Archives for category: The Lesson Applied

A number of writers from across the political spectrum have been writing about the word “capitalism” recently.* What does it mean? Do we have what it signifies? Does talking about such a seemingly vague thing increase our understanding?

enjoy-capitalismJohn Stossel argues that we don’t live under capitalism, unless you modify the word to mean “crony capitalism.” His essay “Let’s Take the ‘Crony’ Out of ‘Crony Capitalism’” makes a very familiar case:

The word “capitalism” is used in two contradictory ways. Sometimes it’s used to mean the free market, or laissez faire. Other times it’s used to mean today’s government-guided economy. Logically, “capitalism” can’t be both things. Either markets are free or government controls them. We can’t have it both ways.

The truth is that we don’t have a free market — government regulation and management are pervasive — so it’s misleading to say that “capitalism” caused today’s problems. The free market is innocent.

But it’s fair to say that crony capitalism created the economic mess.

This is all very well and good. Accurate in its own way. But I am not sure we should give in to either libertarians who want to defend free markets or statists who want to bury them in red tape. “Capitalism” isn’t a word that means just one thing, just as “democracy” isn’t a word that means just one thing. One usage isn’t obviously better than another. Thackeray’s coinage serves more than one master.

I support laissez-faire. It’s a great and noble — and ultra-civilized — policy. But laissez-faire isn’t the only form of capitalism. Indeed, the dominant form has always been some form of dirigisme, or piecemeal state control of market activity.

So, I suggest letting everybody use the word “capitalism” in a broad sense, as an economic system featuring a large degree of private property both at the consumer and producer levels, wide market interaction in both consumer and producer goods, and fully developed labor markets.

It nevertheless remains the case that laissez-faire is more capitalistic than dirigisme. For, the more state control of markets, the more limitations on private property — particularly with command-and-control regulation, rather than rule-of-law oversight — capitalism morphs into socialism. The more government you have, the less the capitalist element dominates.

To put this more straightforwardly, capitalism is defined by the features that laissez-faire unreservedly supports: private property, freedom of contract, markets in capital goods, and contract labor. So, though dirisgistic capitalism is indeed capitalism, laissez-faire capitalism is “more capitalistic,” by the standards of its very definition.

There is one sense that this understanding, however, is not true. That’s the sense in which dirigistic capitalism serves capitalists, that is, people with money. It is a truism of government that it rarely serves all, equally. And it is also a truism that money talks in politics. So, dirigistic capitalism amounts to little more than plutocracy.

This sad truth comes as a shock to those who hail from the left. Those leftists who propose to make capitalism more dirigistic often merely serve as useful idiots for the very rich. Businesses have a long history supporting mercantalist policies, policies that so-called “progressives” thought “regulated business.” Instead, regulations most often help business cartelize, even monopolize, their positions. Getting the upper hand is something many businessmen attempt, and attempt through government.

Such operations have taken many forms, from anti-trust (which actually makes businesses less competitive) through micromanaging regulation to outright subsidy.

It can be quite amusing to watch a standard-brand leftist make all the arguments necessary for businesses to trump their market competition. The trump being, of course, government.

This was most entertainingly seen in the recent bailouts, where it was a whole class of bankers and intermediaries who were aided, not the general run of market participants. Indeed, bankers’ jobs and intermediaries’ jobs were made secure, and their fortunes restored, while the economy lurched out of control and into double-digit unemployment. Such is the logic of dirigisme: Not very logical.

Very political, though.

The great rule of capitalism is that everybody’s worth differs in differing contexts. Laissez-faire is a form of regulating capitalism by the rule of law, trying to set a political limit on the value of human beings. In laissez-faire, the political value of people are equalized by their equal rights to liberty and free contract. But under dirigistic capitalism, the fluctuating value of human beings is re-introduced into the political system because rights no longer regulate human interaction, micromanaging policy-makers do. So everything goes up for grabs.

Under dirigisme you get the general exploitation of the politically weak by the politically powerful — two classes that continually shift, according to the deals and machinations of politicians. You get what Anthony de Jasay calls “the churning state.”

I have no special love for the term “capitalism,” and see no great and overriding reason to shore it up. I just want people to be able to talk to each other about the realities of the current (and past) social world. Capitalism obviously exists in some form today. But it is obviously not laissez-faire capitalism. What we are blessed with and suffer under is dirigistic capitalism.

Two French terms. Why not?

It should be remembered, though, that dirigisme is the ancient, traditional state practice. It flows naturally out of the limited-access society’s basic deal: Tough guys provide order, and in “exchange” we — each of us — gets a fairly stable, quasi-guaranteed place in that state, however lowly.

The idea of laissez-faire, though perennial, is much newer, and quite revolutionary. It is deeply associated with the idea of a rule of law, and its main feature, on the personal level, is personal freedom, the ability to choose what you do in life.

It is always amusing to me how advocates of dirigistic capitalism so readily devolve into advocates of ancient political notions of status. Both centrist Republicans and Democrats tend to move in that direction, and leftists, in particular, keep reviving ancient notions of class and “my station and its duties.”

The great thing about laissez-faire is that it allows us that opportunity to throw off the shackles of time and chance and programming, it conjures up the ability to remake oneself, correct course. This allows for a great amount of progress and flexibility. But stability? Nothing can be guaranteed.

Those who want guarantees of place and position, they tend to hate the freedom in laissez-faire. They don’t want government to “let others act” within the confines of a rule of law, they want more regulation.

Ah, regulation!

The lifeblood of dirigisme. The command structure of socialism. The inheritance of the conquerors who established the first states. At one with military orders, the darling of bureaucracies, the goal of most politicians. It is coercion instantiated in its most paradigmatic act.

The paradigmatic acts of laissez-faire, on the other hand? First, the trade; and, second, being held responsible for one’s own actions.

But I’m more than willing to admit that “capitalism” fits a broader history than the ideal of laissez-faire. So the word must be modified. “Dirisgistic” will do. I offer it to those reasonable people — see, for instance, Stephan Kinsella in his recent essay “Capitalism, Socialism, and Libertarianism” — who wish to keep their terms straight and move beyond semantic disagreement to substantive argument.

And perhaps more French words could be found for the varying degrees of control that have characterized American market life.


* This essay was originally posted April 16, 2010, on The Lesson Applied, by Wirkman Virkkala. A very few changes have been made to the original text.

…reposted from The Lesson Applied, April 5, 2010:

I may disapprove of what you take, but I’ll defend till your death your right to take it.

The same sort of values and reasoning that support the right of free speech supports, also, the right of self-medication.

Because we have had free speech rights, but have lacked the right to self-medicate, the two rights seem (to many) the most distant of cousins, if not warring foes. To most folk, the idea of self-medication? Heaven (or the state) forbid: We must always be guided by doctors, who know better!

But, in a free society, it is each person’s own responsibility to decide what to do with his or her body. In families, spouses and parents and siblings and even children can assist. But, unless a person is addled or unconscious, the responsibility for decision making is his or her own.

It’s this way regarding belief and speech. We have a right to believe and say as we wish. But the responsibility to refine those wishes for our own betterment? That’s ours, too. The right and the responsibility. The right gives us freedom to choose a wide array of thoughts. The responsibility means that we can’t blame others for our silly notions or foolish talk. And decisions.

So it is with medicine. And by this we must mean psychoactive drugs as well as drugs for acid reflux, blood pressure, or what-have-you. When I mentioned this to a friend, he was aghast at the thought. “We don’t have a right to self-medicate for pleasure!” I asked why not. He was on the fence about a right to self-medicate to avoid pain or repair physical maladies, but for just pleasure? Of course not! The idea had never crossed his mind. And yet he, like me, knows many people who are prescribed Paxil-related drugs, drugs that are designed to increase pleasure.

But avoid pain, first and foremost. Avoid the pain of stress and anxiety.

Besides, these drugs are prescribed. It’s not a question of a right, right?

Wrong. I see no persuasive reason for the prescription system, either. If I want a pain killer, it’s my business, no one else’s.

The arguments for the current manner of regulating drug usage is harm prevention. And, surely, people can hurt themselves with drugs. As they can with food. As they can with cars. As they can climbing rocks and mountains. As they can believing weird things about “being clear” (and I’m not referring to Peircean pragmaticism).

The reasons for treating one’s own medicinal use as a right, and the costs of said exercise of the right as one’s own responsibility, are the same here as regarding speech. These reasons include:

  1. Each person has the greatest incentive to learn from his/her mistakes, to make the best search for knowledge and advice, so it is almost natural and commonsensical to leave such decisions up to each person, not to “each other.”
  2. Other persons often face strong incentives to exploit persons under their care. By distributing responsibility to each person’s own self, rather than to some organization of others, one cuts down on temptations for corruption and abuse.
  3. When a responsibility is one’s own, the natural relations with others tend to be contractual, and contracts contain more clarity of scope and correction than other forms of interaction, which tend to be arbitrary and murky. When things go bad, it is easier to correct for mistakes and error when rights and responsibilities are assigned to each person rather than focused on professional bodies.
  4. Charitable aid and generosity are more clearly demarcated, and flourish with less chance of self-delusion, when responsibilities are individually assigned rather than collectively devolved onto other groups.

These sorts of reasons for individual freedom and personal responsibility apply to matters of belief and speech and to matters of care and feeding as well as medication. When the default position for rights and responsibilities, for adults, is to the persons themselves, feedback systems are set in place for widespread chance at learning. When these rights are taken away, or the responsibility for bearing the costs associated with exercising those rights is taken away, you end up with people becoming weaker of judgment, more foolish.

This principle of what might be called moral education was summarized in relation to money in a classic essay:

The ultimate result of shielding men from the effects of their folly,
is to fill the world with fools.

And here we come back to the sentiment I began with. It is a somewhat harsh doctrine. Voltaire is said to have declared “I may disapprove of what you say, but will defend to the death your right to say it.” I revised this for drug use, to say “I may disapprove of what you take, but will defend till your death your right to take it.” Drugs are dangerous things. You can, indeed, cause yourself much harm, even death. I can see no reason to mask the danger here. I support freedom even if some, under the tutelage of generalized personal responsibility, fail rather than grow.

This harm and the possibility of failure is why many people wish drugs regulated, prohibited (depending on the drug). But this intention of helping does not guarantee that people are actually and truly helped.

The unintended effect of the prohibition of something some people really, really want, means that they purchase those goods on the black market. And there, without standardization, dosage is hard to control. Drug overdoses, which on the free market would be the occasional result of carelessness, is, on the black market, a too-frequent and far too common result of prohibition itself.

The clarity that freedom engenders would surely help many who now abuse illegal drugs. But it is very hard to get people to rethink old prejudices against freedom in these cases. In other cases, too. So often folks let themselves assume that freedom doesn’t work “in this case,” but still expect it in so many others, like where they wish to eat, where they find employment, and much else.

The logic of liberty works across all (or: nearly all?) realms of experience. Responsibility, the flip side of freedom’s coin, promotes betterment by providing feedback and spurring learning. Few elements of life neatly wrap up into a tight system where learning is perfection. We all make mistakes. Sometimes we make fatal mistakes. But not allowing us to make some mistakes ill prepares us for all sorts of situations. And the sheer bulk of regulation in all walks of life, from education and medical care to dining and wining and even signing, weakens us, turns us, increasingly, into sheep who require shepherding, rather than more independent stock who have the wherewith to decide when to follow the flock, when to strike out on our own.

The lack of courage amongst the knowing population on this issue saddens me. But it’s not just courage that is lacking in the populace.

What is most lacking is the vision of social causation that sees human beings as complex and fallible, not perfectible but most adaptive if held responsible for their actions. Our diversity requires distributed responsibility, several property, and individual freedom. And we must be able to think beyond the obvious or the merely traditional. We must apply Bastiat’s lesson of looking beyond the easily seen, outwards, towards what is usually unseen. But there. And vitally important.

One sentence has been elided from the original, in this reposting.