“A FINE OLD CONFLICT” For the better part of five generations, the enemies of capitalism have been singing lustily to celebrate its imminent demise.
During strikes, demonstrations, May Day parades and other sacred occasions, those who reject and denounce the free market system still raise their clenched fists and solemnly intone the thrilling words of “The Internationale”, worldwide anthem of the socialist movement:
No more tradition’s chains shall bind us,
Arise you slaves no more in thrall!
The earth shall rise on new foundations
We have been nought, we shall be all!
‘Tis the final conflict,
Let each stand in his place
The international soviet
Shall be the human race!
‘Tis the final conflict,
Let each stand in his place
The international working class
Shall be the human race!
As a young teenager in London, Jessica Mitford accompanied her governess to Hyde Park for regular Sunday expeditions to savor radical soapbox oratory and to listen to fervent renditions of this song. Unfortunately, she mistook the repeated references to “the final conflict” to be an invocation of a “fine old conflict.” In fact, she later gave the title “A Fine Old Conflict” to a wry 1977 memoir of her decades-long affiliation with the Communist Party.
For Mitford and other critics of the free market system, their ongoing conflict with capitalism may indeed count as “fine” and “old” but it’s never come close to climactic finality.
The florid text of “The Internationale” came from the pen of transport worker and revolutionary leader Eugene Pottier in June, 1871, two weeks after the collapse of the sixty-day socialist insurrection known as the Paris Commune. Despite the bloody breakdown of his utopian dreams, Pottier felt exhilarated by his personal participation in street fighting amidst the boulevard barricades; as he poetically proclaimed in his celebrated song: “Justice thunders condemnation: a better world’s in birth!”
For a hundred and forty years, Pottier’s fellow visionaries have eagerly awaited that promised delivery, expecting the rapid unraveling of the profit-motive economic system that ultimately reached its most powerful, influential expression in the United States of America. Even among the reigning elites of that bourgeois Republic, young radicals of the ‘60’s believed that their own insurrectionary adventures in the Ivy League could bring the nation’s business crashing to a halt. Even at the time, it struck some of us as insanely narcissistic to expect that a boycott of classes or the occupation of administration buildings by a few self-righteous students at Harvard, Columbia and Yale would threaten the productivity and progress of the most prosperous economy in the history of the world.
On a similar note, Newsweek ran a notorious cover story (February 16, 2009) under the headline: WE ARE ALL SOCIALISTS NOW, suggesting a new consensus regarding the well-deserved demise of the free market economy. A few months later (June 2), USA Today columnist Jonah Goldberg aptly pointed out that even the co-author of that much-discussed piece had abandoned the claim of socialism’s universal acceptance and implicitly returned to the idea that in the United States describing someone with the S-word still represented a savage insult. In an adoring interview with the President of the United States, Newsweek editor Jon Meacham snickered with Mr. Obama over nasty right-wing suggestions that the leader of the free world actually qualified as a “crypto-socialist.”
Actually, conservatives went much further than that, and only rarely bothered with the timid qualifier “crypto.” On March 23rd, National Review ran a cover story under the headline “Our Socialist Future” as the magazine that William Buckley founded to “stand athwart history yelling ‘stop!’” instead seemed oddly (and briefly) resigned to stand aside sighing “we lost.” Glenn Beck, lachrymose and theatrical host of a popular program on Fox News, planned a new book entitled “America’s March to Socialism” and often illustrated his TV show with archival footage of goose-stepping hordes in Red Square or Beijing. On a more thoughtful note, columnist Daniel Henninger asked the dreaded question in an April 2 headline in the Wall Street Journal: “Is This the End of Capitalism?” He answered his own query with a resounding ‘no,’ explaining: “Capitalism didn’t tank the U.S. economy. Overbuilt housing did.”
“ONLY A MATTER OF TIME….”
All of the dire and portentous talk about the current “Crisis of Capitalism” carries with it an inescapably familiar, even shopworn feel for all those familiar with recent history. In the “Camelot” era of 1962, African-American activist Malcom X unequivocally announced: “It is impossible for capitalism to survive, primarily because the system of capitalism needs some blood to suck. Capitalism used to be like an eagle, but now it’s more like a vulture…It’s only a matter of time in my opinion before it will collapse completely.”
During the Great Depression, of course, some of the finest minds of the century expected the weakened economic system to disappear altogether. On the eve of FDR’s 1933 inauguration, theologian Reinhold Niebuhr offered an obituary for the old order, written on the assumption that “capitalism is dying and with the conviction that it ought to die.” A member of Congress expressed similar sentiments the same year, as Tom Amlie, a Wisconsin Republican who later returned to the House as a representative of the Progressive Party, told a convention of radicals that the system had no future because Roosevelt wouldn’t spend the huge sums necessary to “keep it alive.” In any event, he declared that “whether capitalism could be kept going for another period of years or not, it is not worth saving.”
A more influential figure of that era, three-term Minnesota Governor Floyd Bjornstjerne Olson, made the destruction of capitalism even more central to his political persona. When asked by visiting journalists whether he considered himself “radical,” the populist governor with the booming voice and larger-than-life personality liked to shock them by announcing “I’m radical as hell!” In 1934, he addressed the convention of his Farmer-Labor Association (the ancestor of today’s Democratic Farmer Labor Party in Minnesota) and explained that he felt tired of “tinkering and patching” and wanted to change the entire business system in his state. The convention obliged by adopting a platform specifically declaring that “capitalism had failed and that immediate steps must be taken by the people to abolish capitalism in a peaceful and lawful manner, and that a new, sane, and just society must be established; a system in which all the natural resources, machinery of production, transportation and communication shall be owned by the government.” Despite the extreme rhetoric of the platform, Olson won re-election in a landslide. He toyed with the idea of challenging FDR from the left as a third party candidate in 1936, but rejected the idea shortly before he died in office of stomach cancer. He was only 44, and remains a wildly popular figure in Minnesota history and folklore.
In the 1930’s, the assumption that the free market system must quickly fall to pieces became so widespread that intellectuals concentrated many of their arguments on selecting the most promising replacement. Lawrence Dennis, former child evangelist, first lieutenant in World War I and Foreign Service officer, passionately rejected both the communist and socialist alternatives. Instead, he became one of the nation’s most influential advocates for fascism in the style of Hitler or Mussolini. In a letter to a friend he wrote, “I should like nothing better than to be a leader or a follower of a Hitler who would crush or destroy many now in power.” In 1932 he published an influential and much-discussed book entitled “Is Capitalism Doomed?” and then answered his own question with his next release, “The Coming American Fascism.”
THE IRRESISTABLE TIDES OF HISTORY
For many reasons, the commentators, activists and politicians of the 1930’s had far more basis for predicting the end of the free market system than either gloomy conservatives or gleeful leftists in 2009. Most significantly, as the arguments of Lawrence Dennis made clear, developments around the world suggested that the irresistible tides of history favored an international future of Statism. With the unholy trinity of Hitler, Mussolini and Stalin riding high in Eurasia, the United States looked increasingly isolated with its capitalist institutions – even as modified and re-arranged and regulated by FDR. Aside from the growing domain of the dictators, huge swaths of the globe had never even developed modern capitalist economies that radicals could reject. China remained paralyzed by a chilling combination of colonialism (both Western and Japanese), feudalism and War Lordism, with Mao’s rebellion already gaining considerable strength. The Japanese Empire ran according to principals of medieval militarism, rejecting the western profit system as soft and corrupt. India remained the “crown jewel” of the British Empire with only the bare rudiments of business development, while colonialism continued to dominate the lives of the vast majority of people in Asia and Africa, with corrupt kleptocracies all but universal in Latin America. Only Canada and a small handful of Western European nations seemed to share the values or economic outlook of the United States and every year brought new progress to the forces of collectivism and dictatorship.
By contrast, the thirty years preceding the economic crisis of 2008-2009 displayed unstoppable momentum in the opposite direction. The embrace of free market ideals became so universal that Francis Fukuyama famously proclaimed “The End of History” in 1992. The world’s two most populous nations, China and India, both pursued radical economic reforms to empower the for-profit private economy and reduce central planning (and control) of the economy. The results for both nations involved unimaginably spectacular and consistent growth, and an unprecedented improvement in living standards for nearly half of humanity. China implacably resisted the long-awaited political reforms to accompany its booming economy, and Russia flirted with one-party rule and showed scant respect for civil liberties, but both nations engaged the world economy in distinctly capitalist terms. Putin’s Russia even experimented (mostly successfully) with a flat tax in a demonstration that should provide encouragement for free marketers everywhere. Other former Communist bloc nations of eastern and central Europe not only flocked to join the European Union and NATO but also developed some of the most vibrant capitalist economies on earth.
The notion that the worldwide economic crisis would lead to a global slide toward socialism ran into populist reality in the first weekend of June, 2009. Voting for the European Parliament expressed a continent-wide rejection of left-wing economic prescriptions, with Center-Right parties crushing their Socialist opponents in every nation (except Greece). In France, Germany and Italy, ruling Center-Right coalitions strengthened their standing with the public, while the opposition conservatives in Britain and Spain gained significant ground. Hungary provided one particularly salient example: candidates of the ruling Socialist Party drew only 17% of the vote, while the right wing opposition party gained 56% (and a far-right anti-Gypsy Party earned an additional 15%). Despite the grim talk of an all-but-inevitable march toward socialism, the recent balloting gives evidences of an international surge toward capitalism. In Canada and Israel, market-oriented coalitions also won recent electoral victories, and only in Latin America (with conspicuous exceptions like Mexico and Columbia) have leftist candidates consistently triumphed.
In the United States, the claim that the election of Barack Obama represents a watershed choice and a decisive realignment looks increasingly tenuous in light of recent polling. The most recent Gallup Poll (in May) to ask respondents to state their party affiliation showed an exact tie between Republicans and Democrats at 32% each, with 34% describing themselves as “independents.” Amazingly enough, even these waffling independents looked evenly divided: when asked to express their preference between the two major parties, these non-partisan participants showed an identical number of Republican and Democratic leaners. These numbers represent a dramatic turnaround from the first month after the ’08 election, with the GOP improving its standing by six points, and the Democrats losing seven points of support.
Such polls will shift quickly and unpredictably in the next months and years but the apparent Republican comeback during the first 140 days of Obama’s presidency (with GOP candidates running ahead in both 2009 governorship races in New Jersey and Virginia) indicate that the American people made no significant ideological shift toward collectivism. Even the President’s stratospheric personal popularity hasn’t produced a reliable majority for the big government reforms he favors. In March, the Pew Research Center asked respondents if we are better off “in a free market economy even though there may be severe ups and downs from time to time.” A reassuring 70% agreed, while only 20% disagreed.
BETTER THAN POLAR BEARS
Fortunately, the future of capitalism rests on a firmer foundation than the vagaries of public polling or even the electoral fates of pro-market candidates and parties. The unprecedented worldwide improvement in living standards in the last century owes everything to the technological innovation, increased productivity and personal choice that characterize economies driven by competition and the profit motive. Beyond political advances or reverses, beyond the variations in the unemployment figures or the foreclosure rate or the Dow Jones, the fundamental changes in the very terms of human life in the last several generations will help to inspire the sort of confidence (and even gratitude) that will protect the capitalist system from widespread public rejection, destruction or dismantling.
Consider the direction of the most basic measure of human welfare and opportunity: life expectancy.
Mean life expectancy stood at only 30 years, worldwide, in 1900. This meant that half of all children born in that year would die on or before their 31st birthday. By 2008, that number had soared to 65 years. In other words, despite the misery and malnutrition and deadly epidemics that afflict the developing world, for all of the six billion human beings on the planet we have more than doubled the expected span of life.
In the United States, a baby born in 1900 could anticipate 47 years of life; by 1950, that number rose to 68 years, and in 2009 it passed a previously unimaginable 78 years.
Put another way, in 1900 American parents with four children (a typical family size at that time) could reasonably expect that at least one of them would die before reaching adulthood. Today, the death of children has become a blessed rarity.
Aside from the figures on health and mortality, consider the difference in the way we live our lives: the opportunity to go on family outings in cars (or airplanes), to enjoy entertainment options unimaginable even to royalty of the nineteenth century, to attend universities, to speak to loved ones on the other side of the continent, to bathe daily, to retain our teeth through old age, to shop in book stores stocked more plentifully than the best-equipped libraries of old, to own spacious homes and to tend gardens – all of this makes us easily the most fortunate generation in human history. The current economic crisis can neither erase nor obscure the overwhelming and ubiquitous evidence of progress.
I personally savored some of that evidence a few weeks ago when I attended a dazzling IMAX 3-D documentary of the breathtaking Disney documentary, “Earth.” Aside from the technological marvels displayed on the screen and through the sound system, the movie’s content left a lasting impression. Culled from hours of nature footage previously featured on the BBC and Discovery Channel, “Earth” provided an intimate examination of every sort of living creature in every corner of the planet. As narrated by James Earl Jones, the film strained to provide personality and drama to the experiences of elephants and polar bears and whales and lions and gazelles. The chief revelation of the film, however, involved the common element that linked each of these complex and magnificent creatures: the fact that they all spent nearly all their waking hours obsessed with food, and in efforts to try to secure the next meal, or to avoid becoming the next meal for someone else. Their only triumphs and tragedies concerned the basic business of consumption – like the emotional highlight of the film, when a weakened, starving polar bear makes a final effort to attack a robust walrus in the hope of devouring his blubbery flesh and drinking his blood.
For most of man’s history, the bulk of humanity lived lives that placed them closer to the food-focused animals than to today’s pampered people with our array of choices, joys, adventures and diversions. Subsistence economies for serfs or peasants or slaves meant that each day represented a struggle to guarantee a meal for self and family. Even in purportedly advanced societies, major portions of the population enjoyed scant time for any activities or initiatives not directly connected to survival.
In 1992, I heard an unforgettable presentation at an Aspen retreat from Baron William Rees-Mogg, a distinguished British journalist and one-time editor of the Times of London. He recalled his own boyhood in the depression when the mass of Britons lived lives only marginally more secure and varied than the struggling polar bears. He estimated the ratio as 80/20 between those who worried and toiled for daily bread while accumulating no wealth and few dreams, and the privileged fifth in the middle class and above with the ability to move up the comfort ladder and provide more for their children. Amazingly, after sixty years, the Baron estimated that in the United Kingdom the ratio had flipped – with 80% now enjoying bourgeois pleasures and opportunities, and only 20% still desperate and destitute.
He argued that the business system of the west could lead the world to a similar transition, altering the mathematics in which the majority of human beings on the planet still battled for life’s basics in 1992.
Amazingly, the last decade and a half brought the realization of his vision, with the overwhelming majority of human-kind now beyond the reach of starvation and avoiding that ferocious, animalistic focus on the next meal. That progress came from capitalist economies, or from socialist nations borrowing and adapting the key capitalist tools.
The frustrations and suffering of the last few months must not bring about a total loss of perspective on our situation. The reverses associated with the financial crisis can’t overwhelm the obvious fact that we enjoy pleasures and privileges and choices all-but-unimaginable to our own grandparents. Capitalism made that possible, and the proposed dismantling of the business system would threaten to send untold millions back to the sustenance struggles of hungry bears and birds.
CHANCES FOR HOPE AND CHANGE
In the last analysis, the prevalent predictions about the free market’s destruction and the coming of a new socialist order amount to a simplistic, childish, ill-informed distortion with unlikely origins in the bad old days of the Cold War.
During the years of “long, twilight struggle” (in JFK’s haunting phrase) serious people divided the developed portions of the planet into “Iron Curtain” vs. “Free World,” communist dictatorships vs. lands of liberty, them vs. us. Some nations insisted on “non-aligned” status (like the maddening Indians with their pacifist and neutralist traditions) but even those bastions of indecision ran the horrible risk of “going communist.”
According to the understanding of the time, when any nation “went communist” and installed puppets of the Soviet Union to positions of real power, the alteration in status became permanent. The Communist agents or dupes might come to power through elections and the manipulation of Democratic institutions, but in many countries that meant “one man, one vote, one time” – with a quick brutal crackdown on all opposition and the rapid establishment of the mechanics of dictatorship.
Future U.N. Ambassador Jeane Kirkpatrick became famous through an article (“Dictatorships and Double Standards,” November, 1979) that talked about the long-term results of Communist takeover. In making the case for the uneasy U.S. alliance with various non-democratic regimes, she emphasized the distinction between “authoritarian” and “totalitarian” dictatorships. In authoritarian nations (like Batista’s Cuba) the government never took full control of all institutions and allowed rival sources of power, thereby admitting possibilities for change. In totalitarian regimes (like Castro’s Cuba) the ruling elite attempted to dominate all political, economic and cultural institutions, allowing no challenge to its all-inclusive power and providing virtually no chance for change.
According to the conventional wisdom of the time, no totalitarian regime had ever released its oppressed populace or evolved toward enlightenment; such nation-states could only be transformed (as with Nazi Germany and Imperial Japan) through the overwhelming application of military force. This meant that once a society “went communist” there was no chance to turn back, and you could count on that nation to work against American interests, follow the Soviet lead, and shun all ideals of liberty and decency.
Such thinking contributed powerfully to the decision to fight both the Korean and the Vietnam Wars, and also impacts the current debate about “our socialist future” and the demise of the free market system. For many worried conservatives, the possibility that the Obama administration will impose a vast expansion of the federal government amounts to the chance that America would “go socialist” – moving definitively and permanently from column A to column B. According to this argument, once the majority of voters grow accustomed to a cornucopia of governmental goodies, it will be impossible to break their addiction, and the irresponsible spending will bring about either the bankruptcy of the federal government or (far more likely) vastly increased and punishing taxes on society’s most productive citizens.
The problem with this line of reasoning is that there is no defined or obvious tipping point in which a nation moves clearly from the sunlight of liberty into the shadows of statist tyranny. There’s also little historical evidence that even the most radical sorts of bureaucratic expansion amount to irreversible change.
Consider the mother country, our friends across the pond in the British Isles. In the 34 years from the end of World War II until the arrival of Margaret Thatcher at 10 Downing Street, the officially socialist Labour Party controlled the government almost precisely half the time. They succeeded in instituting the National Health Service (socialized medicine) and vastly increased spending for public housing and other welfare programs. Did this mean that the United Kingdom had “gone socialist” and couldn’t return to a dynamic market economy?
Fortunately, Mrs. Thatcher didn’t believe in the inevitable loss of British initiative, and in 1979 she set about transforming her country for the better. She didn’t immediately re-establish capitalism any more than her Labour predecessors had firmly established socialism. She did, however, change a mixed economy in a free market direction, in much the same way that Barack Obama means to alter the American economy in a big government, “spread the wealth,” socialist agenda.
All western nations operate with mixed economies, and the mix is different from place to place and from time to time. Switzerland shares a border with Germany, but the two nations offer vastly different economic systems (so that any true lover of liberty will prefer Swiss chocolate to German beer). Ronald Reagan took over the White House directly from Jimmy Carter but he brought vastly different ideas to the table on how to run the nation’s bureaucracy and economy (Reagan believed the economy should, ultimately, run itself). Naturally, it makes a difference when a president attempts to lead the nation in a new direction, but the chief impact of his efforts will be to alter the balance (probably only slightly) between the private and public sectors.
The notion that Europe has become a socialist wasteland with no entrepreneurial energy and no possibility of redemption distorts the continent’s complicated realities. Russell Shorto, an American writer living in Amsterdam, provided a fascinating account of life in the supposedly “socialist” Netherlands for the New York Times Magazine. “It is and has long been a highly capitalistic country,” he writes. “The Dutch pioneered the multinational corporation and advanced the concept of shares of stock and last year the country was the third-largest investor in U.S. businesses—and yet it has what I had been led to believe was a vast, socialistic welfare state.”
Even the top Dutch tax rate of 52% misleads people about one of the Old World’s more prosperous enclaves. Noting that the top federal tax rate in the United States now stands at 35%, Shorto quotes Konstanze Woelfle, an American accountant working in Amsterdam. “People coming from the U.S. to the Netherlands focus on that difference, on that 52%,” she said. “But consider that the Dutch rate includes social security, which in the U.S. is an additional 6.2%. Then in the U.S. you have state and local taxes, and much higher real estate taxes. If you were to add all those up, you could get close to 52%”
And, of course, President Obama may well succeed in raising that figure beyond the Dutch level, but even if he does, the chances for future cuts and reforms remain vibrant. The top tax rate has fluctuated wildly over the years in response to both economic and political pressures --- from 73% under Woodrow Wilson to 24% under Calvin Coolidge, to 92% under Harry Truman, to 70% under John Kennedy, to 28% under Reagan, and then back to 39.6% under Bill Clinton. Though all Americans would benefit from more predictability, rationality and simplicity in the tax code, there’s no reason to assume that the forthcoming rate increases under Barack Obama will be any more permanent than previous alterations.
In any event, we can only damage our effectiveness by misrepresenting the nature of the battles that surely lie ahead. We are fighting against a bone-headed and unaffordable expansion of government by well-meaning but misguided bureaucrats, not the imposition of socialist tyranny by jack-booted thugs. We’re struggling to protect our free market system from damaging intrusion by Washington, D.C., not to defend it against definitive obliteration. If President Obama pushes the system the wrong way (and he will) then it is up to conservatives to push back, rather than wringing hands over the system’s total destruction.
In fighting for smaller government, we fight for more liberty--- not the survival of liberty itself. Yes, that struggle amounts to a “fine old conflict” (which we can ultimately win), but it is by no means The Final Conflict of communist fantasies and conservative nightmares.