THE U.S. is universally recognized as the capital of capitalism, the land of free markets and the home of resourceful entrepreneurs. More than any other country, it has been known for leaving an entrepreneur free to decide prices for his products and set wages for his workers, free to grow and prosper—and free to go bankrupt if he failed. Historically, the U.S. Government has often done much to strengthen those twin pillars of free enterprise, private ownership and unfettered competition. Americans have grown so accustomed to living under free enterprise that they rarely even think in terms of class struggles, expropriation, the proletariat or other concepts that mark national debate elsewhere.
Only in the U.S. are airlines, radio and television networks, telephone systems, power companies and all other major industries owned primarily by private individuals. By contrast, Japan is a corporate state in which government and industry are so closely interrelated that it is difficult to tell which segment is in control. Half of France's auto industry is owned by the state; 35% of Italy's industrial production is state controlled.
Recently, however, free enterprise in the U.S. has been under heavy pressure—not so much from the New Left or consumerist critics as from some of the system's primary defenders, namely the Republican Party and private businessmen. By ordering the first controls in the nation's history (outside of a military emergency) clamped on wages, prices and rents, President Nixon made one of the boldest encroachments so far on the free-enterprise system. Nixon's New Economic Policy is, in fact, only the latest and most dramatic in a series of events that seem to challenge the principle of free enterprise. In business, the role of Government is fast growing larger—as savior, subsidizer, owner, regulator, decision maker.
It is business leaders themselves who often urge the Government to step in. When the aerospace industry tumbled into trouble last year, its generally conservative captains importuned Washington for subsidies to bail out Lockheed (successful) and save the SST (unsuccessful). When the housing industry slumped in the late 1960s, home builders pressured the Government to increase subsidies greatly; under the present Administration, the number of federally assisted housing starts has jumped 150%, to almost 400,000. After passenger rail service had become a hopeless drain on profit, Congress last year relieved the railroads of that burden by creating Amtrak, the Government-sponsored rail corporation.
The Government's recent actions raise troubling questions. Does free enterprise have much of a future? If so, what should be done to preserve and strengthen the system? If not, what will replace it?
Actually, the system has never been as free as its folklore suggests. Business and Government have often been partners in a common-law marriage. What is happening now is largely an intensification of a long process of Government involvement.