The Mises Institute monthly, free with membership
July 1997
Volume 15, Number 7
If you love bad news, devote your life to studying government. You'll learn about the
colossal
waste of NASA, the diseases spread by the school-lunch program, the lies of the FBI, the
corruption subsidized by foreign aid, and the debauchery of the military base.
So where can we turn for good news? To private enterprise, of course, where efficiency, hard
work, and creativity still count for something. In markets, the old ideals of public service still
survive, with people working hard to bring us great products and services at prices we can pay,
and without waste. Here the average guy is sovereign, and people fall over each other to put
excellence first.
The glories of private enterprise are most evident in the marvels we take for granted. For
example, free enterprise created the marvelous, if much derided, institution of fast food. If there
were a bureau of hamburger production, they'd be as scarce as budget cuts. As it is, citizens of
every social and economic standing have daily access--in minutes--to a balanced meal denied to
kings only two centuries ago.
This is no small feat, but one of many millions of miracles of the marketplace. The great
challenge of economies from the earliest times was to get all people, not just the rich, access to
food. Otherwise, a large and growing population could not be sustained. Only the advent of
capitalism, particularly in America, made this possible, and fast food has played a key role in our
times in making it so.
Anthropologists note that throughout human history, one key sign of prosperous times is the
wide
consumption of beef (which requires far more land and other resources than crops). It's no
surprise that America distinguished itself in world history for being the first society in which
beef
was available to one and all, no matter how poor, especially through the hamburger.
And what a glorious thing the hamburger is. It combines meat, grains, cheese, and vegetables
into a simple, delicious package for quick and enjoyable consumption. It seems so easy, yet the
efficient production of the hamburger, in all its details, is of infinite complexity. Only the
coordinative powers of a market economy could possibly produce it.
Without the freedom of contract and capital accumulation, the right of private property, stock
markets, and the price system, there would be no way to bring together the thousands of
production processes needed to make a hamburger, from farming, ranching, and the
manufacturing of thousands of individual capital goods from branding irons to refrigerators.
This is why the fast-food burger is rightly seen as a symbol of freedom around the world, and
why the citizens of former socialist countries crave it more than any other American export.
Living under communism, beef was for only the super rich and well connected. A delicious,
cheap, widely available beef sandwich is an unimaginable dream come true.
Even at the retail level, consider the way capitalism works to everyone's benefit in the
fast-food
industry. To attract more business, McDonald's is slashing the price of a Big Mac (that's "two
all-beef patties," etc.) to 55 cents. That's one-fourth of its current price and only a few pennies
above the cost of its ingredients.
Moreover, the company will serve it in 55 seconds, or you get it free. This discount harks
back to
1955, the year McDonald's began to revolutionize how people eat, in America and all over the
world. In time, the company will offer the same deal on other favorites like the Quarter Pounder.
And this is despite the dollar having lost 83 percent of its value since 1955!
Why is this huge company, with sales of $31.8 billion and 42 percent of the fast-food burger
market, doing this? Not because anyone ordered them to do so or because the management swells
with compassion for humanity and its need to eat cheaply. McDonald's would love to raise its
prices. But it can't, so long as it needs to strike back against competitors making serious inroads
into what it sees as its territory.
Burger King won the hearts of many by offering a Whopper that weighs more than the Big
Mac.
It's also tapped into the huge market for breakfast that McDonald's pioneered with the Egg
McMuffin. It turns out that consumers are also impressed by Burger King's Croissanwich. Then
there's the "problem" of Wendy's. Sales are growing by 7 percent per quarter, because
consumers like the old-fashioned atmosphere, larger burgers, and ketchup that comes in cups
instead of aluminum baggies.
It was, of course, a huge error for McDonald's to do away with its wonderful Styrofoam
boxes on
crazy eco-grounds. And like all large companies, it has an institutional tendency to want to rest
on its laurels, a temptation the free market does not allow anyone to indulge.
Americans tend to take all this scampering for consumer loyalty for granted, but think what it
implies on a deeper economic level. It shows who's really in charge of the free enterprise system.
It's not the moguls who own or manage the company or the franchises. It's not even those who
make the food.
No, the king of the market for fast hamburgers is the consumer. With his decision to buy or
not to
buy, he shapes the market and determines the range of qualities and prices of goods and services.
And it is he who will decide the winners and the losers in the burger war. No matter how big a
company is, or how vast its market share, all is lost without the vote of the little guy with the
spare change.
Under no other system of economics (forget politics) does so much depend on the individual
choices of the average fellow. He can be as fickle or finicky as he wants; there is no penalty for
him either way. Meanwhile, the private company can't complain; it can only respond. It is
enslaved to the whims of the buying public, which is exactly as it should be.
History is littered with businesses that despised this system because they grew tired of
competing. Instead, they enlisted the state to gain a leg up, bypassing the competitive
marketplace and the will of the public. This is how we came to have anti-trust laws, trade
protection, business subsidies, loan guarantees, and government-enforced cartel arrangements.
Thankfully, the fast-food industry is still largely governed by market forces, as the burger
wars
show. The profit and loss system functions here as well as anywhere. This system turns
double-entry bookkeeping into the crucial means for the public to communicate its desires to
those who
provide the goods we depend on every day. If you don't like the Whopper, you don't have to call
Burger King's corporate headquarters. You merely refrain from buying it.
Neither are any of these competitors free to waste resources in pursuit of consumer dollars.
They
must scrimp and save, cutting costs at every corner. And they must find the most efficient way of
getting consumers what they want without ever sacrificing quality.
The result is a vast, efficient, and productive process that serves all of society. And it
happens
without costly elections, bipartisan commissions, ethics-in-hamburger laws, regulators,
bureaucrats, special prosecutors, or any of the other trappings of government.
So successful is this system that its fiercest critics are reduced to complaining of the
supposed
"cultural decline" it brings about, as if the ability of everyman to buy a burger is a grave threat to
civilization. This aesthetic critique of capitalism is about all that's left of the socialist lie.
What, then, have been the cultural effects of the fast-food industry? In fact, they have been
wonderful. It has rescued us from socialist puritans who hate cows and want to permanently ban
beef from the American diet. It has provided jobs to millions of young people, and taught them
the work ethic. It has single-handedly kept alive the great American birthday party. Above all, it
has showed us that eating well in good times and bad does not have to be the exclusive privilege
of the well-to-do.
We take it all for granted, but make no mistake: without the institution of capitalism that
makes
fast food possible, the vast majority of the human population would be reduced to
hunter-gatherer status in short order.
Is there a way to bring the workings of the market to bear on now-frustrating sectors like
education, mail delivery, utilities, public safety, and the courts? Of course. The government
merely needs to get out of the way, and let the market do for these services what it has done for
the great American habit of eating on the run.
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Llewellyn H. Rockwell, Jr. is president and founder of the Ludwig von Mises Institute
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