Criticizing Economic Systems

If the dispute is conceived of as a dispute about the economic system of the good society, one may want to characterize it as follows: Those who favor a free enterprise system believe that in the economic system of the good soci­ety, most of the means of production are privately owned and people are free to sell their labor; those who favor socialism, on the other hand, maintain that most the means of production are socialized in the economic system of the good society.

This is correct as far as it goes, but it only represents half of the story. There is a more negative, critical edge to the debate that is absent from this characterization. It is not just that there is some nastiness in the dispute that has not been reflected. There is, after all, considerable nastiness in nearly any intellectual dispute. Rather, the point is that much of what each side has to say consists of bad things about the type of economic system favored by the other side. Socialists, especially, very often begin with a litany of complaints about the free enterprise system and/or criticisms of the arguments of its defenders (e.g., Miller 1989a, pt. 1). What unites each side—what constitutes the real basis for cognitive solidarity within each camp—is a belief in the wickedness of the type of economic system favored by the other side. Those who favor a socialist economic system spend much of their time arguing that a free enterprise system is by its very nature a disaster, and those who favor a free enterprise system say the same thing about socialist economic systems. Moreover, the chain of reasoning that leads from the offending type of eco­nomic system to what is wrong with it is usually fairly short. This is why many on each side believe that those on the other side are stupid, evil, or both.

To understand more clearly the nature of these critical claims, notice that the terms ‘free enterprise system’ and ‘socialist economic system’ refer to highly abstract types of economic systems.

The fact that criticisms of economic systems are usually pitched at a fairly high level of abstraction is what makes the critical side of this debate inter­esting. Socialist critics of the free enterprise system direct their complaints not against this or that version of the system but against any economy that meets the defining conditions of a free enterprise system (viz., private own­ership of most of the means of production and the freedom to sell one’s labor). The claim is that whatever the institutional details, any such system has the problem the critic has identified. For example, Marx’s charges of exploitation and alienation against capitalism (i.e., free enterprise systems) have this generality, which is one of the things that makes Marx’s critique of capitalism especially interesting.

Critics of socialism, on the other hand, pitch their criticisms of socialist economic systems at a somewhat lower level of abstraction, in part because there is such profound disagreement among socialists themselves about how to understand socialization of the means of production. (Abig tent has many poles to knock down.) For example, a famous criticism by Ludwig von Mises and E A. Hayek (discussed in chapter 2) about the inefficiencies of socialism is, strictly speaking, directed not against any socialist economic system but only those socialist systems in which the state owns the means of production and the economy is centrally planned. As such, these objections do not apply to a market socialist system dominated by worker cooperatives.

How these criticisms connect with the concept of the good society is straightforward: the defects attributed to the offending (and offensive) type of economic system are not minor or incidental; instead, they are sufficient to make any society that suffers from them not a good society. To put it another way, any society that has this type of economic system fails to meet some necessary condition for the good society. The key claims have to be so strong because what is at stake in this dispute are not minor problems around the edges of economic systems, but instead, profound problems that are rooted in the fundamental nature of the type of economic system in question. This explains the urgency of this debate in the minds of its participants. Whatever differences there are within each camp about the nature of the good society, all agree that some necessary condition(s) for a good society are not satisfied by a society which has the offending type of economic system. Admittedly, these conditions need not be the same for different theorists on the same side of the dispute. For example, one socialist might believe that X is a necessary condition for a society to be a good society and that any society with a free enterprise system lacks the attribute X. Another socialist may believe a comparable thing about attribute Y. Each may deny the proposition maintained by the other. In this way, they reach the same conclusion by dif­ferent routes.

However, this possibility is more theoretical than actual. In point of fact, there seems to be a fair amount of agreement on each side about why the type of economic system favored by those on other side is not the economic sys­tem of the good society. Characteristic socialist complaints against free enter­prise systems mention exploitation, material inequality, unemployment caused by the business cycle, alienation, and a lack of democratic control over one’s economic life.

Is the foregoing just an observation about the psychology of the partici­pants, or is there a substantive connection between each side’s critical and positive views? This resolves itself into two questions: (1) do criticisms of one type of system presuppose any positive claims on behalf of the other type of system? and (2) does the positive case for one type of system require a cri­tique of the other type of system? The former question is perhaps the more pressing of the two because it questions the legitimacy of a fairly common practice in this debate.

Let us begin with this question, relativized to one side of the debate. Can one be a critic of the free enterprise system without offering a positive defense of some version of a socialism? On the face of it, it would seem so. A Marxian socialist, for example, would presumably maintain that one reason why a free enterprise system is not the economic system of the good society is that its operation involves the systematic exploitation of the workers. To make this charge stick, it does not seem to be necessary to prove anything about a socialist economic system.

But as a matter of fact, the situation is a bit more complicated than that. First, any such criticism is going to presuppose at least a negative conception of the good society, that is, a conception of what the good society is not. As noted earlier, what truly unites the members of each camp in this debate is the belief that the type of economic system favored by the other side is fun­damentally flawed, where the type is specified at a very high level of abstrac­tion; that is, it has some social vice or vices (i.e., some sufficient condition for a society not to be a good society).

The example about the Marxist charge of exploitation can be used to illus­trate these points. Suppose someone maintains that any free enterprise sys­tem systematically exploits the workers. To substantiate this claim, it is not enough to produce an arbitrary definition of exploitation and then show that a free enterprise system is systematically exploitative because it fits that def­inition.¹² One must also be able to explain what is wrong with exploitation so defined. One way to do this would be to articulate a theory of justice according to which exploitation is a form of injustice. The reason for this is that presumably, a necessary condition for a society to be a good society is that it is not plagued by systematic injustice.

But the question remains: Does any of this require the critic to prove any­thing about socialism? As a matter of logic, the answer would seem to be, in general, no.¹³ Criticisms of the free enterprise system do not appear to pre­suppose any substantive claims about a socialist economic system. However, if criticisms of this sort are conceived of in the larger context of the capital- ism/socialism dispute, then the answer is different.

Pressing any such criticism does presuppose, at least pragmatically, that some socialist alternative would not face the problem the critic has called attention to—or at least would face a much reduced version of it. The rea­son for this is that criticisms of the free enterprise system are supposed to provide reasons for social change—change that moves a society in the direc­tion of socialism. In lodging these charges, the critic at least tacitly supposes that some favored socialist alternative either will not face that problem or will face a much reduced version of it.¹⁴

There is something pragmatically self-refuting about denouncing a free enterprise system for its exploitation of the workers and then to add, “By the way, exploitation under socialism might be just as bad or even worse.” Of course, no socialist has ever said this—not because they had available a deci­sive refutation of this charge against socialism but because this possibility sim­ply has not been taken seriously.

It is possible, of course, to maintain that one is not offering reasons for social change in criticizing a type of economic system. For example, a critic of a free enterprise system might claim to be simply making an assessment, taking a kind of moral inventory as it were, of that type of system. However, if this critic does not conceive of his task as, at least in part, providing rea­sons for social change, he is leaving open the possibility that genuinely ben­eficial change in the economic system in some particular respect cannot be achieved. This possibility reflects a pessimism or conservatism that few crit­ics of the free enterprise system seem to endorse. Moreover, if one believes that this conservative diagnosis is at least a serious possibility, intellectual hon­esty would require that one call attention to it. Since critics of the free enter­prise system have not called attention to this possibility (without exception, as far as I can tell) and are, we shall presume, intellectually honest, they must believe that there are potentially feasible alternatives to the way things are currently done that do not have the problem the critic has called attention to. For these reasons, failure to specify alternatives is not a live option for crit­ics of the free enterprise system. Critics of socialism face similar burdens, though those burdens appear to be lighter, since these critics can point to existing free enterprise systems as embodying the main features of the eco­nomic system they favor.

These points can be illustrated by reference to Marx. Marx maintains that the two main evils directly attributable to a capitalist (i.e., free enterprise) eco­nomic system are exploitation and alienation. It is not enough for him to sus­tain these charges; he must also argue that the economic system of post-cap­italist society will not be responsible for the continued existence of these problems. Unfortunately, Marx made no effort at all to provide these argu­ments.¹⁵ On Marx’s behalf, it might be objected that he did not do this because he did not think of himself as offering reasons for social change. His purpose was simply to describe the underlying forces and mechanisms by which social change takes place; social change takes place as the result of the clash of large-scale social forces, not merely because people have given rea­sons why society should change. Perhaps so. Or perhaps social forces oper­ate through reasons, as those who favor rational choice explanations main­tain. But however Marx conceived of his task, he is nevertheless committed to the belief that the systemic evils of capitalism are not permanent features of the human condition (or of industrial societies generally) but are, instead, transitory evils that attend one or more historically limited modes of pro­duction. And if these evils are transitory, then they will disappear in postcap­italist society. To hold that the evils of capitalist society are permanent or semipermanent features of the human condition is to hold a deeply conser­vative view, something of which neither Marx nor, indeed, nearly any other socialist, can be justly accused.

Moderate critics of existing systems, whether free enterprise or socialist, bear similar intellectual burdens. They believe that existing economic sys­tems suffer a variety of defects, and they believe these problems can and should be cured by less drastic means than radical institutional change. Mod­erate critics of free enterprise systems (without any qualifying predicates) believe that private property rights in the means of production are respon­sible for some range of social ills; they propose a government program to ameliorate the problem they have attributed to the free enterprise system per se. Moderate critics of existing socialist systems favor the introduction of some market pricing of goods and services. Radicals on both sides regard these cures as homeopathic or worse; they may or may not be right. However, the general point remains that all intellectually responsible criticism requires the articulation and defense of an alternative or, at the very least, a frank acknowledgement of ignorance or skepticism about the possibility or prospects for improvement.

To sum up, explicitly or implicitly, one of the chief virtues claimed for each side’s favored type of economic system is that it would prevent, pre­clude, or (at the very least) substantially ameliorate the evils that allegedly attach to the other type of system. In other words, they believe that the favored type of economic system has the virtue of not having the social vices associated with the other type. Not all social virtues can be construed as the absence of some social vice, but some of them are most naturally thought of in that way. If participants in this debate are to make real progress, they must not only substantiate a charge against an abstractly specified type of economic system; they must also make the associated case that a favored alternative does not suffer the same malady.

Let us turn now to my second question, namely, Does the positive case for one type of system require a critique of the other type of system? Once again, as a matter of logic the answer is, in general, no.¹⁶ One could make a case in favor of a certain type of economic system without offering any criticism of an alternative type of system. On the other hand, in the context of this dis­pute, there does seem to be a pragmatic presupposition to the effect that at least some of the virtues of the good society attributable to the favored type of economic system are absent in the alternative type. If these virtues were present in the other type of system, then, in making their positive case, these theorists would not be giving us reasons to believe that one system ought, or ought not, to be replaced by the alternative. In point of fact, many partici­pants in this debate begin with a systematic critique of the disfavored type of economic system and then move on to make the positive case for some favored type.¹⁷ From a pragmatic point of view, this makes sense; the favored alternative is motivated by an attempt to avoid the social vices attributed to the other type of system.