Is capitalism legalized greed or an organic model of resource allocation?
Capitalism is “survival of the fittest”… capitalism is rooted in the idea of merit; everyone should be compensated according to his or her contribution (to the common good?)… capitalism is about the movement of capital; the more it moves, the richer everyone gets… capitalism is an upgraded feudalism, where the capitalist is an overseer of an abstract terrain made up of investments, not of arable lands… capitalism is democracy; the free spirit of an open society requires capitalism to support the liberties of individual citizens, and protect against government overreach… capitalism is virtue… or, capitalism is the absence of virtue…
These are just a few commonly held ideas, not all compatible with one another or with reality as we know it. Depending on point of view, we find ourselves favoring or opposing some aspect of something we call capitalism, with sometimes radical swings in the underlying reasoning of our political philosophy — we being Americans, generally. And across the world, the same questions come up time and again: one nation’s democratic marketplace, rising tide that lifts all boats, is seen from a poorer nation as an upgraded feudalism, a new age of empire.
What about pragmatism? Capitalism is the best way we know, the idea goes, to achieve the best results for the largest number of people, so it is a pragmatist ethic. Or… capitalism is an efficient, “organic” model of wealth distribution: the market distributes wealth “efficiently”, because individual players in a free market make all their own interested choices about where they should send their capital in order to extract the benefits, the goods and services, they seek or require.
This is perhaps the truest statement about the potential virtues of capitalism, or what are widely accepted to be virtues any capitalist system should aim to embody. But, in practice, a system that privileges capital over cause often does so by giving special privileges to those who hold the capital, not to those who seek it, or who are laboring intensely in the harshest conditions to earn a share of it. Capitalism is the enemy of communism: this idea is almost universally held, but actually, it refers to one of the biggest grey areas in the history of social philosophy.
As a matter of social ethics, communism cannot really emerge in its Marxist form, as a philosophical approach to economics, unless it emerges within a capitalist society. Marx specifically says so: communism is not suited to old-style agrarian societies, because only the industrial societies, where democracy and capitalism have taken root, have the kind of civil structures able to reward the actions of collective bargaining organizations.
Hence the violent tendencies of many Marxist factions around the world: even in the US, there was violence during the heyday of 19th-century unionizing, but in the US, a dynamic, open democracy allowed for collective bargaining to achieve nearly all of the major socialist innovations the world has seen (the weekend, the paid vacation, the 40-hour work-week, over-time pay, the end to child labor). Does this make the US a socialist or a Marxist country? No. It means that in the capitalist system, underpinned by the most experienced modern democratic system, the United States found efficient ways to achieve major social-policy goals of Marxist philosophy, without undermining or uprooting the capitalist system.
Several European nations have now followed that example and gone further (Sweden is a commonly used example), but they remain democratic, capitalist societies. Michael Moore has argued that capitalism is “legalized greed”, a view held by both critics and proponents, rooted in the idea that the most pragmatic approach to economics is to let vice have its purpose, and let self-interest power the mill. This idea is partly about “social Darwinism”, partly about a near cynical approach to human freedom, or if you’re Michael Moore, it’s about the reasons why capitalism needs to be curtailed by democratically determined regulations.
Moore argues that what we now call capitalism needs to be cast aside in exchange for a different kind of market system in which democratic processes allow the citizenry to guide the hand of economic influence. But whether one agrees that capitalism is legalized greed or an organic model of resource allocation, it remains true that it is only as virtuous as those who apply it to the circumstances of human experience.
Capitalism, the same as any -ism, is not a hard-and-fast, unchanging object or species; it is a conceptual realm whose qualities vary as applied. It is what we make of it and only as virtuous or democratic as we shape it to be. Because capitalism, as a tendency, as a philosophical urge, operates among and across the lived realities of a society, it is only as democratic as its interrelationship with those realities.
Capitalism that fosters and cooperates with, protects and serves democratic processes and principles can be democratic in both purpose and in practice, but capitalism that interferes with, obstructs, undermines and abuses democratic processes and principles tends to be undemocratic in both its purpose and its practice. It is a false choice that would have us choose between capitalism and morality, or between the service of profit and allegiance to the liberties and worth of individual human beings as a socio-economic priority.
It is a false choice that asks us to choose between naked laissez-faire capitalism, unfettered by any social conscience and the crushing political bind of a planned economy in which no one is allowed to seek personal gain. Capitalism is about privileging the flow of capital through society. It works better when those who do not have access to capital are able to come in contact with it, acquire some of it, and capitalize on their own merits, expanding their economic reach. That cycle must, however, be both persistent and pervasive. The freedom to seek personal gain and to innovate must share space with the need to ensure that human dignity is not eroded and free people subject to strategies of indenture.
The pastoral letter on a Catholic approach to economics, Economic Justice for All, makes clear that it is not only unnecessary, but unreasonable, to hand over the navigation of our economic policy to purely profit-driven considerations that ignore ethical accountability, erode community bonds and disrupt the human quality of human existence within our society. In the preface to the 2006 edition of the pastoral letter, the United States Conference of Catholic Bishops writes that:
… the measure of our economy is not only what it produces, but also how it touches human life, whether it protects or undermines the dignity of the human person, and how it promotes the common good.
In order to support and expand on that idea, they then offered five principles that must inspire the direction of major economic policy choices:
- The economy exists to serve the human person, not the other way around.
- Economic life should be shaped by moral principles and ethical norms.
- Economic choices should be measured by whether they enhance or threaten human life, human dignity and human rights.
- A fundamental concern must be support for the family and the well-being of children.
- The moral measure of any economy is how the weakest are faring.
How the weakest are faring… a great and successful market economy must find a way to protect against starvation, deprivation, homelessness, and lack of access to quality medical attention when needed. Indeed, an economy in which the human person is made subservient to the imperatives of an economic machinery of resource allocation is totalitarian and not democratic, though one can imagine plenty of examples where something called ‘capitalism’ has this effect.
To protect the human rights and the human dignity of the individual, a democratic society must establish meaningful checks on the unfettered application of raw power through accumulated wealth. A social conscience must be part of a democratic society’s application of capitalism as an economic paradigm, or the primal urges of the marketplace will allow for distortions of the economic landscape, the rise of monolithic power structures, the blocking of dynamic resource flows, and the erosion of democratic freedoms and quality of life.
For this very reason, the American system has been a brilliant example of a free, democratic society, in which capitalism has fought its fight, but major achievements in the history and advancement of social justice have come, through democratic processes and the free assembly—Constitutionally guaranteed—of free people, demanding that capital not sideline the citizen.
Capitalism is not democracy, though the two can be mutually nourishing. And capitalism is not unfettered economic aggression. It is not imperialism, though it can be used to effect a kind of imperial control of resources and social patterns. It is not an ethos, not a way of measuring whether we are good or bad, right or wrong. Capitalism is an idea, a way of looking at the priorities of a society, and the diffusion of power throughout a political system. It is a conceptual realm, in which pirates and villains compete with saints and public servants, where control competes with creativity, where concentration of wealth competes with discovery and the opening of new terrain.
The capitalist imperative is not to amass the most wealth imaginable, but to effect the most practical outcome for the most dynamic society possible. This will always be to the benefit of those with the most access to capital, even if their actual wealth is not as high as it might be in a less democratic setting.
In order to achieve that most dynamic society possible, however, virtually nothing is as vital as ensuring that the human individual, at all levels and across the entire range of that society, be as empowered, as capable, as free and as worldly a being as possible. Any one human individual that lacks the skills, the agility, the rights or the freedom, to choose a better, more dynamic and broadly beneficial path, is hampered in such a way by far more powerful forces so as to slow the entire process of adaptation and makes the whole system more sluggish, less dynamic, less able.
This is where capitalism and democracy have their most vibrant and nourishing interaction, in their potential to adequately shape the dynamics of markets—for resource distribution, pricing, quality of the human contribution and reach of human mobility—in such a way that the human individual becomes society’s greatest asset, both economically of high value and socio-politically of primary worth and reliability.
No amount of stripping away of individual rights or the terrains of individual liberty will make a capitalist system more vibrant. On the contrary, such measures help to foster the concentration of wealth, and those concentrations have a sclerotic effect on the economy broadly and tend to pressure democratic systems in such a way that they must over-react or give way.
The Poet Economist 