The Cultural Desirability of Capitalism
Greed – Is this all there is with capitalism?
(c) Can Stock Photo
This essay has been inspired by notions concerning capitalism I have heard or read from a number of people, who had varying degrees of dislike for it. In a way, I will address the same themes I discussed in the posts Morality and Capitalism and The Morality of Wealth. Are we as a culture better off for the choice of capitalism as the primary method for organizing our economy? Should we move the mixture ratio in our mixed economy more toward Socialism? Or more toward Capitalism?
Setting Up the Discussion
I will tell you immediately my answers to these questions. My very strong belief is that adhering to free-markets, which when paired with the non-state ownership of the means for producing and distributing wealth is called Capitalism, is the very best way to give everyone the means to live a satisfying life. Given the recent romance of the Democratic Party and Millennials with socialism, the odds are excellent you disagree with me to some degree. I will do my best to persuade you.
Before we start thinking about the issues in earnest, I need to make some remarks about nomenclature. The notions of Capitalism and Socialism are platonic ideals that are polar opposites. Every real economy in existence – with no exceptions whatsoever – are mixtures of Capitalism and Socialism. Even the Soviet Union had some non-state producers of wealth, particularly farmers producing fruits, vegetables, and livestock. On the opposite side of the economic spectrum, countries like the United States have some government production of wealth. such as military services safeguarding the country. To avoid confusion I will use the words ‘Capitalism’ and ‘Socialism’ with the first letters capitalized as appropriate for names when I am referring to the platonic ideals; I will use the words ‘capitalism’ and ‘socialism’ with initial lower case letters when I am speaking about realistic “mixed” economies with the mixing-ratio primarily toward Capitalism or Socialism respectively.
The thought I needed to write a post like this was inspired by an exchange of comments on the the post Economic System States, Feedback Loops, and Adam Smith’s Invisible Hand between a reader Chease and myself. At one point Chease wrote
If we wanted to facilitate cultural evolution on the other hand, in other words engineer society so that people behaved more rationally (without impinging on their self-determination), we could modify capitalism so that it is less darwinistic. Why do this? Because the world in which we live is less darwinistic than the one we evolved in (and that our economic system evolved in). We live longer than any animal under any significant selection pressures possibly could, and there is very little in the way of natural selection at all. To have our society be able to confront reality, it needs to ascend from a system that is built on a culture of cutthroat competition, because this system entails a lie: that we live in a world in which we need to be as materialistic as possible or we will fail.
To this, I answered in part:
Is it not rather hubristic for elites in a society to decide they have both the knowledge and wisdom to decide for everyone how the culture should evolve? Once you have made that decision, you are on the path to autocratic government. This is one criticism I have leveled against progressives in a number of posts. Currently, all over the world we are witnessing the mismanagement of economies by governments trying to exert central control. I have very little trust in apparatchiks of the central government who want to dictate how I live and work. Whatever its faults, free-market capitalism provides individuals much more economic freedom than socialist models. It is also the most successful form of economic organization in balancing the preferences of individual consumers with the production of suppliers,
Chease’s answer to this was as follows:
A key clause was “without impinging on their self-determination”. Assuming that it is possible – because otherwise the possibility goes unexamined – it is the opposite of directive. My view is that we could remove a directive feature of society, not add one. In other words, I am not saying how society should evolve, I am merely suggesting certain changes could enable it to evolve, by removing aspects of economic life that no longer reflect reality.
To help you understand where I am coming from, let me give you a breakdown of my worldview: http://lackingconviction.blogs…
My answer in part:
That phrase “without impinging on their self-determination” is truly problematic, for from what I can see of what progressives would like to do, they appear to desire very much to impinge on everyone’s self-determination. If you want to guide the evolution of society without coercion, you can only do so by suggestion, and logical argument to persuade. … In the blog post you cited with the breakdown of your world view, I was most struck by your belief that materialism is the basis of capitalism. Also, you used the phrase “cutthroat competition” as a necessary description of capitalist activity …
Chease then disabused me of some misconceptions I had assumed.
A quick response: I am not saying materialism is the basis of capitalism, nor am I saying that capitalism is inherently cutthroat or inhumane. I am saying there is a cultural trait of materialism which is in a feedback loop with capitalism, but will not indefinitely serve us well.
This conversation really got me thinking about how people might think capitalism could be changed to encourage the evolution of our culture.
The Issues Concerning Capitalism
What ultimately concerns Chease then is materialism, and its injection into a positive feedback loop with a capitalist economy. The feedback would certainly be positive since the gratification of material desires could be expected to stoke more material desires in a materialistically oriented soul. The new desires would then create more economic demand. Is this necessarily a bad thing? I suspect the answer to that question would depend on what was being demanded. Economic demands that are either self-destructive or destructive to society in some fashion are more often than not regulated by law, with the justification for those regulations being noneconomic. Demands for recreational drugs, and demands that would create one of Garrett Hardin’s “tragedies of the Commons” come quickly to mind.
Other possible problems caused by materialism’s interactions are reasons why government must generate laws to insure everyone who makes a contract to do something must be legally required to fulfill it, and why there must be laws prohibiting theft, fraud, and monopoly. Our governments have never been shy about passing yet another law to regulate our economic activity to ameliorate the effects of people’s greed for getting more goodies from the economy. This is why I myself am not particularly worried about materialism’s effects
Indeed, much more of a problem is the government over-regulating in worrying about the effects of materialism. When governments put companies in regulatory straitjackets, they can harm the economy far more than help the society. I suspect much of the enthusiasm fueling such over-regulation comes from cultural attitudes driven into us by religions over the centuries. One can find these attitudes in all religions I know, as I mentioned in Meanings of the Word Capitalism. Because of the natural motivation of all individuals to look after their own material well-being, every society has needed cultural restraints to control materialistic impulses from harming society. Religions provided this with teachings on self-sacrifice and the control of materialistic appetites. It is ironic that progressives, who often pride themselves on how secular they are, should be so in the sway of past religious doctrine!
One perfect recent example of such over-regulation is the Dodd-Frank Act, enacted as progressives’ response to the 2007-2008 financial crisis and the subsequent Great Recession. The immediate response of progressives to the crisis was that it was created by greedy bankers and investors who seduced poor people seeking houses into sub-prime mortgages. Capitalists, they thought, were the cause of the housing bubble that burst to create the Great Recession, and this market failure had to be remedied by even tighter regulation of the bankers and investors! For some reason the progressives could not see the immensely well documented facts that the sub-prime mortgages had been required by government, and those bankers who resisted issuing these risky instruments were bullied by government power into submission. Dodd-Frank is therefore based on a progressive lie. As a result the regulations of the Dodd-Frank Act have been wreaking great damage on banking and other investment organizations. Community banks in particular have been made into an endangered species.
Much more can written about these themes, but the hour grows late and the post is growing long, so I will continue this discussion in the next post. In it I will speculate on ways in which the institutions supporting capitalism might be changed to aid in the further evolution of our culture. Much in the spirit of Chease’s hopes, I think this can be better achieved by removing directive features of society, not adding them. Also I will look at criticisms of capitalism concerning the distribution of the economy’s fruits.
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