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Plural centers of power are the only reliable barriers to dictatorship. Labor unions are notoriously not the most democratic organizations in modern society; and were a so-called socialist country like Britain to lose its 50 percent remnant of capitalism, the traditions of British liberty would disappear into a dictatorship of the unions.


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There is also the point of efficiency. Whatever government does, we have learned to our bitter experience, it does ineptly and expensively. We are left, then, with capitalism. It permits freedom, and it is productive.


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  • We are not required to worship it. And, in fact, that would be one of its advantages over a socialist system. A great deal of the antagonism toward capitalism historically has come out of the unrecognized need to satisfy other and more obscure gropings. I think I can say, with some degree of assurance, of every intellectual I have known personally who was a committed socialist, that the socialist ideal represented a displacement of moral and religious values which had not found their outlet elsewhere and here came to distorted expression.

    Was not the socialist position as invulnerable as any religious over-belief? You did not have to defend the imperfections of any existing regime. The outcry against alienation was another misplaced yearning.

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    The alienation of modern man is indeed a real thing, but its sources lie elsewhere than in the specific economic arrangements of society. The workman cannot be expected to enter the factory as a cathedral, despite those early Soviet movies we saw as kids. In the socialist tradition you can scarcely disentangle specific social protest from a metaphysical rebellion against, or evasion of, the human condition itself.

    The inner history of the last twenty-two years is best described for us not by any sociologist, economist, or political historian, but by the novelist Dostoevsky in The Possessed , which in the light of present-day terrorism becomes even more startlingly accurate.

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    The violent dissatisfaction with the prosaic and workable arrangements of society from the family on upward that permit liberty, is part of the general spiritual sickness of modernity. There lie the real questions behind this symposium. Capitalism, of course, has its own very serious problems, among which structural unemployment now seems to be particularly pressing.

    The more efficient the economy becomes through capital-intensive investment, the fewer people are needed to produce the same goods.

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    In principle, however, if the system is healthy, it should have momentum enough to initiate new enterprises and jobs. It is up to us not to interfere with this health. Since the welfare state is going to be with us for the foreseeable future, it would be advisable if the economy were left otherwise free and productive enough to pay the cost of welfare. This is obviously a problem of delicate management, and it remains to be seen whether it can be brought off without our sliding into a form of de facto bureaucratic socialism.

    And precisely here, the problems of democratic politics become crucial. The title, as well as the opening statement, of this symposium suggests that democracy is somehow a synonym of liberty. In some aspects, however, democracy is not always a friend of liberty.

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    While capitalism essentially entails liberty, democracy does not. In its demagogic possibilities, for example, democracy may become the enemy of liberty, as the experience of ancient Greece and Rome bears witness. In our society, these demagogic tendencies often take a violently anti-capitalist turn. In a tight situation, the political orator can always take a swipe at the corporations. A politician is someone intent primarily on his own reelection, and will therefore do anything to satisfy the immediate clamor of his constituents without considering for a moment whether the new burden he creates for the economy will in the long run confer no lasting benefits upon those same constituents, but indeed the very opposite.

    Government often acts as if, no matter what it does, the abundant American economy will always be there, like Mother, to provide her blessings. In this witless fashion we could drift into becoming an economically second-rate nation.


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    In that case, the cause of liberty throughout the world would have suffered a very grave defeat. Only the power of our nation now stands as a barrier before totalitarian imperialism. And as the viability of our economy, with its productivity vastly superior to their own systems, is the sharpest thorn in the side of the totalitarians, so it has to be reckoned also as our most powerful weapon against them. Intellectuals have kept busy for well over a century defining and redefining the three entities under discussion here.

    This is confusing enough when it is done, at least with a modicum of detachment, by economists and social scientists. Here is a modest suggestion for cutting through this Gordian welter of conceptualizations; it is, as it were, a statistical suggestion: despite the great variety of societal arrangements in other areas say, that of family institutions , mankind has shown remarkably little imagination in arranging the distribution of scarce commodities and services. When all is said and done, only three mechanisms have been invented.

    The distribution has been governed by tradition, or by the dynamics of the market, or by acts of political allocation. Tradition has been in pretty bad shape since the advent of the modern era, which has left the other two mechanisms by way of options. It is safe to say that neither exists in empirical reality; both, to use Weberian terminology, are ideal types. Empirically, different societies are closer to one or the other type. A great simplification? Yes, certainly, but a useful one. It opens the eye to an essentially simple fact: in the empirical reality of the contemporary world, all democracies cluster in that part of the ideal-typical scale that is much closer to the capitalist than the socialist pole.

    This fact can be put in a number of different propositions: there is not a single democracy that is not part of the international network of capitalist economies. There is not a single socialist society that is democratic. Put differently: there is a high positive correlation between capitalism and democracy; the correlation between socialism and democracy is altogether negative. Once again, a statistical manner of looking at this is useful.

    There are, to be sure, capitalist societies that are not democratic, yet all societies that are democratic are also capitalist. This statistical scrutiny of the world map becomes even more interesting when one makes the important distinction between two types of non -democratic societies that Hannah Arendt has taught well though the lesson has not been learned by many —the totalitarian and authoritarian types.

    There are both capitalist and socialist societies with authoritarian political systems; since the demise of Nazi Germany assuming that it could be described as capitalist—a not altogether convincing assumption , all totalitarian societies have been socialist. It is this distinction that is crucial when comparing, say, North and South Korea, mainland China and Taiwan—or, for that matter, present-day Vietnam with South Vietnam under the Thieu regime. Put differently: not only does socialism have a high negative correlation with democracy, but it also has a high positive correlation with totalitarianism.

    These facts are simple. The explanation is no great mystery, either. Whatever else capitalism may be or do, it maintains in a society forces and institutions that are at least relatively detached from the organisms of the state. The modern state is the most massive concentration of power in human history. Whatever socialism may be as an ideal, its empirical realization removes from the scene yet another limiting factor to the power of the modem state. Let there be no misunderstanding: to say these things in no way implies the sort of faith in the necessary beneficence of market forces that is still so characteristic of the American business community.

    Let it be stipulated, then, that capitalism can be rapacious and exploitative, and that there should be political remedies to limit these manifestations.

    Also let it be stipulated that there is no ironclad logic disproving the proposition that, under different historical circumstances, socialism might take on a new face in Italy or France, say, as against Russia or China. But the empirically-minded observer will be forgiven if he refuses to bet on this—and even if he suspects that there is something in the constitution of the drunkard that leads to drinking. The major cognitive function of Marxism and its derivative theories is to obfuscate the empirical reality just described.

    It is therefore unreasonable to expect that those still under the sway of these theories will reassess their view of the contemporary world in terms of a less pejorative perception of capitalism. There is, of course, the democratic Left, or that section of it which holds to a non-messianic, pragmatic vision of the future and which seeks to control rather than abolish market forces.

    There will be no difference in the opposition to totalitarianism—indeed, especially in Europe, many of the staunchest anti-totalitarians are to be found in this camp—and there may even be a good deal of agreement on the foregoing understanding of the relation between democracy and a market economy.

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    It is difficult, however, to be overly optimistic about the prospects of this variety of pragmatic socialism among intellectuals, least of all in Western Europe, where a messianic and doctrinaire Marxism has become massively institutionalized. Both the class interests and the cultural proclivities of the European intelligentsia make it tend toward this or that version of Marxist messianism rather than toward the sober perspective of social democrats like, say, Helmut Schmidt or Bruno Kreisky. Even in their case, though, one must wonder why it needed the publication of The Gulag Archipelago to make them take note of the realities of Soviet socialism; it is as if someone suddenly discovered that something was wrong about Nazism because of the Eichmann trial in For the greater number of committed socialists, in Europe and elsewhere, the more likely option is to follow disillusionment in one type of socialism with new illusions about another.

    Those disappointed by the Soviet Union have turned to China. As more and more disappointing news keeps coming out of China, many are already turning elsewhere; Mozambique seems to be a current favorite. This option which has a long tradition in Judeo-Christian eschatology has the great advantage of being immune to falsification—the future is empirically inaccessible—while leaving in place all the negative perceptions of the capitalist status quo. Thus, while present-day France may not look so bad when compared with Mozambique, it cannot help looking awful when compared with an eschatological kingdom of perfect justice.

    Capitalism, Socialism, and Democracy

    In sum: those who understand the intrinsic linkage between capitalism and democracy should be open to alliances with all those who abhor totalitarianism—even if some of them still call themselves Marxists or gauchistes of some other denomination. Politically and morally, indeed, one will ten times prefer the socialist who opposes totalitarianism to the capitalist who thinks of nothing but doing business with totalitarian regimes.

    But one should not have the unrealistic expectation that an espousal of capitalism in the name of democracy is the coming wave in the intellectual community. When I was a boy at Yale, along about the time they were superannuating God, they were enshrining something called economic democracy.