EUROPE:
When Business Don't Get No Respect

By Tibor R. Machan

Now that communism has fallen, why hasn't Eastern Europe embraced capitalism more wholeheartedly? Hoover fellow Tibor R. Machan explains.

When the Soviet empire finally collapsed, many people, especially in the West, were filled with unreasonable expectations. Journalists in particular demanded an instant revitalization of Eastern European economies, the flowering of business, investments, a rise in the standard of living, vigorous entrepreneurship everywhere, exploration of natural resources, and, most of all, the establishment of a legal framework for all this throughout the region.

Although prices have been deregulated in various countries, the needed reforms in property and contract law are still a long way off. The political will and conviction needed to produce them is not in evidence anywhere apart from the Czech Republic--certainly Bulgaria, Russia, and Poland appear not to be headed toward the establishment of legal instruments that facilitate the development of bona fide free markets.

This has even prompted such big financial market players as George Soros to turn away from capitalism and embrace a so-called open society that is really just the old-fashioned mixed economy, which, as Hungarian economist Janos Kornai warned in The Road to the Free Market Economy (1990), cannot be supported until a society has generated significant wealth.

Socialism and the idealization of communism are by no means the only obstacles to economic health in Eastern Europe. More deep-seated is the enduring hostility toward business.

This is not new: Throughout human history, prominent thinkers and theologians have decried commerce and trade as lowly, base, and ignoble. Plato had Socrates place merchants at the lowest rung of society in The Republic; Aristotle believed that wealth creation was never a source of genuine human goodness; in Islam, the concern with the afterlife often leads to hostility toward efforts to secure prosperity in this one; Christianity says that sooner will the camel go through the eye of the needle than the rich man gain entrance to the kingdom of heaven; the practice of money lending with interest was regarded as usury until very recently; and even business in the so-called capitalist United States is regulated by government in ways members of the clergy or the press would never tolerate if subjected to such regulation themselves.

Artists, politicians, philosophers, theologians, movie scriptwriters, poets, and lyricists have hardly anything nice to say about business and commerce.

But everyone would like to be rich. What schizophrenia: Men and women all over the world clamor to be better off financially, while the ideas propagated by most intellectuals and moral leaders in their societies denounce that very desire. Nowhere is this contradiction more evident than in the former Soviet colonies.

Although people throughout this region longingly eye the wealth of countries where capitalism has experienced some measure of freedom, they nearly always express disdain and even contempt for those who actively, ambitiously enter the commercial world. Such people are condemned as speculators and exploiters, and those who witness their success are resentful--though often envious.

This has to stop. But how? First of all, one must abandon the labor theory of value--the idea that only the kind of work in which people sweat is real work and deserves reward. Most worthwhile work is actually a matter of good judgment, figuring out what people want badly enough and then making sure it is produced for them at a reasonable price. Business acumen is a matter of intelligence, so it is often not directly observable. Successful businesspeople use their minds to earn their millions--though, of course, as with everything, luck has its place there too.

But even more in need of remedial thinking is a matter that has led to the condemnation of business. The human race has always been ambivalent about where a person really belongs--here on earth or somewhere else, in some other realm, nearer to God, perhaps.

Well, we are here, and this is where we have something to say about how we live. If there is an afterlife, there is little anyone actually knows about it.

The good thing for everyone to do would be to focus clearly on what it takes to make something out of this life. And this life clearly includes a hefty economic dimension: That is how children get better shoes and education, families a good vacation or dental care, and anyone a safe and comfortable car. Even high culture is easily accessed if one is able to afford it. Books, music, theater, and the rest are all going to come our way more readily if we work hard to earn a decent living.

It is businesspeople who can provide us with the service of increasing our wealth--carefully, cautiously, depending on one's situation, responsibilities, and talents. It is this profession that secures the health of our bankbooks, so we should treat it with no less respect than the doctors and dentists who secure the health of our bodies.

Businesspeople in Eastern Europe need respect from society comparable to that received by educators, scientists, artists, and physicians. Then they can go to work with pride and embark on the difficult task of revitalizing the stagnant, defeated economic culture that was produced by an ideology that thought of those in business as the scum of the earth.

It is, in short, not enough simply to say an official good-bye to the antibusiness mentality of the communist era. It is necessary at the same time to establish a newfound respect for the profession of business, one that will gradually teach those who embark on business--of whom, let us hope, there will be many--that they are doing some-thing worthwhile, honorable, and respectable.

With that psychological, even spiritual support, the economies of numerous formerly communist countries where progress is still stagnant can begin to improve and, in time, even flourish.

Tibor R. Machan is a Hoover research fellow, professor emeritus of philosophy at Auburn University, and holds the R. C. Hoiles Endowed Chair in Business Ethics and Free Enterprise at the Argyros School of Business & Economics, Chapman University.