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Jul 8, 2014

A Review of Jason Brennan’s Why Not Capitalism?

This inventive and ambitious—though occasionally flawed—book demonstrates that developing the moral defense of markets is a worthwhile endeavor.

“Is socialism desirable?” asked G. A. Cohen in Why Not Socialism? “Is it feasible?” These questions are not necessarily as distinct as they might first appear. We can imagine two ways socialism could be infeasible. Perhaps socialism requires more than imperfect human agents are willing to do. That is, socialism might be contingently infeasible. Alternatively, socialism might be infeasible because some aspect of what it is makes it impossible even assuming perfect agents. That is, socialism might be logically impossible.

If socialism is merely contingently infeasible, then it makes sense to ask “Is socialism desirable?” as a distinct question. On the other hand, can I desire something that is logically impossible? If I told you “What I’m really after is a three-sided square,” you would justifiably say that I’m confused.

In his reply to Cohen, a new book called Why Not Capitalism?, philosopher Jason Brennan addresses both the question of desirability and the question of feasibility. He then asks the same two questions about capitalism that Cohen asked about socialism. Is capitalism desirable? Is it feasible?

The centerpiece of Cohen’s argument is a fictional camping trip where people behave in ways Cohen characterizes as both socialist and obviously morally appealing. Instead of a camping trip, Brennan uses a community of Disney characters living together on the Mickey Mouse Clubhouse animated television show in a way he characterizes as both capitalist and obviously morally appealing.

Near the beginning of his book, Brennan offers an inverted parody of Cohen’s argument, and proceeds from there to discus where the argument fails and what can be done to salvage it.

Brennan thinks that socialism is only contingently infeasible. If humans were smarter, they could centrally plan an economy, but they aren’t. Mickey Mouse might try to plan an economy, but he “just isn’t smart enough” (p. 91). Brennan notes:

Socialism dispenses with the market economy and thus with market prices. But no one can run an economy without information. Socialism thus needs some substitute for market prices. According to the Calculation Problem, large-scale socialist planning cannot work, because planners do not have a workable substitute for prices. The problem of planning an economy is too hard. (p. 15)

I think this is a misreading of Mises, one that inappropriately conflates Mises’s calculation problem with Hayek’s knowledge problem. I discussed the former in some detail in my recent review of Cohen’s book. The latter is the idea that planned economies fail because the information the planners need is distributed among society’s actors and therefore not centrally available. These problems are related but not identical. (A simplistic version of Hayek’s position is that that the relevant social data are not “given” to decision makers in the way that the needed facts are “given” in a math problem, but that if they only knew enough, planners could solve the problem. A simplistic version of Mises’s position is that even if the data were “given,” they wouldn’t be in a form that someone could use to solve the problem, nor would there be any way to convert them to a usable form.)

Brennan says, explicitly, that the “Socialist Calculation Problem” and the “Knowledge Problem” refer to the same thing (p. 14). To the contrary, Mises wasn’t saying that the problem with socialism is that no decision maker has all the relevant information. The problem is that even if you give one person, who can be as smart as you like, all that information, it wouldn’t be useful to him because you can’t do the relevant calculations in kind. You need money prices, especially money prices for capital goods. Mises argues that without money prices, planning is not difficult, but impossible. Brennan may think that Mises is wrong, or has drawn a stronger conclusion than is warranted, but Brennan does not make these points in Why Not Capitalism?.

Now, whether Brennan is right or I am right about Mises’s and Hayek’s arguments against socialism is a matter of some contention. (To get a sense for the debate from the side I favor, see Professor Salerno’s “Reply to Leland B. Yeager on ‘Mises and Hayek on Calculation and Knowledge’” and “Mises as Social Rationalist”, pp. 41-54.) I bring it up because Brennan’s position on the feasibility of socialism raises the stakes for his critique of the desirability of socialism and his argument for the desirability of capitalism. On my view, socialism-as-practiced so often devolving into a bloodbath has a lot to do with the fact that socialism attempts the impossible. Suppose I asked you to draw a square by hand to an inhuman degree of precision. Being only human, you would fail, but your failure would at least be square-like. If I had asked you instead to draw a three sided square, you would again fail, but not in a predictable way. Anything might happen, and the harder you tried to make it work the messier things would get. Brennan cannot fall back on this position or something like it. He cannot argue that Cohen is simply being incoherent when Cohen argues that the three-sided socialist square would be morally best if we could find a way to make it work. Brennan has to turn the tables on Cohen and make the ethical case for capitalism. Let us turn our attention to the matter of whether Brennan succeeds.

Brennan’s second chapter, “The Mickey Mouse Clubhouse Argument for Capitalism: A Parody,” is a delightful, clever inversion of Cohen’s argument. If Cohen’s characterization of capitalism is grim, Brennan’s parody characterization of socialism is dystopian, even apocalyptic. After Cohen’s sanitized camping trip and his grotesque caricature of the market system, Brennan’s turnabout was refreshing. About the only issue I would raise is that because he is speaking in the context of parody, I was unsure in places whether I was reading Brennan the moral theorist or Brennan the parodist. For example, in a section on how capitalism realizes the ideal of social justice, Brennan writes:

In our world, we often try to achieve such goals through coercion—by having governments control and provide services, or by having governments tax the successful to transfer resources to the less fortunate. And perhaps, under our dire circumstances, the villagers might be willing to accept such brutal, direct, and antisocial methods of achieving social justice. (p. 33)

So does Brennan support the “brutal” welfare state in “our world?” I am not sure from the text alone. As a brief aside, I confess I’m also unsure what exactly is covered by the principle of social justice that isn’t covered by the subsequent principle Brennan says is realized in the Mickey Mouse Clubhouse village, that of beneficence. If all the villagers, being beneficent, “are always willing to help those in need” (p. 33), is this sufficient to attain social justice? Is social justice redundant in the village, but not in our world? Brennan touches on the topic without giving the reader an answer.

I was pleased to see a reply to Cohen’s argument for why economic inequality creates a barrier to community. Brennan writes that in the village, this type of inequality is “just another difference—in the same way that Donald is a better dancer than Goofy or that Minnie has more common sense than Daisy” (p. 34). This strikes me as the correct response. Any difference between people puts a limit on empathy and community, yet for many types of difference this gap can be crossed with effort.

By contrast, there are places in Cohen’s tract where he seems hostile to human difference itself. Cohen informs us:

What I would call socialist equality of opportunity treats the inequality that arises out of native differences as a further source of injustice, beyond that imposed by unchosen social backgrounds, since native differences are equally unchosen…Socialist equality of opportunity seeks to correct for all unchosen disadvantages, disadvantages, that is, for which the agent cannot herself reasonably be held responsible… (pp. 17-18)

The talents (and, Cohen later adds, tastes) that make us unique as humans are, it bears repeating, a source of injustice according to Cohen. With passages like this, one begins to wonder if Cohen thinks “Harrison Bergeron” was an instruction manual.

After completing his parody, Brennan makes a distinction about what is meant by justice. Some thinkers hold that justice is a concept that applies to our dealings with one another in the real world, where we make moral mistakes and come into conflict. Others—Brennan puts Cohen in this camp—say that justice is the condition that obtains when agents are perfectly virtuous. Brennan says he finds the debate “largely terminological,” and tells us that he means to proceed ahead on Cohen’s terms arguendo.

I grant Cohen that justice is the thing that is realized in utopia, where people are as morally pure as they are in the socialist camping trip or the Mickey Mouse Clubhouse Village. But, contrary to Cohen, even if we play the game of political philosophy on his terms, capitalism, not socialism, wins. (p. 57)

But wait a minute. Is Cohen imagining that his campers are the sort of angels Brennan purports them to be? Cohen tells us that “People regularly participate in emergencies like flood or fire on camping trip principles” (p. 54). I don’t think Cohen is speaking metaphorically here. These aren’t moral superheroes, but real-world actors who Cohen says live up to the principles he describes in his camping trip story. Cohen thinks that the biggest obstacle to organizing society along socialist lines “is not, primarily, human selfishness, but our lack of a suitable organizational technology: our problem is a problem of design (italics original)” (pp. 57-8). Cohen thinks we are at least potentially good enough, given the right circumstances, for socialism to work, although we might be deficient in other ways. There might be political obstacles we lack the skill to overcome or design issues that we lack the savvy to solve, if they are indeed solvable. Cohen’s camping trip isn’t about the definition of justice, but an example of a familiar context where humans actually do behave in a way that is closer to Cohen’s ideal.

Cohen is concerned with questions about how the form society takes influences the way humans relate. Capitalism is predatory and has a corrupting influence; it undermines the social virtues Cohen prizes. Potential socialist modes of organization, says Cohen, should be judged on whether they “would reinforce, or rather, undermine, the communal and egalitarian preferences that are required for socialism’s stability” (p. 57).

Brennan thinks Cohen’s major mistake is to compare an idealized socialist world, inhabited by “morally perfect people,” to a non-idealized capitalist world, inhabited by “flawed, real people” (p. 58). I don’t think this is what Cohen is doing, although I do agree with Brennan that Cohen’s comparison is flawed. To his credit, Brennan points out exactly what the flaw is: Cohen has simply assumed that socialism embodies “a set of moral principles and virtuous dispositions he likes” (p. 62), and assumed that capitalism embodies the opposite. Not so, says Brennan:

Socialism is not love or kindness or generosity or oceans of delicious lemonade. Socialism is not equality or community. It’s just a way of distributing the control rights over objects. Cohen asserts that capitalism runs on greed and fear. Yet Cohen cannot simply assert this as a conceptual claim. Capitalism is not analytically tied to greed and fear. Whether a regime is capitalist or not has nothing to do with people’s motives. (p. 63)

Brennan then drops the hammer: “Cohen is not doing social science,” but rather merely stipulating that “agents in socialist economies are motivated by altruism and community spirit” (p. 65).

Having already shown us a hint of what he thinks a capitalist society might look like if you applied Cohen’s utopian assumptions to capitalist agents, Brennan then proceeds, in what is my favorite part of Why Not Capitalism?, to examine what the evidence shows about the impact of capitalism on our moral sensibilities. It turns out, pace Cohen, that the market society is salutary to our moral characters. Brennan cites studies showing that market societies tend to be comparatively more tolerant and less corrupt, that members of those societies tend to be comparatively more motivated by fairness in their dealings with strangers, and that market exchange bolsters the traits of “mutual trust, reciprocity, and trustworthiness” (pp. 67-8). If Cohen disagrees with these findings, the onus is on him to raise issues with the studies in question.

Having dispatched Cohen, Brennan sets up his own vision of utopia. At the beginning of the book, Brennan tells us that he will demonstrate that “the best possible society is a capitalistic society,” (p. 21), though he later softens this to the claim that in utopia, we “can be capitalist,” and “get value from doing so” (p. 78). Drawing on the work of John Tomasi and Loren Lomasky, among others, Brennan admirably describes the instrumental value of property rights. Property helps us live virtuously. Brennan does not, to my disappointment, offer any defense of property rights as the foundations of a deontological ethical system, but I am not going to be able to resolve that long-standing debate today, and in any case I wouldn’t really be saying anything new if I tried.

I am more concerned with an oddity in Brennan’s description of property. Property, he tells us, is a bundle of privileges, entitlements, powers, and so on. Drawing on a paper by Gerald Gaus, Brennan lists seven elements of property. Gaus lists eight, not all of which overlap with Brennan’s, but the influence is clear. Let’s focus on Brennan’s number six:

6. If others harm or destroy Minnie’s Bowtique [a factory she owns], they owe her compensation.

At first glance, it seems that this claim is totally out of place in a description of “utopia,” which Brennan tells us is inhabited by perfect moral agents. “Compensation” implies that someone somewhere has committed an injustice. Could a perfect moral actor commit an injustice? One way to resolve the paradox is to concede that even someone as morally exemplary as the Clubhouse’s virtuous namesake, Mickey Mouse, sometimes makes moral mistakes. We don’t, however, only commit injustices because we make moral mistakes. We can also commit injustices because of errors about empirical facts. For instance, I might pour a foundation for a new tool shed on what I think is my own property, but turns out (because I’m not a very good surveyor) to be on yours.

It appears now that there isn’t a clear line of distinction between the sort of project Brennan wants to do—thinking about justice in terms of the relations between morally perfect agents—and the sort of project that (instead) thinks about justice in terms of how to resolve conflicts in the aftermath of a moral mistake. This has huge implications for Brennan’s argument. For one thing, he can no longer bracket out the question of justified violence from his (stateless) utopia by saying that even the minimal state, in performing its law-enforcement function, fails to “fully satisfy the capitalist standards realized in the Mickey Mouse Clubhouse Village,” (p.43), so failing “because there is always a moral failing in a society in which some people hold positions of coercive power over others or in which some people threaten to wield violence against others” (pp. 44). Conversely, it is no longer enough for Brennan to cut off certain types of criticism of Cohen by saying that “In a perfectly just world, Cohen’s socialism would be voluntary” (p. 19). Even under utopian anarchist socialism, moral disputes might occur and the socialists would have to decide whether or not to use violence to enforce the “correct” decision.

Brennan can try to escape concerns of this sort by stipulating that utopia is characterized by perfectly moral and perfectly knowledgeable agents. The added premise, however, would undercut his claim that “[i]n utopian conditions, socialism’s incentive problem disappears” but “the information problem remains” (p. 90). Since Cohen does not distinguish between the calculation problem and the knowledge problem, this would undermine much of the force of his argument against the feasibility of socialism.

Where Brennan’s argument in Why Not Capitalism? breaks down, it fails in interesting ways—and I don’t mean that to sound like damning with faint praise. Pretty much everyone who has something to say about political philosophy is wrong at least some of the time, myself not excepted, and a big part of how we judge the quality of a contribution is by whether it fails in compelling ways or pedestrian ones. On that count, Why Not Capitalism? stands out for its inventiveness and ambition and demonstrates that developing the moral defense of markets is a worthwhile endeavor.