(Music) David Kelley: Jim, you and I both make our
living in the realm of ideas. We’re both writers, I’ve been a teacher, you review
books and market them as well as writing quite a few. A question arises what is an idea?
What is this product that we work with and sell that’s clearly important, but at the
same time it’s a little bit of a amorphous, it’s not like steel, or even like a service
like computing. I think we just need to talk about what is an idea? Jim Powell: Well, an idea among other things
is a thought which guides a human action. If we have a high self-esteem or a high thought
about ourselves we’re more likely to be friendly, outgoing to be striving toward what
we want for example ideas certainly include inventions, business ideas, as well as all
those things we associate with the arts. Kelley: That’s interesting you mention the
effects of an idea on an individual, clearly if you read any psychology at all you see
that people that are happy and successful tend to have a certain set of ideas about
the possibility of success, and what it means if they fail and so forth. What about in the
political and cultural realm? Is it the same kind of psychological role for ideas there? Powell: Well I think that many of the ideas
that dominate our lives, or dominate history are often unspoken assumptions. For example
during the 19th century classical liberalism, ideas of limited government dominated and
so when countries came on the world stage like Japan, they liberalized and opened up
not because that was their original thought or deliberate choice, but that’s what everybody
else was doing and it appeared to be successful. And in the same way and in more recent times
we’ve seen countries like India, nations in Africa adopt protectionist policies, big
government welfare, the whole thing. Not because they dream that up, but because they could
see that’s what almost everybody else was doing, those were the dominate ideas of the
age. Kelley: Well certainly if you look at this
century and the way it’s been the century of ideas, big ideas, socialism was perhaps
the biggest of them. It was almost an entirely intellectual movement and guiding force that
lead to the Russian revolution and created the communist state, which is, and then, now
we’ve seen that idea played out and when people talk about socialism being dead, what
they mean is not necessarily that every socialist economy has collapsed, although most of them
have now, but that the idea, the ideal has disappeared. People are no longer drawn to
it. Powell: I absolutely agree with you that the
implicit assumptions have an enormous influence and I think you’re right that one of the
dominating thoughts of the age is that for anything to be moral, noble, worthy of approval,
it has to have come from good intentions and that the, a system cannot really be worthy
unless people are intending to do good. And at the very least, one might start with a
look at results. That if you look at the marketplace you see that first of all markets have always
been for thousands of years the most peaceful places on earth. It has been the opposite
of warfare. Merchants cannot thrive if their customers are broke. It’s never in the self-interest
of the merchant to kill their customers, its never in the self-interest of merchants to
kill their suppliers. So marketplaces, merchants, commerce promotes peace and always has and
has always been the opposite war. It has always been merchants which crossed boarders and
regions of Europe for example that were at war, there were merchants going back and forth,
Jewish merchants, Chinese merchants, Armenian merchants, Italian merchants and many others.
It has always been commerce, profit seeking commerce which created wealth, sources of
knowledge independent of government and which have been absolutely crucial in securing human
freedom not only in the western world, but in other places where it has developed. It
has always been marketplaces which have created very powerful incentives for more moral behavior.
Whatever the intentions are, individuals seeking their own self-interest and yet practically
every fortune that you can name whether you are talking about John D. Rockefeller or Andrew
Carnegie, J Paul Getty, Bill Gates of Microsoft anybody you care to name, all of those fortunes
were based on repeat business. It is very expensive to bring in a new customer, the
cost of salesmen, the cost of telephones, the cost of office space, all the things,
advertising, all the things that you have to do to bring in a new customer. It’s a
lot cheaper to keep existing people happy, and so in order to make a fortune you have
to keep people happy. You have to treat them honestly , which is why it’s impossible
to have a mail order business or almost any other retail store without a money back guarantee.
It’s not necessarily through their good will, they have to keep people happy because
it’s a lot easier to keep existing customers happy. And you do that by offering value for
money, by treating people honestly, by treating people with respect these are the incentives
of the marketplace. And so the results are peace, freedom and moral behavior, they are
not necessarily coming from altruistic motives; there is an element to that sometimes, but
the primary drive or the most reliable force in history is self-interest and it leads to
the very fabric of our civilization. I would say that a civilization, a decent civilization,
is impossible without markets. And indeed civilization originated along trade routes
and all the cultural centers that you might think of from Florence, to Paris and London
and New York, and all the rest have all started as commercial centers and they remain commercial
centers and if they become government centers, primarily a capital, they tend to atrophy
if they are cut off from outside markets they tend to atrophy and decline. So if we put
aside this dominating assumption that something has to be good intentions in order to be decent
and we simply look at the results, that’s one way of doing it. We can see that the,
this idea which is dominated our age of good intentions are the criteria of what is decent
and honorable, that that is entirely wrong. (Music)
