, even needs that no one else may have imagined. Unlike the impetuous, they make disciplined choices. Unlike the automaton, they freely discover new ways of creating and combining resources to meet the needs of others. This cluster of virtues, not the vice of greed, is the essence of what the Reverend Robert Sirico calls the “entrepreneurial vocation.”

Very few critics of the free economy grasp this. But the problem isn’t just with the critics. Too often, even the fans neglect the entrepreneur, focusing on free markets rather than free men and women. Adam Smith, for instance, was rightly intrigued by the invisible hand. Most economists have followed Smith, preferring to study the measurable market rather than mysterious man. Too often, elusive entrepreneurs get replaced with simple abstractions like supply and demand. It’s easy to see why this picture is so attractive. If economists can assume that everyone is producing and trading according to something simple like “self-interest,” they have some hope of predicting what will happen in an economy. Everything is accounted for, and we don’t have to worry about the virtues, vices, and surprises of individual businesspeople. In short, we get capitalism without capitalists. 

Alas, this desire to conform economics to a narrow definition of science has discouraged most economists from focusing on the creative agents that give the economy life. And not just any agents: entrepreneurs. In doing so, however, economists ignore the greatest source of wealth creation. As George Gilder says: “Man . . . and not mechanism is at the heart of capitalist growth.” And man is not a mechanism. Unlike the orbit of the planets, which astronomers can predict with uncanny accuracy, what an entrepreneur will create is unpredictable ahead of time—even to the entrepreneur himself! The process is inherently unpredictable. We see the work of entrepreneurs after the fact. Supply and demand kicks in after there’s a supply. And in a modern economy, supply depends on enterprise. The predictive methods of science are not up to the task of capturing enterprise in a petri dish or a telescope or an equation. So, the entrepreneur is a source of trouble for economists who want their field to be a completely predictive science. 

Even free-market economists often forget this point. They’re right to defend freedom. Enterprise requires a free society. After all, if entrepreneurs aren’t free to save, gather, and risk capital in pursuit of their visions, they can’t create new wealth and opportunity. Without freedom, there can be no creativity.

~ Excerpted from Jay Richards' Money, Greed, God