Socialism and Solidarity


It is at our own peril that we ignore the nexus between moral convictions, the institutions in which they are realized, and our economic culture.

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When the financial crisis began spreading chaos throughout the economies of North America and Europe in the last quarter of 2008, sales of Karl Marx’s Das Capital reportedly soared throughout Western Europe. It’s unlikely this reflected a revival of genuine interest in Communist alternatives to market economies, less than twenty years after totalitarian socialism’s collapse in Eastern Europe. Marxist thought, however, does seem to attract attention whenever those economic systems broadly labeled as “capitalist” enter periods of significant instability. Thousands of Western intellectuals, for instance, were drawn to Communism during the Great Depression, despite compelling evidence of the human and economic destruction being wrought by Marx’s heirs inside the Soviet Union.

One of the attractions of Marx’s thought was the notion that everything, be it politics, religion, or literature, could be explained by the dialectics of history—or, more specifically, the workings of economic history. Among other things, this involved observing changes in the means of production and asking who benefited. As a way of thinking, Marxism dovetailed neatly with the spread of philosophical materialism, positivism, determinism, and social Darwinism throughout nineteenth-century Europe.

There was a half-truth to Marx’s deeply economistic outlook. Economic developments can radically reshape social, political, and cultural life. But Marx was wrong insofar as he underestimated the manner in which particular moral convictions can themselves significantly shape—for better or worse—economic institutions and practices.

Adam Smith’s Wealth of Nations, for instance, did not just reflect Smith’s analysis of particular economic transformations occurring in eighteenth-century Britain. Smith’s articulation of an intellectually powerful case against the mercantilism of his age also flowed from his conviction that mercantilist economic systems were not only profoundly inefficient but also deeply unjust. The injustice lay, in Smith’s view, in the manner in which mercantilist institutions (such as guilds) unduly inhibited the spread of entrepreneurship, investment, capital accumulation, and free trade across the globe. Mercantilism, Smith understood, simultaneously condemned large numbers of people to poverty while legally privileging others whose wealth was at least partly derived from their closeness to political power.

The spread of Smith’s ideas and a belief in the values underpinning them facilitated significant developments in economic life throughout nineteenth-century Britain and Europe, sometimes in surprising places. Between 1815 and 1870, for example, the economies of the then fragmented German states moved away from mercantilist, cameralist, and interventionist arrangements towards deregulation and free trade. The initial impetus for economic liberalization came from government officials in Prussia who had read Wealth of Nations and regarded the growth of economic liberty as one way of spreading freedom more generally throughout the German-speaking world.

There are also modern instances of similar value commitments helping to drive economic change. The market liberalization agendas of the 1980s symbolized by the Thatcher government in Britain and the Reagan Administration in America were propelled by more than economic necessity. They were also underpinned by the discrediting of neo-Keynesian ideas (which themselves embodied a range of normative beliefs) in the 1970s, as well as a widespread desire (especially evident in “Anglo-Saxon” countries) to assert the value of liberty over what were considered excessive concerns for economic equality and security.

The centrality of moral principles to economic life becomes apparent when governments attempt to push the economy in directions at odds with a society’s morals and culture. One prominent example of this was the Obama Administration’s healthcare legislation. The widespread opposition of Americans to Obamacare was a source of puzzlement to most Europeans (including many conservative Europeans) who simply could not understand why anyone would object to the state’s assumption of such a central role in the provision of health care.

Many Americans believed that the healthcare legislation would unreasonably constrict people’s economic choices, incentivize people to take less responsibility for their own lives, facilitate the further bureaucratization of healthcare, and, perhaps most significantly, expand the government’s control of the American economy. No doubt, there was and remains much worry about the economic inefficiencies associated with any government monopoly. Yet a strong value component was central to all of the above-listed concerns. This may also account for the continuing opposition of a steady majority of Americans to Obamacare—an opposition which played a major role in the Democrat Party’s losses in the 2010 mid-term elections.

But while moral beliefs have an important impact upon economic life, the manner in which they are given institutional expression also matters. This is illustrated by the different ways in which people’s responsibilities to those in need—what might be called the good of solidarity—are given political and economic form.

In much of Western Europe, the language of solidarity permeates public discourse to an extent that often surprises Americans. At the same time, it is widely assumed throughout Western Europe that this moral responsibility should be primarily articulated through state action. This helps explain Western Europe’s extensive welfare states. It follows that even minor efforts to reform social welfare programs or reduce the welfare state’s size are often regarded by many Europeans as a heartless assault on the value of solidarity.

Thus the rather modest welfare and labor-market reforms presently being implemented in Spain, Greece and France have sparked considerable moral indignation (and not just from welfare recipients) despite widespread acknowledgment that such reforms are inevitable. Obviously there are many whose negative reaction is partly driven by consciousness that such reforms mean that the days of not-very-demanding jobs for life may be numbered. Nevertheless it’s also true that many Western Europeans genuinely believe the good of solidarity is threatened by efforts to move beyond the present and economically unsustainable status quo, precisely because of the state-oriented institutional expression given by Europeans to the surely uncontroversial proposition that we are our brother’s keeper.

While Americans are often regarded as more individualistic than Western Europeans, this perception is partly driven by the different economic and institutional expressions that Americans have often given to the idea of concern for neighbor. This was among one of the distinguishing features of America that struck the French social philosopher Alexis de Tocqueville when he visited the United States between 1831 and 1832. The emergence of social and economic problems, Tocqueville noted, did not elicit demands from Americans for the government to “just do something.” Indeed, Tocqueville marveled at the relative absence of government from American life and the corresponding vitality of civil society, especially when compared to the state’s all-pervasive presence in his native France.

Tocqueville quickly realized, however, that this “absence” of the state was not symptomatic of a callous disregard by Americans towards their fellow citizens in need. Though Americans tended, Tocqueville noted, to dress up their assistance to others in the language of enlightened self-interest, he observed that Americans usually expressed the value of helping those in need through the habits and institutions of free and voluntary association. In short, Tocqueville wrote, Americans banded together to try and resolve social and economic problems through voluntary associations. Some of these associations (like churches) had a more-or-less permanent presence in American society. Others lasted only as long as a particular economic or social problem persisted. As a consequence, the same pressures for centralized top-down government-led solutions and all their economic implications that prevailed in France were not present in the young American republic.

If the foregoing analysis is substantially correct, then the implications for successful economic reform are twofold. First, reform efforts cannot consist simply of policy adjustments. They also need to be associated with arguments about the ways in which proposed changes express and institutionalize a range of moral axioms. The reluctance of European political leaders such as President Sarkozy of France and Prime Minister Zapatero of Spain to explain their welfare changes in value terms means they are reduced to articulating technical arguments which, as valid as they are, simply do not resonate with large numbers of Western Europeans.

The second challenge is for policy-makers and the citizenry as a whole to understand that particular values are better actualized in certain economic and political settings than others. Seeking to realize the principle of solidarity primarily through the welfare state and heavy labor market regulation, for instance, has contributed to a tendency to think that our obligations to those in need are exhausted by paying the taxes that fund welfare programs. It has also facilitated a breakdown in what might be called intergenerational solidarity throughout much of Europe. The desire to guarantee employment security, for example, is one of the main causes of the catastrophic levels of youth unemployment in countries like Greece, Spain, and France.

In the last sentence of the last chapter of his General Theory of Employment, Interest and Money, John Maynard Keynes made the observation that “it is ideas, not vested interests, which are dangerous for good or evil.” The context of his concluding thought was Keynes’ effort to explain some of the normative concerns underlying his attempt to revolutionize economics as a social science. However one regards Keynes’ policy prescriptions, he certainly understood that it is at our own peril that we downplay the nexus between moral convictions, the institutions in which they are realized, and our economic cultures. Contemporary governments, policy-makers, and citizens would do well to remember this.

Samuel Gregg is Research Director at the Acton Institute. He has authored several books including On Ordered Liberty, his prize-winning The Commercial Society, and Wilhelm Röpke’s Political Economy.

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