“I Built This!”: The Free Market, the Common Fund and the Common Good

During the last presidential campaign, there was a major flap when Elizabeth Warren, running for the Senate in Massachusetts, informed the entrepreneur that he was not entirely responsible for his own success:

“You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police-forces and fire-forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory — and hire someone to protect against this — because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea. God bless — keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along.”

Later in the campaign, President Obama picked up on the theme, somewhat inarticulately, “If you've got a business – you didn't build that. Somebody else made that happen,” and went on to point out to the development of the internet as an example of government intervention in the market.

The outrage from the right was predictable. Pundits piled on to denounce the President, with the Wall Street Journal proclaiming, “The president's remark was a direct attack on the principle of individual responsibility, the foundation of American freedom.” And at the Republican Convention, “We Built it” became an organizing meme.

The meme was more true than the organizers realized, since “we” really did build it, “it” being the arena in which the convention was held, which was built mostly with public funds. From within this very temple of socialism, the Republican Party was free to proclaim its free market principles. But this is the way it always is; there is no pure free market, nor any pure socialism. Socialism can only work with a market economy, if it is to work at all; but a market economy requires socialism, or it cannot be at all. And capitalism is entirely a creature of the state; there is no point in complaining about “crony capitalism,” since that is the only capitalism that has ever existed, or ever will exist.

Every business depends on a common fund to function at all. It doesn’t matter how well you can produce goods; if there are no roads to take them to market, you cannot be successful. If every businessman had to drill his own well, dig his own latrine, hire his own police, educate his employees and customers, and provide a hundred other services he receives from the common fund, business would be impossible. Socialism is not the enemy of the market; it is what makes the market possible. Nor is the market the enemy of socialism, for only the market can fund the common fund. The two are locked in an embrace, and the attempt to destroy either one can only destroy them both.

Now, I don’t think there is any valid objection to what I have just said, since it is no more than descriptive of actual markets. Still, there is an objection. For example, Tony Esolen, responding to me, says that Warren’s statement is still wrong, because “the small businessman himself not only has already paid taxes for those things; he and his like are the cause why there should be such things to begin with.” But this statement is wrong on two levels, one trivial and one profound.

On the trivial level, it is apparent from the fact that we have a deficit that the services are not, in fact, covered by taxes; we push some portion off on future generations by consuming what we want through national borrowing. The attitude seems to be, “what have the future generations ever done for me?” Indeed, at this moment in our political history, the conversation is dominated by the deficits, by the fact that we don’t pay for what we consume.

But even if there were no deficit, Prof. Esolen’s statement would still be wrong. For in truth, the common fund must be there before the entrepreneur pays his taxes. It is the presence of the common fund that allows him to be an entrepreneur in the first place. What the businessman does when he pays his taxes is pay it forward; that is, he ensures that the fund will still be there when the next business idea comes along.

Conservatives these days seem to view society as a contractual affair, and Prof. Esolen’s statement makes sense from this individualistic viewpoint: the businessman paid his taxes, and by doing so discharged all of his obligations to the common fund. He paid his money, got the goods, and there’s an end of it. But this is to misunderstand profoundly the actual situation. Taxes fund the common fund, but they are not the reason for its existence. Rather, the fund exists because of a widespread concern for the common good. This concern stands over, and is prior to, a market economy. But the market cannot exist without it, while, on the other hand, the concern for the common good evaporates if it is not supported by the market.

Markets are very good at making evolutionary changes to an already existing order by responding to price signals. But they can never create that order. They can, in fact, do only one of two things: sustain that order, or destroy it. They sustain the order by recognizing their dependency on it; they destroy it by believing that they don’t need it. When they reduce everything to individual effort, and forget the gifts that the common fund, based on a concern for the common good, has given them; when they truly believe “I built this,” and believe it in the sense of “I built it by myself,” then the concern for the common good evaporates to become a mere contractual relationship, and the whole system, both the common fund and the free market, are on their way to destruction.

Now, the proper name for this individualistic, contractual idea of society is Liberalism, and its natural home was on the left. And the market expression of Liberalism is what we now call “capitalism.” Indeed, the older and more accurate name for capitalism was economic liberalism. This liberalism would free us from all the “hegemonic” sources of authority: the state, the Church, the family, the community. But today, the positions seem to be reversed: economic liberalism has become the content of “conservatism,” while the left has discovered the community and the common good. There’s a kind of reversal of the poles going on: the left is beginning the question the shibboleths of liberalism, while the right has adopted it as their own tradition.

It’s a mad world we live in. 

John Medaille