Speeches, etc.

Margaret Thatcher

Article for Guardian ("Competitive enterprise or state bureaucracy")

Document type: Speeches, interviews, etc.
Source: Guardian, 1 June 1975
Editorial comments: Item listed by date of publication. Transcript of an article published in The Guardian on 1 June 1975 and reproduced with the permission of Guardian and Observer News Services.
Importance ranking: Major
Word count: 886
Themes: Conservatism, Industry, Privatized & state industries, European Union (general)

Competitive enterprise or State bureaucracy

Some years ago a cartoon appeared in an undergraduate newspaper at Oxford. It depicted two dons striding along the towpath of the river, in earnest argument. Said one: “There is no meaning in meaning.” To which the other replied: “You mean that there is no meaning in what meaning is meant to mean.”

Academic preoccupation with the definition of terms may be a legitimate target for student mockery. Carelessness about terminology is the reproach of politicians.

With regard to free enterprise, we need to ask ourselves two questions. First, what do we mean by it? Second, does it exist, or even can it exist, in our contemporary society?

Collectivists of every description generally avoid use of the term “free enterprise.” They prefer “private enterprise,” for the excellent reason that there is a smack of selfishness about the word “private,” an innuendo of greed. Moreover, it affords a better contrast with the other expression they are fond of using, which is “public enterprise.”

The truth is that free enterprise is not private: it is public. What happens is that any individual with what he believes to be a productive or remunerative idea invites the public to subscribe to a project for its exploitation. In order to get the public's subscription, the enterprising individual must produce a prospectus in which he states the costs involved and the prospects of profit. The public put in their money on the basis of their judgement on its chances of success. I cannot imagine anything more public than that.

True, there are cases when the entrepreneur can back his project with funds derived exclusively from his own private savings. But even he has to offer his goods for sale in the public market place, in open competition with the products of other concerns.

Let us look, by contrast, at what the collectivists call “public enterprise.” For a start, it is never enterprise in the sense of being in the exploitation of a new idea or product. Invariable the enterprise took place years ago. The state merely takes over a going concern, usually when all the enterprise has been knocked out of it.

Nor is it even very public. The people at large are given no choice as to whether or not they will invest. Their money is taken off them by taxation and they have no vestige of influence or control over the purposes to which it is then applied. Indeed, the proceedings of some of our so-called public enterprises appear to be about as private as those of the Mafia.

It has been the fault of those of us who stand for free enterprise that for too long we have accepted without protest the terminology of our opponents. We even use it ourselves. In Parliament we find ourselves talking about the “private” sector of industry. We should insist on saying the “free” sector.

We should cease to tolerate the use of the expression public enterprise to describe what is in fact state industrial bureaucracy. The controversy is between competitive free enterprise and monopolistic industrial bureaucracy. Once we can get those phrases accepted, we shall be more than half way to winning the argument.

What about the second question: Does free enterprise exist, or can it exist today? State intervention in industry by governments of one party or another has now been going on continuously in this country for more than a century. A great deal of that intervention has been by Conservative Governments for excellent social reasons.

But to be free, industrial enterprise does not have to be totally unregulated and unrestrained. It cannot be regarded as a restriction of freedom that a modern manufacturer is prohibited from employing child labour.

The elements of freedom consist in the availability of opportunity to earn a fair return on capital in fair competition, in scope for the exercise of initiative and originality, and in security from capricious interference by the State. It is not the fact of State intervention which inhibits freedom of enterprise so much as the nature of that intervention.

For example, to establish universal standards of safety in factories, of pay and conditions for workers, of respect for the environment, is consistent with industrial freedom. Suddenly to penalise one class of industrial project with heavy and discriminatory taxation is inhibiting to freedom. Free enterprise needs from the State consistency and continuity of policy, its fair and equal application to all, and recognition in fiscal policy that there must be a reasonable relationship between profits and the risks involved.

I have no doubt myself that free enterprise can exist, that its vitality is not inconsistent with a considerable measure of state regulation, provided that regulation is neither capricious nor discriminatory. But now the extent of state intervention and the level of taxation has become such as gravely to impair the essential freedom of our system.

This means that I believe our task to be a good deal more than the defence of free enterprise. There is need for positive active measures to restore some freedoms without which there can be no enterprise.

We have not passed the point of no return though we are close to it, and would have passed it if the referendum vote on Europe had gone the other way.

Historically, free political institutions have always been linked with a free enterprise economy. I do not believe that political freedom can exist without economic freedom. They are two sides of the same coin. If we lose one do not doubt that we shall lose both.