“We live in an era of collapsing confidence in institutions, and the market economy has been no exception. Polls show declining support for capitalism, especially among the young. And the market system is increasingly under attack not only from the left but from some smart social conservatives, populists, and nationalists on the right. To effectively defend democratic capitalism, its champions will need to understand the nature of these criticisms, to see where they have a point, and to think about how to make a case for markets that takes them seriously. …”
I would argue that all of these things are related.
We’re living through one of those turbulent periods in history where an old system is becoming increasingly dysfunctional and breaking down and making life in general seem a little crazier than it has been in the past while a new system has yet to emerge to replace it. Specifically, it is the exhaustion and collapse of the liberal paradigm and free-market capitalism that is driving the rise of populism around the world by creating both large amounts of social and economic stress within the electorate.
“For the most part, these complaints are not fundamentally economic but rather are moral. This sometimes is not obvious even to the people lodging them. …”
My criticism of free-market capitalism is both economic and moral.
In my view, conservatism and free-market capitalism destroyed itself back during the Great Depression by concentrating too much wealth in the hands of the privileged few. FDR and his successors reformed and stabilized the system during the New Deal populist-progressive coalition.
It was their success in saving capitalism from destroying itself and the backlash against the Civil Rights Movement that gave conservatism and free-market capitalism a new lease on life during the Baby Boomer generation. Since around the 1970s, we have been systematically dismantling our country socially and economically from both the Left and the Right, and this has produced both the polarization and dysfunction in Washington, which is a symptom of the collapse of our common culture and an economy which no longer fairly distributes the benefits of economic growth, as well as the demise of many of the guardrails which were put in place during that era to prevent something like that from happening again.
Here’s a useful thought experiment: what would unfettered free-market capitalism do to itself if ALL those guardrails and bandaids which are currently in place to restrain and stabilize the system like FDIC insurance or child labor laws or environmental protection laws or minimum wage laws or the welfare state were removed at the stroke of a pen tomorrow? What would happen then?
“This means, for one thing, that evidence of capitalism’s ability to produce prosperity will be of limited use in response. It is important to make people aware that the market system has brought billions out of grinding poverty and continues to do so still. This is essential to the moral case for capitalism and is an answer to the shallowest charges against it. …”
I would argue that it is scientific and technological progress, which is now bound up in an incestuous and ever expanding web of influence with the state through research and development, which has lifted billions out of grinding poverty. It is also due largely to harnessing new sources of energy to perform work since the Industrial Revolution and the Second Industrial Revolution. All it would take to return all those billions of people to grinding poverty tomorrow is removing those three things.
“The case for markets as engines of liberty is crucial to the defense of capitalism too, but in a similarly constrained way. The right to property is especially vital to human dignity, and no society could be just while violating it or trampling our other liberties. …”
What are the limits of private property?
In the 19th century, we used to believe that slaves that worked on our plantations in the South were our private property. We’ve since replaced all of those slaves, as well as the sharecroppers who succeeded them, with new technology that has mechanized agriculture and eliminated the need for human labor. Only a tiny fraction of the population now works in agriculture.
This development which occurred in the 20th century didn’t inspire much self reflection because the welfare state was created and new jobs were created for displaced agricultural workers in manufacturing and services. What happens though when automation abolishes most of the jobs in manufacturing and services? What happens if this time it is different and new jobs aren’t created for human beings and it dawns on them that machine slaves are producing the wealth? Will the property rights of the owners of the machine slaves like Jeff Bezos of Amazon that have driven millions out of the workforce in areas like retail trade still be considered sacrosanct or will the matter be reconsidered?
“The deepest challenges to capitalism therefore have to be answered on the grounds of morality. If, as Irving Kristol once asserted, the market economy promises us wealth, freedom, and a just society, it is the third of these promises that the system’s most serious critics insist it is failing to keep. And a sense that our way of life is in some key respects unjust is behind much of our broader loss of faith in institutions too.”
I would argue the whole system is driven by avarice.
Historically speaking, the course of free-market capitalism over the past several centuries has been the gradual demolition of our common culture as well as our memory of what used to be morality. We’re living in a world in which our culture has been debased and hollowed out. No one remembers or can articulate morality in terms of practicing the classical virtues. Fewer people live by a Christian moral code. It has gotten to the point where even the “liberal” moral code of the Enlightenment – ideals like free speech, religious tolerance, individual liberty, a revulsion against political violence and fanaticism – has started to give way as well to the toxic cancer that is nihilism and the values of political correctness.
“Part of a moral defense of the market system would have to shed light on its moral goals and premises. These are not hard to discern, for instance, in the thought of capitalism’s intellectual progenitors.”
Our response to this defense of the morality of the market system is just look at the pornography industry it created in the 20th century. The rise of the pornography industry is the ultimate proof that the market system is blind and that its incentives will reward evil unless it is restrained.
“Adam Smith was a professor of moral philosophy, and his project sought to ground a modern successor to Aristotelian ethics in a sophisticated sense of human sympathy and sociability. “
Clearly, Adam Smith has failed in this project, as nothing but moral confusion and cancers like nihilism and political correctness have flourished in the wake of the collapse of Aristotelian ethics and the Christian faith in Western Europe and North America.
“In a free society, Smith suggested, men and women cannot be compelled to act morally, so we require institutions that form our characters and dispositions so that we might choose to act morally. The market is one such institution.”
I would argue that under Free Society the market DOES NOT encourage people to act morally. Quite the opposite. As proof of this assertion, I will point out that simply speaking honestly about any number of subjects in our society is now considered IMMORAL under the political correctness. How did we get to the point where honesty is immoral?
“Through the division of labor, it enables essentially every person to approach the larger society on the basis of what he can offer rather than just what he needs, reinforcing his dignity.”
What about the millions of people who are not in the workforce because of cognitive stratification in the context of a free-market economy? What about the people who are excluded from the division of labor in society for the crime of violating the mores of the dominant political correctness?
“And by valuing reliability, honesty, civility, discipline, and similar bourgeois virtues, markets give us the habits required to handle an enormous amount of freedom responsibly.”
Is this is an accurate description of our world? Do we as a society value reliability, honesty, civility or discipline? Have you seen the “public conversation” on Twitter? If we value honesty, then why are all the people who lied to the public about Iraq still around trying to foment the overthrow of Venezuela’s government? Why are all the people who lied about the Russia conspiracy hoax for two years still employed?
“Because they prioritize the needs of consumers, rather than just those of the owners of capital, markets are also powerfully democratizing forces. And because they are so very good at making us productive and rich, they help the poor to rise as well.”
The markets are very good at creating false needs by manipulating ordinary people with advertising. It is also being taken to a whole new level in the age of surveillance capitalism. It is also the state through government intervention in the market and redistribution of wealth which has kept the poor even hanging on because otherwise the inequality in our society would be several orders of magnitude greater than it is now.
“Left to itself, it would tend to prioritize consumption over every other human endeavor and profit over every other standard of the good, and so could badly distort our priorities. If our politics and culture were merely extensions of the market system — if market signals were our primary measures of merit, virtue, decency, freedom, responsibility, and worth — then ours would indeed be an unjust society.”
Yes, the free-market capitalist system is blind and if left to itself would encourage and facilitate everything from child labor to prostitution to pornography to gambling to market hunting to organ harvesting to pedophilia. Imagine a free market in child sex slaves.
“But our politics and culture are much more than that. The best case for capitalism is a case for markets as one crucial set of institutions in a free society deeply rooted in the West’s liberal and pre-liberal soil …”
How can free-market capitalism possibly stay rooted in the West’s liberal and pre-liberal soil while simultaneously demographically replacing the people who created the system in every Western country?
“It is crucial because at its best it protects every man’s right to the fruits of his labor, encourages virtues crucial to living free, and has proven unbeatably capable of improving everyone’s living standards.”
How long can this remain this case though?
If capital continues to abolish the need for human labor over the long term and this radically accelerates in an age of artificial intelligence, then what happens then? What happens when the machines are doing virtually all of the labor or most of it by the middle of the 21st century? How do you live by the fruits of your labor under capitalism when your labor really isn’t necessary anymore in a world of abundance? Come to think of it, why in a world of abundance rather than scarcity would free-market capitalism even be allowed to continue to exist?
“But it must remain rooted, because man does not live by bread alone, and because both the market and the larger society depend upon other formative institutions that help us all become better human beings and citizens.”
Is this really what is going on in our society?
I’ve observed that American agriculture is now fantastically productive. The problem is now what to do with everything in the supermarket. Virtually no one still works in agriculture. The truth is that the government is buying social peace by simply giving millions of people free money through the EBT card to go into the supermarket and buy the loaf of bread.
“These other institutions — the family, religion, schools, civic associations, political bodies, and more — teach and habituate us in ways that encourage distinct virtues of their own. They all have their excesses, to be sure. But they also often work to keep one another in check. Their tensions with the ethos of the market do the same. “
How are these institutions faring under late free-market capitalism? Not so well last time I checked. Virtually all of them are collapsing.
“Seeing the virtues of markets in their embeddedness in our larger social order can also help avoid the kinds of utopian arguments for markets that some of their more libertarian defenders sometimes make. The case for markets is a case for humility before the immense complexity of social life. It begins from our ignorance, and properly understood it should steer us away from overconfidence. “
The problem with lolbertarian defenders of the free-market is that all of its abstract economic models are nothing but intellectual sand castles in the air that are hopelessly detached from reality.
In reality, the economy is embedded in time and space. Everything on earth is embedded in time and space whether it is our environment and its distribution of natural resources (Texas and Saudi Arabia have lots of oil for geological reasons) or our culture (which has evolved through history) or human biology (which is a product of every previous generation) and so on. Every human being also has a unique perspective shaped by forces like their heredity and their culture and their geographic place and position in history.
Suppose you are black and you are born in the year 2019 in a Detroit ghetto. Is the free-market capitalist model going to work for you? The reason that you live there is because your ancestors moved to Detroit to work in manufacturing industries which no longer exist. You grow up immersed in a culture of violence and materialism that is encouraged by the free-market which is bombarding you with rap music that celebrates poisonous moral values. None of this is simply something you “chose” as an individual. It was thrust upon you by the lottery of life.
“Ordering these frequently competing or contradictory ends in hard cases is part of what our politics is for, and the argument for capitalism cannot be an argument for putting economics above all else.”
Why have women entered the workforce in such large numbers since the 1970s? Doesn’t that have a lot to do with the stagnation of middle class and working class wages and the inflation in cost of everything from education to housing to health care which has become more expensive?
“Indeed, the same is true of liberalism itself: To show how its strengths can invigorate us while its weaknesses must be mitigated by our other fidelities is to show how liberalism can succeed, not why liberalism failed.”
Isn’t this an admission that if left to itself the internal logic of the system is destructive? Now, what if we were to look at our society and notice that the arc of the late 20th century and early 21st century has been toward the perfection of Free Society, which is to say that the sphere of economic freedom and social freedom has been steadily expanded? Is everything we are seeing understandable as a kind of disease and inflammation of the body politic?
“Against its most serious and able critics, then, the market needs defenders who see it as one among the several crucial institutions most indigenous to liberalism, and who acknowledge that, like all the others, it draws on our society’s deep roots in pre-liberal traditions and can thrive only as long as it does not twist or sever those. In other words, capitalism needs conservative defenders, and deserves to have them.”
Free Society is sick.
The system is actually on its deathbed. The paradigm is breaking down in the West because it is creating so much stress whether it is the social fabric which is being shredded in countless ways, mainly due to the collapse of religion, mass immigration and the rise of political correctness, or due to the economy whichs grows while all the “growth” is captured by a bloated oligarchy at the top of our society which has corrupted our politics. Then you have the elephant in the room which is accelerating technological change which in the long run will bring down the system itself.