It was frequently pointed out by moralists like Ruskin and William Morris, and by churchmen as well, that this "obvious and simple system of natural liberty" by which "every man was left perfectly free to pursue his own interest his own way," was not only contrary to the dogmas of the popular religion but irreconcilable with moral wisdom. The credo of the unregenerate business man was utterly atheistical in its premises, for it displaced the notion that there is any higher will than his own to which the employer is accountable. It was more than atheistical, however; it was, in Aristotle's sense of the word, barbarous in that it implied "the living as one likes" with virtually complete acquiescence in the supremacy of the acquisitive instinct.
There is no reason to suppose that such theoretical comments on the credo of naive capitalism did more than rub off a little of its unction. Capitalism may be, as Mr. Maynard Keynes has said, "absolutely irreligious... often, though not always, a mere congeries of possessors and pursuers." Were the credo workable in practice, some way would have been found of anointing it with attractive phrases. The real reason for the gradual abandonment of the credo, proclaimed by Adam Smith and repeated so steadily since his day, is that the credo of naive capitalism is deeply at variance with the real character of modern industry. It rests upon false premises, is therefore contradicted by experience, and has proved to be unworkable.
The system of natural liberty assumes that if each man pursues his own interest his own way, each man will promote his interest. There is an unanalyzed fallacy in this theory which makes it utterly meaningless. It is assumed that each man knows his own interest and can therefore pursue it. But that is precisely what no man is certain to know, and what few men can possibly know if they consult only their own impulses. There is nothing in the natural equipment of man which enables him to know intuitively whether it will be profitable to increase his output or reduce it, to enter a new line of business, to buy or to sell, or to make any of the other thousand and one decisions on which the conduct of business depends. Since he is not born with this wisdom, since he does not automatically absorb it from the air, to pursue his own interest his own way is a fairly certain way to disaster.
The fallacy of the theory of natural liberty is undetected in a bonanza period of industrial development. Where the business man has unexhausted natural resources to draw upon, where there is a surplus of customers competing for his goods, he can with naive and furious energy pursue his own interests his own way and reap enormous profits. There is no real resistance from the outside; there are no stubborn and irreducible facts to which he must adjust himself. He can proceed with an infantile philosophy to achieve success. But this bonanza period when the omnipotence of the capitalist is unthwarted, and his omniscience therefore assumed, soon comes to an end. In advanced communities the mere multiplication of industries produces such a complicated environment that the business man is compelled to substitute considered policies for his intuitions, objective surveys for his guesses, and conferences world without end for his natural liberties.
What has upset the idea of the old-style business man that he knows what's what is that the relevant facts are no longer visible. The owner of a primitive factory might have known all his working men and all his customers; the keeper of a little neighborhood shop may still, to a certain extent, know personally his whole business. But for most men to-day the facts which matter vitally to them are out of sight, beyond their personal control, intricate, subject to more or less unpredictable changes, and even with highly technical reporting and analysis almost unintelligible to the average man.
It is, of course, the machine process itself which has created these complications. Men are forced to buy and sell in markets that for many commodities are world-wide: they do not buy and sell in one market but in many markets, in markets for raw materials, in markets for semi-finished goods, in wholesale and retail markets, in labor markets, in the money market. They employ and are employed in corporate organizations which are owned here, there, and everywhere. They compete not only with their obvious competitors in the same line of business, but with competitors in wholly different lines of business, automobiles with railroads, railroads with ships, cotton goods with silk and silk with artificial silk, pianos with furs and cigarettes with chewing gum. The modern environment is invisible, complex, without settled plan, subtly and swiftly changing, offering innumerable choices, demanding great knowledge and imaginative effort to comprehend it.
It is not a social order at all as the Greek city state or the feudal society was a social order. It is rather a field for careers, an arena of talents, an ordeal by trial and error, and a risky speculation. No man has an established position in the modern world. There is no system of rights and duties to which he is clearly subject. He moves among these complexities which are shrouded in obscurity, making the best he can out of what little it is possible for him to know.