Why Capitalism Is Always Suspect

Few people who criticize corporate crime make mention of the fact that we hardly have a genuine free market in place anywhere on earth. So, business corporations operate, as does the rest of commerce, in a mixed economy, with substantial government intervention-'taxation, regulation, protection and so forth'-thoroughly diluting the free market process.

Indeed, it is nearly impossible to tell these days whether a corporate crime amounts to something really wrongful or merely displeasing to those who have managed to get a bunch of laws and regulations passed favoring their own special agenda or learned to depend too much on regulators to look out for their own lot. And business corporations are operated in large measure by making deals not with customers and fellow businesses but with government bureaucrats.

Just consider how much time and money is spent by big corporations lobbying for various government measures, including trying to sic a government agency on a competing business. Microsoft Corporation has been under the gun for quite a while from agents of the Department of Justice who were, in effect, working for Netscape Communications Corporation, et al., which did not like competing in the market place. Many agribusinesses, textile and steel firms, shoe manufacturers and others are only so-so involved in bona fide market competition. To a large extent they are using political means to get special considerations against both domestic and foreign competitors.

Firms of a genuine free market'-ones that would have only one legal standard to abide by, namely, refraining from theft and fraud'-aren't even the big players these days. Those managed by loyal free marketers have a very hard time. They are like participants in a contest who wish to remain honest and play by the rules while nearly all others engage in successfully bribing the referees'-few such folks can continue in the race with those odds against them.

But here is the rub: There has always been a problem for those who really want to operate honestly in a free market since they have been regarded by many moralists as greedy and thus immoral. This is because the most prominent moral outlook being advocated by the verbal class in nearly all societies is altruism, the view that everyone must first and foremost look out for other people's welfare.

As one of the promoters of this view, W. G. Maclagan, a 20th Century moral philosopher from the University of Glasgow (who, following such classic thinkers as August Comte and Karl Marx, discussed the view extensively), put it, 'Altruism . . . is to maintain quite simply that a man may and should discount altogether his own pleasure or happiness as such when he is deciding what course of action to pursue.' Following this ethics is suicidal in life, especially in business'-if managers didn't strive to make a profit, didn't work hard to make the company prosper, their firms would go under and they'd be fired for malpractice. But because altruism is so widely championed by those who sound off on such matters, even the most honest and forthright people in business keep being harangued for just doing their jobs. Turning corrupt, then, hardly gets them any worse a reputation!

Interestingly, even in the heyday of the intellectual defense of capitalism, defenders argued for 'allowing' capitalists to strive to prosper, to profit, to pursue their economic self-interest, so as to produce overall prosperity. Bernard Mandeville (1670-1733), author of 'The Fable of the Bees,' is famous for his saying 'Private vice, public benefit' in support of free markets. And this still tends to be the refrain from many economists who speak out in support of capitalism: Let folks do the admittedly lamentable striving to be rich because, well, in the end we all benefit from it. How sad!

The reason capitalism is a good economic order is that people are free to strive for something worthy indeed'-their own economic well being, first and foremost. Of course, they will enrich many others while doing this. One cannot honestly get wealthy by impoverishing others. It has to be a win-win situation, all things considered. So, yes, capitalism does enhance the 'wealth of nations,' to quote from the title of Adam Smith's famous book.

But this isn't enough for the critics. Nor is it that many capitalists become philanthropists. They want all capitalists to also be motivated only by pure selflessness. They want no one to actually, honestly, strive to seek to advance his or her own economic well being. Never mind that this is terribly paradoxical'-it was W. H. Auden who made this very clear with his reported observation: 'We are here on earth to do good for others. What the others are here for, I don't know.' Never mind that depending upon everyone to become concerned only with the welfare of others is ridiculous'-why are those others deemed so worthy when one's own self isn't? And never mind that champions of altruism are themselves, quite naturally, promoting their own welfare much of the time.

Capitalism will never have a good name until our vocal moralists admit that altruism is a fundamentally mistaken ethical ideal and that rational self-interest is what really ought to guide us all.

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Tibor R. Machan's picture
Columns on STR: 70

Tibor Machan is a professor of business ethics and Western Civilization at Chapman University in Orange, Calif., and recent author of Neither Left Nor Right: Selected Columns (Hoover Institution Press, 2004).  He is a research fellow at the Hoover Institution, Stanford University.