Free Economies and the Common Good

Rev. Robert A. Sirico, Acton Institute

In the 21st chapter of St. Matthew’s Gospel, Jesus proposes a moral dilemma in the form of a parable. The parables of Jesus often appear to us initially to be merely down-to-earth, simple stories, but when studied in depth one often finds complex and profound meanings contained in them.

In this parable, a man asks his two sons to go to work for him his vineyard. The first son replies by saying that he will not go, but later thinks better of it and ends up going. The second son immediately tells his father that he will go, but never ends up in the vineyard.

“Who,” Jesus asks, “did the will of his father?”

Although I am loath to argue that Jesus point in this parable is economic in intent, we may nonetheless derive a moral lesson from it with which to evaluate economics and the achievement of the common good (as well as many other critical areas of life).

History presents us with two divergent models of economic arrangement, one which appears preoccupied with the common good and general social betterment, while the other initially evidences a preoccupation with profits and economic production. Let us keep the parable in mind as we take a brief tour of history.

Socialism came of age in the 20th century and wrought unparalleled destruction. What I seek to show here is that such destruction was not its original aim. In contrast to modern varieties of socialism that tend to regret prosperity and romanticize impoverishment, and even seek to require that human rights become secondary considerations in the organization of human society, at least some of the early socialists sought the fullest possible flourishing of humanity, which is to say, they sought the common good—an ideal that turns out to be best realized within a market economy.

The idealistic core of socialism dates to the ancient world, but I would like to focus on its modern incarnation. A half century before Karl Max published the Communist Manifesto, there was Gracchus Babeuf’s Manifesto of the Equals. Babeuf was an early communist who lived from 1760 to 1797 and wrote during the Revolutionary period in France.1Though he was jailed and finally executed, his ideas would later have an enormous impact on history. His explicit political goal had nothing to do with regretting prosperity or the advance of human well being; indeed, the whole point of his socialist program was to bring about the common good.

He wrote:

The French Revolution was nothing but a precursor of another revolution, one that will be bigger, more solemn, and which will be the last..…. We reach for something more sublime and more just: the common good or the community of goods! No more individual property in land: the land belongs to no one. We demand, we want, the common enjoyment of the fruits of the land: the fruits belong to all.

Far from being the ravings of a lunatic—though he was that, to be sure—we see in his writings two major themes of the socialists that would dominate their writings until sometime after the postwar period of the 20th century: an aspiration of prosperity through ownership by all, and an equation of the phrase “common good” with the reality of the commonality of goods. Indeed, Marx took more from Babeuf than Marx himself would ever acknowledge. Engels in particular echoed that last phrase in calling for “social existence and activity based on community of goods.”2

In our own times, we mostly think of socialists as warning against capitalist excess, seeming to disparage the mass availability of goods and service, and seeking out restrictions on the freedom to produce and consume wealth. socialists today is summed up in economic terms by a society that regards the production of wealth for all far down the list of social priorities. One need only to consider the wrath that socialists feel toward fast food, large discount stores, and even specialty financial services available especially for the poor. The advent of a mass consumer market for goods and services is derided by socialists as institutionalizing false needs, the commodification of the commons, the glorification of the banal, the homogenization of culture, and all at the expense of the environment and the higher goal of equality. Such clichés are common parlance among socialists today, who look for every reason to disparage increases in the standard of living.

But it was not always so. There was an indeed a strain of socialism that embraced primitivism as an ideal. For example, Jean-Jacques Rousseau might have dreamed of a primitive, pre-industrial society, a world uncorrupted by technology. But this view was not mainstream. The impulse toward progress was more common among the early socialists: they believed that socialism would bring about an advance of civilization and wealth. Babeuf, for example, said that the brand of socialism he favored did not glorify poverty but rather “has us eat four good meals a day, dresses us most elegantly, and also provides those of us who are fathers of families with charming houses worth a thousand louis each.”3

The early socialists promised that their utopia would not only bring justice but that it would also deliver the goods and services for all. It would bring prosperity and distribute its gains across the entire population. A particularly poetic rendering of this vision was offered by none other than Oscar Wilde:

Under Socialism….there will be no people living in fetid dens and fetid rags, and bringing up unhealthy, hunger pinched children in the midst of impossible and absolutely repulsive surroundings…. Each member of the society will share in the general prosperity and happiness of the society, and if a frost comes no one will practically be anything the worse…. Why should [the poor] be grateful for the crumbs that fall from the rich man’s table? They should be seated at the board, and are beginning to know it.

And here is the core of the old socialist hope: the mass prosperity of everyone in society, not just the rich, but also the poor and middle class. This material well being of the socialist society will free people from the burdens of laboring for others, and everyone will be in a position to pursue higher ends, such as art and philosophy. This in turn will eliminate social conflict and generate perpetual happiness.

As Babeuf’s co-conspirator Jean-Francois Varlet, said socialism will “lay the foundation that has so far been neglected of social happiness.” By the turn of the twentieth century, however, a problem began to develop in this general thesis. The socialist proposition had promised prosperity for everyone, and a reversal of the plight of the working classes, which was assumed to grow ever worse under capitalism. Marx himself rested his case for communism on the following proposition: “The modern laborer…instead of rising with the process of industry, sinks deeper and deeper below the conditions of existence of his own class. He becomes a pauper, and pauperism develops more rapidly than population and wealth.”4 This predication was to form the basis of the dynamic of revolution: the ever larger throngs of toiling workers and peasants would rise up against the tiny group of capital-owning oppressors and expropriate their riches on behalf of all. The case for the inevitability of socialist revolution was wholly dependent on this historical trajectory playing itself out.

Now, this is an empirical claim, which, if proven false, is deadly to the socialist plan for political reorganization. If the workers were growing more financially secure, and the poor were getting richer, and the rich faced an unrelenting prospect of business failure and then ruin, the motive force of revolution completely disappears. The class conflict that is said to generate the historical inevitability lies in tatters.

To a surprising extent, the socialist hope for, and case for, a revolution against the capitalist class rested on the truth of the belief that the lot of the poor would worsen under capitalism. If that turns out not to be true, there is no real point to the entire movement. The goal itself is undermined. For a Marxist to discover that capitalism is actually benefiting the masses is akin to finding out that there is no pot of gold at the end of the rainbow; rather the pot of gold is right where you are standing. There is no point in chasing down a dream that is a proven illusion.

Of course Marx was wrong on the economic dynamics of his own time but especially wrong after. Far from growing worse off, the workers were indeed growing ever better off. They were not sinking into the status of a pauper more rapidly than wealth and population grew. Quite the reverse: as wealth grew through capitalist means, the pauper’s standard of living rose too as did the expanse of the population.

Historians now realize that even in the early years of the Industrial Revolution, workers were growing ever better off. Prices were falling, incomes were rising, health was improving, diets were becoming more varied, and working conditions were constantly improving. It was not as the later Marxist said; indeed it was quite the opposite. The new wealth generated by capitalism was dramatically expanding lifespans, improving health and sanitation, bringing about drops in child mortality, and was accompanied by dramatic demographic shifts as people moved in proximity in the pursuit of better lives. The new jobs available in industry paid more than most people could make it agriculture. Housing conditions improved as builders seized on opportunities to provide. There were more options for all people. The new heroes of society came from the middle class of business owners and industrialists who displaced the nobility and gentry in the cultural hierarchy.

Much was made about the rise of child labor but little thought was put into the reality that for the first time, there was remunerative work available for people of all ages. As W.H Hutt has shown, the work in the factories for young people was far less grueling than it had been on the farm, which is one reason parents favored the factory.5 As for working hours, it is a documented fact that when factories would reduce hours, the employees would leave to go to work for factories that made it possible for them to work longer hours and earn higher wages. The effect of factory legislation that curbed hours for minors was only to drive employment to smaller workshops that could more easily evade the legislation.

In the midst of all this, however, the underlying reality was more difficult to observe. And what could be observed was rightly distasteful to many. Many people seemed to observe an increase in the number of poor and the people living in squalor, but, in a paradoxical way, these too were signs of increasing wealth, since these very unfortunate people might have already died in past ages. The sick did not die as they had previously, but survived. But the deaths of the past constituted the unseen aspects of the reality, whereas the poverty of the present was omnipresent. As economic development expanded in the 18th century, we saw the growth of the middle class that had access to consumer goods that had once been available only to kings, as well as plenty of new items that had never been available growing out of mining, textiles, steam power, and the advent of fossil fuels.

These economic advances continued throughout the entire period of the rise of socialist ideology that itself was predicated on the opposite reality. Again, the poor were supposed to get poorer because the rich were getting richer (a familiar refrain even today.) The underlying reality was that capitalism had created the first society in history in which all living standards were rising in all sectors of society. As compared with ages past, people were living better, healthier, and longer lives. Indeed, it was the free market that eventually came closer to realizing precisely what it was that the Marx himself had imagined: “the all round development of individuals” in which “the productive forces will also have increased” and “the springs of social wealth will flow more freely.”6

There was one Marxist in England, however, a man who actually cared about the reality on the ground, who seemed to understand what was happening. His name was Eduard Bernstein, who lived from 1850 to 1932. His name is hardly known today, his writings are not studied, his image appears in no posters, and no statue of his likeness exists. His books are read only by specialists. But he was the leading Marxist after Marx and Engels. Indeed, he was considered by Engels their successor, and Marx was very warm to him as well. He was in such high standing that he was asked by Engels to finish editing Marx’s fourth volume of Capital. More than any other living figure, he could claim to have been handed the intellectual flame of Marxism.

What’s more, Bernstein had a stronger case to make that he was a genuine Marxist, not merely an intellectual but a member of the revolutionary vanguard by virtue of his class. He was not from the privileged background of Marx and Engels. He had actually been raised in poverty in Berlin, in a home where there was very little food on table. He worked his way through his education in a most remarkable way. What’s more, he had been living in exile in England to witness events in the home of the Industrial Revolution first hand.

His motivation for his Marxism was the same as for most of those in his period: he hoped for a revolution against capitalism as a means of putting economic power in the hands of the workers and peasants, as a way of bringing about the common good. He had believed, with Marx and Engels, that the continuation of capitalism would only result in the further impoverishment of the masses.

In the 1890s, he began to observe something remarkable. The poor were not getting poorer. Their living standards were rising with the advance of capital. As he wrote: “What characterizes the modern mode of production above all is the great increase in the productive power of labor. The result is a no less increase of production – the production of masses of commodities. “This empirical observation of his strikes at the very heart of the Marxist case. He observed that the numbers of businesses were growing, and not growing more concentrated. The number of well-off people was rising. Incomes were rising. As he further wrote: “the increase of social wealth is not accompanied by a diminishing number of capitalist magnates but by an increasing number of capitalists of all degrees.” He didn’t know it but it he sensed it: in the 50 years after the publication of the Communist Manifesto, incomes in England and Germany had doubled. This was precisely the opposite of what Marx had predicted. “If the collapse of modern society depends on the disappearance of the middle ranks between the apex and the base of the social pyramid,” Bernstein wrote in 1899, “if it is dependent upon the absorption of these middle classes by the extremes above and below them, then its realization is no nearer in England, France, and Germany to-day than at any earlier time in the nineteenth century.”

His demonstration of these facts was devastating to the socialist cause—and especially so since it had come from the intellectual heir to the Marxian idea. The basis of Marxian doctrine had been that society under capitalism consisted to two classes: one tiny and rich, and the other vast and increasingly impoverished. The reality, however, was that the numbers of the rich were growing more rapidly than the numbers of the poor, while the vast multitudes of people were falling into a category that Marxism didn’t seem to anticipate: the growing middle class, which was becoming ever more diversified in its own status as owners of capital.

Here is his own summary of his observations:

Social conditions have not developed to such an acute opposition of things and classes as is depicted in theManifesto. It is not only useless, it is the greatest folly to attempt to conceal this from ourselves. The number of members of the possessing classes is today not smaller but larger. The enormous increase of social wealth is not accompanied by a decreasing number of large capitalists but by an increasing number of capitalists of all degrees. The middle classes change their character but they do not disappear from the social scale.

The concentration in productive industry is not being accomplished even today in all its departments with equal thoroughness and at an equal rate. In a great many branches of production it certainly justifies the forecasts of the socialist critic of society; but in other branches it lags even today behind them. The process of 8concentration in agriculture proceeds still more slowly. Trade statistics show an extraordinarily elaborated graduation of enterprises in regard to size. No rung of the ladder is disappearing from it. The significant changes in the inner structure of these enterprises and their interrelationship cannot do away with this fact.

Essentially, what Bernstein had discovered what that the main propositions of socialism had proven false. The Marxists were of course furious with him. Rosa Luxemburg wrote a famous essay in 1890 which is devoted to attacking him. He became a non-person in their eyes.

The reader might then assume that Bernstein had changed sides, that he had then abandoned socialism, on grounds that it was made up of nothing but myth, and taken up the cause of the old liberals who championed the free market economic order, that he became a defender of capital and free association and the liberating impact of commercial society.

I’m sorry to report to you that this is not the case. What he changed concerned only tactics and goals. He concluded that social legislation could accomplish through democracy what the old Marxists believe could only be brought about through revolution. Though he came to reject the need for an all-embracing political end of complete collective ownership, did not and would not let go of socialism as an ideology. That he was a socialist was integral to his entire frame of mind, just as it was to an entire generation of German and English intellectuals.

Bernstein wrote that he still favored the expropriation of the capitalists, but through a different method: using political mechanisms. Indeed, the rest of his life was spent working towards the socialist goal, which only brought about more regimentation of economic life and nearly brought England to the brink of catastrophe in the 30s and during the war and after. To be sure, some of his socialist activism was based on a simple mistake. He confused all prior events with causes. For example, when he observed the tightening of labor legislation and saw the plight of workers improve, he attributed the change to the legislation rather than to the accumulation of capital. He had not considered the possibility that the legislation might have even held back the progress of development or that markets might have enabled more progress in absence of such legislation.

Nonetheless, he observed that the Marxist dialectic of history, in which capital would rise and workers would fall into poverty, was untrue. Now, if one is aware that the morality play behind socialism is wrong, that capitalism is actually the people and increasing the common good, why would one hold on to the ideology rather than abandoned it? Clearly, it is difficult to abandon a lifelong ideology if there is no clear alternative available, or if the alternative that is available has been demonized in one’s own mind. But there is also the strange fact that socialism was for this generation and many that followed a kind of dogma of truth. It is possible to argue the finer points but it is not possible to completely abandon it. That socialism should be the goal was so entrenched in his mind that it could not even be dislodged by the reality that socialism’s higher goal of the common good was being achieved through other means.

Now, let me be clear: I’m not in sympathy with this perspective at all. To hold on to doctrine that is demonstrably false is to abandon all pretense of objectivity. I would like to think that we should all strive to rise above our biases. If someone could demonstrate to me that free markets and private property rights lead to impoverishment, dictatorship, and violation of human rights on a mass scale, I would like to think that I would have the sense to run from the idea as far as possible. Indeed, I know of no advocate of market economic systems who would adhere to the dogma at the expense of overwhelming evidence that it was contrary to the good of society. But the socialists did lack such requisite intellectual humility. They clung to their faith—their false religion—as if their very lives were at stake. They continue to do so today.

I have met many cases of Bernstein-like thinkers in my work. Most intellectuals in the world are aware of what socialism did to Russia. And yet many still cling to the socialist ideal. The truth about Mao’s reign of terror and bloodshed is no longer a secret. And yet it remains intellectually fashionable to regret the advance of capitalism in China, even as 10increasing freedom of people in China to engage commerce has enhanced the common good. Many Europeans are fully aware of how damaging democratic socialism has been in Germany, France, and Spain—and yet they continue to oppose the liberalization of these economies. Here in the United States, we’ve seen the failures of mass programs of redistribution and the fiscal crises to which they give rise, and yet many continue to defend and promote them.

Time and again, I’ve observed grotesque and obvious failures of socialism, living alongside wonderful cases of capitalist success, and yet heard people find every excuse under the sun for not attributing the difference to the comparative merits of the institutions involved. Even a superficial comparison of North and South Korea, East and West Germany before the wall fell, Hong Kong and mainland China before reforms, or Cuba and other countries of Latin America, reveals that free economies come closer to approximating common-good conditions. And yet the truth has not sunk in. Many intellectuals fear the leap from their attachment to some variety of socialist reform into a full embrace of the old liberal vision of productive society of private owners.

No one can seriously doubt that free enterprise is not only the greatest generator of human well being but that it also serves all classes in society. The old socialists dreamed of a world in which all classes the world over would share in the fruits of production. We look at the Walmarts—to cite only the most conspicuous case—opening up by the day in town after town all over the world. We see in a single store a veritable cornucopia of goods designed to serve human well being, at prices that make them affordable for all, a company that has created many millions of jobs and brought prosperity where there was only despair.

Now, you may not like Walmart. You might find it tacky. You might not like to shop there. But there is no sense in denying that this enterprise, and hundreds more like it, has brought humanity an unparalleled opportunity for enhancing well being for all classes in society.

And who owns Walmart? Call them capitalists if you want to, but its owners are shareholders all over the world, people of moderate incomes who have their savings invested in the well being of the company. It is owned a class of people we can call worker-capitalists. Such an institution as this is more than any socialist of old could have imagined. Had Marx been shown this, he would not have believed his eyes. Indeed, he would have seen the economic aspect of his dream come true.

Does free enterprise accord with the idea of the common good as the socialists imagined it? Certainly it does. It does not, however, accord with the “commonality of goods” as the socialists supposed that it would. What then can we say of those who today remain attached to socialism as a political goal or general trajectory of political activism? We can say that they do not know or have not understood the essential plot behind the economic history of the last 300 years. Or perhaps we can say that they are more attached to socialism as dogma than they are to the professed ideals of the founders of the dogma. I’m particularly struck by the neo-socialist concern for the well being of plants, animals, lakes and rivers, rain forests and deserts—particularly when the concern for the environment appears far more intense than their concern for the well being of the human family.

When we speak of the idea of the common good, we need to also be opened minded about the political and juridical institutions that are most likely to bring it about. The answer is not to be found in the “commonality of goods” but in the very institutions that the socialists worked so hard to discredit. Let me list them: private property in the means of production, stable money to serve as a means of exchange, the freedom of enterprise that allows people to start businesses to pursue their dream, the free association of workers that permits people to choose where they would like to work and under what conditions, the enforcement of contract that provides institutional support to the idea that people should keep their promises, and a vibrant trade within and among nations to permit the fullest possible flowering of the division of labor. These institutions must be supported by a cultural infrastructure that respects private property, regards the human person as possessing an inherent dignity, and confers first loyalties to transcendent authority over civil authority. This is the basis of what we call freedom and results in what we call the common good.

The common good is incompatible with the violation of the right to economic initiative. As Pope John Paul the Great wrote of economic initiative: “it is a right which is important not only for the individual but also for the common good. Experience shows us that the denial of this right, or its limitation in the name of an alleged ‘equality’ of everyone in society, diminishes, or in practice absolutely destroys the spirit of initiative, that is to say the creative subjectivity of the citizen.”7

In writing these words, the Pope was echoing the vision of the Second Vatican Council’s document entitled Gaudium et Spes: “Since property and other forms of private ownership of external goods contribute to the expression of the personality, and since, moreover, they furnish one an occasion to exercise his function in society and in the economy, it is very important that the access of both individuals and communities to some ownership of external goods be fostered. Private property or some ownership of external goods confers on everyone a sphere wholly necessary for the autonomy of the person and the family, and it should be regarded as an extension of human freedom.”

Let me close with a declaration that by the standards set forth in the first writings of the early socialists, we are all entitled to call ourselves socialist, if by the term we mean that we a devoted to the well being of all members of society. The means to achieve this ideal is the matter of dispute. It strikes me that the means to achieve this is not through the central planning by the state but through freedom itself. St Thomas had an axiom: bonum est diffusivum sui. The good pours itself out. The good of freedom has indeed poured itself out to the benefit of the whole of humanity.

In conclusion, I ask you ladies and gentlemen: “Who did the will of the Father?”

Notes

The common good for Babeuf’s life and work is explored in James Billington, Fire in the Minds of Men (NY: Basic Books, 1980), pp. 72-78.

“Description of Recently Found Communist Colonies Still in Existences” by Engels, quoted in Muravchik, p. 64.

In Joshua Muravchik Heaven on Earth: The Rise and Fall of Socialism (San Francisco: Encounter Books,2002), p 18.

From the “Communist Manifesto”

“The Factory System of the Early Nineteenth Century,” in Capitalism and the Historians edited by F.A. Hayek (University of Chicago Press, 1954, p. 178.

Critique of the Gotha Programme, quoted in Ludwig von Mises, Socialism (Liberty Fund, 1981, 1922) p. 72.

Sollicitudo Rei Socialis, No. 15.