|1The Fourteenth Annual
John Bonython Lecture
The Hilton, Sydney, October 15, 1997
The Centre for Independent Studies in Australia
The Morality of Capitalism
Professor James Q. Wilson
Capitalism has won the economic battle around the world, but it is everywhere on the defensive with respect to the moral struggle for men’s souls. We know it won the economic battle because a natural experiment was performed after the Second World War. A number of countries were selected – Vietnam, Korea, Germany and China – and cut into two pieces, with capitalism installed in one part and ‘socialism’ in the other. Capitalism won a resounding triumph. Except for a handful of professors, everyone now recognises that capitalism produces greater material abundance for more people than any other economic system ever invented.
The lasting challenge to capitalism is moral. Even Marx himself may have understood this, at least in his early years. This battle persists, because many people still believe that the economic gains produced by capitalism have been acquired at too high a price. The main critiques of capitalism are familiar to you. Let me mention four.
(1) Capitalism produces excessive inequalities of income and wealth; the rich get richer, and, although the poor get less poor, the gap between the rich and the poor does not close.
(2) Capitalism generates alienation; the worker works for someone else – the owner of the means of production – and is therefore deprived of the ownership of what he produces. The worker becomes a commodity, estranged from what he has produced and estranged from his fellow man, linked with the rest of society only by a cash nexus.
(3) Capitalism produces environmental harm; because of its great success in wielding modern technology and science it has produced ever more sophisticated devices and chemicals that have poisoned our air and water.
(4) Finally, capitalism causes materialism; we see a society built on a consumer culture in which people are obsessed with getting more and more, and where their wants are created for them by television.
Now I think that there are reasonable and, to me, convincing answers to each of these criticisms. Let me mention what some of these answers may be, and then indicate why I think the problem of the morality of capitalism none the less persists.
First, inequality. Every social system produces inequality: if not inequality of wealth, then inequality of power or inequality of military might. We only have the choice of which kind of inequality we wish to subscribe to. Many nations have claimed to eliminate market-based inequalities, but they have done so only by creating non-market inequalities – a Soviet nomenklatura, a ruling military elite, an elaborate black market, or a set of non-cash perks. Inequality is an unavoidable feature of human life in organised societies, and capitalist in-equality is the one that provides the most openings for upward mobility, because to rise in that hierarchy you do not need the largest sword or the most votes, you only need to accumulate economic resources.
Between unconstrained market inequality and the lesser inequality achieved by redistribution there is much to discuss and decide, and so the welfare-state debate proceeds. Participants in this debate sometimes forget that the only society in which such a debate can have much meaning is one that has produced wealth that can be redistributed, and acquired a government that will do so democratically – in short, a capitalist society.
Alienation. I think Karl Marx was wrong, it is not work that produces alienation, it is idleness. People by and large prefer work to non work, even though in many parts of the world society has done its best to encourage non work. In the United States, people when asked how they feel about their jobs almost uniformly say they like their work. Americans are gloomy about the decency of their culture and the justice of their politics; it may be one of the supreme ironies of our time that they are often more satisfied with their employer than with their community. If so, Marx has been stood squarely on his head.
Third, the environment. Environmental harm does exist, and technology is linked in important ways with producing this harm. But that harm is not disproportionately the result of capitalist activities. We know this, because when we tore down the Berlin wall in the early years of this decade, and peeked over that wall to see what lay behind it in a socialist state, we found a vast environmental toxic waste dump. In Eastern Europe and the former Soviet Union, govern-ments had used their resources mindlessly and deposited the refuse egregiously all about the landscape.
Václav Havel explained why: a government that commands the economy will inevitably command the polity; given a commanding position it will distort or destroy the former and corrupt or oppress the latter. And though environmental risks are a problem for capitalist societies, those prob-lems are not nearly as great as they were in state controlled societies.
Finally, materialism. Yes, materialism is the result of economic progress, and yes, economic progress does come from capitalism. What is revealed by materialism, however, is not a corruption of the human soul but a revelation of one aspect of the human soul. On this subject I will have more to say in a moment.
Despite my answers to these common moral criticisms of capitalism, the criticism persists. It persists not only in the words of Marx, and Marx’s few remaining followers (most of whom seem to be located on the campuses on large western universities). It exists even among the defenders of capitalism. The conventional defence of capitalism is that it is an economically impressive mechanism for distributing resources, and a politically useful way of preserving freedom, but it has no moral consequences.
Friedrich von Hayek, a defender of capitalism, wrote that ‘in a free society it is neither desirable nor practicable that material rewards should be made generally to correspond to what men recognize as merit.’ He thought that capitalism was a morally neutral tool for producing wealth; indeed, he resisted the idea that it might have moral significance, because he did not want it to occur to any government to try to claim that its moral significance could be improved by public action. Paul Johnson, the distinguished English historian and writer, has referred to capitalism’s indifference to the notion of moral choices.
Even if you don’t read Marx or Hayek or Johnson, you do watch television, and television contains the ultimate contemporary message. In my country, which produces much of the television seen around the world, every mystery story, virtually every cops and robbers story has the same lesson. In the last reel the villain is the man in the three piece suit with neatly trimmed hair who is driving a fancy automobile, and the hero is a young person wearing blue jeans and a tee-shirt (and, if it is cold, a leather jacket). Never mind that in reality it is the opposite that is almost invariably the case.
Television has captured the image of the capitalist as being the source of those conspiracies that afflict modern society, and that message, if not embraced by the public, is certainly welcomed by it. I do not think there is anywhere in the world where you can find a monument to capitalism. My wife and I recently visited Scotland, and discovered that even in the country that gave birth to the founder of capitalism there is no monument to Adam Smith.
I have a different view about the relationship between capitalism and morality. It is certainly not the view of Marx, and it is not the view of Hayek or Johnson. My view is that capitalism has three relations to morality. The first is that it assumes the existence of a moral order; that point, I think, will be obvious to you and I will comment on it only briefly. Secondly I will argue a more controversial point: that capitalism in the long run actually strengthens that moral order, indeed that it improves people. Having said that, I will concede in my third point that capitalism, like all forms of social organisation, has its limits, and that those limits must be recognised and some restrictions placed on the activity that has brought us wealth.
First the assumptions on which capitalism rests: it requires at least two things of society. It requires trust and it requires a command of your own instincts. Trust must exist in a society for it to be a capitalist society because people who do not trust their neighbors, do not trust other groups, do not trust distant people, cannot trade with them; and, unable to trade with them, capitalism remains at the level of a bazaar economy. That is to say, a few people trading with hastily announced, verbal prices, negotiated to suit friends and raised to penalise enemies.
In any economic system, buying and selling occurs, but voluntary buying and selling on a large scale among strangers requires confidence in fair dealing that cannot depend on one party having much detailed knowledge about the other. Routinised exchanges present some of the same problems as a Prisoner’s Dilemma, in which both parties have an incentive to cheat if they assume they will only play the game – or engage in the exchange – once.
The solution to the dilemma lies in repeating the game in conformity with this rule: do to the other party what he has just done to you (‘tit for tat,’ in Robert Axelrod’s phrase), but make your first move a ‘nice’ one in order to encourage the other party to do the same. In some societies, mainly Western ones, this rule is enforced by contract law; in others, notably Eastern ones, by group affiliations. Capitalism takes advantage of this rule in order to create large, permanent markets among strangers that can operate without incessant recourse to retribution. Without that minimum level of trust, the possibility of capitalist accumulation disappears.
The central problem that Russia faces today is to produce a society that has that level of trust, so that capitalism, which now is in its primitive early stages, has a chance to flourish and bring wealth to the entire country. For this to happen public authorities must take steps. They must define and defend private property laws. They must define and defend contracts and offer a means to settle disputes between the signatories of contracts. Rules against fraud and mis-repre-sentation must be enforced. Today there is contract law but it is managed by the Russian Mafia. There are private property claims but they are managed by self-aggrandise-ment, and the rules against fraud scarcely exist.
The other premise on which capitalism depends is self-command. Not only must you trust your fellow man, you must be able to trust your own instincts, and your own instincts are to consume today what is available today and to put aside nothing for tomorrow, whereas capitalism requires the opposite of us. Adam Smith in The Wealth of Nations understood that investment was required for capital to be accumulated, and that investment in turn required that some people be willing to postpone immediate gratification for the sake of later (and larger) benefits.
Smith did not explain why we should assume that the number of savers will be sufficient to produce the necessary investment. He observed that ‘prodigality,’ the result of a ‘passion for present enjoyment,’ will diminish the capital available for economic growth, and so it will be necessary for the ‘frugal man’ to save enough to spare the rest of us from the consequences of our own prodigality. Will this occur? Smith predicts that ‘the profusion or imprudence of some’ will be ‘always more than compensated for by the frugality and good conduct of others.’ Wealthy societies are those societies in which Smith’s assumption about self-command turns out to be true. Historians have not yet fully explained why self-command arises.
People differ in their degree of self-command but are alike in the high regard in which they hold people who display self-command (provided the display is not excessive, as it is with personalities that are miserly or rigid). Self-command is, in short, regarded (up to a point) as a virtue, one that is essential to capitalism. The recent decline in the rate of American private savings corresponds to a period in which self-indulgence has been conspicuous. I have no idea what to make of this except to suggest that a complete understanding will almost surely require a cultural as well as economic analysis. If all that mattered were net yields on savings, the Japanese would not be saving anything: their banks pay very low interest rates, yet their customers save at world-record rates.
These are the assumptions upon which a capitalist order rests, and I think most people hearing them described will not dissent profoundly from this argument. But now the more controversial part of my argument. My second point is that capitalism in the long run strengthens the moral sensibilities. It does so by sustaining a liberal social order, by sustaining and indeed creating criticism of capitalism itself, and by enhancing civility among citizens.
Capitalism is essential to liberalism – and by liberalism I mean the principles around which a free society is organised. It has become clear during the last half century that democratic regimes only flourish in capitalist societies. Not every nation with something approximating capitalism is democratic, but every nation that is democratic is to some significant degree capitalist. There are capitalist economies that exist in authoritarian states but they do not do very well. There is a relationship between democracy and capitalism that the defenders of democracy often overlook to their great disadvantage.
I think that the relationship rests upon two principles. The first is that capitalism requires free communication. In the long run you do not get ahead by having secrets. You may have a proprietary right in the product you have invented and are now marketing, but getting that product to the point where you can market it requires the freest exchange of scientific and technological information. No society that constrains in any meaningful way the distribution of that information can hope to catch up in the race for economic improvement.
Capitalism also has another advantage that was pointed out by the late great British anthropologist, Ernest Gellner, who died a year or two ago. Gellner in reflecting on the failure of European communism observed that no society can avoid finding a way to channel the desire men have to advance themselves. In traditional and in statist societies, the way to attain wealth is first to attain power, usually by force. But in market societies, ‘production becomes a better path to wealth than domination.’
Critics of capitalism argue that wealth confers power, and indeed it does, up to a point. Show people the road to wealth, status, or power, and they will rush down that road, and many will do some rather unattractive things along the way. But this is not a decisive criticism unless one supposes, fancifully, that there is some way to arrange human affairs so that the desire for advantage vanishes. The real choice is between becoming wealthy by first acquiring political or military power, or getting money directly without bothering with conquest or domination.
If it is in man’s nature to seek domination over other men, there are really only two ways to make that domination work. One is military power, and that is the principle upon which domination existed from the beginning of man’s time on this earth to down about two hundred years ago, when it began to be set aside by another principle, namely the accum-ulation of wealth. Now you may feel that men should not try to dominate other men – although I do not see how you could believe this in Australia given the importance attached to sports. You may like to replace man’s desire to dominate other men, and in a few cases it is prevented by religious conversion or a decent temperament. But as long as the instinct persists, you only have two choices, and if you choose to compete economically you will reduce the extent to which one group of men will tyrannise over another by the use of military might or political power.
Another way by which capitalism strengthens our moral sentiments is that it creates and empowers its own critics. When Daniel Bell published his famous essay on ‘The Cultural Contradictions of Capitalism,’ he argued that the bourgeois culture – rational, pragmatic and moral – that had created capitalism was now being destroyed by the success of capitalism. Capitalism created both a parvenu class of rich plutocrats and corporate climbers, and a counter-culture of critical intellectuals and disaffected youth; the latter began to have a field day exposing what they took to be the greed, hypocrisy and Philistinism of the former.
This is a theme first developed by Joseph Schumpeter, the great Harvard economist, in his 1947 book, Capitalism, Socialism and Democracy. It was a remarkable book because it begins with the proposition that Karl Marx got it exactly wrong. Capitalism will not be destroyed, he said, by its failures; it will be destroyed by its successes. Now I think he was wrong to say that capitalism will be destroyed, but he was right to point to the changes capitalism brings in the social and political order that will constitute an ever-growing, ever-larger challenge to the right of capitalism to exist.
The way they will do this is by creating and sustaining a class of intellectuals. Capitalism requires intellectuals. Business people support universities – especially, it would seem, those universities that devote much of their faculty’s time to attacking business people. It supports them for a very good reason: capitalism understands the value of reason and knowledge. It understands the value of scientific inquiry. It knows that whatever the intellectuals may say on the cocktail party circuit or speaking on television programs or writing in quarterly journals, their general level of activity is essential to the dissemination of knowledge.
But by creating and sustaining an intellectual class it creates and sustains a group of people who inevitably will become critics of capitalism, just as they are critics of democracy, culture, and religion.
Intellectuals live in a world of artificial models that are designed in their mind to capture some part of reality and, unlike practical people, they think that those intel-lectual models in some cases actually describe reality. And when you have the view that the world ought to fit your model and you notice that it does not, you assume that there is some-thing wrong with the world. Religious zealots are destroying your pure spiritual insights, government officials are contaminating your right to communicate, and capitalists are sustaining a gross consumer-oriented materialist society which cannot support intellectuals at the level to which they are entitled.
But this process of creating and sustaining your own critics is unique to capitalism. There is no other economic order that does this. All other economic orders have to be overthrown either by military rebellion or by internal collapse because they do not accommodate them-selves to critics.
It is also the case that capitalism makes it easier to deal with environmental problems. Enviro-n-mental problems exist. Air is free; we consume air without charge, we emit pollutants back into the air, often without charge. And if something is free people will consume more of it then they really need, or at least much more than they would if they had to pay for it. Since we have found no way to endow clean air with property rights, we do not know how to limit this except by the use of an external authority that will put some restrictions on it.
To compel people who are engaged in production and exchange to internalise all of their costs without destroying production and exchange, one must be able to make proposals to people who do not want to hear them, induce action among people who do not want to act, and monitor performance by people who do not like monitors – and do all of this only to the extent that the gains in human welfare are purchased at an acceptable cost. No regime will make this result certain, but only democratic capitalist regimes make it at all possible. Why? It is not that capitalists believe in the environment or have a wish to improve the world. It is because they are part of a system in which the world must be improved if they are to survive.
Capitalism brings three advantages to the environmental task:
(i) It creates and maintains a private sphere of action. A private sphere of action makes capitalism possible because you can operate free of government control. But by maintaining a private sphere you also provide a protected place for people to stand who wish to make controversial proposals. You create a world in which the critics of capitalism – those who wish to see capitalism restrained in order to protect the environment – have an opportunity to move. No such world existed for them in the Soviet Union, and no such world exists for them today in the People’s Republic of China. The absence of a private sphere means the absence of an environmental ethic.
(ii) Secondly, capitalism produces prosperity, and prosperity changes the minds of people, especially young people. It endows them what we in the social science business call in our professional journals, post-materialist or post-industrial goals. That is a fancy way of saying that when society becomes rich enough for everybody to be fed and where no-one has to struggle day and night to put food on their table, we begin to think of other things we can use resources for. Those other things include taking care of animals, protecting the environment, preserving land and the like. The prosperity induced by capitalism produces of necessity an environmental movement. How that environ-mental movement is managed of course is a very real question; sometimes it is managed very badly, other times it is managed reasonably well. Environmental policies in capitalist systems will vary greatly – from the inconsequential through the prudent to the loony – but they will scarcely exist at all in non-capitalist ones.
(iii) The final thing capitalism brings to this task is that it creates firms that can be regulated. You may think that this is a trivial statement. You all know that business firms are regulated – sometimes to the advantage of the firm, sometimes to its disadvantage. But I don’t think you realise the importance of this fact. Consider the alternative. Suppose the government ran everything. What would be regulated? The main reason why Eastern Europe was a vast toxic waste dump, and why many parts of China are becoming a vast toxic waste dump, is because the government owns the enterprises and one government agency does not – cannot – regulate another government agency. This is because neither the regulator nor the regulatee has any personal motives to accept regulation. But they can regulate firms, and so when firms are producing wealth and people decide that the distribution of wealth ought to be made to accord to an environmental ethic, capitalism makes that possible.
My final argument about how capitalism strengthens morality has to do with the rise of civility. This is a slow process; it does not occur overnight. The beginnings of capitalist enterprise in eighteenth and nineteenth century England and America often do not reveal persons going out of their way to be kind to others. But as time persists the obligation for kindness grows. Now many of you may find this a dubious statement; after all, you would argue, capitalism is based on the principle of self-interest. How can self-interest lead one to be more civil?
It is quite true that capitalism is based on self-interest. So are all other economic systems. The great advantage of capitalism, first stated by Max Weber, the German sociologist, is that only capitalism disciplines self-interest. Only capitalism requires that entrepreneurs worry about what their employees might do – because they cannot command their employees to perform; worry about what their customers might do – because they cannot command their customers to buy; worry about what their investors might do – because they cannot command their investors to invest. Capitalism is the only economic system that takes self-interest and puts it in a position in which it is moderated by the logic of the economic system.
As a consequence, capitalist style self-interest encourages the emergence of civility. Let me give you some examples. Many of you may recall stories about the old Soviet Union. In Moscow, you tried to shop at a department store (there was only one department store), or to eat in a restaurant (there were only a few, and the government owned all of them). Everybody who did this brought back stories about how the help in the department store and the waiters in the restaurants were inattentive to the needs of the customers. Communist managers never took customers as seriously as they took commissars. But if you haven’t been to Moscow – and I have not – you have examples much closer to home.
In the case of the United States, take airports. Until recently the only way to eat a meal in an airport was to sit down in a cafeteria that was licensed by the airport to supply on a monopoly basis all of the food consumed in the airport. Of course you could leave the airport, but the airport was ten miles from the city, so there was no other place to go. The airport purveyor of food had no corporate name that you would recognise, it was called something like ‘Host.’ The thing to know about ‘Host’ was that it didn’t host you; you went in and found bad food served by indifferent or surly waiters.
Then a light bulb went on in American airport management, and they said ‘Let’s license our food providing service to competitors that have national reputations to protect.’ Now you go into an American airport, not unlike the airports here in Australia, and you can choose between McDonald’s, Burger King, Taco Bell and Starbucks. Each of these companies knows that how you judge them in the airport will reflect how you evaluate them off the airport. Capitalism requires people to treat customers as if they matter. As any economist will tell you, a firm’s reputation has a capital value (it is sometimes measured on the balance sheet as goodwill), and so business executives who wish to maximise that value will devote a great deal of effort to inculcating a service ethic in their employees.
You will see a problem in this argument. ‘Well this is just pretence, isn’t it? I mean, of course McDonald's, Burger King and the like will treat you as if you matter, but do you really matter? Isn’t this just a charade thrown up to get your three dollars and fifty cents for a Big Mac?’
To answer that question you have to ask yourself, ‘How is human character formed?’ The best answer was given by Aristotle two and a half millennia ago. He said that human character was formed by a process of habituation. You did not become a good person by listening to a moving sermon and memorising it, or reading a beautiful poem and having it embedded firmly in your soul. You became a good person because you parents and your friends told you that you must do the right thing in countless small ways every day, and you built up the habit of doing a good thing, under the guidance of the people who already knew what a good thing was.
Now there is little reason to suppose that habituation ends with adulthood or cannot occur outside the family. I have to appeal to your own intuition here, because I can present no evidence. But suppose everybody who delivered food in airports still worked for Host. Would their character off the job be better than would be the character of the same people, working for essentially the same wages, but working now for McDonald’s, Burger King, Starbucks or Taco Bell, and being told by management to speak politely to every customer, ‘Good morning Ma’am,’ ‘Good morning Sir,’ ‘Thank you Ma’am,’ ‘Thank you Sir,’ ‘Will there be anything else Ma’am?’, ‘Anything else Sir?’ Employees must do that eight hours a day, five days a week. My suggestion is that that will have an impact on human character, just as parents train their children by means of constant small reminders and an insistence on routine observances.
When Adam Smith wrote that the ‘understandings of the greater part of men are necessarily formed by their ordinary employments,’ he was worrying about the harmful effect on the mind of dull and exhausting labor. But the shortened work day and the use of machinery have made this effect much less likely than it was in the eighteenth century. Smith suggested that the increased division of labor would turn most workers into unhappy copies of Charlie Chaplin in Modern Times, but the advent of modern technology has relieved many workers of precisely those mindlessly repetitive tasks that he supposed would destroy the human spirit. Today it may be that it is the manners of people that are enhanced by their daily employment.
People, of course, know the difference between a profit-making firm on one hand and a child-rearing family or a soul-comforting church on the other. They have different expectations of each. But no economist should suppose that since firms are about profits, that is all they are about, any more than we should imagine that because families are about sex that is all they are about.
There is still an American institution that has not yet embraced this philosophy of mine. It is Disneyland. I don’t mean to criticise Disneyland; on the contrary, along with jazz music and the United States Constitution, I regard it as one of the three greatest organisational accom-plishments of American culture in the last 200 years. I adore Disneyland – I take my children and my grandchildren there every chance I get – but it has one problem. Disneyland sells its own food. No matter which restaurant you go to, the Mexican restaurant, the Italian restaurant, the French restaurant, the seafood restaurant, it’s Disneyland food. The food is awful. It has not occurred to them to license out food distribution to companies that have a personal, self-interested stake in supplying good food and thus in teaching their employees to do better.
Capitalism promotes civility in another way: it makes prejudice too expensive to afford. The great Nobel laureate economist, Gary Becker pointed this out in a book written 40 years ago. People didn’t take it seriously then but I think we must take it seriously now. If you say to yourself that you will not serve or employ blacks, or Turks, or Cypriots, or whatever group your society happens to be hostile to, you will reduce the number of customers you can reach and the number of potential employees you can hire. This has the effect of shrinking your market and raising the wages of those employees whom you can hire.
Now in some environments, such as in the American south until the 1960s, it was possible to maintain segregation in public facilities, because the legal system and its surrounding culture supported segregation so strongly that a businessperson had no chance. Embedded in a thoroughly racist community, capitalism could easily exist side by side with prejudice, because there are no competitive disadvantages to acting on the basis of prejudice. But once that legal and cultural system began to crack, once there were a few opportunities for hiring people on a non-discriminatory basis or serving customers on a non-discriminatory basis, firms changed dramatically. The nationwide firms changed the fastest, because they realised that capitalism is incompatible with prejudice.
None of this is to deny the important role played by law, court order, and the example of desegregated government agencies. But imagine rapid desegregation occurring if only law were operating. It would be slow, uneven, and painful. Public schools desegregated more slowly than hotels and restaurants, not only because white parents cared more about whom their children went to school with than about who was in the next hotel room or at the next café table, but also because school authorities lacked any market incentive to admit more or different pupils. Indeed, a statist economy will not only resist desegregation, it will allocate economic benefits – franchises, licenses, credit – precisely on the basis of political, class, ethnic or racial status. It is capitalism that really requires a cosmopolitan attitude.
Finally, I think that capitalism enhances civility by promoting self-command – not invariably, not routinely, but often enough. You may have an especially rich executive suite equipped with two helicopters and two Lear jets, and you may take long vacations and you may accumulate large salaries. But somebody out there is going to notice it. There will be a hostile takeover attempt, and the first thing they will promise to do is to sell the helicopters and the Lear jets and reduce the size of your office, to deliver more value to the shareholders. It does not happen automatically, and it does not happen in every case, but it happens often enough so that executives contemplating their own benefits realise that somebody is looking over their shoulder.
Capitalism creates privilege; socialism creates privilege; mercantilism creates privilege; primitivism creates privilege. Men and women everywhere will seek advantage, grasp power, and maintain hierarchies. But to the extent that a society is capitalist it is more likely than its alternatives to sustain challenges to privilege.
These are the ways in which, in my view, capitalism enhances morality. There are limits to this, limits that exist in any social or economic system. Every human activity has costs (it was a defender of capitalism, after all, who reminded us that there is no such thing as a free lunch). We know that capitalism left unattended can produce monopoly or achieve privileged political positions. Adam Smith argued against this in 1776 in The Wealth of Nations. We also know that capitalism, like all economic systems, will consume external resources boundlessly if it doesn’t have to pay for them. So laws have to be put in place to block collusion and fraud and monopoly and the unfettered use of scarce natural resources. However, I think that democratic politics is keenly aware of the opportunities to do this.
Having said all of this let me conclude with the following note. Capitalism, despite my arguments, perhaps indeed because of my arguments, will retain its critics. It will always be a system under attack. There will never be a monument built to it. Adam Smith will remain a name in Scotland with probably no statue erected to him. And why? There are at least two reasons that occur to me.
One is that people prefer equality to liberty. This is an observation Alexis de Tocqueville made about the United States in the 1830s, and I think it is even more true today. Americans, Australians and Englishmen have fought to defend liberty, but only when it was clearly challenged. The rest of the time liberty is something that works to the advantage of small dissident groups, reaction-aries or radicals. We do not live and breathe a desire to see our personal liberty maintained. But equality, ah well! If you can reduce the gap between me and my fellow man, by raising me up or by pulling him down, that I can see as a continual and constant benefit. And as a result, no matter who is in office, whether it is Margaret Thatcher or Ronald Reagan or their deepest critics, the share of public resources that go from the private sector to the public sector continually increases in all industrialised nations.
The other reason, which is perhaps more compelling in the long run, is that capitalism reveals all sides of human nature. When you allow people to produce what they want, some will produce things that we don’t like, and others will consume things that we don’t like. We will get from Hollywood trashy movies. We will get from the media tabloid journalism. We will get from the pharma-ceutical business feel-good drugs. We will get from music composers self-indulgent music. We will get from our children idiotic adolescent dress with spiked purple hair knobs. There is an enormous temptation to say that these prices we pay are too high.
But this is human nature revealing itself, and human nature is a mixed bag. We have beautiful instincts, and we have base instincts. We like good things and we also like trashy things. Kenneth Minogue, who teaches politics at the London School of Economics, once said, ‘Capitalism is what happens when you leave people alone.’ To which I would only add, ‘What you see is what you get.’
About the Author:
James Q. Wilson spent 26 years as Professor of Government at Harvard University and has served on a number of national commissions in the United States concerned with public policy, including the White House Task Force on Crime and the National Advisory Commission on Drug Abuse Prevention. Professor Wilson is most famous for the 'Broken Windows' theory of crime, developed in a paper written jointly with George Kelling in 1982. He is also the author of numerous books, including most recently Moral Judgement: Law, Science and Personal Responsibility (1997).