# Speaking Out: “Social Responsibility” and the Free Market (November 1972) **URL:** **By** John Tepper Marlin **Published:** November 1, 1972 --- “Thus, both libertarians and many members of the New Left believe that regulatory agencies are inevitably captured by the businesses they are supposed to regualte.” People like Karl Hess have already noted the kinship that exists between libertarians and the New Left, resulting largely from the latter’s suspicion of government in the military arena. Questioning the government’s wisdom in war-making is one of the factors that have led the New Left to question its wisdom in other activities. Thus, both libertarians and many members of the New Left believe that regulatory agencies are inevitably captured by the businesses they are supposed to regualte. Both favor a negative income tax which would put dollars into the hands of the poor yet encourage them to work, instead of the existing welfare system which is highly restricted, encourages broken families, and offers no incentive to work. Both oppose rent control as a means of aiding tenants, since it leads to harrassment of tenants when linked to vacancy increases or vacancy decontrol, and leads to housing shortages or deterioration under any conditions. It is because of support from both groups that Ralph Nader’s investigations of the Federal regulatory agencies have received such widespread interest, I believe. Some commentators have rightly pointed out that if the agencies are bound to be corrupted, there is little point in setting up new ones (such as a revamped ICC or a Consumer Protection Agency); and others have noted that investigations of the regulatory agencies are sideshows which do not tackle the main questions. Ralph Nader himself is the epitome of a libertarian, in the sense that he has struck out individually against the ills of the world. Nader might be upsetting to those who believe that people are essentially economically motivated, since he is a man of personal austerity and non-economic dedication. The essential thing about Nader, though, is that he is operating outside the government, appealing directly to the public opinion which is an extension of the free market. When I made some of these points in a speech to the Philadelphia Society in April 1970 (_“Ralph Nader and the Free Market”_), Milton Friedman and Henry Manne objected to Nader being brought into libertarian orthodoxy, and countered that Nader must be anti-market because he is against businessmen. Nonsense! The essential problem for a libertarian is: what do we do about businessmen that conspire against us (to fix prices, set up tariff walls, restrict entry, or block tougher pollution controls? They have full access to the government (unlike charitable foundations, they are free to lobby) and are not bashful about using their power. American tariff history, farm subsidies, resistance to pollution controls and now the Penn Central and Lockheed cases have amply demonstrated their use of power. One way for libertarians or the New Left to attack the problem is to set up counter-lobbies in Washington. But the business lobbies are much too effective and well-funded for these to have much impact. A much more promising approach is to point out business irresponsibility in businesses’ own constituencies—their shareholders, employees, consumers, communities in which they operate. Businessmen are much more vulnerable when they are approached through working relationships rather than through their Washington lobbyists. The problem for most people is evaluating non-financial corporate performance. Fortunately, there is a group of researchers receiving volunteer level wages for gathering data of this kind—the Council on Economic Priorities (CEP). The CEP is a non-profit organization dedicated to obtaining and disseminating truth about businesses—their records in the area of pollution control, hiring of minority groups, lobbying, military contracting and foreign investment. Some libertarians may not be critical of business in all of these areas; however, the Council on Economic Priorities is not an activist organization. It merely gathers information, like a Dun and Bradstreet of the corporate conscience. The subscriber makes up his own mind about the use of the information. In this light, the “social responsibility” of a company becomes just one more competitive factor in business. Libertarians who would like to see business competition extended into non-financial areas will find CEP much to their liking. \[_Interested readers can contact the CEP at: 456 Greenwich Street, New York, N.Y. 10013.—Ed._\] _Dr. Marlin is Assistant Professor of Economics and Finance, Baruch College, City University of New York. He would like to acknowledge, in the interest of full disclosure, that his wife is Executive Director of the Council of Economic Priorities._