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THE WORLD'S MOST DANGEROUS IDEA
Capitalism is the most ethical form of economics
The fact that capitalism vanquished an even worse rival should not blind us to its manifold defects.
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When faced with the even worse options of the 20th century, totalitarian communism and fascism, there is a danger that well-intentioned people defend capitalism without being aware of the real injustices that are part of its foundation, history, principles, and ethos.
Bad ideas usually come in pairs, one being subtly evil, the other being grotesquely and openly evil. Ironically, the grotesquely evil idea is usually the result of a backlash against the real injustices caused by the subtly dangerous idea. We can see this reality in the relationship between capitalism (subtly dangerous materialism) and communism (openly evil materialism). Both systems are materialistic at heart, feed off of vice, and deflate the human spirit. Of the two, capitalism does this in a subtle way.
In the story of Faust, Faustus makes a pact with the Devil. At first, Faust gets to enjoy all the comforts and pleasures of life, but eventually, the devil comes to require his due. This story, which emerged in Europe as a popular story at the same time that the instruments of capitalism developed, provides us the warning we need to heed in our own day if we were to be tempted to think that capitalism is good.
First, let’s look at history. Most, if not all, of the mechanisms for capitalism were developed in the 15th century. However, capitalism requires capital formation, so that capitalists can acquire land, money, and the tools of production. The greatest period of capital formation began in 1531. The place where it happened: England. The instigator: Henry VIII, his advisors and their successors for the next century. His action: the theft of Church property. In short, theft and looting of Church property created the capital necessary for building capitalism as an economic system. Over centuries, as the English Empire grew, the English were able to use ruthless and Machiavellian tactics to spread the system over the entire globe.
Second, we should focus on principles. Eventually, someone had to come up with a rationalization of the theft, looting, greed, avarice, and fraud that are all part of the capitalist order. And so, theorists in the 18th and 19th centuries developed the idea of self-interest as the fundamental human motivation. Capitalism became the economic science built on the principle of self-interest, a code word for avarice, as if this vice could constitute the basis for a science independent of the moral order.
But, of course, the principle of self-interest and the capitalist system upon which it was based, was nothing more than a return to a very traditional and pagan system, the system in which the stronger could determine the “justice” of an economic contract, and the weaker had to suffer what they will. The principles of capitalism, consistently applied, allow individuals and countries to suffer under usurious financial systems in which the strong can exploit the weak. It has enabled usury to return as one of the scourges of modern times.
In the interest of profit alone, the owners of capital could drive down the wages of workers to subsistence level. In short, those who control capital can use their wealth as a gun to coerce the rest of society to accede to their demands. The “iron law of wages”, we are told, requires that a worker can no longer obtain a family wage, enough to own some land, take care of his wife, educate his children, and leave them a little inheritance.
While GDPs increase, real wages decline. Capitalist private equity schemes are little more than sophisticated and thinly disguised forms of looting. Bankers can take risks, knowing they will get bailed out, as they were in 2008. Workers and immigrants cannot. Corporations work with government officials instigate raids on immigrants working in their own companies, selecting the undocumented immigrants who have been around the longest (and, therefore, have the highest wages), so they can be replaced with new workers for half the cost.
We also cannot forget the evils that capitalism fosters for families and children. The excessive concern for profits and the materialist ethos that accompanies it helps promote the widespread use of birth control, abortion, easy divorce, and now gay marriage. Children in proudly capitalist families are frequently beset with alcohol, drug and sex addictions. This should come as no surprise. If their parents have given in to avarice in an unrestrained way, why not, the children might reason, give in to other vices in an unrestrained way as well?
Capitalism is not compatible with the principles of equitable human development: the necessary connection between the laws of economics and the moral order, subordinating profit to the moral order, the common good, cultural development and the requirements of solidarity; a spirit of solidarity that avoids self-centered localism, allowing the possibility of state intervention to prevent disasters, allowing the state to determine a strong juridical framework within which the economy functions, the possibility of limiting profits for individuals and businesses in the interest of the common good, state intervention in the market, the right to treat the improper accumulation of wealth as immoral, seeing economic activity as an occasion to live solidarity and the communion with others to which God has called us.
With all the historical, philosophical, and contemporary baggage connected with capitalism, we are better off not using the term.
Jefrrey Langan is the chairman of the Liberal Studies Department, Holy Cross College at Notre Dame University.
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