Death to Capitalism! (Seriously)
In recent years, there has been an increasing undercurrent of discussion among conservative scholars and public voices about whether conservatism is theoretically hamstrung by the continued use of the term “capitalism” in mainstream political discussion. I wrote about this question six years ago, before it became something of a hot issue, and I’d like to reproduce my take on it below.
A few words of introduction to the article below, which was originally published at Canada Free Press on January 17th, 2012, during the heat of the U.S. presidential primaries, when the GOP establishment was busily working every angle to prop up their preferred (read “most progressive”) candidate, Mitt Romney, just as they would do again in 2016 in favor of Donald Trump.
At that time, the Tea Party was at its zenith of popularity and influence, and although it was clear the Washington establishment had its pieces in place to prevent a short-term constitutionalist revolution, there was still, at least among diehard optimists, a feeling that such a change was afoot, however nascent. A little of that optimism could still seep into my own thinking and writing at that time, as is evident occasionally in this article, where I note, in passing, the means whereby conservatives might achieve a gradual constitutionalist takeover of the Republican Party, a notion that now seems about as likely as establishing a constitutional republic on Pluto.
By way of context for the article’s jump-off point, I remind you of the mainstream media’s attempt to smear Mitt Romney as a bloodthirsty robber baron type, by way of dredging up half-truths about jobs lost due to business decisions made by his private equity company Bain Capital. Rick Santorum, Romney’s last grassroots-friendly rival in the primaries, classily stood up to defend his establishment competitor against the smear of “vulture capitalism” that was making the rounds at that time. Two other GOP hangers-on, however, Newt Gingrich and Rick Perry, actually leapt on the leftist bandwagon and tried to use Bain’s hard bottom-line decision-making against Romney, personally stoking the “vulture capitalist” smear.
Rather than defend Romney and his venture capitalism business model per se, I saw a more fundamental problem with the tone of the debate about the subject, particularly from the Republican attackers: People were all speaking as though it were self-evident that capitalism as such had to be justified on social welfare grounds, rather than on grounds of individual liberty. At the root of this problem, I realized, was the trap of terminology, and specifically the term “capitalism” itself — terminology defined and universalized by progressives, but now as much a part of the American conservative bloodstream as “self-made man” and “equality of opportunity.”
The issue was, and is, much more than semantics. Entailed in the lexicon of “capitalism” and “capitalists” is a fundamental misunderstanding or misrepresentation of the nature of freedom. It is the ultimate moral equivalency sham, reducing economic liberty to just one of the various morally equivalent “policy options” on the table for a civilized society. This is a theoretical trap from which any modern nation with hopes of regaining its freedom must find an escape.
Without further ado, then, I give you (with a few cosmetic style updates) my 2012 attempt to unravel this problem. Enjoy.
Death to Capitalism! (Seriously)
Recent events in the Republican primary campaign, ugly though they have been, have nonetheless performed a tremendous and necessary service for the American people, or at least for those still capable of caring about their country. They have shined a blazing white light on a fundamental theoretical divide between the Republican Party establishment and the conservative voters it pretends to represent. The divide pertains to whether free enterprise is a positive government project, as it clearly is for the establishment, or a pre-governmental default position, as it is for constitutionalists.
When Newt Gingrich and Rick Perry began attacking Mitt Romney’s tenure at Bain Capital, many criticized this open assault on capitalism by Republican presidential candidates. Some of us sought to focus the issue not on the details of Bain’s decisions, nor on a defense of Romney, but rather on the nature of the attacks themselves. As I have previously argued, there is something fundamentally wrong with attempts – especially by alleged conservatives – to subdivide free enterprise into its “legitimate” and “illegitimate” manifestations on the basis of whether or not the capitalists in question are motivated by public-spiritedness. Free market endeavor is not essentially about providing and protecting jobs in the community. It is about gaining profit through voluntary exchange.
The Gingrich and Perry types will claim that they, too, are advocates of free enterprise, and that they understand that the profit motive is indeed the best means to the general welfare. But this is precisely the problem: They see “capitalism” as a public policy decision, on a par with welfare statism, socialism, fascism, or communism. This is a fallacy. Capitalism is not, in truth, an “-ism” at all. It is not a project, an experiment, or any sort of means to a socially-sanctioned end.
When Gingrich said of Bain’s practices, on January 7th, 2012, “I think it’s a legitimate part of the debate to say ‘Okay, on balance were people better off, or were people worse off, for this particular style of investment?’” he gave the game away. Free enterprise, in his view, is just another “conservative solution,” “21st century agenda,” or what have you – like “green conservatism” and the individual mandate he once promoted – a government-designed and directed “framework” for bringing about desired social results. For such pseudo-conservatives – i.e., for most leading Republicans, whether in elected office, in the media, or in academia – the debate with the Left is over which “system” is the more effective job- and tax revenue-producer.
As is often the case in modern politics, the trouble here can be traced back to Karl Marx – although perhaps, in this instance, he is not actually to blame for it.
Marx attempted a complete, if hazy, historicist reinterpretation of productive activity, with the intention of changing his contemporaries’ understanding of existing economic conditions. Specifically, his immediate goal was to plaster over traditional economic theory – which took the existing conditions at face value, and sought to explain how they worked – with a new, positive theory of his own: dialectical materialism. In this theory, the evolving eras and their corresponding political arrangements bespoke not a complex interaction of the conscious decisions of individual men and the vagaries of chance and circumstance, but rather a fully comprehensible schema, which, like Freudianism after it, rejected the idea that there ever was a “face value,” arguing instead that the belief that present conditions were natural was itself a manifestation of the forces of history – specifically of the changing material conditions of men, where “men” means units of productive energy.
The ultimate goal of this theory was not to explain the past, but to explain the future; in particular, to explain how present conditions, which Marx called “capitalism,” would inevitably give way to a worker’s paradise, by means of violent revolution. Of course, Marx’s theory of dialectical inevitability could never quite be reconciled with his revolutionary activism. What was supposed to be an impersonal force of matter working through history was always undermined by Marx’s own obvious desire — that is, his personal, individual intention — to achieve specific communist ends. In addition, as is well known, his theory of economic relations in the capitalist “stage” of history was thoroughly discredited by its lack of predictive value – the facts utterly disproved the theory. The entire theory, in fact, was bunk, nothing more than a clever (and typical) social scientist’s effort to justify his desired political ends by creating a thin pretense of objective inevitability.
Which brings us back to the present. No one – certainly no Republican presidential candidate – believes in Marx’s theory of surplus value anymore. Nor does anyone on the Republican side find anything edible in the intellectual light lunch of dialectical materialism. There is, however, one remnant of Marx’s influence on politico-economic analysis that has wormed its way into the present, and continued to wreak havoc on political discussion, even in the one country that is most constitutionally unwelcoming to Marx. That remnant is Marx’s premise that “capitalism” is a transient societal construct, springing out of the material conditions of a particular historical moment, rather than a by-product of human nature and its intrinsic inclinations. If this Marxist premise is correct, then the so-called free market is in truth a positive (i.e., artificially-constructed) element of the “superstructure” – essentially, a government program.
It is this false, post-Marxist presupposition, deeply insinuated into today’s political discourse, that leads to absurdities like the Gingrich and Perry assaults on certain “styles” of investment, or on “vulture capitalism,” on the grounds that “good” capitalism is about creating jobs. It also leads to Romney’s equally absurd claim that he would defend himself against a similar attack from President Obama by making direct comparisons between his own actions at Bain and Obama’s “management” of GM and Chrysler. As Mark Levin has pointed out, government manipulations of private business operations – on the “too big to fail” model – have nothing whatsoever in common with profit-oriented business decisions made in the semi-free market. On the contrary, by making such a comparison, Romney reveals that he is granting the same post-Marxist presupposition as his critics.
This is not a small theoretical quibble or a mere semantics issue. The issue at stake is whether today’s Republican Party elite understand what freedom means. If they do not, then America is in mortal danger. (All signs suggest they do not.)
Separated from its Marxist heritage, “capitalism” is not an “-ism.” Nor is it an “economic system.” It is, in effect, the absence of a system, which is to say the absence of a government-imposed framework determining the nature of human productive activity and interaction.
Perhaps the best way to clarify this most important issue is to address two potent counterarguments to the claim I have just made.
1. Must not government create the conditions or climate in which the market can work, and does this not make the free market a system, just like other economic systems that involve a government-established framework?
In a word, no. Socialism, for example, cannot arise at all independently of government regulation. Even if a very small group of people chose to live in a socialistic manner, they would have to make some form of quasi-governmental arrangement among them as to how goods will be produced, labor divided, and shares allotted. Rules of behavior, rules which must be adhered to strictly in order not to violate the principle of economic equality, are necessary from the outset. The larger the community, the more complex the rules must be — and the more powerful and omnipresent the regulatory authority — in order to project the principle of economic equality throughout all the complex facets of human interaction.
A free market, by contrast, exists in principle any time two people trade something voluntarily without externally-imposed rules as to how their transaction ought to be undertaken, including rules about what is to be considered satisfactory “value” or “fair trade.” That is, it is precisely the absence of pre-established rules, or of any need for regulatory oversight (because there is no “objectively” predetermined outcome to be enforced), that defines the free market. Government does not, strictly speaking, “create” the conditions that constitute a free market, whereas it does, and must, create the conditions of any other economic system.
This is the fundamental difference between the free market and all other economic arrangements: The free market is born independently of government, and avails itself of government only as a means of protecting the unregulated voluntarism of trade. That is to say, the free market can exist quite perfectly in an anarchic condition, while only the threats against property and voluntary trade that are always presented by our imperfect human nature make overarching judicial and police authority a useful instrument or servant of freedom. The other arrangements, the true “systems,” require government, not merely as a protective authority superimposed on pre-existing conditions, but as a founding authority, and a constant guide — a rulebook.
2. If the free market is a “natural” non-system, why does it not arise everywhere as it did in the West, and most fully in the United States? Are not humans essentially the same everywhere?
Human nature is the same everywhere, undoubtedly. What is not the same everywhere is the political and moral climate that allowed free markets to flourish in some places more than others. Nevertheless, some semblance of a free market has indeed existed throughout all human societies that were not governed by totalitarian tyrants – which means most societies prior to the twentieth century. The extent to which these instances of free market interaction led to the kind of wealth-production and growth achieved in the modern West is inversely proportional to the level of irrational power-lust displayed by the governing authority, and also perhaps to the level of collectivist morality bred into the citizenry, thus dulling the profit-seeking (i.e., practical power- and security-seeking) impulses that individualism promotes. But that some measure of voluntary trade existed in almost all past communities which had figured out how to produce anything worth trading is obvious. In short, free markets of some sort really do arise everywhere; the question is whether they are allowed to remain free, and develop freely, as usually they are not.
One of the by-products of this post-Marxist view of “capitalism” as an artefact of a particular historical moment – a modern “invention” – is the distorting lens through which past economic ideas and conditions are now seen. A famous, relevant example that has always rankled me personally: Modern interpreters of Plato’s Republic, reading his prescription for communism among the ruling classes, assume that this communism was intended to be pervasive throughout all strata of Plato’s theoretical “just city.”
In fact, Plato never suggests this, and the Republic addresses the role of trade in his model city. The fact that Plato never explicitly prescribes a “free market system” for his “appetitive class” – the vast bulk of the citizenry – leads many today to assume he meant to impose his communism on everyone. (Karl Popper’s famous critique of Plato in The Open Society and Its Enemies falls into this trap.) On the contrary, Plato explicitly prescribes communism with regard to the ruling class precisely for the reason I have explained above, namely that a controlled economy, on any scale, requires founding regulations. He does not explicitly discuss or prescribe a market economy for the non-rulers, for the simple reason that he does not need to. As everyone understood before Marx, voluntary trade between the materially productive is the default assumption, and thus requires no formal arrangement.
Voluntary trade is not an artificial construct; it is human nature, tied to our instinct for self-preservation and self-development. Regulation of that natural activity – i.e., the restriction of freedom – is an artificial construct. The U.S. Constitution was thus, first and foremost, an attempt to preserve the primacy of human nature, and to limit the insinuation of artifice into human social life.
In sum, the free market is not a government project, a “noble experiment,” or a system to be tweaked or “saved” by state micromanagement and regulation. It is the condition of free, productive people interacting with one another voluntarily, independently of any government decision or dictate. It is not to be negotiated, compromised, or restricted without a clear understanding that under such circumstances, no net gain of freedom is possible.
Contrary to the view of the entire Republican Party, the free market is not preferable because it is more productive than other social arrangements. That is the utilitarianism of John Stuart Mill, who, not surprisingly, died a socialist. The free market is the practical manifestation of Locke’s theory of the natural right to property, a theory so honored by the American Founders that they adapted it broadly into the Declaration’s right to “the pursuit of happiness.” Thus, the free market is no more a government creation than are those natural rights themselves. It is simply freedom as manifested in people’s productive lives.
This point is essential in the fight against the continual deprivations of liberty that are about to choke the life out of the Western world. As long as the free market – i.e., individual practical liberty – is defined on Marxist terms, namely as “capitalism,” the intellectual ground of the argument has been conceded to the Left. For on that definition, the free market is merely one of the various alternative societal arrangements. If that is so, then its only defense is that it is more productive, and thus more conducive to the general welfare, than other equivalent societal arrangements. (The job-creation argument.)
This defense, while true as far as it goes, will always be susceptible to criticism by those who argue that superior productivity is not enough, if it does not lead to more equitable distribution, and therefore that some means of “spreading the wealth around” is a necessary concomitant of whatever benefits capitalism can bring. In other words, the “productivity” defense gives rise to the “inequality” counterargument, thus leading to the “reasonable limits” compromise, i.e., to progressive taxation, redistributionist programs, suffocating regulatory agencies, public-private “partnerships” — welfare state progressivism, socialism. Since what is compromised in this case is not merely productivity, but the very principle of liberty, those who would subsequently wish to stem the progressive tide have nothing more to stand on, intellectually, than a reiteration of the “productivity” defense. And so we go, round and round, spiralling into the authoritarian quicksand.
If, on the other hand, the small contingent of genuine American constitutionalists finally succeeded in wresting control of the GOP from the oh-so-clever establishmentarians who have forgotten it was freedom they were supposed to be defending, then they could, in time, shift the argument back to its proper ground. The battle to be waged is not government-facilitated productivity (capitalism) vs. government-mandated equality (socialism). The battle is individual freedom vs. government encroachments upon freedom – natural rights vs. political authority. If the debate were framed in this way – the correct and properly American way – the authoritarians in either party would never stand a chance. The great challenge, however, is to shift the battle onto this ground.
A first step toward meeting this challenge: Cut your way out of the tall grass of progressive-controlled language. Kill the out-dated Marxist perception of economic liberty as “capitalism.” Freedom is not a “politico-economic system,” comparable to the socialist system, the communist system, and so on; it is not a project of, or a gift from, the ruling class or the academic elite. It is your birthright. The Founders understood this. Today’s Republican Party establishment does not.
