The Nature of the Dispute
What exactly is in dispute between those who favor a free enterprise system and those who favor a socialist economic system? As a first approximation, it might be said that the issue is about which type of economic system is best and why.
But what does “best” mean in this context and for whom are the rival types of economic systems supposed to be the best? Let us consider the latter question first. It would not be accurate to say that either side necessarily believes that their favored type of economic system is best for any society at any time. Following Marx’s theory of history, Marxian socialists have maintained that a free enterprise system is best for some societies at some times. And modest thinkers on both sides of the debate might be skeptical about what economic system is or would have been best for ancient or primitive societies about which little is known.The dispute is most usefully conceived of as focused on complex industrial societies, either in the present or in the near-to-medium-term future. The debate has been going on since complex industrial societies came into existence around the time of the Industrial Revolution; it seems that most participants have thought in terms of a time frame that begins somewhere between the time at which they are writing and about a generation or so from then and extends indefinitely into the future. I suspect that the reason for this is that most parties to the dispute have intended, or at least hoped, that their cogitations would have some practical effect on existing institutions—either in conserving them or in bringing about fundamental (i.e., radical) institutional change. Of course, some authors have made more universal claims in both time and space for their favored systems, but the most plausible discussions include—or at least should include—restrictions of the sortjust indicated.
The question about what “best” means in this context is more difficult to assay. It does suggest a comparative judgment of some sort. To say that an economic system is best is to say that it is better than all the others. But what are the others? And better in what respect or respects? Let us begin with the former question. One way to understand the comparison class is in terms of all logically possible types of economic systems or, more narrowly, all feasible types of economic systems. But either understanding presents a formidable difficulty, to wit, it is hard to see how one could formulate a useful list of all logically possible, or even all feasible, types of economic systems—at least in such a way that one could know that one had covered all the possibilities. If one is claiming a kind of global superiority for a favored type of economic system, it could well be exceedingly difficult to prove.
A more manageable comparison class would be any economic-system of the type favored by the other side of the dispute under discussion. In other words, those who favor a free enterprise system believe that some such system is superior to any socialist economic system. The situation of those who favor socialism is similar, but it is complicated by the fact, noted in the last section, that there is a fundamental disagreement about what socialization of the means of production really means. Those who favor worker cooperatives, for example, maintain that an economic system that socializes the means of production in that way is superior to any free enterprise system, but they might not want to defend state ownership as superior to a free enterprise system. Those on either side of this dispute may believe stronger claims on behalf of their favored system, but they would not have to establish anything more than what was just indicated to resolve the dispute in question.
Let us now turn to the question of the standard of comparison against which types of economic systems are to be judged.
There are numerous social virtues and vices (as they might be called) for which economic systems have been held responsible. Efficiency, respect for basic rights, equality of one sort or another, and opportunities for self-determination are some of the social virtues an economic system might have. Social vices that have been blamed on economic systems include gross inefficiency, exploitation, alienation, and the denial of basic human rights.These virtues and vices are diverse. This fact makes it difficult to give an overall comparative assessment of types of economic systems. This raises some difficult and important philosophical questions about whether a common metric (e.g., utility) is available to assess social institutions in general or economic systems in particular. A related problem, which will be discussed in more detail later in this chapter, is that there is disagreement even about what counts as a social vice (or virtue). For example, most advocates of socialism believe that a cardinal vice of free enterprise systems is that they permit and encourage substantial inequality of material condition. Those who favor a free enterprise system generally do not believe that this is a social vice or that relative equality of material condition is a social virtue.4
Since this chapter aims not to resolve the dispute but only to represent it accurately, it is not necessary to adjudicate these disagreements about the standard or standards of comparison. We only need some way to characterize the dispute which reflects all the issues involved. The social virtues and vices mentioned that have been attributed to economic systems are obviously of fundamental importance. The vices are alleged to be serious social ills, and the virtues are believed to be important desiderata that any society should satisfy. One way to capture what is at stake is to say that there is sharp disagreement between the two sides about the economic system of the good society. However the contending parties envision the good society, each participant in the debate believes that the economic system of the good society is a instance of one or the other of the two types.
The two camps divide on the question of whether that type is socialist or free enterprise. But how is the concept of the good society to be understood? It might be most useful to think of it as a placeholder for something more definite—to be filled in differently by different theorists. Clearly, there are significant differences between, and even within, the two sides about the nature of the good society. But are there any general constraints on the concept of the good society that both sides should respect?Some people might think of the good society as the best society imaginable (i.e., a kind of utopia) that may or may not be historically possible or realizable. On the other hand, others might think of it as the best society one can reasonably hope for. The former may best accord with how some participants in the debate have thought of it. There are, for example, significant strands of socialist thought that are utopian in the sense that they exhibit little or no sensitivity to the question of whether or not their vision of the good society could be realized in the foreseeable future or even as far into the future as it makes sense to look.5 The same might be said of some libertarian defenders of the free enterprise system. However, this may not be the best way to think about the good society. At stake is the utility of different ways of thinking about social institutions generally and economic systems in particular. There are a number of reasons why it is useful to think of the good society in terms of the best society one can reasonably hope for, instead of in terms of an ideal society that might not be historically possible.6
The most important reason in favor of the former is that it imposes an epistemic constraint on one’s speculations. Fourier’s world of abundance in which the seas are made out of lemonade and lions lay down with lambs is ruled out, as it should be. Thinking about an economic system for a world like that is like thinking about a health care delivery system for a society in which no one ever gets sick.
(People would still be hurt in accidents, so there would still be a need for such a system.) Since it is not reasonable to hope that all disease could disappear in the next three generations, there is no point in thinking about a health care delivery system for a society facing that eventuality. Analogously, one should not conceive of the good society as, for example, one in which human wants and needs are in such perfect harmony with each other and with what nature and a little labor can provide that there are no conflicts about how society’s productive powers should be deployed; nor should one conceive of it as a society in which everyone values the common good so highly that any member of that society would sacrifice the most important of his or her own interests to make an insignificant contribution to some societal interest when the two interests conflict. There is, of course, a line-drawing problem here. One must be careful not to assume that some transitory aspect of contemporary social life is a permanent feature of the human condition. This is why speculation should only be restricted by what one can reasonably hope for, instead of by what one can reasonably believe. Our reasonable hopes outrun our reasonable beliefs but not our fondest dreams. Second, the types of economic systems that are being attacked or defended in this dispute are themselves realizable. What is ultimately at issue is what kind of economic system is to be preferred for the real world. It is not at all obvious that telling us about the economic system of a society that might be empirically impossible is contributing anything useful to this debate. This is true even if empirically impossible models of economic systems are of some use in economics proper.To conceive of the good society in terms of what one can reasonably hope for is to impose a weak reality check on one’s thinking. It suggests a role for the social sciences, especially economics conceived of as an empirical science.
Only an empirically grounded social science can describe how social institutions function and what their effects are. The alternative is simply to ignore that reality check. If this debate is to have a salutary practical effect on existing institutions by helping to conserve them or to overthrow them in their essentials, then it seems most useful to think of the good society as a society that is at least arguably historically possible.Each of the various participants in this dispute believes that a different type of economic systems is the economic system of the good society (employing, of course, different conceptions of the good society). What is the general nature of the relation between types of economic systems and conceptions of the good society? An answer to this question should tell us something the kinds of arguments that the participants have to make.
On the face of it, there seem to be two kinds of relations that could subsist between a type of economic system and a conception of the good society: instrumental and logical. An instrumental connection obtains when the functioning of a certain type of economic system causes, or at least is contingently responsible for, some necessary condition for the good society—what was earlier called a social virtue. On the other hand, a logical connection obtains when some defining feature of the type of economic system being defended is itself constitutive of the good society.7
Consider the following two examples of instrumental connections. Some defenders of a free enterprise system believe that a certain level of economic development, or even a certain rate of economic growth, is a necessary condition for a good society. They further believe that as a matter of empirical fact, only a free enterprise system (perhaps of a certain subtype) can achieve and sustain that level of development or growth. In a similar vein, a socialist might maintain that only a certain type of socialist economic system can achieve a relatively egalitarian distribution of wealth and income and that this sort of distribution is a social virtue; that is, that it has a relatively egalitarian distribution of wealth and income is part of what makes a society a good society, and only a society with a certain type of economic system can achieve that distribution.
In these two cases, the functioning of a certain type of economic system is claimed to be responsible for achieving something thought to be, in part, definitive of (i.e., a necessary condition for) a good society—in the former case, a certain level of economic development or growth, in the latter case, a relatively egalitarian distribution of wealth and income. (Why these social virtues are constitutive of a good society is a separate question.) Notice that the main claims being advanced in this context are empirical and are about how a type of economic system actually functions. This suggests a substantial role for economics, conceived of as an empirical science, in adjudicating some aspects of this dispute.8
The connection between an economic system and a conception of the good society may, however, be more intimate than merely factual or empirical. For example, according to some libertarian defenders of a free enterprise system, being free to buy and sell things, including means of production, to and from whomever one chooses is a basic human right. The freedom to exercise this basic human right is not merely an empirically necessary condition for something else that makes a society a good society (though it may be that, too). Rather, this freedom is itself a social virtue, that is, it is part of what makes a society a good society, perhaps because it is a requirement of justice.9 In other words, on this libertarian vision, part of what makes a society a good society is that people have this freedom. Analogously, it may be that for some Marxists, social control of the means of production is constitutive of a good society. For them, it is a necessary truth that in a good society, people in their capacity as producers control the conditions of their interaction with the material world for the purposes of production. This state of affairs may have further good consequences, but control of these conditions may be held to be intrinsically valuable.10
Whether they are empirically or conceptually related to a conception of the good society, these conditions, constituents, or elements of a good society (i.e., these social virtues) derive from deeper views, such as theories of justice, theories of what sort of life is good for human beings, and views about the relation between the good life and the good society. These, in turn, depend on still deeper theories about the ultimate sources of political, moral, or practical obligation and theories of moral and nonmoral value. At this point, nonphilosophers are likely to despair of ever reaching agreement and resolving the dispute. Philosophers, by contrast, hear the fire alarm go off, quit their card games, and don their gear. Disputes about the penultimate and ultimate sources of value and obligation are distinctively philosophical in nature.
The fact that there are both instrumental and logical connections between economic systems and conceptions of the good society indicates that the cap- italism/socialism dispute has an economics component and a philosophy component. The line separating these two may not always be sharp, but the twofold nature of this dispute carries an implicit warning to participants from either discipline. Economists should realize that the philosophical aspects of this dispute are less straightforward and more complicated and difficult than they might have supposed but also that these issues are not wholly intractable. Philosophers, on the other hand, need to recognize that there are empirical constraints on conceptions of the good society and that questions about how economic systems actually function cannot be abstracted from or ignored and, indeed, must be systematically investigated. This distinction between the philosophy and economics components corresponds in a rough way to the distinction economists draw between normative and positive questions or issues. However, nothing should be made to depend on these distinctions; the lines between disciplines have become blurred in recent years, and (as most philosophers know and most economists do not know) the distinction between facts and values has been seriously questioned at least since the early part of this century in the writings of John Dewey.