BY DAVID MIN
Capitalism is an incredible system, obviously, with the capacity to generate extraordinary economic growth and innovation for any society in which it operates. Free trade and open capital markets have fueled enormous increases in productivity, which have led to concomitant increases in the world’s wealth, in terms of material goods to satisfy our material needs. Malthus perhaps is very restless right now in his grave at the thought of 2001, where the world can produce not only enough food and other basic necessities for a population of 6 billion, but luxury goods and services for the convenience and entertainment of a significant portion of that population. Capitalism, in large part, has made this possible.
But with the undisputed victory of capitalism as an economic system has come a sharp rise in the rhetoric surrounding capitalism and economics. Economic principles are now prevalent in discussions of law, philosophy, politics and science. This supercapitalism, or extension of capitalist ideology beyond the economic sphere and into our core belief system, is troubling at the very least.
What is the role of capitalism, or any economic system, in the larger context of society and government? What is the role of society and government, for that matter? If we assume that a democratic government, on some level, exists to reflect the preferences of its citizenry, then it would appear clear that capitalism exists within that framework as well. While there are a few arguments for the notion that capitalism is itself a moral system, which I will go into, I would argue that the main reason capitalism has been so successful in modern society is because a basic preference among all people is to achieve material comfort, for themselves and others, and capitalism simply does a better job of creating the material wealth that can provide material comfort. Virtually no one wants to be poor, starving and wretched. Virtually no one wants their fellow citizens to be poor, starving and wretched. Virtually everyone enjoys comfort and leisure. Insofar as capitalism’s results coincide with these democratic preferences, and insofar as democratic preferences are considered a justifiable moral foundation for law and policy, capitalism is clearly a desirable economic system.
But should capitalism itself be considered a proper moral foundation for our system of justice? Economic libertarians often argue that capitalism is a proper moral system, because, in theory, it protects contract rights and property rights absolutely. While contract rights and property rights are certainly important, I would hope that everyone agrees that there are other rights that are just as, or more, important, and that an absolute right to property or to contract is morally untenable, to the extent that these rights must and do conflict with other rights. If you take the idea of absolute property and contract rights to their ultimate conclusion, you end up with results that are abhorrent to our moral sensibilities, such as the argument that the right to contract should include the right to contract into slavery.
But, increasingly, it has become apparent that the success of capitalism as an economic system has led to an increased acceptance of capitalist ideology as a legitimate metaeconomic philosophy. People, a lot of them, now discuss efficiency and wealth maximization as independent bases of justice. Missing the forest for the trees, they use capitalist doctrine as a normative guideline. When something is efficient, it is right. When something is wealth maximizing, it is good.
Hey, I’ve got nothing against efficiency and wealth maximization. For the aforementioned reasons, I think they’re pretty good objectives. I just happen to think that they’re not independent moral justifications for doing something. I think these are economic objectives and should be considered in such light. I think that when these economic objectives conflict with our noneconomic moral principles, these economic objectives should defer. And I think that most people, if they think about it, would agree with me.
The economist Edward Luttwak states this principle simply: “I believe that one ought to have only as much market efficiency as one needs, because everything that we value in human life is within the realm of inefficiency – love, family, attachment, community, culture, old habits, comfortable old shoes.”
But too often, these days, it seems that people aren’t thinking about the role of capitalism in the larger context of society, and instead are blithely accepting the notion that efficiency and economic growth are somehow overriding justifications. Much of the new Federalism argumentation is based on the idea that local control is a more efficient method of government than central government. Coincidentally, a rise in Federalist jurisprudence has resulted in de facto reduction of equal protection of the laws. Many proponents of tort reform, including our current President, argue that the current system is administratively inefficient and have proposed closing off access to the courts for many classes of lawsuits. A large number of States have found that funding indigent defense counsel is an inefficient use of scarce budgetary resources and have scaled back to arguably sub-minimal levels, resulting in wholesale violations of the Sixth Amendment right to counsel. Whether you agree with these particular outcomes or not, the fact that part or all of the justification for these policies is based in economics might be disconcerting.
Ultimately, democracy itself is an inefficient system of governance, which is why corporations aren’t run democratically. At some level, it seems clear that the goals and principles of capitalism must defer to the goals and principles of our democratic society, and to other principles that we hold dear. Clear to me, at least.