Friday, January 22, 2010

Capitalism versus Capitalism

Sorry for the slow blogging lately - sometimes life gets in the way of my blogging and a one-man blog is a grind when the pressure of deadlines mounts up.

I want to share a few thoughts about capitalism. Usually conservatives support capitalism and leftists (whether democratic socialist or communist) attack it. I have never been able to figure out which side I am supposed to be on and it has finally dawned on me that this is because capitalism is not an "it" but rather a "them." There is no one single entity that historically constitutes "capitalism." If you take a textbook definition of capitalism and then look for it in history, you can't find "pure capitalism" anywhere. No only that, you can't find any "pure capitalists" either. You can find defenders of free enterprise and you can find people who argue for moving in the direction of capitalism, as well as those arguing for moving in the direction of more collectivism (eg. liberalism) and yet both sides can disavow the logical extremes of pure monopoly capitalism and communism. So how do we bring clarity to this question?

I suggest that we think about what aspects of capitalism existed prior to modernity and what aspects of capitalism are an outgrowth of modernity. Both capitalism and socialism, as economic theories, are modern and yet both have pre-modern precursors. But I'm focusing on capitalism here.

Here is a list of concepts that are identified as part of capitalism, but were definitely not invented by the Enlightenment.

1. Private Property. The prohibition of stealing (which presupposes the legitimate existence of private property) is in the Ten Commandments. I think we have to agree that Moses is pre-Enlightenment. If I have to defend capitalism in order to defend private property, then I cannot be biblical unless I defend capitalism. Socialism, if it means violating private property, is unbiblical, anti-Jewish and anti-Christian.

Private property is a bulwark against tyranny, absolute power concentrated in the hands of the ruler(s) and oppression. The more people in a given society hold private property, especially their own homes and family businesses, the more freedom a society has.

2. Division of Powers: The idea that there should be multiple power centers in society that are not all reducible to one central power is a powerful Western idea that goes back, again, to the division of power in ancient Israel between king, prophet and priest. God allowed Israel to have kings, but he redefined the role of king to be, not as elsewhere in the ancient near east, an absolute monarch, but rather as the guardian and promoter of Torah (the first constitutional monarchs, if you will). Prophets were those who were authorized by God to condemn the kings for ignoring or acting contrary to Torah. Priests taught Torah.

The biggest problem in Marxist-Leninism is that it once again centralizes all power in the hands of the Party and its strongmen, which is a regression back to pre-Western and pre-Jewish times. Capitalism, insofar as it promotes many power centers in society instead of just one, is beneficial is warding off absolute power being vested in the hands of a small elite or person. Of course a large corporation is powerful, but so is government. The difference is that the corporation has competitors; the government does not. To abolish capitalism is to abolish the basis of freedom and openness in society and substitute a centralized, absolute, unaccountable power over the people.

Now some might think that since capitalism leads to monopoly this can happen if capitalism is left unchecked and that is a partly valid point. But in a capitalist system there should be a government that has the power of making the rules for the playing field on which business and individuals compete. The government should be the umpire and not a player; but in its role as umpire the government can and should work to prevent monopoly, price-fixing and exploitation of customers. This is what government should do. What government should not do is become one of the competitors and thus create a situation in which there is no umpire, which is to enter into a state of lawlessness - the very thing opponents of monopoly capitalism decry.

3. The Rule of Law. The idea of the rule of law has slowly built up in Western civilization as a result of its Jewish and Roman heritage and it can be expressed as follows. The "rule of law" is the opposite of rule by administrative law because the rule of law exists when government makes the rules prior to the game and then lets the game unfold according to those rules. The government does not predict or pre-determine the winners and losers of the game; that is the point of the game. If it becomes necessary to change the rules part way through (as it inevitably does) then the rules are changed for all player equally at the same time and the players know the rules before they make their decisions to invest, sign contracts, etc. The government plays the role of impartial arbitrator, not manipulator of the outcome.

Now, in socialism, there is no rule of law in this sense. There are no (or no unchangeable) fixed, publicized-ahead-of-time rules of the game. Bureaucrats use administrative law to make regulations, tweak conditions and monitor the game so that a pre-determined outcome occurs. The goal of socialism is equality of outcome; the goal of the rule of law is equality of opportunity. You can have only one of these kinds of equality; having both simultaneously is impossible.

It is crucial to understand that equality of opportunity, which is guaranteed by the rule of law, has to be destroyed by the socialist commitment to equality of outcome. Socialism takes away the fruit of your effort to give to someone else thus ensuring that even if you play the game fairly and work hard you might not enjoy the rewards that you deserve. So equality of opportunity is reduced to equality of opportunity to work for the government and not opportunity to work for yourself - a difference with a huge impact on incentive to work hard, willingness to take risks and entrepreneurial creativity.

4. Free Enterprise. This is simply an expansion of point #1 above. Free enterprise means the freedom of individuals and families to start and operate their own business, farms and other enterprises without undue interference from or control by government. Quite often, it seems that critics of capitalism can see nothing but big banks, corporations like Microsoft or Nike and other multinational corporations as they rail against the evils of capitalism. But if they were to remember that every family farm and every small, family-operated business was also part of this capitalist system perhaps they could be persuaded to moderate their rhetoric and become more focused in their criticism.

Of course, Marx was anything but focused as he strove for the highest possible level of generality in order to make his rhetoric sharp and his theory appear as "scientific" as possible. This is because he was so modern; he was a product of the Enlightenment and his goal was to reorganize human society according to reason - tradition be damned. His naive faith in the infinite malleability of human nature led him to make proposals that doomed millions to death, serfdom or oppression. He refused to work with human nature as given and the result was disaster. To call him a humanist is a misnomer; he was an anti-humanistic enemy of ordinary people, an intellectual with a conviction that he could ignore the constraints of human nature and the accumulated wisdom of humanity acquired painstakingly over centuries in the name of his all-powerful and all-wise ideas. In the end that is all Marxism is: ideas. Sure they were powerful ideas, but they were basically a gnostic imposition of intellectual constructs on the real world that ignited a conflagration on the earth.

5. The Family as Pre-Political. Marxist-Leninism makes a concerted attack on the family because the family constitutes a barrier to the total power of the state. But the family has been the cornerstone of Western civilization and has always been regarded as an entity that exists prior to the state both temporally and logically. The state has no authority over the family; it did not create the family: God did. Therefore, it cannot regulate the family or change the family or abolish the family. At most, it can intervene in particular, disfunctional families to help restore them to health. But this is a therapeutic intervention, not a sovereign creation or destruction of the family unit.

Insofar as modern consumer capitalism has the effect of fragmenting the family, it must be resisted and curbed. We see this in overly sexualized advertising, for example, and in the demand that women enter the labor force as cheap labor. The refusal to pay men a living wage is something that governments should not allow businesses to get away with. As long as the rules are clearly laid out and applicable to all, this requirement should do nothing to stifle competition or prevent economic growth, any more than any payroll tax applied across the board to all employers would. If unlimited economic growth must be limited by fairness to workers, so be it. But Marxist-Leninism is not either necessary or effective in protecting workers.

Capitalism is often criticized for being anti-Christian because it destroys families and to the extent that consumer capitalism promotes greed above responsibility, material things above personal relationships, things above persons, it must be resisted. But to earn a living is not greed and work is not materialism. So economics is a good servant but a poor master and it must be acknowledged that greed, materialism and individualism are problems of the human heart and transcend all economic systems including both capitalism and socialism.

But in the fight against capitalism, socialism is not on the side of the family. All its rhetoric in this matter is deceptive and cynical. Socialism seeks such a degree of control over individuals that the family inevitably becomes a rival to the state and a threat to state projects of social engineering. With proper laws in place, capitalism can be more friendly to families than socialism so to criticize capitalism in the name of defending the family is a non-starter.

6. Religious Freedom. The attack on capitalism by socialism is always an attack on religious freedom as well. The absolute state of socialism cannot tolerate a rival in the form of the Church, which makes competing claims on the loyalties of citizens. So wherever socialism has triumphed, religion has been privatized and marginalized. In this regard socialism and capitalism, as modern ideologies, both threaten religious freedom insofar as they can function as substitute, secular religions. The market must be the tool of men, not an idol to which human sacrifice is offered. But any society with centralized, concentrated power is going to be a worse environment for religious freedom that one with multiple centers of power and plenty of space for civil society that is not under state control and supervision.

If people are concerned to criticize capitalism, I have no desire to defend everything about historical nineteenth century "robber baron capitalism" or "monopoly capitalism" or multinational capitalism that attempts to escape the rule of law by transcending the nation state. Capitalism, in its 18th century form, became an intellectual construct that could no more be applied purely and absolutely to the real world than Marxism and as such it is uniquely modern and open to all the criticisms justly leveled against modernity.

But in criticizing capitalism the modernist system or ideology, we must not allow ourselves to end up destroying the accumulated wisdom of the West insofar as it is seen in private property, the division of powers, the rule of law and free enterprise, the family as basic to society and religious freedom. Insofar as socialism opposes these things it makes itself into the enemy of mankind and a friend of tyrants like Stalin and Mao. Significantly, these tyrants ruled over non-Western or quasi-Western empires. Marxism in the West has never yet completely overturned the weight of traditional wisdom that is the fruit of 3000 years of Western civilization and its predecessors in the Greek and Jews. Conservatives today have the responsibility to guard this heritage against the reversion to barbarism and exploitation that is promoted by Marxist-Leninism.

Since there is so much confusion over what exactly is being attacked when capitalism is attacked, I therefore suggest that the ideology of "anti-capitalism" is one of the most dangerous ideologies in the world today. Under its cover, private property, the division of powers, the rule of law, free enterprise, the family and religious freedom are being attacked. We see this in Spain, we see it in the UK, we see it in America. Wherever anti-capitalism gains an inch, it destroys a yard of traditional, Western liberty and justice.


Josh said...

Craig, until your last paragraph, you actually sounded moderate in this post!

I appreciate this line: "If people are concerned to criticize capitalism, I have no desire to defend everything about historical nineteenth century 'robber baron capitalism' or 'monopoly capitalism' or multinational capitalism that attempts to escape the rule of law by transcending the nation state." I hear a critique of (among other things) globalization or global consumer capitalism here, but not necessarily of capitalism broadly defined (as you say, capitalism--like democracy--takes many different forms). Brian Walsh, Sylvia Keesmaat, and Graham Ward have all offered strong critiques of global consumer capitalism / globalization.

Craig Carter said...

You are right to hear a critique of global consumer capitalism here. But I become uncomfortable being compared to the folks you mention because I think they buy too uncritically into the ideology of Anti-Capitalism.

The destruction of the "system" as a whole would bring the house down upon our head and I want an explicit recognition of that fact from those who recklessly throw around their anti-capitalist rhetoric.

Let me be clear, if socialism is the net outcome of the anti-capitalist critique then I feel that I must side with capitalism in that fight. As bad as it might be, socialism as an ideology is worse. Hence my last paragraph.

For years I resisted taking sides. Now I realize that is irresponsible.

Peter Dunn said...

Great post. The most serious way that socialism undermines the place of the family is through income taxes and inheritance/estate taxes. Governments reduce the power of the church by the removal of tax exemptions and reduction of tax credits for giving to the church, and through overtaxing its members so that there is little left over to give to the church. The result is that people begin to feel that only the government can take care of the needy. Traditionally, the safety net was family and church. With families taxed to the hilt it is very hard to provide for those in need. The government does a very bad job of caring for the weak and is wasteful and destructive in the process.

I only worry about the following line: "The refusal to pay men a living wage is something that governments should not allow businesses to get away with." Well, a living wage is also problematic. I could not have lived on what I made at Tyndale Seminary, and so I am sensitive about this issue. But the result of government intervention in minimum wage laws is higher unemployment. The current US unemployment problem coincides with a minimum wage increase, and the only thing that will stop the higher minimum wage from being a problem is the devaluation of the dollar. Businesses must be able to make a profit off the labor or they can't afford to hire anyone. Governments can't force businesses to pay living wage without making the problem worse. If governments lowered taxes on small businesses, they would be able to hire more people at a higher wage. So the solution probably isn't more government intervention but less.

Peter Dunn said...

After writing what I did yesterday about how the all-powerful government undermines the church through the removal of tax exemptions, I came across the following headline: