The values and institutions referred to above, in an atmosphere of relative freedom, have been responsible for more development and change in the last one hundred years than has taken place in the entire previous history of man's inhabitance of the earth. It is no coincidence that these changes took place during a period in human history when there was more scope for freedom than at any other time.
Change, disturbance and development, in an atmosphere of gradual extension of freedom, subject to limited government and individual responsibility, have in the last one hundred years taken humanity from the era of the horse and buggy to travelling in space. Development in every area of human activity (except perhaps the moral dimension) has been apparent from a period commencing with the industrial revolution (or even before). The incidence of poverty was gradually reduced from the nineteenth century onwards, although the process of development and reduction of poverty has slowed down from the 1960's (except perhaps in science and technology). There is ample evidence to support this proposition for those who are willing to look at the historical development and compare life as it was a century or a few centuries ago with what it is today. The great achievements of private enterprise endured by and large for the benefit of the underprivileged have created a situation where life means very much more for most individuals than it did in the feudal era.
The developments of the last two centuries up to the 1960s took place as a consequence of the evolved set of values and institutions referred to above. Limited government and freedom (restricted by law and other factors but nonetheless providing a significant area for free and independent action) were responsible for these developments. Individual effort and initiative within a known framework of legal rules and institutions and extra legal values and institutions, made possible the change. Gradual changes in the rules and the values and institutions themselves will permit further progress so long as the changes are evolutionary and come from a ground-swell of popular feeling. However, frequent tampering with the rules by over-ambitious reformers threatens to put an end to the whole development that began with the Renaissance and received a new lease of life from the industrial revolution. The extent of government control of the economy in Australia has in the last twenty five years increased from 28 to 43 per cent (as a proportion of GDP). Government regulation affects every aspect of life. Government regulations are drafted by human beings and administered by human beings with their imperfections and fallibilities. This deliberate tampering with the rules by short sighted reformists has put the system into reverse by strangling the relative freedom which was responsible for steady growth and development.
A detailed examination of the great breakthroughs and inventions provides interesting data. It is significant that during the past one hundred and fifty years almost all of them have taken place in liberal societies. The reference is to the pioneering inventions which involved exponential advancement in science and technology. There have been developments in the Soviet Union and in other communist countries but these countries merely adopted the scientific discoveries made in the free world.
It is fashionable in many quarters to denigrate the achievements, values and institutions of western civilisation and private enterprise in particular. Supporters of freedom are active (though without adequate exposure) in making the theoretical arguments to support their position. Whilst these are important, it is equally important to focus on the great achievements in historical perspective and in comparison to other cultural and ideological systems.
The great achievement of private enterprise over about two centuries has been to reduce levels of inequality and to improve standards of living. In feudal times there were relatively few privileged and wealthy persons. The "masses" were exploited and lived in near poverty or absolute poverty. The great achievement of private enterprise was to bring into existence a large middle class — and to reduce very significantly the areas of inequality.
The successes of private enterprise are succinctly explained by Milton and Rose Friedman, Free to Choose, Melbourne (1980) pp 147-148:
"In the past century a myth has grown up that free market capitalism increases such inequalities, that it is a system under which the rich exploit the poor.
Nothing could be further from the truth. Wherever the free market has been permitted to operate, wherever anything approaching equality of opportunity has existed, the ordinary man has been able to attain levels of living never dreamed of before. Nowhere is the gap between rich and poor wider, nowhere are the rich richer and the poor poorer, than in those societies that do not permit the free market to operate. This is true of feudal societies like medieval Europe and India before independence, and much of modern South America, where inherited status determines position. It is equally true even where central planning has been introduced, as in many countries, in the name of equality.
Russia is a country of two nations: a minutely small privileged upper class of bureaucrats, Communist Party officials, technicians and a great mass of people living only a little better than their great-grandparents did. The upper class has access to special shops, schools and luxuries of all kinds; the masses are condemned to enjoy little more than the basic necessities.
Industrial progress, mechanical improvement, all of the great wonders of the modern era have meant little to the wealthy. The rich in ancient Greece would have benefited hardly at all from modern plumbing — running servants replaced running water. Television and radio — the patricians of Rome could enjoy the leading musicians and actors in their home, could have the leading artists as domestic retainers. Ready-to-wear clothing, supermarkets — all these and many other modern developments would have added little to their life. They would have welcomed the improvements in transportation and in medicine, but for the rest, the great achievements of western capitalism have rebounded primarily to the benefit of the ordinary person. These achievements have made available to the masses conveniences and amenities that were previously the exclusive prerogative of the rich and powerful."
Williams supports this analysis:
"It is arguable that the destruction of mercantilism, the industrial revolution, and the emergence of an essentially market economy, did more for the poorest, in material terms, than did some 1,800 years of preaching about charity. It is so easy to forget that life for the masses was, under mercantilism, nasty, brutish, and short. London and Paris were cursed with recurrent famine; indeed life expectancy at birth in France was, in 1800, 24 for males and 27 for females. In 1780 over 80 per cent of families in France spent 90 per cent of their income simply on bread. Yet in one century the very nature of poverty was transformed. The working populace in Britain quadrupled, and real per capita disposable income doubled between 1800 and 1850, and doubled again between 1850 and 1900. A sixteenfold increase in wealth and services — is hardly adequately dealt with simply by sighing over the fiction of Dickens and Zola — or of Marx and Engels, for that matter".— (J K Williams, The Christian and the State, Sydney (1983) pp 18-19).
Most of the benefits of western technology and capitalism have endured primarily to the benefit of the less privileged sections of the community. Poverty and injustice, which critics make much of, exist and will exist in any human society. Jesus Christ said, "the poor you will always have with you". However, the perspective which radical and not so radical reformers overlook is the extent of the change that took place under freedom.
The strengths of private enterprise are also visible when the standard of living under capitalism is compared with the standard of living under communist and other totalitarian systems. Whether private enterprise is compared with what it replaced, namely feudalism, or whether it is compared with other available alternatives — communist totalitarian regimes or dictatorships (feudal or semi-feudal, or fascist) — private enterprise must rate head and shoulders above its competitors. Critics of private enterprise do not consider this aspect, except to concede that capitalism is superior to feudalism. They do not focus on the extent of the superiority, nor do they compare its record with communism or with democratic socialist interventionism.
Critics refer to the "crisis of capitalism" today. But if by capitalism the reference is to a system of free enterprise, such a system does not exist anywhere in the western world. Private enterprise has been so gradually strangled by government regulation and taxation that from about the 1960's onwards it has been incapable of reducing levels of poverty and inequality. Over a period of a few centuries limited government and private enterprise had been responsible for the gradual reduction of poverty and inequality.