AMERICAN FREE MARKETS
at the American Jewish Committee (AJC)
Human Rights Dinner,
June 17, 1991.
Where Mr. Melamed was awarded the AJC Human Rights Medallion.
was a unique opportunity to speak about a characteristic of
free markets, particularly futures markets, which is rarely
mentioned in assessments of their intrinsic values: their unyielding
force on behalf of human rights.
it is an eye-opening experience to visit the floors of the
futures exchanges, their administrative departments, and the
back offices of their member firms. Only then does one gain
an insight to the free market's disregard of age-old prejudices
and traditional inequalities that continue to plague other
spheres of our society.
hear much these days about the sins of the marketplace. We hear
much about the sins of market-makers: their greed, their lack
of integrity, their misconduct. No doubt some of what we hear
is true and that is most unfortunate. We must be vigilant in
our efforts to do better. But these regrettable sins of the free
marketplace do not represent the whole story, nor do they even
represent a significant portion of the story. For lost in all
this negative rhetoric is something so fundamentally important
about free markets, something so priceless, something so valuable,
that lest we occasionally stop to remind ourselves, we might
allow irreparable injury to occur. We might someday, in a thoughtless
moment of sanctimonious folly, allow someone or something to
take from us the most precious gift we possess: the markets of
America and the unyielding force on behalf of human rights that
these markets represent.
to Choose, Nobel Laureate Milton Friedman asserts
that the United States is the result of two separate but interdependent
miracles: an economic miracle and a political miracle. He explains
that each miracle resulted from the implementation of a separate
set of revolutionary ideas and that both sets of ideas—by a
curious coincidence—were formulated in documents published
in the same year, 1776.
set of ideas was embodied in Adam Smith's The Wealth of Nations,
a masterpiece of economic thought. It established that an economic
system could succeed only in an environment that permits individuals
to freely pursue their own objectives for purely personal gain.
As a consequence of such pursuits, the individual, when taken
in mass, will be led by an invisible hand to promote an overall
second set of ideas, drafted by Thomas Jefferson, was embodied
in The Declaration of Independence. It proclaimed a
new nation—the first in history to be established based on a
set of self-evident truths: that all men are created equal,
that they are endowed by their Creator with certain unalienable
Rights; that among these are Life, Liberty, and the pursuit of
success of our nation, asserts Friedman, is a consequence of
the combination of these two basic ideals: economic freedom coupled
with political freedom. The ideals are inexorably intertwined.
One without the other cannot work.
is replete with examples of sovereign powers that ignored these
truths. Indeed, we need only be mindful of the desperate events
unfolding today in the Soviet Union to bear witness to the unmitigated
failure of Communism—a dictatorial political system imbedded
in an economic structure based on government central planning.
As Friedman suggests, the Soviet experiment not only proves that
economic freedom is an essential requisite for political freedom,
it is unequivocal proof of the opposite as well: the combination
of economic and political power in the same hands is a sure road
we move from the macro-economic stage to the practical arena
of everyday life, we find that there is yet another dimension
to Adam Smith's free market postulates that is also entwined
with Thomas Jefferson's political freedom ideals. The lofty principles
published in 1776, when applied to the practical world of 1991,
offer some startling—albeit expected—results: successful markets
are the quintessential example of human rights and equality.
you ever hear any rational person say: "I won't buy those lower
priced wares I need, simply because you—the seller—are a Jew." If
you did, it was not for long. Those who conducted their business
practices in this fashion were soon left in the historical scrap
heap of economic malfunction. Did you ever hear any rational
person say: "I will not sell my wares to your higher bid simply
because you are Polish or because you are Afro-American, Irish,
or Chinese. Not in the markets I know. Ask Lee Iacocca whether
Americans refused to buy Japanese cars simply because they were
not made by Americans!
financial markets are color blind. They know no distinction between
race, they know nothing about ethnic origin, and they are indifferent
to gender. What matters are price and quality. In the financial
markets, the trophy goes not to the Catholic or to the Jew, not
to the White or Black not to the male or female, but to the one
who understands the economic principles of supply and demand.
Personal pedigree, family origin, physical infirmities, and gender
are meaningless when measured against one's ability to determine
the customer's needs and how to market your product. Little else
matters. The market rewards you when you are right and punishes
you when you are wrong no matter who your father was, no matter
what he did for a living, and no matter where he came from.
other private sector establishment, entity, or apparatus is more
free of human prejudice and less concerned with race or religion
than the American free market structures. The principles embodied
in Adam Smith's Wealth of Nations and the precepts set
forth in Thomas Jefferson's Declaration of Independence have
produced the miracle we know as the United States of America.
only have those principals triumphed over centrally-planned economic
systems, when applied to the practical world of our markets they
have brought them to the leading edge of human rights and equality.
This is especially evident in the financial markets of Chicago.
Examine our trading floors, our employees, walk into our trading
pits, and review our firms and their personnel. Religious discriminations
of past eras are virtually non-existent; race barriers still
practiced elsewhere are not recognizable here; and ethnic distinctions
of consequence in other endeavors are meaningless in our work
place. Did you know that sex discrimination within the infrastructure
of American finance was first challenged by our Chicago markets?
Did you know that our Chicago markets led the battle against
race discrimination in the business world? This was accomplished
without fanfare, without marches, and without outside pressures.
we do not claim utopia, Chicago's financial markets have gone
a long way in becoming the ultimate equalizer of race and religion,
ethnic origin, and sexual gender. Here, talent is supreme, hard
work is rewarded, integrity is prized, and excellence is absolute.
Indeed, with respect to human rights, the financial markets of
Chicago practice what the United States Constitution preaches.
it any wonder Carl Sandburg immortalized our city's distinguished
market history: Hog Butcher for the World/Stacker of Wheat.
Is it any wonder our guest speaker, our good friend Congressman
Dan Rostenkowski, has stood up to those who threaten our markets'
existence or impede their growth. He does it in such a delicate
manner. He reads to them a poem by Thomas Babington Macaulay
which tells of Horatius at the Gate, the lone Roman
gatekeeper who valiantly defended the ashes of his fathers and
the temples of his gods. Then Congressman Rostenkowski explains
the following to our adversaries: at the end of the day, after
all the battles they had faced, they will yet have to face the
Chairman of the House Ways and Means Committee, who, like Horatius,
will stand to protect the temples of Chicago—our markets.
like Horatius, whenever we hear a blanket condemnation of the
free market system, let us too rise up zealously in its defense.
At stake is the very essence of the American miracle. At stake
is our very freedom. And while there are failings within the
markets, and regrettably, while there are sins by some within
the system, these negatives are insignificant when measured against
the incalculable and priceless achievements of the American free
market system. It is on behalf of these markets that I proudly
accept the Human Rights Medallion.
by permission. Excerpted from Melamed on the Markets, by Leo
Melamed. John Wiley & Sons, 1993
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