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March 3, 1963

The Cost of Foundations

The Old Liberal economists, who have for so long maintained that everybody's business is nobody's business, are right far more often than they are wrong. Their formulation of the problem of responsibility is, however, better superseded by a concept of "involvement" which is at once more exact and useful. When put generally, the new concept seems vague: but once at work, it sharpens abruptly and clearly. In general, only those who are psychologically involved in an operation are responsible for it. The issue then becomes one of determining precisely who are involved and of what social value their behavior.

Thus, it is not correct to say that a government enterprise or a foundation or a university or any other "non-profit" group is inefficient or incompetent or anything else because for lack of direct ownership, it is nobody's business. It is indeed the business of those who promote and run it. Usually there are at least as many involved persons responsible for such an agency as there are for any corporation. They are, however, deriving different satisfactions and putting out a different product than they would if conducting the same operations as a commercial corporation.

It is quite in error, effectively, to define away all involvement save market-profit involvement and to conclude that everybody's business is nobody's business anywhere else than in a business firm.

At the same time, it must be emphatically asserted that reducing, altering, or limiting the market-profit motive does nothing in itself to increase the "unselfish" or socially-oriented behavior of a group. Only social utility can make such a judgment. Hence, to state the matter simply, we are by logic and empiricism compelled to look at the social contribution of all organized groups in the same light.

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