Propping Up Capitalism

Can Capitalism Survive? by Benjamin A. Rogge. Liberty Press, 328 pp., $9.00.

“Can capitalism survive?” Joseph Schumpeter suddenly asks the startled reader of Capitalism, Socialism, and Democracy. In 1942 this may not have been a terribly happy question to ask, but Schumpeter’s conclusion that capitalism will not survive certain of its own implications could scarcely have been any less dolorous. Accused of defeatism, Schumpeter replied that when the ship is taking on water it is not defeatist to sound the alarm in hopes that the hands will man the pumps; it is defeatist to sit and contentedly sink into oblivion. Is capitalism worth saving? Schumpeter only says that it has been uniquely responsible for the relatively fabulous material well-being the West enjoys today, and so, unless our society sees little significance in low infant mortality rates and well-fed leisure, perhaps some of us ought to run to the pumps.

We will, of course, find a few indefatigable souls already on duty. One of them was, until November 17, the late Professor Rogge, who, with the help of the splendid Liberty Press, has performed in this book two tasks: he sounds a loud and clear alarm and he proceeds to bring wit and reason to the chore of pumping out a good deal of the economic nonsense that has beset the discussion of public policy. Can Capitalism Survive? is a collection of vintage Rogge. It contains essays and speeches written during the last twenty years or so on diverse topics: the business system, labor markets, money and inflation, the problems of cities, and higher education, to name some.

Like Schumpeter, Rogge sees capitalism as being in deep trouble, and he endorses, in his opening essay, Schumpeter’s explanation of what is doing it in. On the face of it, the analysis is Marxian: capitalism is, really, wreaking its own destruction. But, at bottom, Schumpeter’s reasoning follows a different path from the one that Marx treads. Capitalism is edging toward its demise, Schumpeter argues, because, though it and only it produced the material splendor of our time, it is incapable of winning substantial loyalty from any sector of society, not even from the businessmen.

Capitalism rewards those who show initiative, intelligence, and appropriate common sense and ability, and thus it must reward some more than it does others. But, as Schumpeter painstakingly points out, the successful cannot win their reward without serving (sporadic benefit) and enriching (lasting benefit) a good deal more people of all classes than they had intended. Discontented with their lot, and naturally enough unwilling to draw from it the apposite conclusions about themselves, the intellectuals begin to strike at capitalism by propagandizing amongst and (mostly) to the working and lower classes. These people cannot be expected to comprehend, any more than anyone else, quite how bread and butter and much more comes to them from what is, by dint of its diffusion, dispersion, and decentralization, a vexingly complex economic system. Some are thus seduced by the intellectuals. The businessman, competent in his office, is ill-suited almost by nature to struggle against the intellectuals; he is essentially unaggressive and preoccupied by the proper, but mundane and strictly delimited, tasks of his calling.

The intellectual has two sets of allies, the like-minded “public servants” who staff the hypertrophic levels of government and the so-called organization men who would be equally comfortable toiling for nationalized corporations. Add to their assault the disintegration, brought about by capitalism itself, of the last remnants of the traditional, protective, aristocratic elements in society, and the result, Schumpeter concludes, must be the collapse of capitalism and its replacement by socialism. After presenting these themes, Rogge, in a much later essay, “The Businessman and the Defense of Capitalism,” makes bold to prescribe a course of action meant to combat the recent trend against capitalism, a trend that has uncannily conformed to Schumpeter’s description.

The businessman and anyone else who wants to man the pumps, Rogge says, must see clearly that the regnant idea in the hands of bureaucrats and socialist intellectuals alike is the notion that they know what is best not only for themselves, but for everyone else as well; they further believe that, since they know this remarkable thing, they may justifiably exercise the coercive powers of government toward the making of the good (or Great) society. It is a mistake to discount the power of ideas. On the other hand, these ideas can and must be confronted with counter-ideas. Anybody solicitous of capitalism, Rogge insists, should develop and refine his own notions about human nature and the role of man in this unjust world. He must read and reflect, and even do a bit of writing. All this is hard work, which may be why businessmen have been so much on the run lately. They must, if they are to preserve capitalism, Rogge says, apply to their own most fundamental ideals the incredible dynamism and shrewdness they are used to exerting from nine to five. Perhaps the most important conclusion they will reach is, not that they know what is best for everyone, but that they only know what is best for themselves; and, in the light of this humility, they may be prepared to take on the ideas of those hostile to capitalism.

Perhaps the most important essays in this book are the several that follow the opening essay on Schumpeter. In “The Case for Economic Freedom,” Rogge sets out his conception of what, in part, human nature comprises. Man, he says, is essentially a free, responsible, and imperfect creature. Later, in his essay on another mentor, Adam Smith, he appears to add “competitive” to the list. Now, as he says, these are “assumptions,” intuitions about human nature no doubt derived from much reflection, reading, and, above all, observation, and so we can hardly ask him to “prove” them. Still, a bit more substantiation, perhaps drawn from that reading and observation, would have been in order. Rogge does clearly define what he means by these terms, however. A free man is one who may do anything so long as he refrains from forcing or defrauding any of his fellows. This liberty is Rogge’s principal value, and, by including it in his catalog of human nature, he seems to imply that men will naturally incline toward freedom of this sort and against all restraint, no matter what their condition. Responsibility merely means that we are all, in the last resort, to be blamed or credited for what we do; our misbehavior cannot properly be laid to society or to our parents, for the fault lies in us.

It can be conjectured that Rogge gives us his conception of rationality in his remark on Marx’s famous claim that in communist society, I should be able to “hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner, just as I have a mind.” Rogge, in his concluding essay on the Foundation for Economic Education, calls this sort of thinking a “denial of reason, of process, of rational choice.” Apparently, then, he sees rationality as thought that adheres to the elements in human nature already mentioned; Marx’s utopian dream is thus irrational because it neglects the essential imperfection of man (and, arguably, his responsible and competitive sides). If indeed this is Rogge’s conception tion of rationality, it is certainly worthy enough of further discussion, and it is regrettable that he did not elaborate it, perhaps in his section on the nature of economics.

These are the fundamental ideas of the book, at least to this reviewer. Professor Rogge, as mentioned, has something to say about several topics in and out of economics, and much of this is quite illuminating. These essays, though obliquely, carry on the theme of the title; they try to explain a good deal of the workings of capitalism and the failings of its alternatives. The essays “Profits” (they can never be “too high” or “too low” in a free exchange”), “The Labor Monopoly” (closed-shop unions not only harm their members more than they serve them, they violate a sacred principle of our society—equality before the law), “The Long Run Economic Outlook” (in current circumstances—accelerating inflation, no depression, but periodic recessions), “The Problems of Cities” (again, regulation by government is the chief culprit), and “Financing Higher Education” (colleges can only overcome their budgetary woes by charging tuition that meets the full cost of education) are the most engaging and trenchant.

One learns a good deal of economics in reading this book, and Rogge’s style and humor are refreshing departures from the usual habits of social science writers.

The Liberty Press is to be commended for its service in making available so many worthy titles at such agreeable prices. Can Capitalism Survive? will take its place as one of the worthiest of those titles, for the humane and good-humored qualities of the author as well as for the wit, good sense, learning, and scope of the book.

John D. Stewart is a free-lance editor.