Apr 13, 2015

The Spirit of Capitalism

via The Distributist Review

Capitalism is something that is frequently defined differently by different people. For example, some people imagine that it is private property that is the distinguishing mark of capitalism, or freedom of competition or minimal government intervention in the economy. But private property is hardly peculiar to capitalism, and while free competition and a laissez-faire economic policy are normal results of capitalism, they are not its distinguishing marks. For a long time I have thought that the definition of capitalism enunciated by Pope Pius XI in his 1931 encyclical Quadragesimo Anno (§100), is the most accurate of the definitions that I have seen. In fact, it expresses the specific note that distinguishes capitalism from all other ways of organizing our economic activity. In that encyclical Pius calls capitalism “that economic system in which were provided by different people the capital and labor jointly needed for production.” In other words, in a capitalist economy most economic activity is characterized by the separation of ownership and work, by a split between those who own the means of production and those who are employed to do the actual work. This is in contrast to a Distributist economy in which, to the extent feasible, owners and workers are the same people, or to some forms of socialism in which the government is the owner of most productive property and administrators hire others to do the work.

Although I am a Distributist, I admit, as Pius XI went on to say, that the capitalist organization of an economy is not essentially unjust. It is not unjust to own property and hire someone else to work with that property—provided of course that a just wage is paid. But although such an arrangement is not in itself unjust, it is not necessarily wise when it becomes the characteristic means of organizing an entire economy. Catholics must accept that the capitalist system can be just, but Catholics are not required to hold that capitalism is the best economic system. As John Paul II wrote in Centesimus Annus (§35): “We have seen that it is unacceptable to say that the defeat of so-called ‘Real Socialism’ leaves capitalism as the only model of economic organization.” Even if, theoretically speaking, capitalism can be just, there have been few examples of a just capitalism in fact. In Centesimus John Paul gave words of praise to what appears to be the West German social market economy. He notes that after World War II there was
in some countries…a positive effort to rebuild a democratic society inspired by social justice, so as to deprive Communism of the revolutionary potential represented by masses of people subjected to exploitation and oppression. In general, such attempts endeavor to preserve free market mechanisms, ensuring, by means of a stable currency and the harmony of social relations, the conditions for steady and healthy economic growth…. At the same time, these attempts try to avoid making market mechanisms the only point of reference for social life, and they tend to subject them to public control which upholds the principle of the common destination of material goods. In this context, an abundance of work opportunities, a solid system of social security and professional training, the freedom to join trade unions and the effective action of unions….are meant to deliver work from the mere condition of “a commodity,” and to guarantee its dignity. (§19)
But this is by no means the typical way that capitalism operates.

Capitalism, when it lacks the social and political safeguards which John Paul specifies, and when it advertises itself as mainly an engine for material production, too often brings about
the affluent society or the consumer society. It seeks to defeat Marxism on the level of pure materialism by showing how a free-market society can achieve a greater satisfaction of material human needs than Communism, while equally excluding spiritual values. In reality, while on the one hand it is true that this social model shows the failure of Marxism to contribute to a humane and better society, on the other hand, insofar as it denies an autonomous existence and value to morality, law, culture and religion, it agrees with Marxism, in the sense that it totally reduces man to the sphere of economics and the satisfaction of material needs. (§19)

This is the more usual way that capitalism operates and one of the reasons for the historically widespread opposition to it by many thinkers and writers who emphatically cannot be classed as left-wing.

John Paul’s observations about “the affluent society or the consumer society” lead to my main topic, which is the spirit of capitalism. What is the spirit of capitalism? Before we can attempt to define the spirit of capitalism, it is necessary to understand what is the psychological mechanism by which capitalism, that is, the separation of ownership and work, operates. Hilaire Belloc provides a succinct but accurate description of this.
But wealth obtained indirectly as profit out of other men’s work, or by process of exchange, becomes a thing abstracted from the process of production. As the interest of a man in things diminishes, his interest in abstract wealth—money—increases. The man who makes a table or grows a crop makes the success of the crop or the table a test of excellence. The intermediary who buys and sells the crop or the table is not concerned with the goodness of table or crop, but with the profit he makes between their purchase and sale. In a productive society the superiority of the things produced is the measure of success: in a Commercial society the amount of wealth accumulated by the dealer is the measure of success. (An Essay on the Nature of Contemporary England, 1937)
A craftsman who owns the means of production himself wants to make enough money by means of his work to support his family, certainly, but generally he will also have some interest, some pride, in his skill and in his product. He will see himself not primarily as a businessman, but as a brewer or a shoemaker, and for the most part will be interested in the quality of his product apart from how much he can sell it for. Although this interest will be greater in some than in others, for the most part it will be the case that the “man who makes a table or grows a crop makes the success of the crop or the table a test of excellence.” But the man who hires another to make the table or grow the crop for him usually will not have this same interest. He is not a craftsman, he can hardly have the professional pride that only a craftsman can have. His interest will be at best in management and marketing, or worse, in finance, or as a stockholder, in being a merely passive owner of a corporation, content to receive dividends or capital gains, having little interest in or knowledge of what the corporation actually does.

I know of course that defenders of capitalism will tell me that the owner of capital has got to take an interest in product quality because otherwise he could not sell the product. And yes, this is true. The capitalist has an interest in making his product saleable, and at times that can even include manufacturing a well-made product. But it need not include that. If it did, if the need to sell a product could itself guarantee quality, then unsafe or shoddy products would be as rare as snow in summer. Moreover, advertising exists as a powerful means to sell products, whether well-made or not. I am not arguing that all capitalists can or do ignore the question of product quality entirely, though some come pretty close to it, but simply that the tendency in a capitalist economy is, as Belloc said, that “the amount of wealth accumulated by the dealer is the measure of success.”

We can offer a rough definition, then, of the spirit of capitalism as the way of thinking and acting which capitalism and the capitalist motive tends to produce in a society, the way of looking at all things sub specie pecuniae, as a mere means of gain. Education, for example, is valued chiefly as a means of getting greater earning power, the physical environment is seen as having no value except the amount of cash it can bring in, even if that results in permanent damage to the common home which God has given to us.

The study of economics as that has descended from Adam Smith is for the most part an intellectual construct concocted to explain and justify the ideal workings of a capitalist economy. As such, the very conceptual tools it employs are predisposed in favor of capitalism. The concept of economic efficiency, for example, does not mean a lack of waste, but rather the production of the greatest amount possible with a set amount of resources. In practice it means that the market mechanism of supply and demand dictates the use of resources, and it is held to be economically efficient to waste resources if there is no actual current market for them. Thus natural gas can be simply burned off at the wellhead when there is no immediate cheap way of storing or transporting it, in order to extract the oil that lies underneath.

Capitalist economy efficiency also results in a curious kind of reductionism. Although we all recognize the difference between packaged food, heated up in a microwave, and a fine meal, prepared with care from original ingredients, the spirit of capitalism actually works to destroy any acknowledgement of the importance of such a difference. Since each type of meal will eliminate our immediate hunger, capitalism’s inherent logic tends to compare them merely on the basis of cost, to the detriment of the meal prepared with care, because this latter seems to violate the near-sacred imperative of economic efficiency. If we can obviate our pangs of hunger with cheap food, is not this more economically efficient than the long and more costly process of preparing food by hand? We thus ignore the health consequences of eating packaged corporate food, as well as the destruction of local culinary traditions and skills that packaged food entails. Food made with real ingredients is seen as a luxury, a needless expense, something that is all right if you have enough money, but in fact unnecessary. In such a manner we congratulate ourselves on how inexpensive food is in the United States. That in fact our food is largely denatured, filled with pesticides and artificial ingredients, matters little or not at all, since it meets the obvious and measurable standard of being able to still one’s pangs of hunger. If the rich or the countercultural want better food, then let them pay for it. The rest of us (so we are implicitly told), should be grateful to have a relative abundance of cheap edibles, never mind the long-term health effects, the destruction of local cultural traditions, or the poisoning of the environment by means of pesticides and poor farming practices.

I mentioned above that one of the effects of the spirit of capitalism is that we mostly look at education as simply a means for obtaining a well-paying job. But the reductionist logic of capitalism goes further and has now begun to interfere with the mechanism of education itself. A real university with real classrooms and the give and take of discussion may be nice, but why not provide most people with taped lectures and online discussion groups? Certainly if the rich want to pay the price to attend a physical college, that is fine, but again, for most people this is neither necessary nor particularly desirable. (Of course the fact that higher education is overpriced provides easy justification for those seeking to disparage real physical institutions, but the logic of capitalist efficiency would point toward the same goal in any case.) Because the differences between high-quality products and services and low-quality are not always easily measured, and the difference in cost is easily measured, our notion of economic efficiency works against the former. If we can provide people with degrees via mass online courses, then why should state governments spend unnecessary funds providing costly physical universities, paying for thousands of faculty members, when we can accomplish the same with a handful of professors, who probably don’t even need to be full-time employees?

As I said above, it is the difficulty of measuring the difference between real food and packaged food, between education provided according to models that are millennia old and taped, mass-provided lectures, that makes the capitalist logic so attractive. The very evaluative tools that capitalist society creates to measure outcomes are biased against recognizing any important differences so long as the obvious immediate need is taken care of. The fact that the benefits of education cannot always be discerned by quantitative testing, the fact that many important nutritive ingredients in food are ignored by standard analysis—all this militates in favor of using the cheapest means of satisfying some easily identifiable immediate need.

If we are interested not in “the superiority of the things produced” but only or chiefly in “the amount of wealth accumulated,” then we will naturally not focus overmuch on the quality of the goods we produce, provided that we can convince someone to buy them. If we are in the business of selling food, we will take advantage of public ignorance as well as people’s inability to afford quality food, in order to sell packaged corporate food that does indeed satisfy the immediate goal of taking away hunger, but is hardly able to nourish the human body in the way that food made from real ingredients, with few or no artificial additives, can. Economic efficiency will mean not production without waste, but production that is as cheap as possible. It is not a waste, however, either of time or of resources, to prepare a meal from healthy ingredients, even though it might cost more than to heat up packaged food. But the latter satisfies better the reductionist logic of capitalist efficiency in that it appears to produce the same output—immediate alleviation of hunger—with fewer inputs as measured by the cost of production. The same logic applies in education and indeed in any area of the production of goods or the provision of services. In this way the spirit of capitalism operates to set the tone for society as a whole, to focus our attention on wealth accumulation, and distract us not just from concern with product quality, but from all those aspects of life which, in the end, matter so much more than the accumulation of riches.

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