Profits with Honor

Capitalism delivers the goods…but is capitalism good?


Capitalism is largely held in contempt in today's moral climate. A culture's moral climate is the prominent opinion about what sort of conduct is proper and improper. Those who accept and seem to practice it need never explain their conduct. Its rejection in theory and practice, however, calls forth rebuke, censure, and condemnation by the media, politicians, religious leaders, and others who dominate forums of opinion in society.

In earlier eras, too, aspects of capitalism were widely condemned by spokesmen of the times. The system continued to function anyway, mainly because of its undeniable productivity. Today, however, the criticism of capitalism has reached a crescendo, even though what capitalism ever really existed has virtually vanished.

Does capitalism fit into our culture's moral climate? If not, is this climate misguided and unhealthy, or should capitalism be abandoned for some other system? One thing is certain: it is impossible for any social, economic, or political system to flourish in a climate morally opposed to that system.

Two main currents dominate our moral climate. One is altruism—the belief that everyone's proper purpose in life is to serve other people, to promote others' welfare, or at least to provide for those who are in need. The other is pragmatism, which in this arena translates into a belief that morality is a mythical notion and that only a scientific or technological outlook makes sense today.

Altruism is usually contrasted with egoism. The virtues of self-sacrifice, of giving and not taking, of humility instead of ambition, are stressed by those who favor altruism. And egoism, for them, involves callousness toward others, inconsiderateness, crass self-gratification, and no concern for principles and ideals.

More generously understood, though, egoism is informed by principle and actually involves a positive goal—the enhancement of one's own human life. This isn't achieved by simple-minded pleasure seeking or by running roughshod over others, however, but by bettering oneself as a rational being, by fostering mutually beneficial relations with others, and by securing political principles for one's society that protect the rights of everyone.

Altruism is the far more prominent view. This may be obscured by the occasional popularity of doctrines like the Playboy philosophy, the hedonism of the "me decade," and the sales of such self-help books as Robert Ringer's Looking Out for Number 1 and Wayne Dwyer's Pulling Your Own Strings. In fact, however, these phenomena are hardly prominent and, when they threaten to become so, are frowned upon. From pulpit, pundits, and politicians, the prevailing message is altruism, with its call for self-sacrifice, for tightening our belts and reducing our standard of living so the needy and the poor of the world can benefit.

In politics, altruism leads to social-welfare measures, even at the expense of the liberty of many to better their own circumstances. At times, of course, there arises a political sentiment that counters altruism. When Californians passed Proposition 13, which rolled back property taxes and therefore government spending in the state, opponents of the measure found it selfishly motivated. Many insisted that it gave evidence of an abhorrent "me first" mentality.

Yet, defenders of Proposition 13 did not counter by declaring it quite all right to think of one's own prosperity, to assert one's right to a decent life. Instead, they spoke of waste and abuses in government. This testified eloquently to the prominence of altruism. Even when people do act for their self-interest, they deny it in public, searching for explanations that make it appear that this was not their intention.

Ideologically, those who have been called humanitarians or collectivists—who have favored sharing the wealth or redistributing the fruits of work—have tended to be altruists. Those, however, stressing individuals' liberty and the right of anyone to succeed by his or her own effort have tended to favor individualism or egoism as their ethical position. Two examples illustrate the division quite clearly.

Karl Marx in his earliest days, before he had worked out anything like a total system of thought, was an ethical altruist. In an essay entitled "On the Jewish Question," Marx wrote:

The actual individual man must take the abstract citizen back into himself and, as an individual man in his empirical life, in his individual work and individual relationships, become a species-being; man must recognize his own forces as social forces, organize them and thus no longer separate social forces from himself in the form of political forces. Only when this has been achieved will human emancipation be completed.

People, Marx was arguing, should cast off individuality and organize their lives for the benefit of the whole—which amounts to living and working for the benefit of others.

The point comes through even more clearly in Marx's attack on the doctrine of individual rights, especially property rights:

The right of man to freedom is not based on the union of man with man, but on the separation of man from man.…The right of man to property is the right to enjoy his possessions and dispose of the same arbitrarily, without regard for other men, independently of society, the right of selfishness.…It leads man to see in other men not the realization but the limitation of his own freedom.

Marx complained that the right to freedom and to property make ample room for individuality, for personal autonomy. He was right on target; these rights do indeed permit a sphere of privacy wherein the individual is not subject to others' claims and demands. But Marx found this unsuited to the goals he recommended for human beings—their collective emancipation, the development of the human species as a whole.

In contrast to the connection between altruism and collectivism, there is the link between egoism and individualism. Ayn Rand, the novelist-philosopher who gave capitalism and the free society much support during the last few decades, was an ethical egoist. In one of her essays, "What Is Capitalism?" she wrote:

The recognition of individual rights implies the recognition of the fact that the good is…a value pertaining to…the lives of individual human beings (note the right to the pursuit of happiness). It implies that the good cannot be divorced from beneficiaries, that men are not to be regarded as interchangeable, and that no man or tribe may attempt to achieve the good of some at the price of the immolation of others.

Self-assertion and self-interest are commendable, Rand argued. And the free society, she insisted, with its capitalist economic system, is the best means by which individuals' interests may be pursued. Altruism, with its subordination of the individual to the whole, is explicitly rejected, especially when imposed, as most often urged, by force of law.

With capitalism and altruism so diametrically opposed, it is no small matter whether the case for altruism is sound. The question is not whether helpfulness, considerateness, generosity, and the like are to be counted among the human virtues. The question is whether we have a primary moral duty to devote ourselves to bettering the lot of others.

No philosophical system has successfully defended altruism as an ethical position. No one has demonstrated that we should indeed live for the sake of others. And it is not for neglecting to try.

Why is the doctrine insupportable? Altruism, Nietzsche noted, is the master-slave morality. It demands that humanity split itself into camps, one preaching and reaping the benefits of altruism, the other abiding by the doctrine and assuming the position of servitude. But even if Nietzsche's forthright polemics are rejected, we find that on logical grounds alone altruism collapses. Why on earth should each person live for others' sakes if, as it surely follows in this doctrine, all these others must do the same, ad infinitum? Who is the ultimate beneficiary of this kind of conduct—who deserves, finally, to be honored with a decent life of his or her own? Some abstraction called "humanity" or "the species" or "society" is frequently proposed, but what are all these if not the individual members they comprise? Why, then, should all these individuals be orienting their lives to serve others? Why don't we simply encourage all people to do well in their own lives, thereby cutting out the "middleman"?

The most common answer to this line of questioning is that not everyone will fare equally well if individuals are encouraged to pursue their own self-interest and prosperity. And this exposes the real incoherency of altruism: it rejects excellence—that is, excelling as individuals. A decent life for each and every individual is touted as the highest ideal, yet anyone who achieves such a life for himself is castigated as selfish.

Altruism is not prominent because it hangs together as a coherent position. It is prominent because no alternative moral doctrine has been effectively promulgated. From the earliest times of human thought, when most of mankind lived in subjugation, altruism seemed to a few to be a benign morality. To many more, it was a convenient doctrine by which to extract service from others. Because of its incoherence and impracticality, human beings could only implement the doctrine ineffectively, suffering guilt all the while. Yet, since it was not effectively opposed, altruism continued to serve as the standard by which human beings judged themselves and each other.

It is no surprise that many, aware of the hopelessness of a morality of altruism and equating altruism with morality, turned their backs on morality altogether. Thus, supported by the evident success of science and technology and by certain trends in philosophy, we find pragmatism alongside altruism as a main current in today's moral climate.

Scientific knowledge is highly regarded in pragmatism; and since claims about what is good or evil cannot be proven by standard scientific methods, morality tends to be discounted. As reflected in our use of the word pragmatic, pragmatism rejects principled conduct and is instead interested in efficiency, usefulness, and practicality.

This is the stance of economists who defend capitalism or the free market. In an effort to give economics scientific standing, economists have tried to rid their study of human social life of any mention of value. This "value-free" approach is well known in many social sciences. It is less well known that the most prominent defenders of the free market embrace this stance.

Those economists who reason along the value-free line argue that moral judgments, convictions, and principles and related aspects of human life really amount to no more than biases or personal preferences. There is, in their view, no meaningful difference between one person's preference for strawberry ice cream and another's preference for honesty. Though some people prize honesty more than their favorite ice cream, that some don't is merely a natural phenomenon. Science—which is the only route to knowledge—can say nothing about this. All it shows, as Milton Friedman once expressed it, is that "every individual serves his own interest.…The great saints of history have served their 'private interest' just as the most money-grubbing miser has served his interest. The private interest is whatever it is that drives an individual."

A naive view of science does appear to support such a view. If all that concerns science is finding the causes of events—which many thinkers believe—then finding what drives an individual will suffice for scientific purposes. This view gives one the satisfaction of having a simple tool by which to explain human affairs. Moreover, progress seems to be on its side. Science and technology have facilitated innumerable advances in human life. They have produced the theories and tools by which we can manipulate the universe quite efficiently. And so the question arises, Why should they not succeed as well when it comes to human affairs?

The economic defense of capitalism—the so-called scientific defense—seems a promising one. Why is capitalism sound? Because it accords with the way we really are; it is the empirical way of things. Given this view, interference with the free market is artificial, disturbing of the natural balance. The theme has been advanced before, on numerous occasions, in support of various systems and policies. It might help capitalism too.

And capitalism has all along been in desperate need of help, with attacks upon it coming from both the political right and left. Baudelaire wrote: "Commerce is satanic, because it is the basest and vilest form of egoism." Balzac, in Melmoth Reconciled, declared that "when commercial interests are at stake, Moses might appear with his two luminous horns, and his coming would scarcely receive the honors of a pun; the gentlemen whose business it is to write the Market Reports would ignore his existence." And then there were, of course, Marx and Engels, writing in The Communist Manifesto:

The bourgeoisie…has pitilessly torn asunder the motley feudal ties that bound man to his "natural superiors," and has left remaining no other nexus between man and man than naked self-interest, than callous "cash payment." It has drowned the most heavenly ecstasies of religious fervor, of chivalrous enthusiasm…in the icy water of egotistical calculation. It has resolved personal worth into exchange value.

How can those schooled in economics reply to such erudite, lofty assaults? They can dismiss it all as motivated by private interest and as unscientific "music," to quote Milton Friedman again. If the scorn of Baudelaire and Balzac, of Marx and Engels, is what morality has to offer, then no wonder people concerned with the actual world turn their backs on morality and claim a more realistic, scientific view of human affairs. Practical people realize that freedom of trade is responsible for prosperity. So if morality condemns freedom of trade and commerce, morality must be something confused—an obstacle to what is useful and workable. Morality, by its wide association with altruism, is thus rejected in favor of pragmatism, of practicality and efficiency.

But this is a mistake; for there is no escape from good and evil in human existence, and failing to think about them simply leaves the sphere for others to conquer. Nor does science require that we deny the place of morality and principles in human life. There is no sound reason to expect human life to be fully explained and understood along lines suited to physics, chemistry, or biology. Persons are beings with physical, chemical, and biological attributes, yes—but that is not all. Attempting to reduce the study of man to the study of other objects in the world doesn't make sense when the object is to understand something that is distinctive about human beings.

Ultimately, the value-free scientific approach to defending capitalism will not work, because human beings do have values. Science does not show that the system is decent; it shows only that if the system is adopted, we can mainly expect widespread economic productivity. Why should this be considered so crucial? Value-free economics does not have an answer.

There is an answer, however—that productivity is indeed morally right for us. We should lead lives that are productive. And we should do so because we will benefit from it, because we will live more in accord with our human nature if we produce things, if we strive to earn profits in business, if we seek to achieve our self-interest.

But it won't do to say only this much. The answer must be fleshed out. What is the meaning of self in self-interest? Is one's interest simply whatever one prefers or wishes for? How does the pursuit of one's interest square with the best ways to live in a society?

The idea of self involved here rests on the fact that each person is human and is individual. Identifying one's self-interest must take account of oneself both as an individual and as an intentionally social being.

There is no conflict between self-interest and the interest of others when all pursue their self-interest—not unless we construe the universe to be absurd from the outset. Why doesn't the basic interest, or good, of an individual clash with that of another? It could only do so if we mistakenly identified all our desires, wishes, and unreflective wants with our basic interest. But what is in our interest is not so simple as that.

A human being's basic interest cannot conflict with his basic human nature. Our basic human nature is characterized by the fact that we are rational living beings; that is, we are animals capable of thinking, reasoning, imagining, and so forth. As rational living beings, we benefit enormously from social interaction. Language, love, education, science, commerce, art, and the other fruits of social intercourse benefit us, because we can both learn from and enjoy them tremendously.

Because we benefit from social interaction, rules of social life that promote decency and consideration are extremely beneficial to each of us. Indeed, such rules are the very means for constructive human associations beyond the narrow ties of family or clan. The appropriate principles of law and politics are the rights of individuals—on the order of the Bill of Rights that is part of the Constitution. These principles spell out the basic rules for organized social life that are to the mutual advantage of all members of society. The natural human rights all of us possess are principles by which we can guide ourselves in our relations to others for general, overall mutual benefit. Even if every wish or desire we have cannot be satisfied as we abide by these principles, they are to our general welfare, because they grow out of our human nature and what it requires for social life.

This is the framework within which a capitalist, free-market society is morally defensible. The guiding morality, drawn from a recognition of what it means to be a human individual, is the morality of rational self-interest. Let us consider, then, the consequences of this morality for commerce, the most visible feature of the system. What is the role of productivity—or profit making—within human life and in the social system that suits such life best?

I am referring here to the virtue of working for a profit. To strive to improve one's life, to be thrifty and prudent as well as self-fulfilled and joyful—all of this is morally admirable, commendable. To seek profit is right, indeed, for everyone.

Let me dispel a common confusion, however. Making profit cannot properly involve assault, fraud, theft, and other parasitic activities with which profit making is so often identified. The morality of productivity—of making, not taking profit—cannot, by its very nature, include stealing the productive result of others' activities. Profit making consists of activity that produces more than there was previously.

Beyond outright theft, embezzlement, or other forms of confiscation of private property—including the fruits of labor and ingenuity—there are less obvious ways of seeking to gain by coercion and interference with freedom. Government regulation, for instance, is a clear intrusion into the lives of citizens who have not been proven to be guilty of any violations of others' rights.

Usually, government regulation of our economic affairs is advocated on grounds that the poor, helpless, uninformed, and easily duped require protection. Regulatory agencies are assumed to express the care and thoughtfulness of politicians and the electorate.

But if we are as helpless and careless as some supporters of regulation may sincerely believe, such care would be futile anyway. For why, if we are so hapless, have bureaucrats escaped this fate? Why, if our local merchants and manufacturers, or those in large corporations, are crooked and malicious, wishing for a buck even if gained at the expense of someone's life or well-being, are politicians and their appointees immune to such temptation? And if they are not immune, is it not clearly unwise to centralize the forces of incompetence and malice instead of leaving them dispersed throughout the population so that individuals and organizations might cope with them more effectively?

Furthermore, government bodies set up to help us help ourselves often are captured by special-interest groups who use them to further their own ends. Licensing bureaus in the health and other professions, for example, do just exactly this. The proffered justification is that licensing locks out competition—from "fly-by-nights" and incompetents, of course—so as to help us. But all this kind of help comes to is a usurpation of our individual authority, our freedom.

It is the doctrine of altruism that supports such government interference with our freedom. In the name of helping others or improving society, our liberty to pursue life by our own judgment is curtailed constantly, even in a political community that was founded on the principle of individual rights. The mere chance that a marketplace exchange might leave the consumer or worker less well off than expected—the mere chance that such will occur justifies, from the altruistic point of view, the limitation of everyone's liberty. After all, according to altruism, what we do for ourselves with our liberty is negligible. So it doesn't matter if, in order to reduce the probability of wrongdoing, the chance of doing well by ourselves is curtailed or even eliminated. It doesn't matter if it will take millions of dollars to install airbags in all new cars—so long as this might help some people. Never mind that such policies deprive millions of people of the opportunity to choose whether to spend their funds for that or for something else for themselves or those for whom they care.

All this is crucial not only to the survival of a free and civilized society but to human life itself. That is why the altruistic ethics, which levels such a frontal attack on the idea of profit, must be confronted directly—on moral grounds—instead of pushed aside in favor of considerations of waste, of helping the unemployed, and of other pragmatic defenses of the profit system.

Ironically, it is not only intellectuals and politicians who distrust profit making—so do those who make profits. Most of them shy away from defending it. When confronted by sanctimonious politicians—at congressional hearings into the operations of various industries, for example—business representatives often offer lame excuses for doing well at their business instead of a straight, indeed proud, declaration that they are in the profession of making profits, and when these are big, they have done their work very well.

Many who are all too willing to have government regulate the business profession are eager to keep their own professions free of such regulation. The news media and the publishing industry are prime examples. While quick to resist government interference in their endeavors, they rarely speak out in support of other professionals who are regulated to the hilt. Yet many—perhaps most—books are written irresponsibly; numerous magazine articles contain falsehood and distortion; the news is often biased. Why is none of this seen as terrible enough to control the press? Because people in publishing know well enough that the risk of going wrong—including misinforming people, ruining reputations, and so on—is worth the creativity and progress that is only possible if their field is left free of coercion. They simply will not generalize this to cover other professions as well.

Those in other professions, however, are not favored by an explicit First Amendment in their own behalf. And those in business are not even of one mind about economic freedom. This lack of solidarity in the business community is not, however, very surprising. Ideas about what is right and wrong do not emerge, contrary to Karl Marx's teachings, from one's economic environment. Some of the most entrepreneurial individuals in the world are political socialists, while some of the most fervent advocates of capitalism are plain lazy. There simply is no "class consciousness" that governs people's thoughts on politics and ethics.

The business community's lack of concern with its own best interests is evidenced, for example, by the practices of Mobil Oil, IBM, Xerox, and Texaco when it comes to the investments they make apart from direct enterprise. Such corporations repeatedly support artistic, scientific, educational, and related nonprofit endeavors that are unambiguously hostile to capitalism. Movies, plays, television programs, foundation projects, and universities receive funds from these corporations. Yet, evidence indicates that most of these directly or indirectly attack the very principles that make corporate business possible.

A few years back, to offer an illustration, there was the motion picture Heaven Can Wait. The only villain in the story "happened" to be a capitalist who supported free enterprise. The protagonist counted among his virtues his refusal to take the free-enterprise approach seriously. Innumerable television scripts equivocate between wishing to make a profit and criminal motivation. Virtually every major crime, from murder to rape, is treated in TV dramas and pulp novels as a necessary consequence of people trying to prosper in life. The implied indictment of human nature itself is staggering. Still, sponsors continue to support such programming. The business community also continues to sanction hundreds of magazines and newspapers whose editorial stance toward the capitalist system is one of hostility. And this is the very system, of course, that keeps sponsors solvent and the press free from government dependence—unlike in socialist societies.

So, Marx was wrong—business folks do not always know or pursue their interests. There is no reason to believe that the so-called bourgeois class takes any better care of itself, of capitalism, of its own alleged base of operation, than others would. This is not surprising, but it is a pity.

Capitalism, the commercial life that it fosters, the general freedom that accompanies it, and the prosperity that results—capitalists need apologize for none of this. The moral support for their system is that within it, the pursuit of happiness by human individuals is made possible to a far greater extent than in the other systems under which the peoples of the world have lived and do live. Indeed, capitalism's fundamental humanitarianism, as humanitarianism should be understood, must be stressed.

The point here is not to appear kind and altruistic! It would be dishonest to advocate a political and economic system simply on grounds that it benefits others. No, capitalism needs to be supported unapologetically as a system in which one's own well being has the best chance to flourish. Unless this hearty support is given more and more, the morality of self-sacrifice, of altruism, of human self-debasement and servility, will triumph; and along with it, all types of statism—the systematic threat to human liberty everywhere.

Turning away from the moral issues isn't an answer, contrary to the claims of some defenders of capitalism throughout the system's history. There is too much evidence of the reality of moral concerns in our day-to-day endeavors. Instead of renouncing morality, defenders of capitalism must show that the basic values and virtues stressed in our moral climate are wrongheaded. Altruism alleges the supremacy of what should be simply one aspect of human concern—namely, the welfare of others. If this is recognized, the political and economic system that makes supreme the human individual—that is, capitalism—will emerge as demonstrably superior not only in practical but in ethical terms.

Tibor Machan is a senior editor of REASON and the author of Human Rights and Human Liberties, among other works.