Greed, Socialism and the Free Market

One of the more remarkable and momentous results of the recent economic troubles facing the nation, and the two presidential campaigns, has been the way the language of capitalism and socialism have been weirdly juxtaposed.

Opponents of the latest version of the government “bail out” program that recently passed, and was immediately signed by the panicky president, argued that it is “the end of our free market system,” the “socializing of private debt,” and the “nationalization of the country’s banking system.” Maybe it is; it’s hard to say.

Such claims take as a given that 1) we know what a free market is, and how it is that we allegedly still have one (if we ever did); and 2) we know what socialism is, and why it is a bad thing.

While I once thought I knew what the answers to these questions were, I am no longer certain that I do. The current crisis has driven the point, like the lesson, home.

In 1989 and its aftermath, when the United States allegedly “won the Cold War,” it was declared to be a victory for the system of global capitalism, which was deemed superior to the various forms of socialism defended by the Soviet Union as a prelude to the final communist revolution. (We have learned to be wary of declarations of victory like this, I trust.)

Among intellectuals, one of the bases for the claim of capitalism’s superiority was that it was more realistic about human nature. Human beings are competitive creatures, and capitalism hinges on such competition. Capitalism as a system actually harnesses competition, and uses it. Communism and socialism, by contrast, were simply too optimistic about human beings’ cooperative instincts. The victory of capitalism as an economic theory thus relied on its more realistic and sober assessment of human nature. Call it an economic version of original sin.

Here’s the puzzling thing, then. If capitalism is more realistic about human greed and human nature, then how does that become an argument for free markets? If human beings naturally compete, and are inclined to take more than their share, then why is this not an argument for greater regulation of such markets, not less?

And while we are at it, what is an economic system for? Does it serve the ends of efficiency and innovation, or of justice? To be sure, an economic or any other social system should serve all of these ends, but that’s just the point of the current debate and the current crisis. We are trying to marry our concern for social justice, and compassion, against the alleged theoretical needs of a market with clear rules and free procedures. In such moments, we are forced to choose between these competing values; we cannot maintain them all.

“Compassionate conservatism,” a misnomer coined by Doug Wead and co-opted by President Bush, is no option and no help in these troubled times.

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