The Spirit of Democratic Capitalism - 3

Family, The Economic Order, and Self-Interest Properly Understood

Socialist apologists criticize the supposed selfish principles that underlie our economic order. They note that several theorists of capitalism look to a crude motive of "self-interest" in formulating their economic system. But what do they mean when they use the term "self-interest"? Is it what the socialists say - crude? Michael Novak elaborates for us, speaking about the family in this context
“... each individual life being short, the most profound of economic motives is almost always – and must necessarily be – family oriented. Economic laborers seldom work only for themselves. It is no doubt true that those who do not have families of their own do work rather more for themselves; but even in such cases one often observes the help generously given by such persons to the elderly, sick, or very young members of their extended families of birth. For those men and women who have chosen to establish families of their own, there can be no doubt whatever that much of their economic conduct makes no sense apart from the benefits they are trying to accrue for their children. The fundamental motive of all economic activity seems clearly to be, far more than economists commonly suggest, family-regarding.” (pg. 162)
This corresponds, I think, with most peoples experience. He follows this datum to its conclusion with regards to self-interest on the next page
“Insofar as democratic capitalism depends for its economic vitality upon deferred gratification, savings, and long-term investment, no motive for such behavior is the equivalent of regard for the future welfare of one’s own progeny. Self-interest is not a felicitous name for this regard for the welfare of one’s children and one’s children’s children. Yet it is just this extended motivation which cuts to the quick. This is the motivation that adequately explains herculean economic activities. This is the only rational motivation for long-range economic decisions. For, in the long run, the individual economic agent is dead. Only his progeny survive to enjoy the fruits of his labors, intelligence, and concern.

Through this regard for family, the isolated individual escapes mere self-interest or self-regard. Through it, “charity begins at home.” Through it, human solidarity achieves its normal full development, in the very territory cloest to the knowledge and wise concern of the individual agent. Indeed, until the collectivist state began to take over more and more of its economic functions, it was through familial socialism that most highly developed cultures cared for the poor, the sick, the retarded, the needy, and the very young and very old in their midst. Their religious traditions, meanwhile, taught them as well to care for those most unfortunate of all, the widows and orphans and those who were “homeless.”

But if the family is a form of socialism which corrects the exaggerated individualism of capitalist economists, it is also a form of liberty which corrects the exaggerated collectivism of statists. …”(pg. 163)
Novak is right on. From this, we can say confidently that capitalism, in theory, needs and supports the family. This is in contrast to socialism, which, since its original formulation in Plato's Republic, has sought to abolish the family for the sake of the common good. Indeed, the family is at odds with any collectivist system by design - a family necessarily creates strong loyalties that are at odds with loyalty to the state. The more intelligent socialists have recognized this from the beginning.


Darwin said...

I'm wondering if perhaps there's a more general point to be made there as well:

People often assault Adam Smith's conception of "self interest" as fundamentally selfish. But what exactly does "self interest" get one? Resources. As Novack points out, these are often used to further one's family, but more generally they are used in any way that the self considers good. (According to the Platonic understanding of the good, anything that the self desires it desires out of an idea that it must be good.)

Now perhaps I want those resources to feed, house and clothe my family in the best way possible. Or perhaps I want to use them to help my parish, or support my extended family, or patronize a company I approve of, or invest in someone starting a business.

Indeed, when you think about it, the only way that I can get any use out of money that I make is by giving it away. Even if I buy things which are strictly personal luxuries, I do that by giving money to others who provide those goods or services to me.

Socialism seeks not only the breakdown of the family (to be replaced by the relationship between individuals and the state) but also the breakdown of the capital cycle. Instead of me choosing to give money to a given store because I like it, a planned economy makes sure that I receive exactly me "due" and in turn give exactly everyone else's due to them. Indeed, the most absolute socialism preempts every relationship with the relationship with the state. Even my relationship with my mechanic or my butcher or my yard man, utilitarian though that relationship might seem to some, is replaced with an impersonal relationship with the state.

Zachary said...

To play devil's advocate, I think a socialist would argue that an individual in a capitalist society could hoard money and resources and thus deprive others of material well being.

But I think you are right generally, in a capitalist society, your money is generally not good unless it is exchanged for something else, and that exchange has to be something mutually agreed upon with another person. Capitalism can, in that sense, draw you out of yourself even if you don't want to be.

Novak says something similar in the subsequent chapters of the book; I think he is playing it safe with his passage about the family.

Darwin said...

Good point.

Certain types of hording would be self-correcting. Say, if you're taking a hundreds of millions of dollars in cash each year and burning them, that would simply increase the value of the dollar and help everyone out except you.

Perhaps you'd buy up huge amounts of some resource, say corn, and destroy it. That would drive up the price of the resource, which would hurt others, unless it successfully impelled an increase in supply.

So yeah, while a lot of attempts at destructive hording would be self-correcting, some would probably cause pretty genuine damage to others.