domingo, 29 de marzo de 2015

THE MORAL FOUNDATIONS OF CAPITALISM (Ponencia presentada en la Mont Pelerin Society, Lima, Perú, 24-3-2015)


1. The ethical foundation of private property.

It is not the first, nor the last time that this issue is explained, especially with the ever renewed Socialism´s attempts of keeping the monopoly on morality. However, this time my goal is not to refute socialism at that point. My goal in this paper is to talk between classical liberals and libertarians about our moral foundations, from two perspectives. One, a better foundation of property rights; two, noting that there are two issues usually forgotten in our intellectual circles.

There is nothing new if we make an elementary review on various ethical foundations that are common among us. It is customary to say that authors like Mises[1]  and Hayek[2]  have a strong utilitarian component -I have my reservations about it[3]- , while authors such as Rothbard[4], Nozick[5] or even Israel Kirzner[6] would favor an "absolute" foundation of property as “property of the person itself”. Ultimately, the debate between us keeps turning around deontologist or moral consequentialism around the private ownership of the means of production.

My contribution is to argue that there may be an overcoming instance of that conflict: Thomas Aquinas´s philosophy of law plus the economic foundations of property in Mises and Hayek.

I will not say anything original if I remember that Aquinas has relatively utilitarian grounds for property (in his time), though not as "utilitarianism”, an issue that has been remembered by Hayek[7].
What must be emphasized is that Aquinas did not have today's dichotomy between utility and morality, understandably inherited from Kant. For Aquinas, the secondary precepts of the natural law are based on what is useful to human nature[8]. In turn, what is "appropriate" to human nature is ethical precisely because human nature and the free development of their potential is part of the “hard core” of ethics in Aquinas[9].

This “utility” does not depend on place and time, nor is it a necessary consequence of human nature (this would be the central axis of the primary precepts of the natural law) but is stable enough to talk of morality. For example, the precept "do not pull anyone out of the window" is ethical, of course, presupposing we inhabit a world with gravity. If we were in a space station with no gravity, throw anybody out the window would be as much a lack of education. The example is very important for the relationship between law, economics and ethics. In a world without scarcity, property would not be a secondary precept of the natural law, but in a world with scarcity, it is, in the same way to throw someone out the window is an assassination attempt in a world with gravity.

Therefore, if property, in Aquinas, is ethical because it is useful, economic arguments of Mises and Hayek in favor of property becomes ipso facto the reasons why the property is a secondary precept of the natural law. In a world where property is necessary for economic calculation[10], in a world where property is necessary for market coordination[11], respect for  property is then a moral duty, and property becomes property rights.  It's not a matter of saying that property is a right "even if not useful" or that property is useful "regardless of its morality," but that is ethical because it is useful. This is a way of overcoming the post-Kantian debate between consequentialism and deontologism. I should also clarify that, as we all know, Mises and Hayek´s reasons for property are not circumstantial, but part of a universal economic science in the world of dispersed knowledge.

2. The non-aggression principle and Judeo-Christianity.

But someone could tell me that this is not enough. The absolute foundation of property would be “being your owner” like Rothbard has explained[12]; that would be the foundation, in turn, of the non-aggression principle. Indeed, someone could tell me that, for the Christian natural law point of view, to be in favor of the non-aggression principle would be very difficult, as in Christianity the only absolute owner is God, not man.

The objection is excellent, but can be answered. It is true that I talked, in the previous section, only of ownership of the means of production. And, of course, this is not enough. A free society has a deeper moral foundation: human dignity, understood as human person created in the image and likeness of God, concept that was used nothing more and nothing less than the declaration of independence of the USA.

It has often been said that human dignity and individual rights has its origin in the Judeo-Christian tradition, and I share that view. But not always it is related -understandably- to the non-aggression principle. In the Judeo-Christian tradition, only God is "Dominus", “The Lord”. In that sense, He is our owner, our Lord, our Master; we are just administrators of our talents (Matt 25, 14-30). I know that any libertarian could have a strong disagreement. However, God as our Lord is in no way contradictory to the non-aggression principle. Why? Because given that God owns us, none of us is, therefore, owner of other people. That is, and none of us is the absolute master of his person, because only God owns, from which it follows that no one person owns the other. (“The other” as “other people”). Invading other people is to take the place of God. A believer knows he/she must not inflict violence on another precisely because he/she is not God. A God who, in the Judeo-Christian tradition, has not used violence on a man: he has established an alliance, new and old, and alliance that requires free-acceptance. The tragedy of authoritarianism is not to use violence that God "could" had used: the tragedy is using violence that God never used, however being "the Lord". In the Judeo-Christian thought and history, humans are not the slaves of a farm owner, at most kind; are rational beings who must respond freely to God's call. The Judeo-Christian tradition leads to a Christian non-aggression principle: you shall not invade “the other”, ever because God alone is The Lord.

3. The alleged instrumental rationality of capitalism.

There is another debate, which libertarians and classical liberals should pay more attention. Many times our rejection of non-limited government is not understood, because from other paradigms we are accused of not understanding certain “intrinsic” violence of the free market. But, for us, this is absurd. How can there be violence in a free contract world? In order to understand this, we have to understand the Frankfurt School´s paradigm. Authors such as Adorno and Horkheimer considered that both totalitarianism and capitalism are based on the same logic: the logic of an instrumental rationality, a rationality of efficiency, a rationality that only allocates means to an end[13]. The moral problem is that according to the 2nd Kantian categorical imperative, nobody should treat a person as a means but an end. Locating a human being in a contractual relationship where the other is only a means for my purposes, would be unworthy a moral society. They offer no solution, because they are pessimistic authors:  there is no way out of what they call the dialectic of Enlightenment, and although they are supporters of Marx´s exploitation theory, were critical of the communist revolutions.

This view has spread far and was essential to the qualification of capitalism as an immoral but economically efficient system.

The next representative of the Frankfurt School was J. Habermas, who in his book Theory of Communicative Action[14]  saw a way out, not for capitalism, but to the ideals of Western reason: communicative reason. That is the dialogic reason, a reason that attempts to understand the other instead of controlling. Habermas obviously did not include a free market in the communicating reason.

However, we know, following Hayek that the free market is communication, coordination, of dispersed knowledge. The market is, in that sense, communicative action. However, the free market involves buying and selling by a free contract. The question is: buy and sell involves considering the other, necessarily, just as a mean to our ends?

As we know, Habermas considers -following Austin, Searle and Wittgenstein[15]- the existence of perlocutionary speech acts that generate an effect on behavior or thoughts of the receiver.  If those perlocutionary acts are hidden, then one could speak of an intention of deceiving the other person. But he distinguishes between open and closed perlocutionary acts. The open perlocutionary acts involve a "language game" (Wittgenstein[16]) in which the people involved know the game play. That knowledge may be implied (due to assumed cultural traditions) or explicit, when the rules are made explicit. The good news is that the market is precisely one of those open, communicative speech acts: the buyer knows the seller wants to sell and the seller know the game too. There are, in addition, known game languages once it comes into play. In that case, you are not treating the other just as a mean but respecting their personhood to assuming that the other involves freely in the market game, knowing the rules. The market is, in addition, a positive sum game, not an exploitation process as Frankfurt thinkers believed.

4. Capitalism and alienation.

But the above would not be enough, because, apparently, the classical liberals have paid little attention to a psychological phenomenon that involves serious doubts about the morality of capitalism: alienation, massification.

The collective massification phenomena involve the alienation of the individual: a psychological loss of individuality to unconsciously impersonate another individual, which multiplied ad infinitum, produce the massification, in which there is no room for individual freedom, in a way.

Without referring to capitalism, Freud made a remarkable psychological diagnosis of alienation as an unconscious fixation with the father figure, allowing him, already in the 20s, to explain and predict the authoritarian phenomena spread throughout Europe at the time[17] . Contrary to what is often thought, he also expressly criticized the socialism of his time[18].

Victor Frankl also explained the phenomena of alienation as a result of the "existential neurosis" where the human being, because the anxiety of meaninglessness of his own existence, borrows the meaning of existence of another person, the authoritarian leader, who also finds in this authoritarianism a false meaning of life. You could say, following Frankl that the master and slave are both victims of "existential vacuum"[19].

But it was E. Fromm, in his famous book Fear for Freedom[20], which explicitly referred to capitalism as a situation of alienation. Not by chance, Fromm is also considered part of the Frankfurt School. For Fromm, at all stages of humanity, there is a process of alienation that is defined as sadomasochistic mutual relations, not sexual, but a power-desire nature. The individuals lose their individuality and are immersed in overcrowded relations of domination. The "anonymity"[21]  of personal relationships in the advanced stages of capitalism, the relations of exploitation (Fromm assumes Marx), plus the "cultural industry" where individuals fall into idolatry of artists and sportsmen popularized by the mass media, imply that capitalism is a kind of “breeding ground” for alienation processes. In this case we would be far from talking about personal freedom or an ethical consideration of freedom.

Setting aside the cases of Freud and Frankl, the question is: is Fromm right?

A "no" hasty would be unwise. Fromm is right about certain things:
a) His specific psychological diagnosis of alienation is plausible. Unconscious sadomasochistic trends exist. Those trends are the reason many people enjoy unconsciously "being dominated", that in turn leads to authoritarian situations to which classical liberals have always been very concerned. In addition, these psychological reasons for alienation are a warning to us all: the reason for the popularity of authoritarianism is not to have failed to explain ideas properly, but unconscious motivations of unlimited power that are, unfortunately, beyond rational motivations.

b) The situations of anonymity of inter-personal relationships, in advanced commercial societies, are unavoidable. They are an advantage of a free society. As Hayek has explained very well, a family relationship or friendship is not necessary to enter institutionally in a market relationship with a stranger. But while Fromm sees this as necessarily a disadvantage, it is itself a moral progress, because millions and millions of people could not coordinate dispersed knowledge if it were not for these relatively impersonal interaction relationships. We should be concerned, however, of the detriment of deeper family and friendly relations, but the solution to this lies not in what the free market can do, but in the set of values that make a free society. It is precisely the growth of the welfare states that has broken the cohesion of intermediate societies and families that compensate, psychologically speaking, the necessary depersonalization of most of the market economy in a great society (supermarkets, banks, retail chains, etc.).

c) Authoritarianism is not only a problem of governments. It also happens implicitly in the idolatry that the masses lavish on commercial products and "celebrities" of showbiz.  Fromm has a very important point. But this is not caused by the free market, but by human nature that (he acknowledges this) is beyond this or that prevailing social system. Classical liberals should pay more attention to certain intrinsic alienation of mass phenomena even when they are legally "free and voluntary" but not moral. However, is worse calling the state to solve these problems. The error is serious, because the supposed solution is worse than the problem. Is very innocent to call the force of the state to solve alienation, as if the state were not just people who can be easily alienated just for being in office. Calling the state for solving this problem is a manifest contradiction and a naive ignorance of the depths of the human nature. A free society is not a society where everyone has reached Kantian maturity or Christian holiness. It is a society where individual rights are not violated. That is the moral core of a free society. It is not a paradise of psychological maturity, but the minimum of ethics that requires respect for the dignity of others.

5. Conclusion:

a) The moral foundation of private ownership of the means of production finds in the secondary precepts of the natural law, according to St. Thomas Aquinas, a foundation that overcomes the dialectic between deontologism and consequentialism.

b) This foundation is to recognize that the utility of property, as required by economic calculation (Mises) and coordination of dispersed knowledge (Hayek), has a moral character for his "convenience to human nature" (St. Thomas).

c) The previous point does not deny that an ethical foundation of non-aggression principle remains necessary.

d) This ethical view can be found in the Judeo-Christian tradition, because being God “The Lord”; no human being can own another's life.

e) However, from the Frankfurt School capitalism has been accused of intrinsically immoral, because capitalism would be based only in an instrumental rationality that places the human being in the category of a mere instrument.

f) This objection can be answered by characterizing the coordination of market knowledge as a set of open game-languages where their speech acts are known for their participants and freely accepted.
g) But that freedom is also objected because capitalism is also accused of being one of the unconscious sources of alienation, depersonalization, and massification.

h) The answer to this objection is to recognize that in a free society can be mass phenomena, but these phenomena are not necessary fruit of capitalism, but human nature that goes beyond the systems in question. A free society is not a paradise of personal maturity and personal holiness, but a society with a sufficient institutional framework to protect individual rights. Such a society is very imperfect, but not the hell on earth that lead efforts to improve human nature by force of the state.

[1] Mises, L. von: Liberalismo, Unión Editorial, Madrid, 1977.

[2] Hayek, F. A. von: Los Fundamentos de la Libertad, Unión Editorial, Madrid, 1975.
[3] Zanotti, G.J.: “La filosofía política de Ludwig von Mises”, en Procesos de Mercado, Vol. VII, Nro. 2, Otoño 2010; e Introducción filosófica a Hayek (Universidad Francisco Marroquín, Unión Editorial, Guatemala/Madrid, 2003).

[4] Rothbard, M.N.: The Ethics of Liberty, New York University Press, 1982.

[5] Nozick, R.: Anarchy, State and Utopia, Basic Books, 1974.
[6] Kirzner, I.: Discovery, Capitalism, and Distributive Justice, Basil Blackwell, 1989.
[7] “…The constructivist interpretation of rules of conduct is generally known as 'utilitarianism'. In a wider sense the term is, however, also applied to any critical examination of such rules and of institutions with respect to the function they perform in the structure of society. In this wide sense everyone who does not regard all existing values as unquestionable but is prepared to ask why they should be held would have to be described as a utilitarian. Thus Aristotle, Thomas Aquinas, (13) and David Hume, (14) would have to be described as utilitarians, and the present discussion of the function of rules of conduct might also be so called. No doubt utilitarianism owes much of its appeal to sensible people to the fact that thus interpreted it includes all rational examination of the appropriateness of existing rules” The footnote 13 is the following: “…13) Thomas Aquinas, Summa Theologiae, Ia IIae, q. 95, art. 3: 'Finis autem humanae legis est utilitas hominum.' It is misleading to represent as utilitarians all authors who account for the existence of certain institutions by their utility, because writers like Aristotle or Cicero, Thomas Aquinas or Mandeville, Adam Smith or Adam Ferguson, when they spoke of utility, appear to have thought of this utility favouring a sort or' natural selection of institutions, not determining their deliberate choice by men. When in the passage quoted in note 9 above Cicero speaks of justice as a 'habitus animi, communi utilitate conservata' this is certainly not meant in the sense of a constructivist but in that of a sort of evolutionary utilitarianism. On the derivation of both traditions in the modern world from Bernard Mandeville see my lecture 'Dr Bernard Mandeville', Proceedings of the British Academy, vol. 52, pp. 134”.  Hayek, F. A. von: Derecho, Legislación y Libertad, Unión Editorial, Madrid, 1979, Libro II, p. 28; English versión in

[8] Summa Theologiae, I-II, Q. 95.

[9] Op.cit., I-II, Q. 2 a. 8c.

[10] Mises, L. von: Socialismo, Instituto de Publicaciones Navales, Buenos Aires, 1968.
[11] Hayek, F. A. von: Economics and knowledge; The Use of Knowledge in Society; The Meaning of Competition, en Individualism and Economic Order, University of Chicago Press, 1980.
[12] Rothbard, M.N.: op.cit.

[13] Horkheimer, M., and Adorno, T.: Dialéctica de la Ilustración, Trotta, Madrid, 2003
[14] Habermas, J.: Teoría de la acción comunicativa; Tecnos, 1987.

[15] Austin, J.L.: Cómo hacer cosas con las palabras, Paidós, 1990; Searle, J.: Actos de habla; Cátedra, Madrid, 1990; Wittgenstein, L.: Investigaciones filosóficas, Crítica, Barcelona, 1988.
[16] Wittgenstein, L.: op.cit.

[17] Freud, S.: Psicología de las masas y análisis del yo; Obras Completas, El Ateneo, Buenos Aires, 2008, tomo III.
[18] “…The Communists believe they have found a way of delivering us from this evil. Man is whole-heartedly Good and friendly to his neighbor, they say, but the system of private property has corrupted his nature. The possession of private property gives power to the individual and thence the temptation arises to ill-treat his neighbor; the man who is excluded from the possession of property is obliged to rebel in hostility Against the oppressor. If private property were abolished, all valuables held in common and all allowed to share in the enjoyment of them, ill-will and enmity would disappear from among men. Since all needs would be satisfied, none would have any reason to regard another as an enemy; all would willingly undertake the work which is necessary. I have no concern with any economic criticisms of the communistic system; cannot enquire into whether the abolition of private property is advantageous and expedient. But I am able to recognize that psychologically it is founded on an untenable illusion. By abolishing private property one deprives the human love of aggression of one of its instruments, a strong one undoubtedly, but assuredly not the strongest. It in no way alters the individual differences in power and influence which are turned by aggressiveness to its own use, nor does it change the nature of the instinct in any way. This instinct did not arise as the result of property; it reigned almost supreme in primitive times when possessions were still extremely scanty; it shows itself already in the nursery when possessions have hardly grown out of their original anal shape; it is at the bottom of all the relations of affection and love between human beings possibly with the single exception of that of a mother to her male child. Suppose that personal rights to material goods are done away with, there still remain prerogatives in sexual relationships, which must arouse the strongest rancour and most violent enmity among men and women who are otherwise equal. Let us suppose this were also to be removed by instituting complete liberty in sexual life, so that the family, the germ-cell of culture, ceased to exist; one could not. it is true, foresee the new paths on which cultural development might then proceed, but one thing one would be bound to expect and that is that the ineffaceable feature of human nature would follow wherever it led”. En El malestar en la cultura, op.cit., English version (Civilization and its Discontents) in

[19] Frankl, V.: Ante el vacío existencial; Herder, Barcelona, 1986.

[20] Fromm. E.: El miedo a la libertad, Paidós, Buenos Aires, 1957.
[21] Schutz, A.: Estudios sobre teoría social, II; Amorrortu, Buenos Aires, 2003.

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