Free enterprise ‘still the best’

Press, 27 March 1979, Page 7

Free enterprise ‘still the best’

PA Hastings Free enterprise, profit, and competition are not dirty words and businessmen should be prepared to say so, according to the executive director of the Employers’ Federation, (Mr J. W. Rowe). “The idea that free enterprise is anti-people is ail too prevalent today. Yet nothing could be further from the truth,” he told the Hastings Rotary Club. “Unfortunately, many crticisms are difficult to refute because of the basic complexity of the market mechanism. “Some criticism is justified: there are times when businesses fail and people lose jobs through no fault of their own. But the benefits which market economies have provided for their citizens are too great to be ignored.”

Mr Rowe said that the free-market, private-enter-prise system was in complete contrast to the directed economies of socialist and communist societies, where the principles of private ownership or personal freedom were rejected and planning was centrally yontrolled. In such societies freedom of choice was very limited by the central organisation’s view of the “common good” and there was no freedom in the sense that New Zealanders knew it. “Indeed, it is paradox of our sort of system that criticism is possible simply because people are able to act as individuals.” said Mr Rowe. "I suspect

that for the proponents of collectivism its attraction lies largely in the thought that it is their choice which would prevail.” Mr Rowe said that in spite of present economic problems, New Zealand still enjoyed an enviable standard of living in comparison with much of the rest of the world. This was attributable directly to free enterprise and the fact that personal motivation resulted in a degree of productivity far higher than coercion could ever achieve. However, feelings of pessinrsm abounded. It had become common in many circles to attribute setbacks to the system and either to opt out entirely or to look for political solutions. “When things don’t suit us, we call for Government solutions,” said Mr Rowe. He cited Adam Smith, who wrote “The Wealth Of Nations” 200 years ago, insisting that bureaucracy stifled progress and personal initiative. But even be had not favoured complete laissezfaire and today complete reliance on market forces was a less tenable notion than when he had written, because the democratic process had put power into the hands of various groups to adapt these forces to thir own ends. Some State intervention had always been necessary but that should not obscure the fact that the free-market system was the best means of using talents and providing for individual needs.

“Unfortunately, with the current unthinking cries for Government intervention and controls we are hastening all too rapidly towards a situation where we are so hemmed in by rules and regulations that we can no longer claim to be a free society in any sense whatsoever,” said Mr Rowe. “Nowhere is this trend more apparent than in relation to business organisations. Success in a freeenterprise system depends on delivering the goods, in satisfying society’s needs. “Bad products only .survive where competition is absent. In a free-enterprise system a bad or unwanted product must be replaced or redesigned or the factory making it will be forced to close.

“Tn the perfectly competitive economy, it has been said, what is produced is turned out in response to the preferences of consumers who individually cast dollar votes for various goods and services but this is only possible where market forces are allowed freedom to operate.’’ Mr Rowe said that ’ a restructuring of the taxation system would enable businesses to make the profits which would encourage expansion and job creation. By allowing greater reward for greater effort, a much-needed increase in productivity would be encouraged. The cure for an ailing economy was far more likely to be found in the exercise of personal initiative than in all the efforts of the Government.