Some businesses would rather avoid competition and prefer instead to rely on government help in the form of special incentives, regulations, or other anti-competitive policies. Fred Smith has spent his career fighting that approach to business. Smith is founder and chairman of the Competitive Enterprise Institute and directs CEI’s Center for Advancing Capitalism. He discussed his work with Mitch Kokai for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)

Kokai: You wrote a column … that has the headline, “We’re in a Cultural War between the Forces of Economic Dynamism and Stasis.” So this sounds like it’s a really big deal, these businesses that don’t want to rely on capitalism.

Smith: I think we recognize just like in biology: There’s kind of the beautiful old trees of the past, and there’s the saplings of the future, many of which are going to die, but tomorrow’s forest will be those saplings. Economies are mixtures of what goes on within what’s called the production possibility frontier, what we already know how to do, and there you can get some efficiencies, you can get some mergers, you can get some emulation — very important, obviously, for today, but the future depends on opening those paths to the future, recognizing the creative destruction that Joseph Schumpeter talked about, which blows holes in the production frontier, moves a whole economy dramatically out in ways nobody foresaw before.

We need that freedom, and too often the forces of the past, the forces of stasis, create barriers or don’t oppose barriers to those paths to the future. Wayne Crews on our staff has always said that you don’t need to teach the grass to grow; just move the rocks off the lawn. Entrepreneurial talent is everywhere in the world. And everywhere the entrepreneurial talent is kept down by the rocks of political bureaucracy.

Kokai: Many of us who are not entrepreneurs by nature would see the entrepreneurial spirit in action and say, “Wait a minute, this is just too hard to take.” Why is this something that we have to take and say, “Look, entrepreneurs, do what you do because this is beneficial”?

Smith: Creative destruction is the core of that question because every act of change does some damage to the existing world. The automobile put out of business the buggy makers. The Internet has threatened the whole journalism world we grew up in. … We see the wreckage in the past of the change, but we fail to understand the incredible future that is opened up by that way.

Over the last — well, mankind over the last 10,000 or 30,000 years almost always lived in a stagnant world. Some improvements, but the improvements were critically eaten away by population growth and so on. It’s only when we found ways to unleash the entrepreneurial spirit — the Industrial Revolution — that mankind began to live better and better and better and better.

And yet those very forces of change have made us complacent to some extent. Well, life isn’t so bad. Maybe we ought to slow down a little bit.

Well, individually, perfectly fine: Many of us slow down as we get older. We retire and so forth, and many of us take occupations that a wealthy society can afford. Not economically remunerative, but wonderful jobs we like to see. The public policy world is very much like that as we both know.

But the challenge is to keep those forces of stasis from trying to say, “Change is too disruptive. Let’s only have it when we decide it’s safe.” Because that misses the whole point. Entrepreneurs themselves aren’t sure what the hell they’re doing. They certainly don’t know what in the world they’re going to bring about.

Bill Gates, when he was inventing his products, actually thought computers only needed 32,000 pieces of memory. Who in the name of God would ever need more than that? Well, if Gates didn’t understand that, it’s obvious no one else did, too. Everyone thought they were going to have 100 computers in the whole United States. And Apple came along and realized that aesthetics could be merged with the technology, and now it would be … almost like a painting in a room. All of those changes which now we reckon, “Well, of course now, obviously anyone could see that.” Nobody saw it coming, including the entrepreneurs themselves.

To wait until the bureaucrats understand what’s going on means we’ll have a stagnant society forever. Holding innovation down to bureaucracy speed is a recipe for disaster, for no future at all. And whether we care about that for ourselves or not, we should care about it for the people of the world, many of whom, one-third of whom, are still locked in a-dollar-a-day poverty. Only innovation can bring about the wealth and knowledge to bring those people to our standard of living.

Kokai: Does it help when making this case to point to something like a smartphone and say, “Hey, 20, 25 years ago, no one would have even known that something like this could exist,” and if we block change and entrepreneurship now, the great things like the smartphone of the future won’t come about?

Smith: You can try it, but it’s amazing how difficult it is to get people to accept that. “Well, wait a minute. Everybody knows about smartphones.” Just like everybody knew about cars and everybody — at one time — knew about railroads. We take for granted what already exists. The future seems so uncertain, so risky, so dangerous. What are the smartphones that maybe 20, 30 years from now we’ll need?

Again, Wayne Crews points out, … one of the phrases we’ve gone through a lot is, “Most of the wealth the world would need in 30 years hasn’t even been envisioned yet.” It’s not only we don’t have it yet, we don’t even know what it is going to come from. We know possibly nanotechnology could be a wonderful breakthrough area, 3D printing could be incredibly amazing, totally specializing and decentralizing production for many, many products in our society. Cell biology with a possibility of decoding the reasons why cancers [exist].

All of those areas are incredibly interesting paths to the future, just beginning to be explored, just beginning to be trod upon. And every one of them is threatened by [Food and Drug Administration] regulation, by [Environmental Protection Agency] regulation, by local opposition, by the forces of stasis. We always have to recognize that change is disruptive, but stagnation is deadly.

Kokai: … What is the first step that we ought to take now to get back toward the path of supporting more dynamism and not letting stasis become too much of a force?

Smith: I think one thing we have to do is to recognize that narratives are important. We have to tell stories about the heroism. There’s been a tendency over the last century, really, or more, to tell negative stories about business. We talk about the wealth these people earn themselves. We don’t talk about the wealth they earned for societies.

We don’t talk about the equality that became possible when the cellphone made it possible for handicapped people to live, or the computer, much more meaningful lives. We don’t talk about the technologies that made it possible for Africa to bypass the whole landline world of telephone because they could never have afforded that. And now that world, that whole continent is beginning to be in contact with the greatest knowledge in the world. With Google they have more access to knowledge than a person studying at Harvard Library did 50 years ago.

All of that is the story about how innovation, how dynamism, doesn’t only make us richer and freer, it also makes the world a more stable, resilient place because we’re continuously able to move away from the shortages of today to the infinite resource of the mind tomorrow.

And most importantly, especially for people who are skeptical of markets, we have to recognize that nothing has done more to democratize the privileges that only the wealthy ones, only the elites once had, than capitalism in its dynamic form. Nothing has been fairer, freer, or more stabilizing than capitalism in its dynamic form, and we need to keep that freedom, that dynamism alive. Otherwise we’re … being immoral for the future.