Karl Marx, the founder of communism, thought there was a higher and lower form of communism[10]. Engels and Lenin called the lower form of communism, socialism. Socialism is not egalitarian. Egalitarianism means everything is shared equally. Marx described socialism like this:
“But one man is superior to another physically or mentally, and so supplies more labor in the same time, or can labor for a longer time; and labor, to serve as a measure, must be defined by its duration or intensity, otherwise it ceases to be a standard of measurement. This equal right is an unequal right for unequal labor. It recognizes no class differences, because everyone is only a worker like everyone else; but it tacitly recognizes unequal individual endowment and thus productive capacity as natural privileges. It is therefore a right of inequality, in its content, like every right. Right by its very nature can consist only in the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable only by an equal standard insofar as they are brought under an equal point of view, are taken from one definite side only, for instance, in the present case, are regarded only as workers and nothing more is seen in them, everything else being ignored. Further, one worker is married, another not; one has more children than another, and so on and so forth. Thus, with an equal performance of labor, and hence an equal share in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on. To avoid all these defects, right instead of being equal would have to be unequal.”[11]
Karl Marx thought that communism would eventually replace socialism not by force but by natural progression. Communism is egalitarian. Communism thinks that wealth should be distributed equally among equals. Individuals should not be singled out according to class, wealth, natural abilities, etc. but should work cooperatively for the greater good of society. Communism does not believe in private property. Private ownership and competition is thought to favor the rich and; necessarily, put less wealthy individuals at a competitive disadvantage. Private property is what gives rise to a class stratified society. In communism the ideal is one of egalitarianism; that all people are equal and should receive the benefit of their labor equally.
For communism, individual ownership is not allowed but that does not restrain class stratification. The administrators of shared wealth, the government, become the de facto upper class. Wealth gets disproportionately distributed according to this class structure in communism as well. In practice, capitalism, socialism and communism cannot claim a classless society nor can they claim that the individual is the sole beneficiary of the toil of their labor as property owners.
What follows from this is that the group or the individual is not normative for these economies but ideals. Class is inevitable for capitalism, socialism and communism – it is utopic to think otherwise. A class is group comprised of individuals. Mitt Romney is part of a class, a wealthy class. Most of us will realistically never be in his class. However, humans are aspirational – being human is being towards a future. In this way capitalism offers the promise of a possibility – the possibility for success, the chance to be in the wealthy class. For those that extol the virtues of capitalism, it does not seem to matter as much that the vast majority of these aspirations will never be fulfilled. What matters is the place for the dream, the drama of the ideal. As individuals, we need aspiration just after the need for food and shelter. We need to think we are or will be a part of the wealthy class. The goal of this aspiration is for membership in a group, a communal hope shared in capitalism. We are ready to use our collective language, our economic group arrangements, our families, societies and affiliations to aid us in our goals – the envisioned absolute wealth of our freedom. The dream that imagines itself as self-interested individualism is all the while prefaced, perforated and dependent on the other, the group, the community – our shared language. This is what socialism recognized and tried to articulate in its economics. What communism lost was the aspirational; the value we place on the desire for moving towards a future.
In reality, there never is an isolated individual that can cleanly be separated from a collectivity. Additionally, the dream of accumulating more and more sole property ownership based on the system of self-interested individuals appears to reach practical limits as a result of the third group Adam Smith writes of, the financiers. None of us are hermits and make up private languages as we go through our daily lives. The notion of an Adam Smith styled individualism is what many philosophers think of as metaphysical (meta-phusis as beyond physics or beyond the physical). The aspiration I have referred to is desire for the metaphysical individual. It does not reflect our lived reality but necessarily participates in our sense of meaning and hope as an ideal. Aspiration is essential for meaning. To aspire is to see beyond the hum drum, the daily grind and meaningless repetition – perchance to dream. How does the state, the government, figure into our aspirations?
For Adam Smith the state is the guarantor of our security. It is responsible for the military. It also is responsible for enforcing the law. It holds the promise of reprisal for violations of law. It is also responsible for public works projects and certain public institutions where profit is not possible.
“According to the system of natural liberty, the sovereign [government] has only three duties to attend to; three duties of great importance, indeed, but plain and intelligible to common understanding: first the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and, thirdly, the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.”[12]
Contrary to popular belief, Adam Smith was not opposed to government regulation. He spent 100 pages in the “Wealth of Nations” discussing banking regulations. As has already been mentioned he knew the financiers in a society had a corrosive effect on society. They had a tendency for exploitation and government regulation was needed to hold them in check.
For Adam Smith, self-interest is good for those that live by ‘rent’ and ‘wages’ but not for those that live by ‘profit’ as previously mentioned. Smith thought those that live by profit had a destructive influence on society. This is why Smith favored regulations for those who live by profit. The government certainly plays an essential role for ensuring a fair market. Of course, he recognized the issues with capricious regulations and the way they interfered with the normal market operation of efficient competition. However, he would have never given financiers carte blanch, deregulated access to the market. Adam Smith would have said, “I told you so” when the Gramm–Leach–Bliley Act of 1999, deregulated financial services. It repealed part of the Glass-Steagall Act of 1933 that prohibited a single institution like a bank from acting as any combination of an investment bank, a commercial bank, and an insurance company. Basically, the repeal allowed banks to use customer deposits for risky financial ventures. It also allowed banks to have conflicts of interest by ‘advising’ its customers to use its financial services and products without regard to more competitive and valuable investments. Additionally, the government was implicated in these risky investments as the Federal Deposit Insurance Corporation (FDIC) backed up customer deposits. The Dodd–Frank Wall Street Reform and Consumer Protection Act tried to restore financial oversight of banks and financial institutions and consumer protections. One thing it did was to allow the government to liquidate these institutions that are covered by the FDIC in order to keep these institutions from having large scale failures that would jeopardize the ability of the U.S. government to bail them out. Regulations not only provide a fair market but also protect the government from bankrupting itself from market excesses. Adam Smith would have understood the need for this and would not be calling for deregulation as modern Republicans have been doing.
The issue here is that when individual self-interest promotes the healthy working of the market place then the government should stay of the way. However, the government exists to make sure it protects “every member of society from the injustice or oppression of every other member of it”. While it may be in the interest of oil companies to “drill baby drill” it may not be in the interest of the environment and therefore, other members of society to let them do it merely to increase their profits. The government’s job is to make sure the market protects other members of society whose self-interest may be damaged by one group’s profit incentive in the market.
Adam Smith even recognized that the ‘free market’ was not a panacea that could solve all social ills. He stated that a primary function of government was to take care of public works and public institutions where the “profit could never repay the expense” of doing the project. It is certainly arguable that health care insurance providers and education could come under this rubric. It is not the profit interest of health care insurance providers to cover certain risky population groups or chronic illnesses. In order to maximize their profits it is in their interest to ‘cherry pick’ their clientele and drop clients that are a drain on the system. It would be hard to believe that anyone could seriously argue that health care insurance providers have not had quite a long history that illustrates this point. Additionally, while a very good private education is certainly feasible, the cost would prohibit many classes of society from being able to obtain an education. Education for a profit certainly works for those that can pay but simply ignoring the others that cannot pay is not in the long term interest of a society. Adam Smith argued that education is a public work when he we wrote:
“The same thing may be said of the gross ignorance and stupidity which, in a civilized society, seem so frequently to benumb the understandings of all the inferior ranks of people. A man without the proper use of the intellectual faculties of a man, is, if possible, more contemptible than even a coward, and seems to be mutilated and deformed in a still more essential part of the character of human nature. Though the state was to derive no advantage from the instruction of the inferior ranks of people, it would still deserve its attention that they should not be altogether uninstructed. The state, however, derives no inconsiderable advantage from their instruction. The more they are instructed the less liable they are to the delusions of enthusiasm and superstition, which, among ignorant nations, frequently occasion the most dreadful disorders. An instructed and intelligent people, besides, are always more decent and orderly than an ignorant and stupid one. They feel themselves, each individually, more respectable and more likely to obtain the respect of their lawful superiors, and they are therefore more disposed to respect those superiors. They are more disposed to examine, and more capable of seeing through, the interested complaints of faction and sedition, and they are, upon that account, less apt to be misled into any wanton or unnecessary opposition to the measures of government. In free countries, where the safety of government depends very much upon the favorable judgment which the people may form of its conduct, it must surely be of the highest importance that they should not be disposed to judge rashly or capriciously concerning it.”[13]
While this may seem to promote a certain kind of equality, it is really “the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual or small number of individuals, to erect and maintain”.
The government is not a cancerous growth of society but just as essential as referees and rules are to games of sport. Getting rid of government is cutting off your nose to spite your face. It ignores the need for a market framework where fairness and protections are ensured. It should restrain monopolies and market bubbles that would cause cost to be “the highest which can be squeezed out of the buyers”. It is also responsible for filling in gaps that self-interest and profit cannot address. Karl Marx and Adam Smith both addressed the inherent exploitation built into an economy. Protecting individuals from economic exploitation is vital for an economy as socialism and Adam Smith understood. Karl Marx went further with trying to embody elements of protections for ‘self-interested’ individuals into an economy. Adam Smith understood the human need for aspiration, the need to dream, and tried to embody this in the economy of capitalism.
What is dreamed must pertain to me and not to an abstraction about the state or egalitarianism. An ‘aspiration of the state’ is too abstract from the self-interested point of view. However, the abstract notion of an ‘aspiration for the state’ is not inconsequential – it is the aim of morality or what Adam Smith termed sympathy[14] (more like what we think of as empathy). Morality aims at egalitarianism in that it places oneself in the place of the other for Adam Smith.
“However selfish man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though they derive nothing from it except the pleasure of seeing it.”[15]
When I refer to morality, I am speaking specifically about the natural empathy that many people have for the suffering of others. There are very few people that proclaim outright that if you do not work just go ahead and starve to death. For most of us, we may think that those who do not work will not eat but few are willing to let children, elderly, handicapped or even lazy people die before our eyes. The same holds true for health care. We do not want to pay for others health care but the idea of just letting people die without it is abhorrent. This is why we are willing to pay more for emergency room health care than to address the issues systemically and at a lower cost. Most of us will not overtly proclaim that if you do not have health insurance go off somewhere and die. Few will proudly state that if you do not have shelter go live on the street (just not my street). While there is a certain chest beating, cathartic youthfulness about these proclamations it offends most people’s sense of responsiveness to these situations. It may help some to think that suffering is the fault of the person suffering (as certainly may be the case for some) but pushing this very far starts to look like ‘protesting too much’ and really serves only to show that the pull of morality is felt only reacted to negatively and defensively.
This feeling of responsibility for the suffering for others is what I mean by morality. From the point of view of ‘my aspirations’, the suffering of the other is irrelevant. From the ideal of pure self-interestedness there is no place for this feeling. If the self is thought as the absolute metaphysic of individualism, the sole property owner, it does not serve the absolute interest of the self to care about the suffering of others; much less do anything about it that will not directly benefit the self. While morality is an abstraction from the point of view of self-interestedness, it is nevertheless a notion that most are not willing to depart with. Our self-interestedness tells us not to pay for anyone other than ourselves but the pull of morality will not let us ignore the suffering of the other. Morality is the ghost of our group involvement. It is the basis for the inevitability and indispensability of the state.
As I have discussed while our metaphysics of individualism compels us towards an aspirational future, our realistic, daily involvements are fundamentally based on language, community and group. The capitalistic goal for moving into the upper class is itself a self-interested aspiration that embodies the notion of class, the group. All this shows us that individualism is perforated with group involvement and community. We are indebted to the other whether we acknowledge it or not. While chest beating individualism may be fun for some, individualism, the sole property owner, is essentially a dream, a drama that gives us meaning in our ‘me-only’ self-centeredness. However, individualism ignores the real ways in which we participate with others and are always already indebted to the other.
Karl Marx went further than leaving the option of morality up to every self-interested individual. Adam Smith as well understood the role of government in achieving the affluence and security of individuals in an economy, protecting them from exploitation and providing public works projects. The communist notion of equalitarianism failed to make everything equal in terms of labor and preventing exploitation. However, socialism attempts legal protections of groups and individuals that aim at fairness, equal opportunity, an equal playing field and protections in an economy. It is important to note that ‘equal’ here is not some absolute ideal of equalitarianism as in communism but should be thought under the rubric of fairness. Marx fleshed out possibilities for how this could work more than Adam Smith but Adam Smith would probably have more in common with the objectives of Karl Marx’ than many of the modern Republican, the neo-conservative, advocates of capitalism.
In any case, we are neither socialists nor capitalist; we are both. The ideal of either is not where we live. This is why there never has been a pure capitalism or a pure socialism. All great economies have essential elements of both. Beating others over the head with these labels may make some feel good but it is only a silly drama that fuels an inflated ego. These kinds of accusations can also be used to manipulate less aware people but it is really only empty rhetoric. The outcome of such practices is a chronic condition called hate and only hurts the hater in the long run. I believe it is better to ‘see’ how we live and try to ‘understand’ our drives and aspirations as they show themselves without metaphysical hermeneutics, pre-cognitive dispositions and assumptions, working below the surface. There is value in letting ourselves see and understand ourselves as we are and not in the service of some head game we play on ourselves. In all great economies, socialism and capitalism are really only two different historical ways of thinking about the same thing – an economy that works.
[10] http://www.marxists.org/archive/lenin/works/1917/staterev/ch05.htm
[11] Capital, Vol. I, Chapter 1, Section 4 (p. 78); Also see http://www.lrp-cofi.org/book/chapter3_transitiontosocialism.pdf
[12] Adam Smith, Wealth Of Nations, ([1776] 1976, 687–88)
[13] Ibid, (WN V.i.f.61: 788)
[14] Internet Encyclopedia of Philosophy, Adam Smith, http://www.iep.utm.edu/smith/
[15] The Theory of Moral Sentiments, Adam Smith (TMS I.i.1.1)