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Capitalism Alone Isn't Enough

Freedom, the ability to act and think freely, is only as healthy as the system of values it is rooted in. Similarly institutions are only as positive as the values that motivate them. Detached from their values, freedom becomes a self-destructive farce that tear down society and its institutions, and institutions naturally converge to squelch freedom. This is because unrestrained freedom leads to unrestrained actions that are destructive, and unrestrained institutions become bigger and bigger, and either become absolutely totalitarian or destroy themselves. In either case the lack of values turns freedom of action and institutions into malignancies.

Throughout the Cold War, America insisted that capitalism was the perfect counter to Communism. And it was right. Capitalism conclusively demonstrated the inferiority of communism in the areas of trade, resource production and distribution. Recognizing our success Russia and China switched from Communist oligarchies to National Socialist oligarchies. Using its rigid discipline and dedicated social work ethic, the People's Republic of China has swamped America and the world with the very same cheap consumer products that America was once so good at exporting. Putin's Russia in turn has put an energy chokehold around Western Europe.

Like a Judo fighter, China used our own consumerism against us, building an entire economy based around the lowest bidder principle. American companies began by exporting their manufacturing to China, and are now discovering that they've become little more than the distribution outlets for Chinese products. Since the products are already manufactured in China, the only thing that Western companies have to offer are distribution outlets, which in the age of the internet can easily be managed out of China, and brand names, which Chinese companies can buy or create. Essentially the only thing American business still has to offer its Chinese competitors are logo design services.

By moving our manufacturing base to China we undermined our own industry and technology. And those companies which began by cutting costs, will eventually realize that they cut their own throats. Because without manufacturing, all that's left is advertising. Made in the USA is more than a patriotic slogan, it's the difference between an ownership society and an owned society. Once you lose the manufacturing base, the rest goes with it. And what's left are call centers, logo designers and a handful of businesses protected by their government connections. So the logic of unrestrained capitalism turns the United States into a third world country.

Meanwhile China has demonstrated that it is possible to be Communist and Capitalist at the same time, so long as you push one or the other to an extreme. Because at the extreme, a state oligarchy and a trust don't look all that different. Both squash free enterprise and create a de facto planned economy, which is a natural outcome of the uncontrolled growth and converge of institutions.

There's a reason why the Democratic party attracts so many corporate donors, or why the two richest men in America are dyed in the wool liberals. Big business and big government don't have to be enemies, rent seeking behavior can make them close allies. The growth of government regulation naturally favors big business over small businesses, because large corporations are better able to favorably navigate the web of regulations and more easily employ lobbyists to convince politicians to carve them their own custom made loopholes.

Would a corporation rather have a million customers with a dollar a sale, or a single client with a billion dollar sale? Big governments offers companies a chance to get taxpayer money through a single client who isn't even spending his money. That's how thousand dollar screwdrivers and million dollar grants regularly fly through the air. Why money is appropriated for items that no one actually needs and earmarks to nowhere can be found everywhere. Big government gives companies the chance to make easy and profitable sales, at the expense of donating to the reelection war chests of a few politicians.

While genuinely productive companies eschew such tactics, the growth of government rewards unproductive companies. This skews the competitive playing field in favor of the company with the best lobbyists and the best lawyers, and the best board made up of retired Senators. Rent seeking behavior quickly becomes a business model. After all why bother creating a product that people actually want and trying to sell it to them-- when you can just jump on the Global Warming bandwagon and then get the taxpayer to forcibly subsidize your latest Green venture?

There are fewer and fewer companies nowadays that still take pride in being American companies or English companies or Israeli companies or Australian companies-- except when it comes to advertising their products during football matches. Instead they strive to be multinational and globalized, to embrace global institutions and global regulations. And while that may seem perverse, it parallels the decline of the family business, and its replacement by the faceless corporation, by replaceable CEO's brought in to boost stock prices for a quarter, and then parachuting away on a cloud of golden silk.

That is because healthy social institutions are based around the family. Institutions that are not based around the family are not socially healthy in the long run, though they may be rewarding in the short run. The logic of capitalism took American businesses away from product quality, employee loyalty, brand name worth, patriotism and turned them into distribution outlets for China's lowest bid economy. And that is why capitalism is not enough.

As the United States became detached from regional participatory democracy and American business became detached,from the family, the roots that hold the values of people and their institutions fast to the earth were torn away. And institutions that are detached from the individual and the family have no other purpose except to reproduce themselves in an aggressively Darwinian way. That is exactly what we are now experiencing, as corporations line up for the chance to destroy themselves through outsourcing and socialism, and governments become unwieldy institutions whose own operating costs threaten to consume their entire economies. That is what a runaway steam engine looks like, barreling on down the track toward oblivion, without giving a thought for what lies ahead.

And so corporations put their own interests ahead of the country. The Chamber of Commerce demands more immigration to meet their need for cheap labor. It doesn't matter what that cheap labor will do to the country, or that in the long run they themselves will have to pay the price for the crime and social services by way of higher taxes. American banks sell out to Sharia finance and American companies sell out to China, without considering the long term implications of doing business with the enemy. Because when you're not invested in anything besides your own short term success, nothing else matters but you. And that is where values come in to the equation.

An individual or an institution without values is doomed to self-destruction. Because values define life in terms other than pure short term success. To maintain a civilization, one cannot look only to the short term victory, but to the future. But without the family, without values, there is no future. Little wonder then that the liberal rich are also depressed, that they plow their often ill gotten gains into liberal do gooder ventures, rather than leaving them to their children. Because the secular religion of socialism, the idea of large organizations creating a kingdom of heaven on earth, is their only form of temporal moral assurance.

To fight without having anything to fight for leads to moral emptiness. It is an emptiness that liberals have been more than happy to fill with talk of global superstructures and international aid projects that prove to be hollow in the end. And so capitalism without a value system that puts family and nation first, leads to self-destructive globalist farces. Ted Turner donating his money to the UN. Bill Gates and Warren Buffett donating their money to Africa. George Soros using his money to impose his political will on countries he hardly visits. This is the hollow face of the modern billionaire searching for some form of moral immortality by playing king without a crown, and creating policy in his own name.

The modern devaluation of the family and the nation has left the First World spiritually and politically bankrupt. Its free enterprise has become a farce in which governments and corporations fuse together in a web of regulations that upends the traditional model, putting the individual and the family last. To reverse that requires championing free labor, the dignity of work and free enterprise as the handmaiden of social mobility. For without these capitalism is only a blind giant wandering aimlessly in the socialist night.


  1. Bravo. Well said.
    American has to stop sending its work overseas if it expects to grow and continue. We are destroying ourselves this way.
    The corporations have lost their love of America and the American way and it will come back to bite them in the end.

  2. mikec19/1/10

    I strongly suspect that it is too late for Europe to do anything about this, the ratification of the Lisbon treaty has put the EU into the hands of a corporatist-supranationalist oligarchy which is both unelected and unaccountable. this is a virulent form of Mussolini Fascism, but the 'blackshirts' of the 1920's have been replaced by the cathode ray tubes in our homes. The media moguls are, of course, part of the problem when they should be part of the solution. So we live our lives of 'bread and circuses', we moan about slimy politicians, but we are not prepared to take to the streets. Fear is the key, and our enemies know how to manipulate our fears, and those of our leaders.

  3. Daniel, this is the first piece of yours I've read which I was less-than-stellarly-impressed with. To insist that "family" is the value-base which capitalism needs is, well, sorry, simply very lame and un-intellectual. It's just an insipid "Mom and apple-pie" view.

    The intellectual value-base of capitalism is *individual rights*. I'd warmly encourage you to pick up a copy of Ayn Rand's "Capitalism: The Unknown Ideal" which profusely investigates the nature of capitalism's value-base.

    I'm still a fan of your writings, though! So if I can provide you with a little inspiration and guidance now and then, that makes me happy. :-)

    Klaus Nordby

  4. individual rights too must be based on a higher value system. The family and its perpetuation has always been the basis for civilization, without it a civilization has no future.

    But naturally we are coming at this from somewhat different viewpoints.

  5. Klaus, I have to side with Daniel on this...I read Atlas Shrugged 4 times in the '60's and was an Objectivist. You mentioned Rand, but the following quote proves Daniel's point: One misty winter day [near the end of her life], she stood in front of her living room window, gazing silently at the city veiled in fog. Wearily, she said, "What was it all for?" (Barbara Branden, The Passion of Ayn Rand). You may remember that she'd sent her husband, Frank, away every day while she had an affair with Nathaniel Branden and told him it was justified. Even Ayn Rand did not seem to understand the valuable point that Daniel has made!

  6. I don't view this article as a rejection of Rand's ideas, but as an argument that economic strivings directed only to individualistic or blind collectivist goals will lead to cultural and institutional decay.

  7. Sorry, I wasn't clear that I didn't see your article as as a rejection of Rand's views at all! Perhaps I was wrong, but I did see your article as an explanation for her apparent sense of unfulfillment when she made that statement: "...what was it all for?"

  8. Mikec20/1/10

    Capitalizm grew out of the trading network of Jewish merchants and bankers for whom personal integrity was paramount. Family ties were at the root of this network, and thus capitalism is the offspring of the family which is in turn the scion of the Judeo Christian ethic without which Capitalism founders.

    The moral relativism of socialist humanism does not provide the secure underpinning required for Capitalism, and so we see the replacement of Capitalism and individual freedom with increasingly totalitarian economic structures.

  9. Anonymous20/1/10

    To leave an inheritance for your family, also means to work for the greater good of the community that shares your collective values, both cultural and spiritual.

    Once the Western world adopted large scale immigration without thought to the larger cultural values that hold a nation together, it was only a matter of time, before corporations also thought that a globalised multicultural world was no different from a national multicultural world.

    Frankly, I'm surprised that the armed forces of the UK are fighting for a UK, supposedly united in a shared common language and culture, which no longer exists, against an enemy that is more entrenched at home in the UK, then in many Muslim countries.

  10. Superb article, Sultan, and equally fine comment DP111.

  11. Postscript to Mikec: WSJ 1/20/10 book review ("Outer Office, Inner Life") mentions that "New England's Puritan settlers brought with them two ideas that have driven American society ever since: Calvinism and capitalism. From Calvinism's birth in 16th-century Switzerland, its descendants, including the Puritans, developed ever more rigorous arguments for individual liberty, freedom of conscience, the rule of law, and the freedom to associate and to enter into contracts. Combined with a strong work ethic and high moral standards, these social arguments came to propel the modern commercial economy. By the early 20th century, the sociologist Max Weber could give a systemtatic analysis to the whole potent formula, in 'The Protestant Ethic and the Spirit of Capitalism'" (Sorry to be this late in posting this...stuff happens :-)


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