Capitalism and The Humane Economy

Allan Carlson has posted a recent speech he gave investigating the use of terms like “conservative” and “capitalism” and arguing that today’s popular libertarianism is not actually conservative in any meaningful way and that the only sort of “capitalism” which can be understood as conservative is one which prioritizes and defends conservative ideals and institutions, what he, following Wilhelm Röpke, calls “the Humane Economy.” Here are the key points, taken rom Dr. Carlson’s presentation.

• The Industrial Revolution greatly disrupted human society by turning the home away from being a center of production

• Modern Capitalism has six systematic flaws which make it decisively non-conservative:

1. Laissez-faire Capitalism rests on a distorted understanding of human nature
2. Despite claims to the contrary, the spread of capitalism has depended on forced centralization and the power of the modern state for its effective operation

   As Karl Polanyi has argued, there is nothing “natural” about laissez-faire. Rather, “far from doing away with the need for [state] control, regulation, and interventions, [laissez-faire capitalism] enormously increased their range.” Contrary to myth, the liberal market system of the 19th Century required “an enormous increased in the administrative functions of the state.” A central bureaucracy, backed by an efficient “minister of the police,” was needed to standardize weights and measures, destroy local restraints on trade, enforce contracts, protect shipping, collect debts, and guarantee an open labor market. This unitary market so used the law to crush local diversity and local economies. [The Great Transformation]

   In practice, the modern administrative state and the capitalist economy actually grew in tandem, each feeding on the other. As economist Keith Rankin summarizes: “The tyranny of the self-regulating market can only become the central organizing mechanism if it is intentionally imposed on society by a government…and can only survive for any length of time if such a government resists the spontaneous human impulse toward protection.” 

3. Capitalism undermines true economic liberty and democracy
4. Modern laissez-faire capitalism thrives by embracing and promoting the deadly sins: wrath, greed, sloth, pride, lust, envy, and gluttony [Dr. Carlson says that perhaps wrath is absent, but we would argue that one need not look far to see the “violence inherent in the system,” notably in entertainment and police intrusion- SW]
5. Capitalism undermines natural human bonds and wages a relentless war against tradition

   Economist Joseph Schumpeter viewed capitalism as an evolutionary system, one full of nervous energy, one that could leave nothing untouched and changed. This was and is the process of “Creative Distraction,” — his phrase — which “incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” [Capitalism, Socialism & Democracy]

   Capitalism also excels in leveling natural institutions — most notably, the family itself. Writing in the 1930s, Schumpeter could point to data showing that marriage, family life, and parenthood meant ever less to men and women. Tumbling martial birthrates and “the proportion of marriage that produce no children or only one child” were the clearest signs of this revolution in values. This revolution derived, he said, from capitalism’s “rationalization of everything in life,” the embrace by persons in the capitalist era of an “inarticulate system of cost accounting” that exposed “the heavy personal sacrifices that family ties and especially parenthood entail under modern conditions.” This sharp decline in a desire for children left already functionless homes with even less value.

6. Capitalism’s relentless energy finally comes to rest, not in a regime of liberty, but in what British essayist Hilaire Belloc called “The Servile State,” a genial new form of slavery

• The only sufficient alternative is the Humane Economy which rests upon the following:

1. One foundation of his economic framework was Christian. A descendant of German Lutheran pastors, Roepke held to that concept which “makes man the image of God whom it is sinful to use as a means” and who holds inestimable value as a human being.” In place of homo economicus, he pointed to homo religiosus, religious man, fallen and redeemed.”
2. A second foundation was Roepke’s devotion to a true free market [Though this free market is a non-libertarian one, as we shall see- SW]
3. Roepke’s third foundation for his economic views was the natural family

A major plank to constructing this family-based humane economy would have to be, however, something very much like the distributivism of Chesterbelloc. Dr. Carlson explains:

The restoration of private property was also central to Roepke’s vision. The true antithesis or alternative to socialist or collectivized man was the property holder. As Roepke explained, competition was only one of the pillars of a free economy. The other was personal and familial “self-sufficiency.” Accordingly, expansion of the sphere of competition should be balance by also enlarging what he called “the sphere of marketless self-sufficiency.” This meant “the restoration of property for the masses,” a “lengthy and circumspect” program that would discourage the accumulation of big properties, and use “progressive death duties” to break up large estates, and redistribute land to propertyless families on favorable terms. As Roepke wrote: “the industrial worker…can and ought to become at least the proprietor of his own residence and garden…which would provide him with produce from the land.” This alone would render each family “independent of the tricks of the market with its wage and price complexities and its business fluctuation.”

And there’s even a slight resemblance to New Urbanism and other localist movements:

To heal the distortions of human life wrought by 19th Century laissez-faire Capitalism, Roepke even sought to undo — in some degree — the industrial revolution. Writing in The Social Crisis of Our Time, he called for nothing less than the “drastic decentralization of cities and industries, [and] the restoration of some more ‘natural order’.” He labeled the modern big city a “monstrous abnormality,” a “pathological degeneracy” that devitalized human existence, adding: “the puling down of this product of modern civilization is one of the most important aims of social reform.” Relative to the decentralization of industry, he urged that “the artisan and the small trader” receive “all the well-planned assistance that is possible.” He also saw promise in the rise of the “tertiary,” or service sector. Moreover, Roepke believed that recent technological advances — such as electric motors, the internal combustion engine, and compact machine tools — lent new competitive advantages to small enterprises. Anticipating Prairie Home Companion’s Garrison Keillor (who has said that you buy local products and pay a small premium at Ralph’s Pretty Good Grocery in Lake Wobegon instead of at the Mall in St. Cloud, because Ralph is your neighbor), Roepke urged that consumers “should not shrink from the sacrifice of a few cents in order to carry out an economic policy of their own and support [local] artisans to the best of their ability and for the good of the community.”

We would encourage you to read the whole speech over at the Front Porch Republic. Such a view of being “conservative” would obviously require a radical restructuring of our society. And it could only hope to make any real-world effect if it were able to begin a restructuring of “conservative” philosophy and ideology. That is something that still seems too revolutionary to expect in the near future.