What, Another Marxist Predicts the Collapse of Capitalism?

Vatican watchers in Italy are getting into a fever about the new economic encyclical by Benedict XVI, due out in a month or so.

The same thing happened almost twenty years ago, in 1991, just before John Paul II issued his much-proclaimed economic encyclical “100th Year” ( Centesimus Annus ). Then, too, the beehive of the European left was feverishly abuzz, fantasizing in print that the pope would shortly move to the left of Willi Brandt, Neil Kinnock, and all the other famous leaders of the European left. Then John Paul II issued the most pro-enterprise, pro-human capital instruction of any pope ever (“In our time, in particular, there exists another form of ownership which is becoming no less important than land: the possession of know-how, technology and skill . The wealth of the industrialized nations is based much more on this kind of ownership than on natural resources.” Centesimus Annus #32). The hive fell unforgettably silent.

This time, the newspapers are touting a new diatribe recently released to the Italian press by Ernst-Wolfgang Böckenförde, a German jurist much respected (they say) by the pope. The main point of this distinguished jurist is that capitalism is now definitively dead. From his autopsy he concludes that the death was due to fundamental flaws in its original “logic.”

As for sighting the definitive end and collapse of capitalism”well, here at the end of the first week in June, the U.S. economy has not yet reached the low point of 1983. And that low point occurred just before the biggest and longest-lasting economic expansion in the history of the world, from 1983 until 2008. The current downturn is, moreover, still far from being another Depression of 1929”which did not kill capitalism. If the U.S. economy now collapses further, after the herculean one-trillion dollar deficit spending of President Barack Obama, the cause will not have been lack of state action, but death by state action.

There are three problems with the current ill-tempered attack on capitalism by Ernst-Wolfgang Böckenförde, distinguished German jurist.

First, Böckenförde argues in terms of abstractions and logic and functional analysis. Good enough for the classroom. But real existing capitalism has been shaped by and is responsive to a world of contingency, happenstance, and constantly shifting roadblocks, and opportunities.

Contrary to his analysis of its so-called logic, capitalism succeeds precisely because it is so adaptive to daily reality. Even its own internal reality is concrete, complex”different in different geographies and cultures. Capitalism is not a system of univocal logic and “a very few simple principles.” It is rooted not in the speculative mind of the logician, but in the practical order of practical wisdom. Its adaptability to circumstances large and small marks it as a fruit of practical wisdom, not mere logic.

Second, like his mentor Karl Marx, Böckenförde dreadfully misunderstands the “inner principles” of capitalism”even its main motor force and energy. He is as blind as Marx to its distinctive differences from rival systems (ancient, medieval, traditional, fascist, socialist, Euro-socialist, and third-world agrarian). He does not grasp the secret of its creativity, its ennobling effects upon even small entrepreneurs, and its reliance on many moral principles, such as honesty, hard work, habits of cooperation, and the daily inventiveness of individuals. (Where personal morals are slack, capitalism cannot succeed, and peoples regularly fall prey to authoritarian rulers.)

Third, Böckenförde seems strangely uncritical about his own proposed remedies for the deficiencies which he imputes to capitalism. He recommends as a new point of departure the principle of solidarity (is there only one?), guidance and direction by the state, and special state concern for growing gaps of inequality. It might be instructive in regard to shifting gaps to note the rapidly rising years of average mortality even in the poorest nations, such as Bangladesh, and the quite rapid strides out of poverty for more than half of all nations and billions of people since 1945.

Moreover, we still have vivid memories of ugly regimes in the twentieth century, regimes that proposed to build a New Order precisely upon false conceptions of solidarity, state guidance, and mirages of equality. We are well to remember such regimes, full of exaltation and comradely love.

Such terms as solidarity , the common good , the guardian state , close regulatio n, and even equality are, as history has painfully taught us, equivocations. Each is, tragically, subject to awful abuse. Unchecked by respect for individual persons and individual initiative, these can be principles of strangulation and death, not of vitality, life, invention, and creativity.

That is why John Paul II delineated with such care his own conception of solidarity, as another name for universal love and concern. He was careful to show that genuine solidarity, unlike the false type, must respect the subjectivity of persons and of smaller communities. The pope here had in mind, particularly in Solicitudo Rei Socialis (1981), a defense of the intersubjective culture of Polonia against Communist attempts to suffocate it.

This unique emphasis upon what in Anglo-Saxon cultures we call “the communitarian individual” (the individual who is not atomic and alone, but a member of many different, smaller communities) provides two different forms of protection from the State, one for the individual person and the other for what Edmund Burke called “the little platoons” of daily life.

The distinguished German jurist does, however, make two important observations (which he need not have attributed to Marx, as he did, since many others have empirically made more exact points). He points to two fundamental presuppositions of the twentieth-century welfare state in Europe.

The European welfare state first presupposes the family size of nineteent-century families”about seven young earners to pay (through taxes) for the benefits for each retiree”and also the shorter average life spans of the nineteenth century. But the secular welfare states of today, it turns out, discourage large family size, and offer little motivation for the sacrifice entailed in nurturing large families during many long years of married life.

The second presupposition of the European welfare state was that each welfare nation could control its own borders, population flows, labor market, and currency. But today neither human beings nor human capital (ideas, skills, know-how, sound moral habits, etc.) are held prisoner by borders. Contemporary societies are far more open than in the past”and more peaceful, too.

Indeed, Böckenförde wholly neglects to give praise to that particular combination of democratic (or more properly, republican) polity , inventive, adaptive and mind-centered economy, and humanistic culture (of specifically Jewish-Christian, not merely Greek origin) that have brought the last three generations of Europeans the greatest internal peace, easy prosperity, and getmütlich ways of living in many, many centuries. All this is very much a gift of that capitalism he so badly misunderstands. Real, existing capitalism is a capitalism properly and organically living in, and from, a specific polity and a culture of ordered liberty.

The motive force, the engine, of such an embedded and dynamic economic system is rooted in the hearts and minds of all enterprising creative citizens. It issues in the powerful urge to inquire into the nature and the cause of the wealth of nations”nations, not individuals; all nations, not just one nation. Its great systemic purpose is to break the immemorial chains of poverty which had held the human race in serfdom for millennia.

In what way, Montaigne asked ironically in his own time, do our common people live at a higher level than at the time of Christ? What has been done so far to improve the condition of the poor down all the long centuries? Men and women started making such inquiries in earnest. Gradually, they found a way to begin lifting up the poor of many nations, then more. With many successes to learn from, and much new wisdom won through hard experience, we are now closing in upon the ever narrower circle of those still living “outside the circle of development.”

Adam Smith pointed out that universal development may not be the conscious intention of every individual economic agent. But given access to the system of natural liberty, he proposed, the various peoples of the world will reap the natural result of the law of our own natures, which presses onward through creativity exercised in liberty.

Thus, the inner energy of the system qua system is entirely moral”and it has been transformative of the human condition. Freeing every woman and man on the face of the earth from poverty is not only its aim, but its steady, plodding achievement generation after generation. I myself can remember the war-torn brokenness and poverty of Europe even during the 1950s, and rejoice in its incredible prosperity today. Just in the last thirty years, to cite one more instance, more than a half billion Chinese and Indians have escaped from the prison of poverty. The time is not far distant when all of Asia will also be middle class. Africa is next.

No other system takes the universal destination of all the goods of the earth as seriously as does capitalism. None has by dint of imagination and insight created more wealth and spread it more liberally in all directions than the capitalism much-maligned by Euro-socialists.

In our day, as John Paul II so shrewdly noted in Centesimus Annus , the main cause of the wealth of nations is ideas, knowledge, know-how [ caput ]. That, more than profits, he saw, is the motive, the driving force, of economic action today. Profit, he also wrote, is a necessary measure of how well resources and effort are being used. It is not the main driving force. Economies that burn up a lot of labor and other inputs, only to yield nothing but losses are no boon to the human race. Such systems are immensely wasteful. (Inspect here the histories of European fascism and socialism, as well as third world kleptocracies).

Ask those who think that profits are obscene if they think losses are chaste? And which is better for the human race?

It would be odd if a creature such as man and woman, made in the image of God to be creative and inventive, and made to be provident over our own earthly good, were unable to discover the natural laws of ordered liberty and fruitful creativity. It would be odd if humans could not find in using these laws of our own souls the secrets to the wealth that the Lord God hid all throughout nature itself. For it is in humble things like tar and crude oil in the desert that the great wealth”the black gold”from oil refineries is rendered usable (but not until the late nineteenth century). It is in grains of sand that the silicon so vital to electronic communications lay hidden.

Yet it is not only the useful arts, but also the highest forms of artistic creativity and the deepest forms of spiritual liberty that lie open before us”the beneficiaries of modern political economy. If we do not take advantage of the charitable, artistic, and spiritual riches open before us”we who lack not for food nor drink, nor leisure, nor ample means for discovering and then developing our own talents”then woe be upon us. We would then be the most unfortunate of all creatures.

Those who wish to destroy capitalism in its present humane forms, flawed as all human things must be (even the Church of Christ), should be terrified that their wish might come true. For what then? What shall happen to the poor then?

Those of us who were born poor, and now are not poor, can scarcely cease being grateful for the system that allowed us to seize our own responsibilities, as free women and men ought to do. If we do not live up to our possibilities, the fault lies not in our system but in ourselves.

Michael Novak, a member of the editorial board of First Things , holds the George Frederick Jewett Chair in Religion and Public Policy at the American Enterprise Institute. His most recent book is No One Sees God (Doubleday, 2008).