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Facing the Moral Attack on Capitalism

AUGUST 01, 1980 by JULIANA GERAN PILON

Dr. Pilon has taught and written extensively, In the fields of social end political philosophy. She is now Visiting Scholar and Earhart Fellow at the Hoover institution on War, Revolution and Peace, Stanford University, Stanford, California.
      A longer version of this article was prepared for a symposium on capitalism and freedom sponsored by the Free Enterprise Fund, University of Illinois—Chicago Circle Business School.

Is it not paradoxical that after emerging like the phoenix from the ashes of the Gulag Archipelago Alexander Solzhenitsyn should speak out against the land of milk and honey? Is it not ironic that after having known starvation and torture he should attack the enviable—and surely envied—comforts of the West? And yet, on the occasion of the Harvard University commencement on June 8, 1978, the man who could well be called the most significant moral leader of our century, whose challenge to the conscience of mankind may prove to have been the ultimate test for our sclerotic spiritual fiber, accused us of moral myopia, of pretending not to live in “A World Split Apart”-the apt title of his prophetic message.

The world is split indeed, by divergent ideologies no less than by economic disparities. Those disparities, of course, are no secret. Indeed, were economics alone at stake in the dialogue it would seem that the Marxist—assuming he is truly a materialist—would opt for capitalism: the experience of nearly two centuries indicates that prosperity is attained best when trade is not hampered by regulatory legislation.

Though few men are less utilitarian in outlook than Solzhenitsyn, he is no exception in recognizing the material success of the capitalist system. He thus readily concedes that “it is almost universally recognized that the West shows all the world a way to successful economic development,” inflation notwithstanding. He notes immediately, however, that in spite (or maybe because) of this, “many people living in the West are dissatisfied with their own society. They despise it or accuse it of not being up to the level of maturity attained by mankind. A number of such critics turn to socialism, which is a false and dangerous current.”[1]

The problem, evidently, goes beyond economics. It would seem that we have here not so much an absence of information concerning the success of laissez faire in producing wealth—indeed, wealth for the greatest number—as a deep misunderstanding concerning the ethical foundations of capitalism. The socialist challenge, I submit, is ultimately a matter of morality.

Capitalism Under Attack: The Socialist Challenge

Solzhenitsyn himself lists many of the reasons why Westerners are dissatisfied with their own society: a weak social structure with a correspondingly alarming level of crime, ubiquitous mediocrity, worries and tensions that naturally accompany competition, especially material competition, a highly conformist media, the cheap stupor that is tele vision, and in general a pervading sense of “hastiness and superficiality” polluting our aesthetic space. Not many a contemporary liberal would disagree. It is nevertheless mysterious why the preferred alternative is almost invariably found in socialism. Whence its charm? Which of its attributes seduces the liberal critic? How do its cosmetics manage to hide the leprous wart?

In his speech, Solzhenitsyn makes no attempt to account for this disturbing state of affairs. He cites a book by Igor Shafarevich entitled Socialism (published recently in France and due to appear shortly in this country) as “a profound analysis showing that socialism of any type and shade leads to total destruction of the human spirit and to a leveling of mankind to death.”[2] But how could—how does—such a system win the hearts and minds of intelligent people throughout the capitalist world? Solzhenitsyn tells us that in the East communism—which of course is but a shade of socialism—has suffered a complete ideological defeat (meaning, evidently, a de facto defeat, though tragically not de jure). Why, then, do we flirt with it in the West?

Undoubtedly Shafarevich’s book has some of the best answers ever offered to that question. In an essay which summarizes the argument of his book, published in a 1974 anthology entitled From Under the Rubble, Shafarevich traces the ideology of socialism to the beginning of civilization, to Mesopotamia in the twenty-second and twenty-first centuries B.C., which Shafarevich takes to be the first known society to embody the basic premises of socialism. These are: the abolition of private property, the destruction of religion, the destruction of the family. Explicitly, therefore, socialism is not only an economic concept but “an incomparably wider system of views, embracing almost every aspect of human existence.”[3] This observation provides a key to understanding the Western malaise. For it is clear that the same is true of “capitalism”—it too has come to refer to more, much more than the description of an economic system.

At least one authority on popular usage, the American College Dictionary, lists as a second meaning of capitalism “2. the concentration of capital in the hands of a few, or the resulting power or influence,” to be read in conjunction with “3. a system favoring such concentration of wealth” (emphasis added). Capitalism is thus wedded to inequality. And if there be one supreme secular evil that truly irks the anti-capitalist temperament it is “in equality,” sometimes also called “social injustice” to further load the term with self- righteous indignation.

“Social Justice”: A Meaningless Concept

For those who abhor inequality, the question is simply what means will most effectively eliminate it. There will be some, of course, who point out that in fact capitalism has done more than any other system to further that end. Thus William F. Buckley cites Professor Amnon Rubinstein, himself a socialist, as having made “a grudging, though elegant, admission in a television colloquy a year or two ago [1971-2] in Israel: ‘On the whole,’ said Rubinstein, ‘those systems that have put liberty ahead of equality have done better by equality than those that have put equality above liberty’,” an idea Buckley very much shares,[4] as does Senator Daniel Patrick Moynihan.

But others, who wish for greater equality than the grossly unaided eye is able to fathom in a capitalist system, would interfere with private economic arrangements by using the state’s coercive power. And here the obvious differences are a matter of degree: some would have the state interfere only as a result of majority vote and only by taking away some, not all, of a person’s private property, thus ensuring that each person receives from the public coffers only as much as it is deemed he “needs.”

Given the contemporary climate, it is safe to say that Irving Kristol is right when he writes that in our day the idea that the income tax should have redistributive effects is no longer shocking. All about us we find evidence of such a passion which has now gained respectability. What especially concerns Kris-tol, however, is what he takes to be a reluctance inherent in the capitalist ideology to come forth with its own necessary moral justification. Thus, for example, he deplores Friedrich von Hayek’s alleged resistance to the very idea of judging whether capitalism is just. Kristol writes with some alarm that in his otherwise brilliant book, The Constitution of Liberty, Hayek offers an “argument against viewing capitalism as a system that incarnates any idea of justice.”[5]

Unfortunately, Kristol misses Hayek’s major point—even more clearly spelled out in his recent book, Law, Legislation and Liberty, where he answers Kristol’s argument directly—which is to deny that social justice could possibly mean anything. Or, rather, the concept is “capable of meaning almost anything one likes”[6]: usually based on the analogy with human distribution of rewards, where it is appropriate to have some guiding princi ples, the concept misleads.

After all, the function of the market is simply “to indicate to people what they ought to do if the order is to be maintained on which they all rely.”[7] Indeed this is precisely why the market works: you are successful if your product is wanted (e.g., paid for) in the market place; if not, your claim that somehow it “deserves” success is empty. Only by forcing people to buy what they do not wish to have—whether this be an outmoded railroad or horse-and-buggy, an inefficient way of producing steel or television receivers, a boring (or even obscene and revolting) form of art—could you be rewarded once you have failed in the market place. Is that “justice”? Does it not look like its very opposite?

But to say that Hayek dismisses the quest for “social” justice as illusory does not mean that he is either oblivious or indifferent to justice as such. Competition justly carried out prohibits fraud and violence. And this is the same idea that plays so central a role in Adam Smith’s system of natural liberty. To take away from another, by force or fraud, is “injury” and thus “the violation of justice.”

Without Force or Fraud

Capitalism is supposed to allow for free transactions in a world not previously redistributed (according to whatever scheme) through force or fraud. To continue on a just path, there must be no positive interference (or “takings,” as the lawyer would have it). Only then will it work to produce the maximum possible prosperity for all—not regardless but, on the contrary, because of its justice.

“Social” justice, on the other hand, would have boggled the mind of an Adam Smith as it does Hayek’s and mine. A strong advocate of “beneficence,” Smith not only applauded charity but demanded that a truly magnanimous man be compassionate and understand the limits of power and riches, those “enormous and operose machines contrived to produce a few trifling conveniences to the body.”[8] Yet “beneficence” is strictly distinguished from “justice.” One may or may not engage in the former, depending on inclination and sympathy; the latter, on the other hand, must be observed on pain of worldly punishment.

Smith may have thought of beneficence as a means to attain “God’s justice” on earth; but he would certainly have been puzzled if not quite horrified by attempts to impose it through the state in the guise of social justice. Hayek’s refusal to discuss such a concept any further seems to me to be the only philosophically respectable approach.

Inequality Guaranteed

Government-enforced “social justice” leads to the sharpest inequalities. Indeed, when the state steps in allegedly to restore “social justice,” invariably the result is the very opposite of what was originally intended. The literature describing the great gulf that is government-sponsored inequality is too large, but one of the very best documents on the subject is Hedrick Smith’s The Russians, particularly Chapter I, “The Privileged Class: Dachas and Zils.”

My own experience in communist Romania where I spent the first fourteen years of my life is in full accord with Smith’s observations. I remember well the segregated housing: the leaders lived in villas that were off-limits to the rest of us while we waited to be assigned our eight square meters of real estate per person in a prescribed city or village chosen at the discretion of bureaucrats who cared little about the distance from our relatives and friends. (Since then, matters have worsened: all uninvited citizens are now actually prevented by the police from strolling along the official streets of the Jianu district.)

There were also the segregated shops: we, the unprivileged, could only gaze through the windows of fancy stores with foreign products full of such delicacies as off-season vegetables and shoes that fit, unavailable to us no matter whether or not we might have had the money to buy such products.

Then came the segregated vacation spots: we knew exactly which villas on the Black Sea were reserved for Western tourists, for Eastern Bloc visitors, for the Roma-nian elite, and for the rest of the fortunate members of the proletariat who managed by hook or (mostly) by crook to be put on “the list.” A vacationer who happened to wander into the “wrong” hotel would be immediately arrested—an apartheid the likes of which money can never quite buy.

And of course there was always the early lesson in school, where we learned no later than kindergarten, before we had been able to spell out the red-lettered slogans decorating our walls, that some among us had been picked by a kind of irrevocable because ideological fate and were immune to the rules of ordinary—which is to say sandbox—justice.

I remember one well-dressed little fellow protesting my outrage at an unexplained confiscation of what I took to be my personal building blocks by right of first possession and useful (if admittedly unproductive) employment: “I’ll tell my daddy,” he said, “and he is gonna make you go away.” I snatched my blocks right back, without understanding till much later the reason for my mother’s livid complexion at the time I proudly recounted my adventure with all the braggadocio of a potential Gulag inmate.

To return, then, to the title of Solzhenitsyn’s address before his (largely apathetic) Harvard audience: “A World Split Apart.” So it is indeed split, in the communist systems themselves, into classes of power: the planners versus the planned, the decision-makers as against the large mass of the people. All of this in the name, naturally, of “social justice.” But the price, inevitably, is freedom. And to call such a state of affairs “justice” is an abuse not only of language but of common sense. []


1.   Alexander Solzhenitsyn, “A World Split Apart,” National Review, July 7, 1978, p. 839.

2.   1bid.

3.   Alexander Solzhenitsyn et al., eds. From Under the Rubble (Boston-Toronto: Little, Brown and Company, 1974), p. 31.

4.   William F. Buckley, Jr., Four Reforms—A Guide for the Seventies (New York: G. P. Putnam’s Sons, 1973), p. 23.

5.   Irving Kristol, Two Cheers for Capitalism (New York: Basic Books, 1978), p. 259.

6.   F. A. Hayek, Law, Legislation and Liberty, volume 2 (Chicago: University of Chicago Press, 1976), p. 79.

7.   Ibid., p. 80.

8.   Adam Smith, A Theory of Moral Sentiments (London, 1861), p. 262.

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August 1980

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