The Roots of Anticapitalism; E. von Kuehnelt-Leddihn

KUEHNELT-LEDDIHN ing the largely irrational resent ment and desire to kill the goose that lays the golden eggs. In Europe there still survives a considerable conservative opposi tion against capitalism. The lead ers of conservative thought and action, more· often than not, came from the· nobility which believed in an agragian-patriarchal order. They thought workers. should be treated by manufacturers as noble men treated their· agricultural em ployees and household servants, providing them with total security for their old age, care in the case of illness, and so· forth. They also disliked the new business leaders who emerged from the middle classes: the grand bourgeois was their social competitor, the banker their disagreeable creditor, not their friend. The big cities with their smoking chimneys were viewed as calamities and·· destroy ers of the good old life. We know that Marx and Engels in the Communist Manifesto furi657 658 THE FREEMAN November ously attacked the aristocratic so cial movement as a potential threat to their own program. Actually, most of the leading minds of Christian anticapitalist thought (equally opposed to socialism) were aristocrats: VilleneuveBargemont, de Mun, Liechtenstein, Vogelsang, Ketteler.

Bias Against Capitalism Not of Worker Origin Armin Mohler, the brilliant Swiss-German neo-conservative, has recently explained that one of the weakest points of contempo rary conservative thought, still wrapped in the threads of its own obsolete agrarian romanticism, is its hostility against modern tech nology. How right he is! The ex ception might have been Italy with its tradition of urban nobility and of patricians who, even before the Reformation, engaged in trade and manufacture. Capitalism, in deed, is of North-Italian origin. It was a Franciscan, Fra Luigi di Pacioli, who invented double-entry bookkeeping. Calvinism gave a new impetus to capitalism but did not invent it. (Aristocratic entre preneurs in Italy? Count Marzotto with his highly diversified busi ness empire of textile plants, pa per mills, hotel· chains and fisher ies is a typical example. His labor relations are of a patriarchal na ture involving substantial fringe benefits which also characterize Japanese business practice.) The real animosity against free enterprise did not originate with the laborers. Bear in mind that in the early nineteenth century the working class was miserably paid, and this for two reasons: (1) the income from manufacturing was quite limited (true mass produc tion came later) and (2) the lion's share of the profits went into rein vestments while the typical manu fact~rers lived rather modestly. It is this ascetic policy of early Eu ropean capitalism which made possible the phenomenal rise of working class standards. Seeing that the manufacturers did not live a life of splendor (as did the big landowners) the workers at first viewed their lot with surpris ing equanimity. The Socialist im petus came from middle class in tellectuals, eccentric industrialists (like Robert Owen and Engels) 2nd impoverished noblemen with a feeling of resentment against the existing order.

As one can imagine, the arti ficially created ire then was turned first against the manufacturer who, after all, is nothing but some sort of broker between the worker and the public. He enables the worker to transform his work into goods. In this process he incurs various expenses, such as for tools, and a part of the costs of market1972 THE ROOTS OF /"ANTICAPITALISM" 659 ing. He hopes to make a profit from these transactions in order to render his efforts worth while. Curiously enough, his responsi bility toward the enterprise is of far greater scope than that of many workers. No wonder that the interest, once centered on acci dents in the factories, is shifting more and more to the manager diseases. The entrepreneur sacri fices not only his "nerves" but also his peace of mind. If he fails, he fails not himself alone; the bread of dozens, of hundreds, of thou sands of families hangs in the bal ance. The situation is not very different in a stock company.

There, the stockholders sometimes make profits in the form of divi dends - and sometimes they do not. The worker always expects to be paid. The bigger risks are thus atthe top, not at the bottom. Yet, how well the worker is paid depends on several factors, the first of which is the. readiness of consumers to pay for the finished goods a price high enough to war rant high wages. Here we come to the brokerage side of the capital ist. Secondly, there is the decision of the entrepreneur (sometimes the stockholders)· how much· of the gross. profits will be distributed (as dividends,. bonuses, and· the like) and how much should be re invested or laid aside. It is evident that· the enterprise, being competitive, has to "look ahead" in a far more concrete way than does the often improvident worker. The business usually must be planned years ahead. It not only has to adopt the best means of produc tion (which means the purchase of new expensive machinery), but also needs ,financial assets as re serves. Finally, the wages have to be in a sound relationship to the marketing possibilities; and also to the quality of the-work done, the sense of duty of the workers and employees. Virtue enters the picture. Even the net profits paid out are not necessarily a "loss" to the workers, because· a profitable enterprise attracts investors; what is good for the enterprise obvious ly is good for its workers.

There is a commonalty of in terestswhich can be gravely upset by either side.· Needless to say, the most· common way to upset the applecart is through excessive wage demands which, if yielded to, tend to eliminate . the .- profits and to make the merchandise unmar ketable. Politically organized work ers also may pressure govern ments into inflationary policies. Strikes cancel production for a given period and mean economic loss. The inability to sell due to excessi ve wages and prices or to protracted strikes can bankrupt the economy. This mutual relationship be660 THE FREEMAN November tween costs of production and pur chasing power is frequently over looked - especially in the so-called "developing nations." The insist ence on "a living wage," often by well-meaning Christian critics, in many cases cannot be met without pricing the products out of the market. Such critics forget that workers might prefer to work at a low wage rather than not to work at all.

Saving Begins at Home One thing is certain: nascent industrial economies have to start on an ascetic, a, Spartan level. This is true of all economies, free or . socialistic. .The apologists of the USSR can well use this argument in the defense of Soviet economies in their initial stage, but only up to a point: the introduction of so cialism in Russia effected immedi ately a tremendous decline of working-class, peasant-class, and middle-class living standards . which,compared with 1916 levels, have improved only in spots.Large sectors still are worse off than be fore the Revolution. A microscopic minority, however, lives very well indeed.! In the meantime, free economies have made such enor mous strides that the gap between Russia and the West is greater than in 1916. There are two rea1 See "Free Enterprise and the Rus sians," The Freeman, August, 1972. sons for this state of affairs.

First, the Eastern Bloc with the exception of Soviet-occupied Ger many, Latvia, and Estonia, com pletely lacks the famous "Protest ant Work Ethic." Secondly, free enterprise is basically more pro ductive than state capitalism be cause of: (a) the snowballing of millions of individual ambitions into a huge avalanche, (b) the ele ment of competition based on free consumer choice which improves quality and efficiency, (c) the strictly non-political management based on efficiency and responsi bility. So, whence comes the wave of hatred directed against free enter prise? Dissatisfied intellectuals designing utopias and decadent noblemen do not account entirely for the phenomenon. Though nas cent capitalism has not yet "de livered the goods" (children can only show promise, no more) ma ture capitalism has proved that it can provide. Empirically speaking, capitalism has justified itself in comparison with socialism (for the existence of which we have to be grateful in this one respect).

The assaults against free enter prise are launched with the help of theories and of sentiments, sometimes working hand in hand. Frequently these attacks are made indirectly, for instance, by criticiz ing technology. This critique 1972 THE ROOTS OF "ANTICAPITALISM" 661 might be genuine, but often serves as a detour. Much of the current antipollution campaign is subcon sciously directed at capitalism via technology. (This particular prob lem is less acute in the Socialist World only because it is less in dustrialized; it is nevertheless amusing to see the Left embrac ing all the idle dreams of the old conservative agrarian romanti cism.) However, if we examine closely the attack against free en terprise, we find the following elements: • (1) The charge that business cycles are the consequence of free dom rather than political inter vention, though proof to the con trary is well established.

• (2) The attack against the man-consuming, soul-killing, slave driving forms of modern produc tion. In this domain, however, the main culprit is the machine rather than the human factor. Technol ogy per se is strictly disciplina rian. In this respect, socialism or communism would not bring the slightest alleviation. On the con trary! Let us remember the ideal of the Stakhanovite, the absence in socialist countries of genuine labor unions, the limitless means the totalitarian state has for co ercion, regulations, and controls. We must bear in mind that the free world also has a competitive labor market. Man can choose the place and conditions of his work. • (3) The critique of "monopoly capitalIsm," shared in a milder way by the "Neo-Liberal" school, is opposed to all forms of bigness. Still, in the free world we find that most countries have legisla tion against monopolies in order to keep competition alive, to give the consumer a real choice. Any cri tic ism of monopolies by a so cialist is hypocritical, because so cialism means total monopoly, the state being the only entrepreneur.

Deeper Resentments Yet these attacks are frequently only rationalizations of much deep er resentments. At the very roots of anticapitalism we have the the ological problem of man's rebel lion against Original Sin or, to put it in secular terms, his vain protest against the human condi tion. By this we mean the curse to which we are subject, the neces sity to work by the sweat of our brow. The worker is in harness, but so is the manager and so is everybody else. For this uninspir ing, sometimes unpleasant state of affairs, the average man will stick the guilt on somebody; capitalism serves as the convenient scape goat. Of course, work could be greatly reduced if one were will ing to accept a much lower living 662 THE FREEMAN November standard - which few people want to do. Without the opportunities free enterprise provides for highly profitable work, the living stand ards would go down to early medi eval levels. Still, the resentment against this order is directed not so much against an abstraction such is human nature - as against persons. Thus, the culprit is taken to be the "Establishment" - of the "capitalists."

This gives us a hint as to the nature of the anticapitalism which has more and more surfaced since the French Revolution and the de cline of Christianity: envy. Ever since 1789, the secret of political success has been the mobilization of majorities against unpopular minorities endowed with certain "privileges" - particularly finan chil privileges. Thus, in the nine teenth century, the "capitalist" appeared to be the man who en joyed considerable wealth though he apparently. "did not work" and derived a vast income from the toil of the workers "who have to slave for him." Apart from the in controvertible fact that they most ly "slave for themselves," there is some truth to this. The Entrepreneurial Role Almost every worker will usu ally contribute in a minor way to the income of .the entrepreneur or of the stockholders. This is perfectly· natural because a broker must always be paid; and an en trepreneur, as we have said before, is actually a broker between the worker and the consumer by pro viding the former with the neces sary tools and guidance in pro duction. (The merchant is a sub broker between the manufacturer and the public.) It is also natural to pay for borrowed tools for the simple reason that their value is diminished by use. (Thus the trav eling salesman will have to pay for a rented car, the commercial photographer for a rented camera, and so forth.) Beyond; this, the entrepreneur (who is, as we have seen, a broker as well as a lender) takes the risk of failure and bank ruptcy. This situation also may be encountered in the USSR where anyone can get an "unearned in come" for money he puts into a savings bank or where he can buy a lottery ticket.. The purchase of such a ticket is based on an ex pectation (i.e., to make a profit) but also entails a risk (Le., not to win anything).

Risk characterizes all of human existence: to make an effort with out exactly foreseeing its success. Thus, a writer starting a novel or a painter putting the first lines on his canvas is not sure whether he can transform his vision into re ality. He might fail. Often he does. The farmer with his crop is in the 1972 THE ROOTS OF "ANTICAPITALISM" 663 same boat. But the typical worker entering the factory can be cer tain that he will be paid at week's end. It should be noted here that in Austria and Germany, for in stance, the industrial laborer works an average of 43 hours a week (the 40-hour week is in the offing), while the self-employed put in an average of 62.5 hours a week. In other words, the rule within our mature economy is this: the "higher up," the greater the work effort - and the higher, too, the work ethics; the slack em ployee cheats the employer but the slack employer only cheats him self.

Facts and Fiction The trouble, as Goetz Briefs once pointed out, is that the cur rent notions about the profits of the capitalists are totally out of touch with reality.2 The reason for these wrong ideas is partly mathe matical! Let us look at some sta tistics. Too many people think that a radical redistribution of profits would truly benefit "the little man." But what do the figures tell us? According to the E conom,ic Almanac, 1962, published by the National Industrial Conference Board, (page 115), of the national income in the United States, the 2 Das Gewerkschaftsproblem gestern und heute. (Frankfurt am Main: Knapp, 1955), p. 98. compensation of employees amounted to 71 per cent; the self employed earned 11.9 per cent, the farmers 3.1 per cent. Corporation profits before taxes were 9.7 per cent of the total national income (after taxes only 4.9 per cent) and dividends paid out were 3.4 per cent. Interest paid to creditors amounted to 4.7 per cent of the national income. Yet, were the re cipients of these dividends and in terest payments all "capitalists"?

How many workers, retired farm ers, widows, benevolent associa tions, and educational institutions were among them? Would this sum, evenly divided among all Americans, materially improve their lot? Of course not. In other parts of the world the situation is not much different. According to earlier statistics (1958), if aU German incomes were to be reduced to a maximum of 1000 Marks (then $250.00) a month and every citizen given an even share of the surplus, this share would have amounted to 4 cents a day. A similar calculation, expropriating all Austrian month ly incomes of 1000 dollars or more, would in 1960 have given each Austrian citizen an additional 1141: cents a day! But, let us return to corporate profits. The 13 largest Italian companies composed in 1965 a full-page advertisement which 664 THE FREEMAN November they tried to place in the leading dailies of the Peninsula. This statement told at a glance what the dividends had been in 1963, what they were over a lO-year pe riod, what salaries and wages were paid, how much industry con tributed to social security and old age pensions. The relationship be tween the dividends and labor cost was roughly 1 to 12. The com panies added that the estimated number of shareholders (obvious ly from many walks of life) was over half a million - double the number of the employees. Interest ingly and significantly enough, two of the dailies refused to carry the paid advertisement: one was the Communist Unita, the other the Papal Osservatore Romano whose excuse was that it was pub lished in Vatican City, which means outside of the Italian State.

Rooted in Envy To the advocate of equality, the fact that certain individuals live much better than others seems to be "unbearable". The internal rev enue policies which try to "soak the rich" often have their roots in man's envy. It seems useless to demonstrate that a redistribution of wealth would be of no advan tage to the many or that an op pressive tax policy directed against the well-to-do is self-defeating for a country's economy. One usually will get the reply that in a democ racy a fiscal policy which might be economically sound could be politically unacceptable - and vice versa. Pointing out that the spend ing of wealthy 'persons is good for the nation as a whole may bring the snap reaction that "nobody should have that much money." Yet, people who earn huge sums usually have taken extraordinary risks or are performing extraor dinary services. Some of them are inventors. Let us assume that somebody invents an effective drug against cancer and thereby earns a hundred million dollars. (Cer tainly, those who suffer from can cer would not begrudge him his wealth.) Unless he buries this sum in his garden, he would help by lending to others (through banks, for instance) and by pur chasing liberally from others. The only reason to obj ect to his wealth would be sheer envy. (I would add here that had it not been for the liberality of monarchs, popes, bishops, aristocrats, and patricians it would not be worthwhile for an American to pay a nickel to see Europe. The landscape is more grandiose in the New World.) Still, it is significant that one of the few outstanding Christian so ciologists in Europe, Father Os wald von Nell-Breuning, SJ, not noted for conservative leanings, has recently (Zur Deba,tte, Mu1972 THE ROOTS OF "ANTICAPITALIS"M" 665 nich, February 1972) taken a firm stand against the myths of the beneficient effects of the redistri bution of wealth. As one of the architects of the Encyclical Quad ragesimo Anno he emphasized that Pius XI was thoroughly cognizant with this incontrovertible fact but that, in the meantime, this knowl edge has been nearly lost and that therefore demagogical ideas have largely invaded Catholic sociolog ical and economic thinking. Espe cially in the domain of "Third World" economic problems, the learned Jesuit hinted, the hue and cry for "distributive justice" has done a great deal of mischief.

It has become fashionable to at tack free enterprise on moral grounds. There are people among us, many of them well-meaning, idealistic Christians, who freely admit that "capitalism delivers the goods," that it is far more ef ficient than socialism, but that it is ethically on a lower plane. It is denounced as egotistic and ma terialistic. Of course, life on earth is a vale of tears and no system, political, social or economic, can claim perfection. Yet, the means of production can only be owned privately, or by the State. State ownership of all means of produc tion certainly is not conducive to liberty. It is totalitarianism. It in volves state control of all media of expression. (In Nazi Germany private ownership existed de jure, but certainly not de facto.) The remark of Roepke is only too true, that in a free enterprise system the supreme sanction comes from the bailiff, but in a totalitarian tyranny from the hangman.

The Christian insistence on freedom - the monastic vows are voluntary sacrifices of a select few - derives from the Christian con cept that man must be free in or der to act morally. (A sleeping, a chained and clubbed, a drugged person can neither be sinful nor virtuous.) Yet, the free world which is practically synonymous with the world of free enterprise, alone provides a climate, a way of life compatible with the dignity of man who makes free decisions, en joys privileges, assumes responsi bilities, and develops his talents as he sees fit. He is truly the stew ard of his family. He can buy, sell, save, invest, gamble, plan the fu ture, build, retrench, acquire capi tal, make donations, take risks. In other words, he can be the master of his economic fate and act as a man instead of a sheep in a herd under a shepherd and his dogs. No doubt, free enterprise is a harsh system; it demands real men. But socialism, which appeals to envi ous people craving for security and afraid to decide for them selves, impairs human dignity and crushes man utterly. ~ The AmericanEconomy HANS F. SENNHOLZ I Depression-Proof MOST contemporary economists are fully convinced that a major de pression of the 1929-1941 variety cannot happen again. It is incon ceivable, they say, that the Ameri can economy should fall again into such an abyss of despair' when more than 13 million Americans were unemployed, when banks and businesses failed by scores and countless farmers lost their land, when nearly everyone suffered painful losses of wealth and in come. The tragedy of the Great Depression lives on as a nightmare that frightens everyone especially during periods of recession or stag nation. But our politicians and their learned advisors, the econo mists, assure us almost in unison that they will not let it happen again. They are solemnly pledging the awesome power of government to prevent another depression.