Can We Keep Free Enterprise? — Summary

Henry Hazlitt’s “Can We Keep Free Enterprise?” is a single polemical-economic essay. Originally published in The Freeman in 1973, it is both a defense of capitalism and an explanation of why that defense must be continually renewed. Hazlitt opens from a combative premise:

Nine-tenths of what is written today on economic questions is either an implied or explicit attack on capitalism.

His central thesis is not merely that free enterprise is superior to intervention, but that anti-capitalist argument is recurrent because it is rooted in durable human tendencies. Capitalism’s defenders, he argues, have not failed intellectually; rather, they face permanent psychological and political pressures.

The attacks on capitalism stem from at least five main impulses or propensities, all of which will probably be with us permanently, because they seem to be inherent in our nature.

The essay is structured around these impulses: compassion for hardship, impatience for immediate remedies, envy, short-run thinking, and the habit of comparing real institutions with imagined ideals. Hazlitt’s method is to treat each interventionist policy as an instance of good intentions joined to economic shortsightedness. Envy explains support for progressive taxation; compassion and impatience explain relief schemes and minimum wages; utopian comparison explains why even rising living standards generate dissatisfaction.

The middle sections turn from motive to mechanism. Hazlitt argues that monetary expansion cannot create real wealth, only redistribute purchasing power and raise prices. Governments then compound the first error with price controls, shifting blame from inflationary policy to sellers. His account of controls, whether ancient or modern, rests on the coordinating function of prices:

Market prices have work to do. They are signals to both producers and consumers.

This is one of the essay’s core conceptual moves: capitalism is not defended chiefly as a moral slogan but as an information system. Prices communicate scarcity, demand, cost, and opportunity; when they are suppressed, production becomes distorted. Hazlitt applies the same reasoning to rent ceilings, interest-rate controls, and protectionism, treating them as selective attempts to override market signals that inevitably create shortages, misallocation, or inefficiency.

His section on poverty attacks measures designed to help the poor by raising legal wages or expanding automatic relief. Minimum wage laws, in his view, price the least-skilled workers out of employment, while welfare arrangements weaken incentives on both sides of the transfer.

At bottom, almost every government "antipoverty" measure in history has consisted of seizing part of the earnings or savings of Peter to support Paul.

The argument culminates in the problem of economic calculation. Hazlitt follows Mises and Hayek in treating private property, money prices, profit, and loss as indispensable to rational production. Free enterprise is valuable because it aligns incentives and permits comparison among alternative uses of resources.

Only free private enterprise, in fact, can solve what economists call this problem of economic calculation.

By contrast, socialism lacks genuine market prices for capital goods and therefore cannot know whether it is creating or destroying value.

The bureaucratic managers of the socialist economy would not know which items they were producing at a social profit and which at a social loss.

The closing sections return to political psychology. Capitalism’s success raises expectations faster than any real system can satisfy them; prosperity therefore does not silence criticism but often intensifies it.

The very success of the system has encouraged constantly rising expectations and demands—expectations and demands that keep racing ahead of what even the best imaginable system could achieve.

Hazlitt’s relevance lies in this combination of economic analysis and rhetorical diagnosis. Inflation, price controls, welfare expansion, tariffs, and hostility to profit are not, for him, isolated mistakes but recurring expressions of impatience with market processes. The essay ends by identifying free enterprise with economic liberty and economic liberty with human freedom:

What is under constant and mounting attack is capitalism—which means free enterprise—which means economic freedom—which means, in fact, the whole of human freedom.

Thus the work’s final claim is practical and pedagogical: the case for capitalism can never be made once for all. Because error is politically attractive and constantly renewed, the defense of free enterprise must be repeated within every generation and every sphere of influence.