How Moral Is Capitalism?

A writer calling himself "Adam Smith"--you'll see the irony in a moment--nuked me recently on my Forbes.com daily blog. He wrote: "You are too much of a materialistic person to understand the purpose of life. [You big mouths at magazines] find followers who want nothing but money, which they think buys happiness. It's not too late for you to drop your crap and look for the meaning of life--it is certainly not in making money. I wish you luck."

Sorry, Mr. Smith. I do not consider moneygrubbing the purpose of life. Never have. The use of God's gifts comes closer for me.

Still, moneygrubbing--a.k.a. the search for profit--has its purpose. Money (profit) is a tool. It is capital. Without capital there is no capitalism. Innovation starves. Prosperity weakens. Societies stagnate. God-given gifts wither. This is especially true for humanity's wonderfully zany outliers: artists, inventors, entrepreneurs. They need capitalism more than anyone.

Money is good, therefore, because capitalism is good. It delivers the goods, literally, and better--broadly and individually--than does any other system. Hugo Chávez would argue that point, but he's nuts.

Can we go even further and say that capitalism is good because it is moral? Following that logic, can we say: The purer the form of capitalism, the more moral it is? Is capitalism perfectly moral--enough to sustain itself over many generations?

Yes, say Ayn Rand's followers. But most of us would not go that far. We think a capitalism that lacks outside moral influences and pressures, restraints and safety nets would, sooner or later, fail.

Bill Ziff, a successful magazine capitalist who died last year, spoke for most of us: "[Capitalism] is not in itself sufficient to create values. It depends on what human and religious values we, ourselves, bring to our affairs. Insofar as those values fail, we would all descend toward a lawless, inhumane, cutthroat society that will no longer harbor our civilization."

Conservatives and liberals agree on little these days. But most agree on this: Capitalism works, but it is insufficiently moral. Conservatives--allow me to paint them with a broad brush--believe capitalism works best when it is spun with golden moral threads, when it weaves in those old values learned in church, charities, service clubs and the like.

Liberals are more skeptical. They know capitalism will produce losers as well as winners. They feel the winners must be forced into helping the losers. Forced help hurts everyone, say conservatives. Redistribution discourages winners from producing and losers from trying. It leaves everyone bitter.

Such is the national debate we find ourselves engaged in as the Democrats take power in the Senate and House. The minimum wage is a form of redistribution. It forces employers to pay workers more than their productivity merits, puny as those paychecks may be. Higher payroll taxes are also redistribution. Who believes higher payroll taxes will show up as higher monthly payments for the employee's retirement?

Restrictions on free trade are yet another form of redistribution, although you may not think of them as such. Tariffs imposed by the U.S. are usually countered by tariffs from other countries. That's what trade wars are all about--retaliation. Trade wars force American companies that are winners in the global economy--the IBMs, FedExes and Citigroups--to give up some of their winnings so that struggling domestic tool and textile manufacturers can stay in business. Trade protectionism asks California to subsidize Ohio and South Carolina.

Generally, Democrats favor forced redistribution more than Republicans do. Republicans--again, in general--would prefer to fix capitalism's shortcomings through good works and giving. This forces Republicans to higher standards of conduct, by the way. Bad people, in power, can redistribute as easily as good people. Only good people can inspire us to good works and giving.

Have Republicans succeeded in holding themselves to this higher standard? Hah! The top two Republicans in the House, John Boehner (Ohio) and Roy Blunt (Missouri), can't summon enough moral courage to say no to "earmarks"--a sneaky form of redistribution. Demo-crats are proud of redistribution. They have no need to be sneaky about it. Democrats will always play the redistribution game better.

What did Adam Smith--not my blogger critic but the real one--say about capitalism and morality?

The great Scotsman seemed to say two contradictory things. In The Wealth of Nations (1776) he wrote these famous words about self-interest: "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages." This sounds like selfishness: Greed is good.

But Smith never believed that. In his earlier book, The Theory of Moral Sentiments (1759), Smith defined self-interest not as selfishness or greed but as a psychological need to win favor within one's society. Smith revised The Theory of Moral Sentiments after he wrote The Wealth of Nations. He did not change his belief that moral sentiments and self-interest are the same thing.

Let's not forget our Adam Smith. When we do, capitalism loses its moral authority, and the redistributionists win.

To those who would suggest that money is the root of all eeeeeeeeevil... I give you this excerpt from the novel Atlas Shrugged, by Ayn Rand.

"So you think that money is the root of all evil?" said Francisco d'Anconia. "Have you ever asked what is the root of money? Money is a tool of exchange, which can't exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil?

"When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others. It is not the moochers or the looters who give value to money. Not an ocean of tears nor all the guns in the world can transform those pieces of paper in your wallet into the bread you will need to survive tomorrow. Those pieces of paper, which should have been gold, are a token of honor--your claim upon the energy of the men who produce. Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on that moral principle which is the root of money, Is this what you consider evil?

"Have you ever looked for the root of production? Take a look at an electric generator and dare tell yourself that it was created by the muscular effort of unthinking brutes. Try to grow a seed of wheat without the knowledge left to you by men who had to discover it for the first time. Try to obtain your food by means of nothing but physical motions--and you'll learn that man's mind is the root of all the goods produced and of all the wealth that has ever existed on earth.

"But you say that money is made by the strong at the expense of the weak? What strength do you mean? It is not the strength of guns or muscles. Wealth is the product of man's capacity to think. Then is money made by the man who invents a motor at the expense of those who did not invent it? Is money made by the intelligent at the expense of the fools? By the able at the expense of the incompetent? By the ambitious at the expense of the lazy? Money is made--before it can be looted or mooched--made by the effort of every honest man, each to the extent of his ability. An honest man is one who knows that he can't consume more than he has produced.

"To trade by means of money is the code of the men of good will. Money rests on the axiom that every man is the owner of his mind and his effort. Money allows no power to prescribe the value of your effort except the voluntary choice of the man who is willing to trade you his effort in return. Money permits you to obtain for your goods and your labor that which they are worth to the men who buy them, but no more. Money permits no deals except those to mutual benefit by the unforced judgment of the traders. Money demands of you the recognition that men must work for their own benefit, not for their own injury, for their gain, not their loss--the recognition that they are not beasts of burden, born to carry the weight of your misery--that you must offer them values, not wounds--that the common bond among men is not the exchange of suffering, but the exchange of goods. Money demands that you sell, not your weakness to men's stupidity, but your talent to their reason; it demands that you buy, not the shoddiest they offer, but the best that your money can find. And when men live by trade--with reason, not force, as their final arbiter--it is the best product that wins, the best performance, the man of best judgment and highest ability--and the degree of a man's productiveness is the degree of his reward. This is the code of existence whose tool and symbol is money. Is this what you consider evil?

"But money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. It will give you the means for the satisfaction of your desires, but it will not provide you with desires. Money is the scourge of the men who attempt to reverse the law of causality--the men who seek to replace the mind by seizing the products of the mind.

"Money will not purchase happiness for the man who has no concept of what he wants: money will not give him a code of values, if he's evaded the knowledge of what to value, and it will not provide him with a purpose, if he's evaded the choice of what to seek. Money will not buy intelligence for the fool, or admiration for the coward, or respect for the incompetent. The man who attempts to purchase the brains of his superiors to serve him, with his money replacing his judgment, ends up by becoming the victim of his inferiors. The men of intelligence desert him, but the cheats and the frauds come flocking to him, drawn by a law which he has not discovered: that no man may be smaller than his money. Is this the reason why you call it evil?

"Only the man who does not need it, is fit to inherit wealth--the man who would make his own fortune no matter where he started. If an heir is equal to his money, it serves him; if not, it destroys him. But you look on and you cry that money corrupted him. Did it? Or did he corrupt his money? Do not envy a worthless heir; his wealth is not yours and you would have done no better with it. Do not think that it should have been distributed among you; loading the world with fifty parasites instead of one, would not bring back the dead virtue which was the fortune. Money is a living power that dies without its root. Money will not serve the mind that cannot match it. Is this the reason why you call it evil?

"Money is your means of survival. The verdict you pronounce upon the source of your livelihood is the verdict you pronounce upon your life. If the source is corrupt, you have damned your own existence. Did you get your money by fraud? By pandering to men's vices or men's stupidity? By catering to fools, in the hope of getting more than your ability deserves? By lowering your standards? By doing work you despise for purchasers you scorn? If so, then your money will not give you a moment's or a penny's worth of joy. Then all the things you buy will become, not a tribute to you, but a reproach; not an achievement, but a reminder of shame. Then you'll scream that money is evil. Evil, because it would not pinch-hit for your self-respect? Evil, because it would not let you enjoy your depravity? Is this the root of your hatred of money?

"Or did you say it's the love of money that's the root of all evil? To love a thing is to know and love its nature. To love money is to know and love the fact that money is the creation of the best power within you, and your passkey to trade your effort for the effort of the best among men. It's the person who would sell his soul for a nickel, who is loudest in proclaiming his hatred of money--and he has good reason to hate it. The lovers of money are willing to work for it. They know they are able to deserve it.

"Let me give you a tip on a clue to men's characters: the man who damns money has obtained it dishonorably; the man who respects it has earned it.

"But money demands of you the highest virtues, if you wish to make it or to keep it. Men who have no courage, pride or self-esteem, men who have no moral sense of their right to their money and are not willing to defend it as they defend their life, men who apologize for being rich--will not remain rich for long. They are the natural bait for the swarms of looters that stay under rocks for centuries, but come crawling out at the first smell of a man who begs to be forgiven for the guilt of owning wealth. They will hasten to relieve him of the guilt--and of his life, as he deserves.

"Then you will see the rise of the men of the double standard--the men who live by force, yet count on those who live by trade to create the value of their looted money--the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law--men who use force to seize the wealth of disarmed victims--then money becomes its creators' avenger. Such looters believe it safe to rob defenseless men, once they've passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter.

"Do you wish to know whether that day is coming? Watch money. Money is the barometer of a society's virtue. When you see that trading is done, not by consent, but by compulsion--when you see that in order to produce, you need to obtain permission from men who produce nothing--when you see that money is flowing to those who deal, not in goods, but in favors--when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you--when you see corruption being rewarded and honesty becoming a self-sacrifice--you may know that your society is doomed. Money is so noble a medium that is does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.

"You stand in the midst of the greatest achievements of the greatest productive civilization and you wonder why it's crumbling around you, while you're damning its life-blood--money. You look upon money as the savages did before you, and you wonder why the jungle is creeping back to the edge of your cities. Throughout men's history, money was always seized by looters of one brand or another, whose names changed, but whose method remained the same: to seize wealth by force and to keep the producers bound, demeaned, defamed, deprived of honor. That phrase about the evil of money, which you mouth with such righteous recklessness, comes from a time when wealth was produced by the labor of slaves--slaves who repeated the motions once discovered by somebody's mind and left unimproved for centuries. So long as production was ruled by force, and wealth was obtained by conquest, there was little to conquer, Yet through all the centuries of stagnation and starvation, men exalted the looters, as aristocrats of the sword, as aristocrats of birth, as aristocrats of the bureau, and despised the producers, as slaves, as traders, as shopkeepers--as industrialists.

"To the glory of mankind, there was, for the first and only time in history, a country of money--and I have no higher, more reverent tribute to pay to America, for this means: a country of reason, justice, freedom, production, achievement. For the first time, man's mind and money were set free, and there were no fortunes-by-conquest, but only fortunes-by-work, and instead of swordsmen and slaves, there appeared the real maker of wealth, the greatest worker, the highest type of human being--the self-made man--the American industrialist.

"If you ask me to name the proudest distinction of Americans, I would choose--because it contains all the others--the fact that they were the people who created the phrase 'to make money.' No other language or nation had ever used these words before; men had always thought of wealth as a static quantity--to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were the first to understand that wealth has to be created. The words 'to make money' hold the essence of human morality.

"Yet these were the words for which Americans were denounced by the rotted cultures of the looters' continents. Now the looters' credo has brought you to regard your proudest achievements as a hallmark of shame, your prosperity as guilt, your greatest men, the industrialists, as blackguards, and your magnificent factories as the product and property of muscular labor, the labor of whip-driven slaves, like the pyramids of Egypt. The rotter who simpers that he sees no difference between the power of the dollar and the power of the whip, ought to learn the difference on his own hide--as, I think, he will.

"Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to be the tool by which men deal with one another, then men become the tools of men. Blood, whips and guns--or dollars. Take your choice--there is no other--and your time is running out."

(italics mine)

I think what people consider as a "conservative" or "conservativism needs to be better understood. To do this in another post I have summarized Russell Kirk's views on who is and who is not a conservative.

We would be more correct to use “conservative” as an adjective than a noun. Conservativism is a way of thinking not a body of chiseled in stone beliefs. Conservativism is a way of looking at civil social order. Who is and who is not a “conservative” depends on a self definition. If you believe you are a “conservative” you are one.

While it is not possible to draw up a laundry list of conservative positions, there are some general beliefs that most “conservatives” will ascribe to.

III. Ten Underlying Conservative Principles: Which of these principles conservatives will emphasize varies with circumstances and time. The following ten articles of belief or assumption reflect the concerns of American conservatives in the modern era. When you read these, anything in quotes indicates a direct quote from Russell’s essay.

”First, the conservative believes that there exists an enduring moral order.” That order is part of the human endowment and these moral truths are permanent. Order is synonymous with harmony and a society so governed by a strong sense of right and wrong is a good and just society. Government machinery may be used to sustain justice, honor, right vs. wrong but these things are part of the human cultural and biological endowment. People who do not ascribe to this view are not only unhappy but usually suffer lawlessness as a consequence.

”Second, the conservative adheres to custom, convention and continuity.”The common culture has customs that permit people to live in an orderly fashion with one another. These customs are ancient and have resulted from trial and error over centuries of use. Besides that these customs link us to not only the past but to the future. As Russell puts it, “…conservatives prefer the devil they know to the devil they don’t know..”

It is not that conservatives are against change. What they want is prudent change that is gradual and based on satisfactory outcomes and never completely unfixing old ways or traditions.

”Third, conservatives believe in what may be called the principle of prescription.”We are “dwarfs on the shoulder of giants, able to see farther than our ancestors only because of their great stature.” Conservatives emphasize ”prescription”as a means to understand the whys and wherefores of our culture. Prescriptions are principles of living and belief established in times past.

Prescriptions of immemorial usage include private property rights as well as morals. Our morals are basically prescriptions that antedated Christianity. In my way of thinking, the best pro life argument can be found in the Hippocratic Oath written in 400 B.C. and taken by most US physicians until 25 January 1973. The species cannot endure if birth can be terminated by whim and convenience.

Russell summarizes thusly, “the individual is foolish but the species is wise as a Burke quote.” The human species has acquired a prescriptive wisdom far beyond any group ideology or private predilection. The species cannot endure if birth can be terminated by whim and convenience.

”Fourth Conservatives are guided by their principles of prudence.” Burke, Plato and many others considered prudence a principal virtue. Public measures should be judged on long run consequences even beyond the current generation. Liberals and radicals as well as David Brooks all want immediate changes and immediate results. To be popular is as Randolph says pleasing to the devil because “the devil always hurries.”

”Fifth, conservatives pay attention to the principle of variety.”Contrary to what many liberals believe conservatives celebrate variety and do everything possible to preserve it.

Orders, social classes, inequalities of ability and wealth and all sorts of other differences must be supported and championed.

The only two types of real equality must be: (1)Before the law; (2) And, before god. All other attempts of leveling will lead to social stagnation. Leveling and other attempts to achieve egalitarian goals invariably lead to “squalid tyrants” and another form of inequality.

”Sixth, conservatives are chastened by their principle of imperfectability.” Call it original sin or human frailty human nature suffers from serious faults. Since man is imperfect no perfect social order can be devised. Claims to the contrary should arouse suspicion. “To seek for a utopia is to end in disaster…” We are definitely not made in perfection for perfect systems of governance.

We may seek and achieve prudent reform if we preserve tolerable order. If we neglect traditional safeguards then man being imperfect results in chaos and destruction.

”Seventh, conservatives are persuaded that freedom and property are closely linked.”Destroy the holding of private property and the state rules all in every conceivable way. As a corollary, economic leveling is not economic progress and neither is getting and spending the chief aim of human existence.

Eighth, conservatives uphold voluntary community and oppose involuntary collectivism.”Americans are noted for a sense of community. Charitable and other voluntary community efforts are important to maintain and protect the vulnerable.

When these efforts are usurped by the government they fail to achieve their goals. Further, these government efforts standardize human beings and destroy freedom and dignity. “For a nation is no stronger than the numerous little communities of which it is composed.”

Ninth, the conservative perceives the need for prudent restraints upon power and human passions.” “Politically speaking power is the ability to do as one likes, regardless of the will of one’s fellows…if only few or one dominates we call that despotism..” Contrariwise, when everybody does what they want society falls into anarchy. The conservative does an imperfect and changing effort at avoiding both despotism and anarchy.

Radicals always see power as a good thing destined to force others into his way of thinking and behavior. While power cannot be abolished it can be controlled and that is precisely why conservatives so jealously guard their freedoms. Conservatives also know not to simply trust human benevolence or claims thereof. They also know humans are capable of good and evil and restraints against overweening will and appetite are necessary.

”Tenth, the understands permanence and change must be recognized and reconciled in a vigorous society.” The conservative is not opposed to social progress. “…Although he doubts whether there is any such force as mystical Progress, with a Roman P, at work in the world.” Where something progresses something else is usually in decline.

I previously summarized Russell Kirk's thoughts on this and the above is a section of that. The remainder can be found: HERE

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