In Democracy in America, Alexis de Tocqueville observed that for a social group to improve its standing in society, it is in the group’s best interest to praise and encourage those practices of members who strengthen the group and to condemn behaviour that weakens or undermines the group. Using honour and dishonour to allocate praise and blame, respectively, is one way to accomplish this (Tocqueville, 626). Acquiring honour in honourable entrepreneurship entails knowing and preserving institutions upon which an extended market order depends. Because the “prerequisite for the existence of property, freedom, and order, from the time of the Greeks to the present” has been the same – “law in the sense of abstract rules” (Hayek, 30) – entrepreneurs are honourable, in the sense of Tocqueville, when they preserve or strengthen general rules of property and justice. They are dishonourable when their actions weaken the market order’s requisite institutions. In a vibrant commercial society, honourable entrepreneurs avoid taking personally advantageous actions, which damages the extended social order. They satisfy the unmet needs of a community by practising standards of excellence that have fostered human flourishing since before the time of Aristotle.
While Aristotle believed that achieving honour is the highest final good for individuals of superior refinement, he regarded virtue as a more consistent means of achieving happiness because groups conferring honour can twist and distort its meaning (Aristotle, Bk. 1, Ch. 5). In a peaceful social order, Aristotelian virtue in the practice of business can pave the way to happiness by simultaneously extending both external and internal goods. For an honourable entrepreneur, external goods of material success are profit, wealth, and status. In contrast, internal goods such as knowledge, truthfulness and prudence are virtues cultivated and used to acquire external goods. While some successful people achieve their ends through “flattery and falsehood” rather than “merit and abilities,” the road to material success and virtue is the same for honourable entrepreneurs.
On the other hand, crony capitalists who willingly violate general rules by seeking preferential legislation create disadvantages for their non-preferred competitors and betray honourable entrepreneurs who hold themselves to a higher standard. Partial truths justifying their special treatment deceive customers, taxpayers, and political authorities. In business practice, both the internal good of virtue and the external good of honour are barred to those entrepreneurs who may be technically astute in their business decisions but don’t adhere to the standards and principles necessary to perpetuate the extended order of peaceful social cooperation.
Honourable entrepreneurs who pursue their enlightened self-interest serve the long-run interests of an entire nation by producing sustained economic growth and creating a surplus that frequently benefits the poorest among us. They practice virtues that benefit themselves and the community at large. Winning a daily election in the marketplace requires continually searching for new and better products to sell at prices people are willing and able to pay. The most successful entrepreneurs are those who find “newly worthwhile goals” and “newly available resources.”
They anticipate consumer tastes and preferences trends and adjust their supply methods to changing resource prices and technological innovations. Achieving honourable success through production and trade is difficult, and firms of those not up to this task soon perish. The private virtues of honourable entrepreneurs who achieve success are a public virtue since they are, as Adam Smith observed, a cause of the wealth of nations.
Article edited by Felix Livingston
Professor of Economics – Kansas State University – USA
