NON-PROFIT-MAKING ASSOCIATIONS AND FOUNDATIONS … – Articles

NON-PROFIT-MAKING ASSOCIATIONS AND FOUNDATIONS AS A FACTOR OF ECONOMIC PROGRESS: A THIRD CHANNEL BETWEEN MARKET ECONOMY AND PUBLIC SECTOR 

INTRODUCTION

Respecting other definitions, I prefer to refer to the economic task as that which tries to obtain a greater degree of humanization from the material conditions of life. In this definition the preponderance of the rules of human nature to acquire the greatest economic valuation of goods is outstanding. It leads us to highlight the features of rationality, originality and freedom as characteristic and vital in all economic activity. The capacity for reasoning, the capacity for being objective and the personal freedom of all human beings, leads us, in definitive, to ownership.

The distinction between the estates of some and others, together with the innate tendency to improvement of life, results in the convenience of voluntary exchange between different patrimonies. It ends in direct exchange or barter of goods, in the first stage, and in indirect exchange with the help of money, in a second step of the process of economic improvement.

Widespread voluntary exchange advances us in the unsuspected world of specialization and division of work to physical levels as well as in the fields of science and technology.

From the budgets of freedom and property a self-generating process of more exchange and specialization is produced that allows modern economies to reach some highly recognised benchmarks of human economic development.

In the social framework of the market the capacity of service to other peoples’ patrimonies and the corresponding solidarity of individuals establish, in the medium and long term, the widespread process of increase in wealth.

This process, succinctly outlined, indicates the importance that freedom and competition together with the classic institutions of the market have had and continue to have in that economic task of humanizing the material conditions of life (MISES, 1980; RÖPKE 1989; FRIEDMAN, 1980; HAYEK, 1976).

In spite of the basic helpfulness recognized by the events of market institutions, criticism started to appear from one or another side of the scientific map that undermined the basic roots of property and freedom necessary to tack together the whole framework of the market economy.

Among the shortcomings of the market an undeniable one forced its way through, on which I endeavour to base this article: the classic market economy, guided by the exclusive motive of personal profit, could work more or less efficiently for certain goods and services, but it was patent that it could not work in the production of goods of collective character.

An important argument to discredit the market economy has been the recognition of the impossibility of lending, through that system, services of collective character over those that payment individualized by the reception of such a good or service cannot be demanded.

This “failure” of the market economy gave rise to a really outstanding increment of state functions with the object of supplying these goods that the market economy was not able to. The difference between private and collective goods and services was on a par with managerial production and production through government expenditure.

“The great advantage of political or governmental organization is that it possesses the power to force all the members of the group to contribute to finance the costs of the collective good” (BUCHANAN and FLOWERS, 1980).

At the moment this is one of the most important reasons for the unstoppable growth of government expenditure in practically all nations.

The position was clear: if it is appropriate that something is produced in the benefit of society, and the market economy cannot produce it, the state apparatus should coercively separate resources from the private sector, to spend them on the production of these goods and services of collective character.

This argument is patent in the classic examples of national defence, legislative power, judiciary and even in general basic infrastructures, but in many other goods and services the alternative is not so necessary.

This has led to the quick and easy conclusion that it should be the State that carries out all the collective activities in the citizens’ benefit.

The thesis that I seek to outline in this essay is that it does not necessarily have to be this way. Not all the production of collective goods that cannot be in hands of the market economy has to be in the hands of the state bureaucratic apparatus.

With this third channel I refer to that of the associations, foundations of private and civil character, but non-profit-making, that socially channel the liberality of individuals towards works of collective character. (When speaking in this article about foundations I do not seek to limit myself to the mere strictly legal term, registered in a completely defined way, but to all non-profit-making associations. The term foundation, in France, for example, is much more widely accepted than in Spain.) 

 
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