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The Role of Business

(Excerpts from a new book, Capitalism and Commerce, by Edward W. Younkins,  Professor of Accountancy at Wheeling Jesuit University in Wheeling, West Virginia. His book should be available in March, 2002.)

          Free enterprise is the natural, voluntary collaboration of individuals exchanging the products of their minds, creativity, abilities, and energy.  Free enterprise thus involves all of us.  It is what unobstructed individuals do to maintain their lives.  As long as activity is peaceful it should be permitted.  It follows that, from this perspective, every person is a businessman.  Every individual who engages in gainful employment in exchange for pay participates in business.  He trades his time, energy, and efforts in order to receive remuneration which he can use to attain his needs and desires.

          Business is the way people in a free society organize their economic activities by producing and marketing goods and services in response to the voluntary actions of people in the marketplace who either purchase or abstain from purchasing.  Commerce makes it possible for people to pursue their desires and achieve prosperity through trade with others.  Business is the method by which a man can voluntarily offer to exchange what he possesses for what he desires.  It is the most effective means by which a person can pursue his vision of happiness in accordance with the natural law principle of natural rights.  It follows that a legitimate businessman does not profit through force, fraud, deception, or other immoral means.

          Each person values things subjectively in accordance with his unique attributes and individual judgments.  Businesses develop to meet the diverse and numerous wants of distinct persons.  In a free society, a business endures only as long as it pleases enough individual customers.  A businessman thus earns his wealth and serves himself only when he first addresses the well being of others.  The free market coordinates the skills and activities of disparate individuals with varying goals and diverse values.  The successful businessman serves others as those others want to be served and not as he thinks they should want to be served.

          Business involves everyone who engages in trading what he creates and owns (i.e., his ideas, goods, and services) to others who consider what they have to be less desirable than the exchange items offered in return.  People only part with what they value less for what they value more.  It is a myth that in an exchange, what one gains the other party must lose.  In a voluntary exchange, both participants must expect to gain or no exchange will take place.

          To be successful, a businessman must objectively perceive reality and rationally process and evaluate information.  He must detect information gaps between consumer wants and needs and the potential of a new but as yet undeveloped product or service to meet those wants and needs.  The businessman must anticipate new markets and consumers’ future wants and needs, learn from competitors’ successes and failures, accumulate capital for his projects, acquire the needed resources, coordinate numerous activities and employee skills, and take risks by trading present and known values for resources that only promise a potential future value for him.  Profit is payment for the businessman’s thought, vision, initiative, determination, and efficiency.

          Businessmen aim to produce a profit by selling at the highest price the market will permit while buying at the lowest prices the market will yield.  They profit by doing the best they can in creating goods and services that consumers desire.  The role of business is to produce the best possible goods, services, and ideas at the lowest possible cost so as to maximize the firm’s profits.  The businessman earns profits by using as little as possible to provide customers with as much as possible.  Profit is made by creating wealth and trading with others.

          Human flourishing involves the creation, acquisition, and use of wealth in fulfilling activities.  It is the practical insights and reason of individual human beings as producers and consumers that are needed, not only in the production and attainment of wealth, but also in the pursuit of each person’s unique vision of his happiness.

          Business, as a calling, is related to the flourishing of the individual.  Innumerable individuals have satisfied their needs, actualized their potentialities, and attained their goals in the realm of business.  It follows that the businessman’s activities are morally proper and worthy goals.