On some self-identified ‘conservative’ sites I visit, the recent election is touted by many as a referendum on capitalism. Their opinions suggest the dire financial predicaments of the U.S. and the largest Western economies are due to the influx of socialist thinking, the departure from free market capitalism, and most egregiously, “progressive” government policies. It is as if the word or idea of capitalism, by itself, is an Apotropaion or invincible benefactor of human progress. Government, being a hindrance to the free exercise of capitalism, is often cited as a cause of the missed Utopia of capitalism’s promise. The belief in capitalism’s beneficence had become more divinized and less intellectually scrutinized by succeeding generations discouraged from self examination by convenient economic circumstances now in abeyance. The complexity of Adam Smith’s observations have been simplified and reduced to childish, unsophisticated mantras impervious to the changing circumstances of mankind and the un-remediated self-interest of men. In a liberal democracy, government and capitalism are natural rivals for the attention and loyalty of the governed, but since government is established to represent the interests of the whole, and capitalism originates in the interest of the individual, the commanding or subordinate role in the betterment of society must be assigned by pragmatism rather than ideology. I think the latter half of the 20th century and the present economic conundrum represents the reversal of the proper order of that priority.
If government is an implement consciously forged in the blast furnace of civilization, the constructive or destructive use of the implement, whether as a tool or a weapon in socio-economic fortunes becomes the debatable issue, not the existence of the implement itself. In Smith’s treatise, capitalism is among other things, a description of his perception of the role of human nature in the chthonian organic economic requisite. And the useful role of government is to provide “industry the only encouragement it requires -tolerable security”. But “tolerable security” would seem to suggest the role of government, of law, is not only to lull the punishing elements of civil and natural unpredictability, but to also offer propitiation from man’s propensity to selfishness and indifference to the welfare of others in pursuit of self-interest, whether the pursuit is by king or commoner. Capitalism, admittedly possessing certain virtues, still can’t be accorded the distinction of being a perfected philosophical terminus of correct conduct, but is more accurately a succession of discrete human acts and actions in pursuit of the individualized definition of self-interest, which must like other human activities bear scrutiny of its continuity with the pneuma of the positive social order. Capitalism, as a philosophy, is not such a perfected apparatus it can operate on auto-pilot. The machine must be periodically re-calibrated by human intellect to account for the different circumstances, goals, and desires of all those which it serves- not just the portion of society called capitalists.
This is why I resist the conservative reflex to recite the spell of rote capitalism to address all economic ills. In my opinion some of these ills are accountable to the manipulative deceptions and fallacious hopes of rote, socially disinterested capitalism. Smith, brilliantly incisive in his recognition of the value of self-interest in the conduct of economic affairs, still was not oblivious to the seductive vice from the same source. He outlined “three great original constituent orders of every civilized society”. There was one order “whose income costs them neither labor nor care, but comes to them independent of any plan or project of their own. That indolence which is the natural effect of ease and security renders them too often not only ignorant but incapable of that application of mind necessary in order to foresee and understand the consequences of public regulation”. The second order was that of wage earners. Of them he says, “But though the interest of the laborer is strictly connected with that of society, he is incapable of comprehending that interest or of understanding its connection with his own. His education and habits are commonly such as to render him unfit to judge”. And the third order is constituted by employers who employ capital for the sake of profit. He says, “The interest of this third order, therefore, has not the same connection with the general interest of society as that of the other two. Their thoughts are commonly exercised rather about the interest of their own particular branch of business than about that of society”. He continued, “The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution. It comes from an order of men who have generally an interest to deceive and oppress the public and who have, upon many occasions, both deceived and oppressed it”.
The recent Wall Street fiasco is probative of Smith’s suspicion of the latter order. The greatest capitalists in the nation used their wealth and its attendant political power and influence to effectively purchase a self-serving dispensation from free-market capitalism, and then compelled the government, whose involvement in their affairs they usually despise, to bail them out from the consequences of their unalloyed greed. Another example of how the lay public’s education and habits render them unfit to judge the validity of proposals put forth by capitalists is in the controversy over the extension of the Bush tax cuts, which are presented by some as unassailable and correct job stimulus. But Smith’s view on the creation of jobs is a little different. As to the motivation of an entrepreneur Smith says, “He could have no interest to employ them unless he expected something more than sufficient to replace his capital, and he could have no interest to employ great capital rather than a small one unless his profits were to bear some proportion to the extent of his capital”. This seems to corroborate my assertion in a prior blog that the authentic incentive to create jobs pre-exists the tax code or structure. Yet, the middle class have been deluded to think and vote against their own interest in favor of the supposedly superior option of providing a windfall for the wealthy, under the apparent misapprehension that classical capitalism requires the unemployed, or the government, in the present argument, to incentivize employers.
As recitation of the formula E=MC² is the limit of comprehension of The Theory of Relativity of most laymen, the simplest classical definition of capitalism, “the private ownership of the means of production”, plasters over the depth of superficiality of the understanding of the concepts of Adam Smith, and is the fertile ground for the subterfuge and perverted intellectual conditioning that causes today’s lay conservatives to think they are defending the integrity of capitalism by supporting the extension of the Bush tax cuts, when it can be easily observed that only a statistically insignificant percentage of the so-called “wealthy” are either entrepreneurs or capitalists, but are merely wealthy, and in actuality might be considered a prosperous strata of labor, possessing neither the means, desire, knowledge, or inclination to create jobs. I believe Smith recognized a distinction between the potential energy of accumulated wealth and the kinetic energy of wealth converted to “capital”, and he never argued that the existence of any tax on anyone or anything was inherently evil, or that the elimination of all taxes is possible or practical in any society requiring and adopting governance. In fact, there are many instances in Smith’s “The Theory of Moral Sentiments”, “The Wealth of Nations”, and even his employment life, where he acknowledges, infers, or participates in a fair contest between civil necessities and his “invisible hand”. And neither contestant is undefeated. Admittedly - "IN SPITE OF THEIR NATURAL SELFISHNESS AND RAPACITY, THOUGH THEY MEAN ONLY THEIR OWN CONVENIENCY, THOUGH THE SOLE END WHICH THEY PROPOSE... BE THE GRATIFICATION OF THEIR OWN VAIN AND INSATIABLE DESIRES, THEY DIVIDE WITH THE POOR THE PRODUCE OF ALL THEIR IMPROVEMENTS. THEY ARE LED BY AN INVISIBLE HAND TO MAKE NEARLY THE SAME DISTRIBUTION OF THE NECESSARIES OF LIFE, WHICH WOULD HAVE BEEN MADE, HAD THE EARTH BEEN DIVIDED INTO EQUAL PORTIONS AMOND ALL ITS INHABITANTS, AND THUS WITHOUT INTENDING IT, WITHOUT KNOWING IT, ADVANCE THE INTEREST OF SOCIETY" - is a compelling clause, and it’s beautiful clarity and sweep intimidates opposition, but in essence, in the end, it is the philosophical and economic equivalent of the plebeian, “It’s all good”, a phrase that doesn’t overawe or stunt necessary deliberation of the complex requisites of the social contract. Still, certainly for Smith, and many Americans, the “invisible hand” is an article of faith, and is an indefeasible extension of religious belief. As an economic notion the “invisible hand” could, with some aptness, be called “the opium of the masses”. This long conditioned cultural aptitude to compartmentalize religion and rationality explains why in times of crisis and complicatedness, political spinmeisters contracted by the economic elite typically construct political avatars possessing the virtuous lack of erudition or gravitas in favor of the simple comfort of the “old time religion”. They know the divided mind can be led first one way, then the other. Egregious practices and obscene profits of capitalists can be justified by the belief that the religious beneficence of “the invisible hand” will ultimately “make nearly the same distribution of the necessaries of life”, and then rationality must be embraced when the capitalists become hard scientific Darwinists and charge the misfortunes of the jobless and homeless to their own lack of “fitness” for the modern economic world and encourage them to re-educate themselves and their children, concentrating on such spiritual subjects as math and science. Thus, by this clever process, the members of the middle class can be induced to vote and act against their own interests “for their own good”.
I am not proposing the abolition of capitalism, but at the same time I believe progressive government as the principal to capitalism’s agency provides the best secular assist to the ethereal “invisible hand”. Unless it is projected that the “invisible hand” not only ensures to advance the interests of society ad infinitum, and will always ameliorate evil or grossly selfish acts with timely equity, it cannot be advisable for any mature society to abdicate responsibility for its destiny to theotechnic predestination over considered human measures. We would be allowing anti-consciousness to make cowards of us all.
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