Don’t miss Matthew Mcmanus’ response, “Social Transformation and the Market Economy: A Reply to Samuel Gregg.”
In a recent First Things column, editor R.R. Reno confirmed that the magazine founded by Father Richard John Neuhaus has substantially revised its hitherto generally positive view of the market economy.
This formal shift toward what I’ll call “One Reluctant Cheer for—and Many Doubts about—Capitalism” was no surprise for regular First Things readers. In recent years, some First Things authors have expressed considerable criticisms of global capitalism’s social, economic, and cultural impact, and reservations about the thinking underlining various free market positions. One 2016 article, entitled “Mammon Ascendant: Why Global Capitalism is Inimical to Christianity,” even claimed that possessing private wealth was an intrinsic evil.
Reno’s recent piece contains several observations about Western societies with which few religiously informed conservatives would disagree. Examples include Reno’s warnings about how authoritarian liberalism is now crushing freedom in the name of “diversity,” his criticisms of a transnational political class that can’t disguise its contempt for non-members, and his highlighting of corporate America’s intellectual feebleness and moral cowardice in the face of liberal social agendas.
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Nonetheless, I believe that parts of Reno’s argument about free markets are seriously flawed. One such part concerns his claims about global capitalism’s alleged triumph. The second involves his critique of the late Michael Novak’s work, specifically Novak’s masterpiece The Spirit of Democratic Capitalism (1982).
Has Capitalism Won?
As Reno notes, the global and American economies are now vastly different from what they were when Novak’s Spirit appeared. The volume of trade between countries today dwarfs the scale of international commerce in the 1980s. We have also witnessed enormous changes in the American economy’s composition. Technologically speaking, Americans live in an utterly different world than they did during Reagan’s presidency.
There have been downsides, Reno stresses, to these changes, such as the turmoil they have introduced into many less well-off Americans’ lives. Reno’s general point, however, is that global capitalism has “won”—so much so that it is not a choice but “our fate.” Furthermore, he argues, market logic now permeates every sphere of life, reducing everything to a matter of choice. “We can even choose,” Reno states, “to become male or female.”
Like Reno, I regard “gender theory” as dangerous nonsense. But the question is: does people’s willingness to believe that Jack is “really” Jill because “that’s Jack/Jill’s personal choice” owe something to the spread of economic liberty? Surely, I’d submit, such errors are primarily driven by flawed philosophical anthropologies, particularly dualistic conceptions of the mind-body relationship. What capitalism’s apparent victory has to do with gender ideology and some of the other contemporary social evils listed by Reno is quite unclear.
I say “apparent victory” because I also question the claim that free markets have prevailed throughout the West, at least in the all-conquering way described by Reno. Take, for instance, something that’s integral to global markets—free trade.
Over the past forty years, a progressive lowering of some trade barriers for some goods and services has occurred. But the trade agreements that most people conflate with free trade are replete with page after page of conditions agreed upon by governments. Such conditions (exemptions, preferential treatment of particular products, etc.) invariably reflect heavy lobbying by businesses, unions, and assorted NGOs. Call it what you will, but it’s far removed from the free trade envisaged by Adam Smith’s Wealth of Nations.
Turning to America, there’s significant evidence to suggest its economy has experienced increased government regulation and intervention in recent years. According to the 2017 Index of Economic Freedom, overall economic liberty in America has declined since 2006 and is now lower than it was in 1995. During Barack Obama’s eight-year Rawlsian presidency, America’s already heavily regulated, already significantly subsidized healthcare system shifted even further toward Western European-style social democratic arrangements. In 2010, America’s financial sector acquired another 2,300 pages of federal regulation, courtesy of the Dodd-Frank Act.
Other instances of decreasing economic freedom could be listed. But the more significant point is that what we’re presently witnessing isn’t global capitalism’s triumph. Rather, it’s the latest round of a contest that’s been going on for 250 years.
In one corner, we have various expressions of what Smith called “the mercantile system”: the weaving of private commerce into webs of political favors and influence (“the Swamp”) in order to benefit particular businesses and the political class at everyone else’s expense. Since the late eighteenth century, these essentially corrupting arrangements have been challenged by those seeking to promote free markets in which privileges are marginalized and the state has clear but limited responsibilities.
As the British economist David Henderson illustrated in his short classic, The Changing Fortunes of Economic Liberalism, the pendulum has swung back and forth for a long time in this contest. Smith himself considered it “Utopian” to imagine that “freedom of trade should ever be entirely restored,” such was the power of those who prefer rigged political markets to free markets.
To this extent, it’s a mistake to claim, as Reno does, that “capitalism is our fate.” Governments and citizens always have to opt for free markets over the neo-mercantilist cronyism presently disfiguring so many Western economies. Right now, it’s not obvious they are doing so.
Being Fair to Michael Novak
A second area requiring significant correction concerns Reno’s critique of Novak’s Spirit of Democratic Capitalism. One of this book’s achievements, Reno point outs, was to immunize many religious believers against socialism while simultaneously making a serious theological-philosophical case for what Novak called “democratic capitalism.”
Reno’s main criticism concerns the book’s heavy emphasis on the openness and dynamism of free markets, something that proceeds from the very high premium attached to liberty in market economies. According to Reno, Novak’s Spirit overemphasizes the dynamic aspects of human beings, such as our inherent ability to be creative. In Reno’s words, “there’s little in [Novak’s] analysis that helps to identify the consolidating dynamics that give focus and common purpose to the ‘open’ system of democratic capitalism.”
Yet if one examines Novak’s writings from the 1980s and 1990s, one finds he did think long and hard about those permanent non-market conditions that promote the flourishing of individuals and communities. Novak even penned a book, Free Persons and the Common Good (1988), to address these matters. He also wrote widely about the importance of stable traditional families, underscoring the social carnage facilitated by the toxic combination of big welfare states and the sexual revolution.
Novak’s attention to what is permanent and gives common purpose also emerged in his public criticisms, beginning in the early ’90s, of how moral relativism was gaining enormous traction in Western societies. He discussed this theme in The Catholic Ethic and the Spirit of Capitalism (1993) and his 1994 Templeton Prize lecture, “Awakening from Nihilism” (a version of which was published by First Things).
Novak’s Templeton lecture specified that the free economy was necessary but insufficient for societies that aspired to be free and good. He even argued that all the achievements enabled by political and economic freedom would be for naught if truth and the good life were not taken far more seriously:
With the ample wealth produced by a free economy, with private liberties bestowed abundantly by free polities, are we not now ashamed of the culture we have wrought, its shocking crimes, its loss of virtue, its loss of courtesy, the decline of common decency? Can all the sufferings of our ancestors on behalf of liberty have been endured for this—that we might be as we now are?
In terms of who is responsible for this mess, Novak held that it’s not liberal institutions. “For three centuries,” he stated in his Templeton lecture, “modernity has been supremely fruitful in its practical discoveries—in, for example, its magnificent institutions of political and economic liberty. But it has been spectacularly wrong in its underlying philosophy of life.”
To this, it’s worth adding that those most responsible for a society’s “underlying philosophy of life” are philosophers, theologians, and intellectuals—not merchants; the men of theory and the cloth—not the men of trade. John Maynard Keynes best summarized this in his General Theory’s concluding paragraph:
Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.
In this connection, Novak argued that if you want to understand the disdain for truth that characterizes the West, you should look to what he called the “vulgar relativism, ‘nihilism with a happy face’” propagated by “many sophisticated people” and “today’s intellectuals.”
The long-term preservation of free and good societies against such people, Novak insisted, required three things. The first was acceptance that there is truth—including universal moral truths—and we can know it. Not everything is in flux.
The second was recognition that freedom can’t be reduced to negative liberty. Here Novak cited Lord Acton’s axiom that liberty is not ultimately the freedom to do whatever you wish but rather the freedom to choose what you ought. “Ought” here implies the classic Jewish, Christian, and natural law insight that man alone can know and freely choose the good—and that the content of the good does not change.
Third, Novak insisted that market economies required something we all find demanding: the pursuit of virtue—Jewish, Christian, classical, and commercial virtues—as people sought to embrace “self-government, self-command, self-control.” One aspect of the free economy that inspired and worried Novak was that it “demands more virtues than socialist or traditional economies.”
For these reasons, it’s inaccurate to suggest that Novak held, to cite Reno, that “the free market gives us a glimpse of the ideal society, one that features order without authority and purposeful freedom without the need for agreement about the common good beyond a procedural rule of law.” Novak’s writings are full of reflections about the importance of authority, the common good’s non-procedural demands, and the necessity of living virtuously. This wasn’t only because Novak believed that free markets’ sustainability needed such things. He knew that such principles and habits bring us closer to what humans are meant to become.
None of this implies that the place of free markets in Western societies is somehow off-limits for debate by religious conservatives. Most economic questions are, after all, prudential. And group-think in the realm of political economy is as sterile as group-think in any other field.
That said, the priority for religious conservatives in this area shouldn’t be to downgrade the market economy’s importance for societies aspiring to be free. Rather, it should involve deepening reflection on life’s economic dimension in order to provide philosophical and theological guidance about how to ground free economies—and liberal institutions more generally—upon more solid foundations than the peculiar mixes of utilitarianism, autonomy-for-autonomy’s sake, and pseudo-evolutionary theory advocated by some liberal thinkers.
This is the type of intellectual economic agenda that a journal with as distinguished a pedigree and as committed to ordered liberty as First Things was made to pursue. Despite their recent shifts, I hope that, someday, they’ll consider doing so.