In a free enterprise system, businesses respond to meet the demands of the buying public. One good example of this is what happened this week in 1932: Henry Ford introduced the flathead V-8 engine in a car that was priced for the average consumer.
The perennial favorite that had made Ford a household name was the 4-cylinder Model A, and he seemed content to continue producing that as long as people would buy it. But other carmakers had begun to outsell Ford. William Durant of Chevrolet had introduced a V-6 engine that produced 20 more horsepower than Ford’s engines, and by 1931 consumers were buying more Chevys than Fords.
Ford had to do something to regain the market. His engineers suggested their own V-6, but Ford had tried that before and didn’t liked it. Besides, introducing a V-6 then would make Ford look like a mere imitator; he wanted to be the industry leader.
Ford decided that he would do the unexpected, what some people said was impossible. He would build an 8-cylinder engine, he would make it of one piece, and he would make it affordable for the average consumer. V-8 engines were not new; Frenchman Léon Levavasseur had built one in 1902. But the only V-8s were in luxury cars. The average consumer could only dream of owning one of the V-8s, V-12s, or even V-16s then on the market. But Ford would take a calculated risk—at the height of the Great Depression, no less—and mass produce a car with such an engine so that everyone could afford it.
Even as early as 1929, Ford had foreseen the problem and had tasked a team of Ford engineers and designers to build his one-piece flathead V-8. Their early versions had problems, including overheating and vast consumption of oil, but they persevered, resolved those problems, and produced a product that was introduced to the public on March 31, 1932. In addition to the larger (65 hp) engine, the new model included other innovations: rubber engine mounts to reduce vibration; a stouter frame; a gas tank in the rear, rather than the front, of the car; larger brakes; and synchronized second and third gears to reduce grinding.
The 1932 Ford V-8 immediately captured the imagination of the buying public—and the market. It catapulted Ford back to the top in car sales. The V-8 engine remained the Ford mainstay until 1953.
Although Ford was a risk-taker, as all entrepreneurs are, he hedged his bets by continuing to build cars with 4-cylinder engines even as he sought to improve them with the V-8. In the same year that he introduced the V-8, he also introduced the Model B. The following year, he introduced the Model C. Both of those cars were equipped with improved 4-cylinder engines. But neither car sold well. Why would someone buy a 4-cylinder, even if it was new, when a new V-8 was available?
This is how the free enterprise system works. The public demand drives the actions of the entrepreneurs. If they want to succeed and sell their products, they respond to market demands, giving the consumers what they want at a price they are willing to pay for it. And they do it without Big Government telling them how.