Prosperity and success tend to relax the mind. After the election of Ronald Reagan in 1980, free-market principles gained widespread support. For nearly three decades, most Americans experienced a long run of economic growth and widespread opportunity. Entire new industries emerged. Unprecedented fortunes were made. America has been awash in wealth and on a massive shopping spree.
These days, of course, we know that we can’t take this success for granted. The global financial crisis reminds us that free-market capitalism is not a perpetual motion machine. A punishing cycle of fear about the credit worthiness of major market actors caused markets to freeze, forcing political actors to intervene. In recent weeks, governments throughout the world have committed trillions of dollars to recapitalizing the global financial system¯hopefully to good effect.
Moreover, the American people have elected a man and a party that emphasize the limitations and failures of our economic system. Theirs is an honorable role. After all, the limitations are plain to see. A wealthy society is not necessarily a healthy one. A Republican may protest that income inequality is not a problem, but, when enough voters are energized by the issue, then by definition it has become a problem¯a political problem. The same holds for medical care, the cost of education, home prices, and the fate of the perpetually unemployed and unemployable. A free-market theorist can explain how markets provide the most efficient approach to these social problems, but the body politic does not always want efficiency.
So let’s set aside the arguments for free-market capitalism based on claims about its efficiencies and capacity to produce wealth. I want to focus on some moral arguments for free-market capitalism, so that we can more fully and intelligently participate in the growing call for a reassessment of our economic system.
John Locke argued in his Second Treatise on Civil Government that private property is a natural right, and for centuries English common law treated property rights as ancient and sacred. As Locke saw, this view of property creates a zone of freedom for the individual. The state can do many things, but it cannot dispossess us. The political will finds a limit in the right of property.
In our day we cannot think of the rights of property in the same way as Locke. Most realize that the complex organization of a modern economy and its capacity to generate wealth is itself a fruit of a well-ordered society. As Warren Buffet has often said, his property is not simply the fruit of his labor. It’s a result of his labor magnified by a system that allows an introverted, geeky guy to make investment decisions in a dynamic, growing economic system. Income taxes are, therefore, something like a user-fee paid by those who participate in the wealth creating machinery of a capitalist economy.
This more contemporary view of property as a social creature accepted, I nonetheless think that Locke’s general point holds. An economic realm largely free from political control gives us a huge arena for status and power that is independent of politics. History suggests that, in themselves, great concentrations of wealth do not seem to be a grave threat to freedom. Company towns before the achievements of the labor movement mark the zenith of capitalist control over ordinary people. They pale in comparison to the Japanese internment camps during the Second World War, to say nothing of Stalin’s gulags and Hitler’s death camps. We are much better off with Masters of the Universe on Wall Street than in Washington, D.C.
The authors of the Constitution embraced the principle of separation of powers as a check against tyranny. As a society, we enjoy an even more profound separation of powers. Our media are not state controlled. Most of our universities are not state controlled. And most importantly, our economic life is not state controlled. As a result, it is extremely difficult for any particular party or ideology to gain control over the countless levers of power necessary to punish adversaries, squash dissent, and destroy lives.
Liberals often bridle against the way in which the separation of powers tends to prevent decisive changes in our common life. A senate filibuster seems forever to block the will of the people¯or at least their version of the supposed will of the people. The same holds for the dispersion of power created by the separation of the political from the economic that characterizes free-market capitalism. As progressives see quite clearly, it is nearly impossible to legislate economic equality unless the state gains a much greater degree of control over the economic life of the nation. What they often fail to see is that the concentration of power necessary to achieve their (perhaps) noble goals creates a massive hazard for the future.
Free-market capitalism is not just a bulwark against tyranny. Markets serve human freedom in a more positive, if less dramatic, fashion. As many critics have noticed, capitalism creates wealth, but it is largely indifferent to the common good. A CEO wants to maximize profits rather than make the world a better place. A factory worker expects his union to negotiate better wages and benefits rather than solve the problems of America’s balance of trade. College professors like I would like higher salaries, and we tend to be unmoved when someone points out the need to hold down the rapid increases in the cost of higher education.
Adam Smith hypothesized that an invisible hand guides these narrow, self-interested concerns toward a good outcome for everybody. Maybe this is largely true, though clearly not always, as the recent financial crisis shows. And in any event, whatever contributions a free-market system makes to the common good, they are not sufficient. We need politics in order to come together for larger purposes¯not only to overcome the limitation of free-market capitalism with social programs, but also to achieve goals and set standards that have little or nothing to do with economic principles. Need I remind readers that the distinction between red states and blue states is not primarily a matter of disagreements about economic policies?
Yet, politics has its downside. As Oscar Wilde observed in a perceptive witticism, “The problem with socialism is too many night meetings.” It turns out that calibrating our daily lives with calculations about what best serves the common good is exhausting. We all know this intuitively, which is why friends who agonize about their carbon footprints or who are preoccupied with the source of their food can seem so dreadfully tedious. I thoroughly endorse responsible citizenship, but God save us from a life of perpetual political deliberation.
Free-market capitalism does not ask us to take a job as an insurance salesman or nurse or teacher or computer programmer as a matter of public duty. Nor does it give high moral purpose to buying a particular brand of toilet paper or pickup truck. Of course, we hear lots of talk about our public duties and moral purposes when it comes to jobs and consumer choices, and that is as it should be. Our larger social selves surround and interpenetrate our participation in free-market capitalism. Nonetheless, free-market capitalism does not enforce this cajoling, moralizing voice; it does not give it the force of law. As a result, in a system where economic life functions at a decent distance from political life, we have a great deal of space to live according to our own views.
This hardly seems a moral advantage. In fact, the freedom to pursue self-interest strikes many as the fundamental sign of the immorality of free-market capitalism. But I wonder if these critics recognize the alternative. It’s not the case that everybody does or ever will agree about the common good. As a consequence, if economic life is to serve public purposes more directly, then our political debates and conflicts must expand in scope and consequence.
I’ve spent two decades in academia trying to fend off those who want to task the university with the supposedly higher goals of social justice. I’m an advocate for something more modest: an intellectually serious education. And I’m also a voice that tries to remind my Leftist colleagues that their political principles are hardly self-evident. It exhausts and demoralizes me to think of a similar political penetration into the rest of American life. Today, we can enjoy the camaraderie of the workplace and enter into the hurly-burly of the marketplace, and we do so without joining together with others in the always difficult and existentially demanding (and dangerous) project of political solidarity. This strikes me as a significant moral achievement. It’s not easy to keep the political idols of our age at bay.
Political choices invariably involve judgments: What are the likely improvements in our common life over and against the danger of real losses? I’m a conservative largely because I fear a moralistic crusade to transform our very imperfect society by recourse to abstract, imagined ideals, and in so doing to diminish the social goods we actually possess for the sake of goals we cannot achieve. Substantive equality has long been a modern dream, one that has created unprecedented concentrations of state power by absorbing the economic realm into the political. I wish Barack Obama all the best in his years as my president. And I hope he has the wisdom not to sacrifice the present moral advantages of free-market capitalism in pursuit of this modern and unholy grail.
R.R. Reno is features editor of First Things and professor of theology at Creighton University.
