The Morality of Capitalism; D Asmus and D. Billings

Never mind the historical fact that systems other than capitalism tram ple freedoms, spawn totalitarian po litical regimes, reduce opportunity, and make a mockery of economic ef ficiency. Despite the evidence that central planning and economic equality lead to government inter vention in private actions, and often ruthless dictatorship, the committed socialist of the left or right never theless believes that a small dose of socialism will one day glorify the hu man situation. Interestingly, an increasing num ber of America's intellectual elite, known for their belief in "the mixed economy," "the middle way" or "eco nomic democracy," are emerging from the socialist closet. They either admit to being socialists or, at the very least, are expressing prefer ences for an institutional mix other than free markets. Motives aside, 541 542 THE FREEMAN September their contention is that capitalism is inherently unfair. Without a moral basis, say the critics, the private property, free-market system could never be compassionate.

In the past, defenders of competi tive capitalism have been just as guilty as anyone for perpetuating this wrong-headed view. They have literally spent thousands of hours extolling the virtues of the efficiency of capitalism, free markets, and of the socially useful information gen erated by prices, wages, interest rates, profits, and losses. Pontificat ing on the efficiency aspects of cap italism, its supporters have failed to devote enough time and attention to the.morality ofthe system. If the case for the morality of capitalism is not made, either through comparisons to its real world alternatives or on the basis of principle, then the probabil ity of the great American experi ment surviving is slim indeed. The Moral Case for Capitalism In fact, it should be clear that the most important part of the case for economic freedom is not its vaunted economic efficiency nor its dramatic success in promoting economic wealth and well-being, but rather that capitalism is consistent with certain fundamental moral princi ples of life itself. These are princi ples that respect the dignity and in dividuality of each person and that don't try to manipulate people as objects but recognize a person's rights and values. They seek to use per suasion and voluntary exchange rather than coercion andforce. Com petitive capitalism thrives on the non-aggression principle of human freedom.

The requirement that transactions in the private property market order must be voluntary guarantees that the moral and physical autonomy of persons is protected from violent at tack by others. Force is inadmissa ble in human relationships under a regime of capitalism. Personal free dom, and therefore economic and po litical freedom, is not "ethically in different," but a necessary condition of morality. Violence or the use of force against other individuals, which necessarily denies the most fundamental character of human freedom, the safety of persons and their property, is inconsistent with a moral order. The moral life requires that individuals act and make choices free of external intimidation and coercion. Friedrich Hayek re minds us of certain fundamental conditions of the moral life: "It is only where the individual has choice, and its inherent responsibility, that he has occasion to affirm existing values, to contribute to their further growth, and to earn moral merit."

Moral choice presumes the neces sary freedom to exercise our responsibilities. The free market system, in which 1985 THE MORALITY OF CAPITALISM 543 only voluntary and mutually bene ficial exchange is permitted, is con sistent with freedom-of-choice, and, therefore, offers the greatest poten tiality for a moral order in which the integrity of the individual consci ence is respected. Hayek, in a warn ing to us about the undesirable con sequences of a planned, socialist order, wrote in his book The Road to Serfdom that only: ... where we ourselves are responsible for our own interest ... has our decision moral value. Freedom to order our own conduct in the sphere where material cir cumstances force a choice upon us, and responsibility for the arrangement of our own life according to our own conscience, is the air in which alone moral sense grows and in which moral values are daily recreated in the free decision of the individual. Responsibility to bear the consequences of one's own decisions are the very essence of any morals which de serve the name.

It is frequently asserted that the ma terialistic character of capitalism is at the very least amoral. However, it is surely an error to blame a social system for being too concerned with material things simply because the individuals in that system remain free to decide for themselves those goals which are to be pursued. The practice of blaming capitalism for being materialistic is to miss. the point. Most would agree that capi talism does have a record of organ izing resources efficiently. It is also Crossroadsis an important and comprehensive presentation of the rise, decline, and restora tion of freedom and the market economy. The authors do an outstanding job of introducing readers to the history and na ture of the American free mar ket experiment. Copies can be ordered from the American Studies Institute, 3420 East Shea, Suite 266A, Phoenix, Ar izona 85028: Paper $14.25, Cloth $26.75. Please add $1.50 for shipping and handling.

important to note that very few peo ple go hungry under this system. In comparison, socialism fails on both counts. Yet, material abundance is admittedly but one of the positive at tributes of living. In most societies of which we are familiar, it is only a minority who are not concerned with economic growth and material gain. As much or even more than market economies, socialist nations of both the left and right place most of their emphasis on economic growth, in dustrial production, and personal sacrifice in the pursuit of material ends. Unfortunately, the people in planned societies who are not ma terially oriented, those, for example, who might want to pursue the life of a recluse, take a vow of poverty, or seek some spiritual end, are perse544 THE FREEMAN September cuted. Freedom, it seems, is more important to the minority of those who do not have material objectives than it is to those who do. Only in a decentralized, pluralistic, private property order can inalienable rights of these persons who are different be secure. But whatever the goals of in dividuals, whether virtuous, mater ialistic, or whatever, the market still seems to be the most humane way mankind has found for dealing with the economic problems of scarcity and the efficient allocation of resources.

The Humane Effects of Freedom One of the great advantages of a social system characterized by social cooperation through mutually ben eficial exchange is the opportunity and scope for sympathy, beneficence, and human friendships. Indeed, the libertarian scholar Murray Roth bard reminds us that " ... it is far more likely that feelings of friend ship and communion are the effects of a regime of contractual social co operation rather than the cause." Each individual has a uniqueness. In that sense, it is difficult for any one else to say what will or will not lead to another's fulfillment. Naturally, when we disagree with a person's actions, there exists the tendency to save that person from himself. Fortunately, capitalism tends to favor those who respect the sanctity of the other person's autonomy because of the respect for and enforcement of private property rights. The deterioration in many so cially useful conventions, and the decay of morality which people have felt in recent years, are partially the result of our shift in thinking from personal to social responsibility. As persons are told their behavior and circumstances are not their fault, be havior is modified, society is in dicted, and government is viewed as the only institution capable of solv ing the problem.

The work ethic, encouraged by the institution of private property, rep resents an important source of moral responsibility as well as a continu ous reminder that our actions al ways entail costs. The essential in gredients of a free market order define a set of social institutions which encourage mutual respect for each and every individual. In con trast with all other economic sys tems, competitive capitalism oper ates on a set of rules which encour ages mutual respect for persons with whom we interact. The processes by which we satisfy material wants through social co operation do not exhaust the goals which individuals might hope to achieve. The search for personal happiness and inner peace, for ex ample, must be found within the in dividual alone. Nevertheless, man kind's social relationships are generally far more peaceful under a 1985 THE MORALITY OF CAPITALISM 545 system of private property and free trade. The .period between the Na poleonic Wars and World War I, the heyday of competitive capitalism, represented a century relatively free of the brutality of war. Furthermore, competitive capitalism was the first social system in human history to di rect an individual's desire to become rich by peacefully supplying greater quantities of goods and services for other human beings.

The market process has been es pecially productive in providing greater abundance for the working class and the poor. Unfortunately, the alternative to serving other peo ple's wants through voluntary ex change is to try to control their lives through the use of force. Wherever socialism has prevailed, it has in. variably meant lower living stan dards for most people, and the sub jugation of the many by the privileged few. A socialist country of the left or right, with few if any ex ceptions, means a totalitarian polit ical regime in which other civil and human freedoms disappear and a form of slavery ensues. Capitalismand Religion The case for morality and justice of the system of capitalism rests on the intimate and complementary connection between private property and voluntary arrangements, and the sovereignty of the individual over his own life. We tend to take the concept of individuality for granted, but in reality, this concern and in terest for the individual came into its own only with the rise of capi talism. In fact, the market system, far from dehumanizing man, finally allowed him to assume his full indi viduality. The individual conscience and its potential for discerning right and wrong, which was recognized during the early Christian period, came to full fruition under the sys tem of competitive capitalism.

The "dawn of conscience," that point in history in which individuals were first argued to be morally free and, therefore, responsible for their actions, first appeared in Egypt and was later borrowed and developed by the Jews. Later Jesus and the Apos tle Paul outlined a view which rec ognized the unique personality of each human being. Essentially, this account represented an individual istic view of mankind which main tained that the individual's soul is the most important thing about him. Christianity provided an environ ment in which individuals, in order to gain salvation, made choices from a position of free will. Not only did the church discover that individual souls were worth saving, but Christianity also im planted the concept of the "rule of law." This attention to the notion of legality also proved to be important in the development of the idea of freehold property and the land deed 546 THE FREEMAN September in the Western world. Admittedly, these contributions were largely to protect the church and its institu tions and property from the power of the secular State. But over time, the principles of the "rule of law," and the private ownership of property were progressively expanded to the relationships between individuals.

There is a distinct and important connection between the Judeo Christian morality and a free-mar ket economy. This relationship rests on the established view of the cen tral importance of the individual in the analysis of social relationships. The system of free and open mar kets is most conducive to the perfec tion, or at least improvement, of man's free will, which tends to gen erate and make moral behavior pos sible. One can learn correct behavior only if one is allowed to make mis takes and, hopefully, to learn from them. After all, one possible conse quence of making a mistake is wis dom. Unfortunately, the larger the influence of government in peoples' lives, the less opportunity there ex ists for an unhindered and free ex ercise of a person's moral faculties. Society itself cannot be moral or immoral; only individuals are moral agents. Following the argument de veloped by Arthur Shenfield, it would appear that in an economic system, ". . . if its essential charac teristics on balance positively nur ture or reinforce moral or immoral individual behavior, [then] ... it is a moral or immoral system in its ef fects." Competitive capitalism, un der the rule of law, positively nur tures moral behavior and, therefore, can be moral in its effects. Where justly acquired property rights are defended, and where contracts are enforced, and where the rule of law applies, then "the voluntary nature of capitalist transactions propels us into respect for others."

Morality and Personal Taste It is, of course, impossible to argue that a system of competitive capi talism will always produce values and behavior of which we would in dividually approve. However, it is important that we tolerate the "un defendable," undesirable or annoy ing behavior of others as long as it is peaceful. An individual should not violate what the nineteenth-century sociologist Herbert Spencer called his "law of equal freedom," which states that " ... every man has free dom to do all that he wills, provided he infringes not the equal freedom of any other man." Consequently, peaceful, nonviolent human action is not a crime. Those who really be lieve in freedom must oppose coer cive acts which would deny the pos sibility of a moral life by preventing that freedom of choice which moral ity requires. Given the uniqueness of individuals and the varied goals they pursue, we must allow actions 1985 THE MORALITY OF CAPITALISM 547 which, while permissable in a free society, are offensive to personal tastes.

Lysander Spooner, a great and pas sionate defender of individual lib erty during the nineteenth century, recognized an important distinction: the criminal and/or violent invasion of one's person or property is differ ent in kind from behavior, " ... whilst perhaps immoral in some broader sense, must be allowed to flourish, and even be given the full protection of the law." Morality is impossible unless one has the free·· dom to choose between alternative courses of action without external coercion. It was the great humani tarian, Albert Schweitzer, who said that civilization can only revive when there shall come into being a number of individuals who would develop a new tone of mind, inde pendent of and in opposition to, the prevalent one among the crowd-a point of view which gradually wins influence over the collective mind and in that manner determines its character. Only a movement grounded in a revised ethical perspective can res cue us from this relentless slide into collectivism. Necessarily, the re vised moral point of view will come into existence only by individual choice. Once again, we encounter the proposition that it is the free market economic system of private property and voluntary exchange which maximizes the potential for leading a moral life.

The effects and results of the com petitive process under capitalism are generally consistent with a moral or der, but even when they are not it is still terribly important to oppose coercive restrictions of human be havior unless they violate the law of equal freedom. Diverse lifestyles and unique opinions represent one of the main arguments for human liberty. It is under a system of private prop erty and free markets where some times annoying or even obnoxious activities are protected by the laws of a free society. Morality and Its Alternatives In summary, the system of insti tutional arrangements called "cap italism," a disparaging reference for many people, is unquestionably more consistent with morality and justice in our social arrangements than any alternative set of social in stitutions presently conceivable to us. The obviously immoral character of the socialist dictatorships in Po land, Cuba, East Germany, the Peo ple's Republic of China, the Soviet Union, the Ayatollah's Iran, anq. the right-wing fascist dictatorships in countries like Argentina and Chile, where the most elementary human freedoms are suppressed, and where millions of human beings have been murdered in the name of a new so cial order, documents the case for the 548 THE FREEMAN September free, open, and decentralized market system.

Poverty 'and brutality are repul sive. From any point of view, starv irlg children must be viewed with anguish. We ask then, under what economic systems are the greatest number of people leading lives with sufficient food, self-chosen occupa tions, and the greatest degree of in ward and outward independence? In which countries do individuals have the opportunity to be free, really free? Have the socialist countries de livered this choice, mobility, and in dependence? Or, in fact, is it best nurtured in an open market, private property, and limited government social order? Within the Limits of Right These questions have already been answered. The Soviet Union talks about "freedom" and "democracy," but they don't seem to have much of an immigration problem. Commu nist East Germany, on the other hand, must build massive steel and concrete walls and guard them con tinuously to prevent an exodus of their people. Even in the so-called "social democracies," the construc tion of peaceful and egalitarian sys tems is failing. In recent years the declining French economy, under a more intense Mitterrand brand of so cialism, ~as been on international display. The myth of the Swedish utopia has been fully revealed for what it really is in The New Totali tarians by Roland Huntford.

The great French economist and social critic, Frederic Bastiat, writ ing in the nineteenth century, cap tured what would be the desirable characteristics of a truly just and moral order. He asked an important question: ... which countries contain the most peaceful, the most moral, and the hap piest people? Those people are found in the countries where the law least inter feres with private affairs; where the gov ernment is least felt; where the individ ual has the greatest scope, and free opinion the greatest influence; where the administrative powers are fewest and simplest; where taxes are lightest and most nearly equal; ... where individuals and groups most actively assume their responsibilities, and, consequently, where morals of ... human beings are con stantly improving; where trade, assem blies, and associations are the least re stricted; ... where mankind most nearly follows its own natural inclinations; ...

in short, the happiest, most moral, and most peaceful people are those who most nearly follow this principle: Although mankind is not perfect, still, all hope rests upon the free and voluntary actions of persons within the limits of right; law or force is to be used for nothing except the administration of universal justice. Understanding that the case we have made for the moral basis of cap italism requires further refinement, we defer to the wisdom of St. Au gustine. He argued that material well-being does not necessarily bring 1985 THE MORALITY OF CAPITALISM 549 better choices, a finer morality, or even more happiness. Referring to earth and the human predicament, he writes: "The things which the earthly city desires cannot justly be said to be evil, for it is itself, in its own kind, better than all other hu man goods. For it desires earthly peace for the sake of enjoying earthly goods. It is all right for men to seek these things, for they are good things, and without doubt, the gifts of God. But there is something better and that is the heavenly city which is secured by eternal victory and peace never ending." That kind of morality is between each person and his God. Salvation is quite another matter.

The Exciting Study of Freedom Despite the arguments of Bastiat, Hayek, Shenfield, and others, a very interesting and important question remains to be asked. Why has a sys tem of social organization which has produced historically unprecedented increases in living standards in those countries where the principles were practiced, and which simultane ously did so much to reduce man's inhumanity to man during its ascen dancy, come to have such a low standing in the minds of so many millions of people? Hayek is surely right when he insists that we must once again make the study of free dom an exciting intellectual issue. Not just for economic, philosophical, or historical reasons, but for the bil lions of people who, whether they know it or not, must faintly perceive that ideas do have consequences, and that their lives are bound to be af fected dramatically by the scrib blings of philosophers. "Liberty,"

said Alexis de Tocqueville, "cannot be established without morality, nor morality without faith." If America is to survive, its indis putably modern elements must be conjoined with what Russell Kirk calls the "permanent things,"- and George Nash calls " ... the spiritual things and the institutions that sus tain them." ~ BIBLIOGRAPHY Augustine, Saint. The City of God. New York: Random House, Inc. 1950. Bastiat, Frederic. The Law. Irvington: The Foundation for Economic Education, Inc., 1950. Hayek, Friedrich. The Road to Serfdom. Chi cago: University of Chicago Press, 1944. Kirk, Russell. The Conservative Mind. Chi cago: Henry Regnery, Co., 1953. Nash, George. The Conservative Intellectual Movement in America. New York: Basic Books, Inc., 1976. Rothbard, Murray. Man, Economy and State. Los Angeles: Nash Publishing, 1962. Shenfield, Arthur. "Capitalism Under the Tests of Ethics," Imprimus. December, 1981.

Spencer, Herbert. Social Statics. New York: Robert Schalkenbach Foundation, 1970. Spooner, Lysander. Natural Law, Weston, Mass.: M & S Press, 1971. Tocqueville, Alexis de. Democracy in America. New York: Alfred A. Knopf, 1946.