HISTORY AND CULTURE:
Freely Given

By Tibor R. Machan

Socialism is supposed to be altruistic, capitalism greedy. But which system produces more philanthropy? By Tibor R. Machan.

The capitalist economic system for most of its history has been both admired and criticized. Its capacity for making productivity possible in human communities is unparalleled.

Even the late American Marxist Robert Heilbroner, famous for his book The Worldly Philosophers, acknowledged this after the fall of the Soviet Union. He wrote in the New Yorker magazine that “Ludwig von Mises . . .  had written of the ‘impossibility’ of socialism, arguing that no Central Planning Board could ever gather the enormous amount of information needed to create a workable economic system. . . . It turns out, of course, that Mises was right.” Mises, of course, was one of the most consistent, uncompromising defenders of pure, laissez-faire capitalism.

Yet, even after the demise of the Soviet system of socialism—the only system that ever aspired to be a fully consistent version of that kind of political economy, with full collective ownership of the means of production (including, as Heilbroner himself noted in his book Marxism, For and Against, human labor)—many people continue to criticize the fully free-market system of capitalism. Libertarianism, the broader political equivalent of it, also gets this criticism, namely, that it provides no safety net for people in dire straits, those who are helpless, indigent, needy, or unprepared to deal with market processes.

This is the usual mantra of the critics. The more extreme among them, of course, don’t like anything about capitalism, wanting some kind of dreamlike, fully egalitarian system where the wealth is nearly evenly distributed, even if this means the complete destruction of productivity. Better that we are all equal and poor than that we are unequal and most of us quite well off, with some even extraordinarily wealthy.

Never mind this last alternative—it’s a loser for sure, and only dreamers who would attempt to remake human nature support it. But what about those who find fault with full, laissez-faire capitalism because of its refusal to allow government to provide for those in dire straits and such? Don’t they have a point? Yes, they do, but they draw inferences from it that do not follow. It is possible in a fully capitalist system for some to be left out. There can be innocent hard-luck cases, no doubt about that. What does not follow is that government ought to do something for such people.

Instead, free men and women would have to resolve to lend a hand where needed. And it’s rank cynicism to deny that they would—after all, it is precisely in semicapitalist systems that charity and philanthropy thrive today. Furthermore, to think that such help would not be forthcoming undermines the very idea that it is used to support: that democratic governments can step in and do the job. That’s because such governments are a reflection of the population, if they are truly democratic. Which means if the people are mean and heartless, their government would be so in spades.

But even beyond these replies to the critics of capitalism, once the principles of a fully free society are compromised in the legal system, all hell breaks loose. Even if government might effectively lend its hand to people in dire straits, as soon as it does so nearly all in society insist that their agenda deserves support, too. There is no way to hold back this logic: a legal system that allows favoritism for the most extraordinarily needy will be unable to resist yielding to the pleas of all others, who would mount massive lobbying efforts to achieve this. All of it is all too evident in current welfare states across the globe, producing financial crises and more poverty everywhere than what a fully capitalist system would.

The bottom line is that a fully free society is really the best idea for human community life, and that even the hard-luck cases are more likely to benefit from it than they would from societies with governmental interference.

This essay appeared in the Orange County Register on March 13, 2007.

Available from the Hoover Press is Business Ethics in the Global Market, edited by Tibor R. Machan. To order, call 800.935.2882 or visit www.hooverpress.org.

Tibor R. Machan is a Hoover research fellow, professor emeritus of philosophy at Auburn University, and holds the R. C. Hoiles Endowed Chair in Business Ethics and Free Enterprise at the Argyros School of Business & Economics, Chapman University.