Among the sharpest political divides in America is between those who want a limited role for the federal government, a view that unites those on the political Right, and those who want to expand that role, a view that unites those on the political Left. The intricate connection between a limited role for government and capitalism is one that deserves close attention. The constitution limits the powers of the federal government, spreading them across three branches, the presidency, and among the states. Recognizing the limits of what government can accomplish can seem sanguine and obstructionist. Piecemeal and fragmented reform make far more sense. It bites off only that portion of the problem in the system that one can chew on in this moment. I am dealing with more than that here. I am focusing on a mindset in relationship to the federal government from which many other political opinions will descend.
Rather than jumping right into a discussion of the political divide, I begin with an understanding of culture that I will lead me to discuss the reasons a limited role for the federal government will serve the best interests of all citizens, whether they know this or not.
The broadest context of the social nexus of human life is that of the shared world we call culture. Thus, I would like to consider ontology of culture.[1]
This cultural world is ambiguous, yet always is present. A field of social relations forms the self. This process develops self-consciousness and subjectivity. Other selves are not simply objects, an “it,” but a field of social interactions over whom we have little control. Development of trust involves the formation of trust toward the shared world and the development of affective life. We at least need to hint at an ontology of the shared world. The fact of the shared world means humanity has never experienced a purely natural world. Yes, other animals have societies, but human beings have the symbols and institutions of culture.
The sectors of culture include language, art, myth, religion, science, family, and economic relations. The experience of such cultural forms is the shared world of individuals.
We begin with the familiar “home-world,” rather than an abstract and isolated self. However, as we mature, we increasingly encounter the non-familiar, the strange, that makes us aware of a larger world-horizon. We puzzle ourselves as well as experience others as puzzles. Crossing such boundaries of the home-world of others and the larger world-horizon is an important part of what makes human beings who they are. Human beings are both the creators and the creatures of culture. The social world shapes human desire. Such a notion of “worlds” means that nothing is “natural,” but is the product of human interactions that generate norms that sometimes feel natural. This is why the type of social world is so important; for it needs to be an ethical world, meaning a world in which its members receive respect from authority and authority receive respect from citizens. Such an ethical world relies upon free participation rather than compulsion. With freedom at its heart, openness to such a social world can lead to meaning and wholeness. However, when the social world becomes tyrannical in any of its forms, openness draws back upon itself in fear, anxiety, and alienation.
Philosophers will reflect upon the freedom of play as a clue to the foundation of culture in the sense that people can lose themselves in play and adopt various roles. Language is already a basic form of culture in its effort to produce a positive deployment of peaceful relations with others. Conversation creates a common bond. The institutions of culture provide a shared lifeworld. The social system offers to those who participate roles to play, status, and role expectations. Family and property are the basis of all cultural forms. Family is the basic area of mutuality and individuality while property introduces conditions of reciprocity.
Freedom is not an abstraction. Freedom occurs in the context of a shared world of beliefs, values, and institutions.
The capitalism and liberal democracy that arose out of the Enlightenment was a matter of stumbling into them by trial, error, and good fortune. The success of the market system depended upon basic bourgeois values, principles, ideas, habits, and sentiments. People who participate in this culture learn such values by seeing and hearing, primarily in family, but also in churches, schools, and other community organizations. Economic analysis of capitalism is not complete unless it factors into it the inculcated values of those who participate in the market system. The Enlightenment, for all its rationalism, acknowledged its dependence upon religion and virtue, as well as freedom. Freedom finds its best expression when it respects the value of tradition that we find in religion and in the virtue of its citizens. Capitalism will eat itself without the self-restraint we find in tradition and virtue. Freedom needs the guidance that tradition and virtue provide. Tocqueville was quite right to refer to this vision as virtuous communitarian freedom. One can defend it on purely secular and rational grounds.[2] Capitalism is the free exchange of goods and services. One way to look at the mission of every business is to exercise all the imagination and initiative it can muster for producing goods, services, and occasions for human achievement that make the world better. Profit is the byproduct of successfully fulfilling that mission. Capitalism promotes the development of people skills, encouraging the development of valuable virtues like promise-keeping, providing for oneself and for family, respect for others, and attentiveness to the needs and hopes of others. Yet, it has come under attack as morally deficient in relation to the coercion one finds in statism, socialism, and communism.
Learning to cooperate has been an important part of human societies. Yes, ancient societies could be brutal. Yet, prehistoric men and women helped each other more than they harmed each other. Of course, they had some enlightened self-interest in doing so, but they did so, nonetheless. In all human societies, some individuals will come out ahead by harming others. Yet, most of the time, one maximizes personal good fortune by cooperating with others. Pre-historic human beings banded together for mutual aid. Hostile and destructive societies, such as Spartans or the Nazis, disappear while cooperative societies flourish. One could argue that good people do not finish last. Rather, they do better than bad people do. Most human interactions are win-win results, both parties coming out ahead. Of course, war is a “game” in which one party wins and the other loses, but most human interactions are not like that. The orientation of human beings is toward increasingly complex forms of social organization, thus moving away from imperial domination and war by the progressive adoption of interactions that provide the potential for win-win results. In fact, one could argue that the spread of global commerce brings a growing recognition of a common humanity. One cannot do business with a people while executing them.[3]
The social system generated by Liberal Democracy is one of partnership. The liberty liberal democracy encourages, particularly in the pursuit of individual happiness, encourages respect for the worth and dignity of individuals. Such respect includes honoring their property, their right to care for that property, the expression of the worth and dignity they have as individuals, the freedom they possess to form families, to become involved in civil society, to pursue their economic interests, and to participate in the political process. Where a modern society fails in its respect for individuals, peaceful reform is at least possible through participation in the political process. Liberal democracy is a partnership that acknowledges peaceful and nonviolent competition between individuals and groups, and the peaceful resolution of disputes through rational discourse, elections and through the courts.
The primary bond of modern society is internal, rooting itself in respect for the worth and dignity citizens offer each other. Citizens offer this respect between employer and employee, between producer and consumer, for a variety of motives, many involving self-interest. The acknowledgement that individuals spend most of their time caring for themselves is important. This is the only life any of us will lead. We properly spend time and energy caring for how to live this life. Yet, the free engagement of citizens with each other also brings them outside of themselves and brings transformation of individuals as they do so. The engagement with others is an ethical engagement by its nature and brings some reflection upon how one ought to behave toward other citizens. This reality increases the internal bonds of society. Civil society as understood within liberal democracies is, in principle, a nonviolent engagement with others. Citizens cooperate and compete, having the freedom to pursue their vision of the best human life. The freedom of engagements in this social world makes for an amazing lack of oppressor and oppressed relationships. Adam Smith noted that one of the three purposes of government is to intervene when one citizen or group of citizens oppresses another, recognizing that such oppressive relationships can occur in a liberal democracy and need to be corrected by the powers of the government.
Modern democratic societies represent the redemption of the social world from the dominant form of government, that of oppressed and oppressor, and invites many other forms of relationships. We might think of relationships like cooperation and competition, producer of products and consumer of products, employer and employee, teacher and student, serving a community, freely associating around specific tasks, political engagement, and so on. For such reasons, one can hope that the world one day will have every government understand that its primary duties are “to form a more perfect union, establish justice, ensure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.” Given the variety of cultures, one can expect multiple institutional embodiments of the principles of economic and political freedom. However, the world will be increasingly peaceful and just if every government agrees with the United States that these are the proper goals of government.
Yet, the harsh reality is that our experience of economic freedom includes the fact that not everyone will find the pathway to full participation in such an economic system. They experience the deprivation and alienation of poverty. The promotion of any economic system depends upon the attention it gives to the poor. How can one say that capitalism is the best economic system for the poor? To put it simply, a system of economic freedom provides for movement between economic classes, rewarding people for their successes and giving consequences for their failure. The system treats individuals respectfully as responsible agents of their lives who need to discover their vocation and their avocation. Even the poor have the power to make judgments regarding their conduct and their future. The freedom individuals have and the values by which they live remain significant contributors to economic life. Values like thrift, sacrifice, job skill, and education are still important for the poor to possess. Personal character and moral choices continue to provide significant indicators to economic well-being. People will need to attend to the desires of their hearts, such as development of a strong domestic life, a monogamous marriage, and children at the appropriate time. Attention to these desires is essential to movement out of poverty. Caring for family is a consistently strong motivator to rise out of poverty. Yes, such behaviors appeal to enlightened self-interest, but this is hardly an appeal to selfishness in the narrow sense. One also directs one’s passion to the formation of a skill that will find a place of employment. One accepts the modest role one can play in other civic and political institutions. Such acts are crucial to successful participation. Such participation requires virtues like faith and hope in oneself, others, and the future. The pathway to such virtues may be long, given the difficult life experience of some, but are well worth the effort. What the poor need are mentors who teach by word and deed the value of actualizing one’s true self and becoming a participating member of various social institutions. The poor do not need an intended “compassion system” that fails to recognize they are responsible agents who can improve their lives through their choices.
Compassion is an important virtue in a free society. Consistent with the Roman Catholic doctrine of subsidiarity, compassion finds its best expression in the lowest and least level of authority. Such a view is particularly appropriate for the American federal system. The first one responsible to extend compassion is me, as an agent of my life, extending compassion toward people for whom I have responsibility, such as family, friends, and community. The type of compassion the poor need is financial and material in part, of course. Yet, it must include elements of the psychological, emotional, and spiritual. Such fully developed compassion is the way a free society helps the poor overcome the obvious alienation they have experienced and helps them become responsible agents of their lives and responsible members of their families, communities, and places of work.
As an institution that helped shaped the culture and institutions of the West, the challenge the culture presents to the church is quite specific. Churches offer an opportunity to reflect upon ultimate commitments at a time when the only commitments worth considering are the immanent needs of human flourishing.
The best way for citizens to influence government is to keep it local. The Roman Catholic doctrine of subsidiarity is helpful here, as it keeps pushing matters to the smallest and lowest level authority. It will be best if the theory that governs those in political power assumes that individuals can and do govern themselves best. They will do so as they engage others and develop moral values. They will do so as they engage in voluntary associations, whether those associations are charitable, religious, or economic in nature. Voluntary associations of an economic nature will include producers, investors, workers, and consumers of the product or service. Civil society will solve most of the problems we see. However, at some point, local and state governments may need to act, but again, in America, problems that may need government action will have a greater likelihood of solution if pushed down to as local level as possible. The national state, as the constitution outlined, ought to have specific powers. Powers not specifically granted to the federal government ought to remain to the states, localities, and the free association of the people.
This means that cultural meaning occurs in important ways through property, work, and economy. When government authority respects the property, work, and economic relationships in which citizens freely engage, it fulfills a vital role of acknowledging the worth and dignity of its citizens. Property expresses the particularity of the owner. It gives the owner a place to stand in the world, as Hannah Arendt put it The Human Condition. Work is the means whereby people turn their natural surroundings into an artificial world that serves to satisfy their needs. The cultural world is an accomplishment of the mutuality of individuals. Work suggests goods and services for others in trade and exchange, all of which fulfill the self-interests of those involved in the exchange. The means of production is human freedom and creativity. Such insights are from Adam Smith. Expanding the role of government runs the risk of deadening private initiative at its most local level as a means of resolving problems. Such a view is consistent with the Roman Catholic view of subsidiarity, which would suggest that matters solvable by free individual exchanges are the lowest and least aspect of authority. Freedom shows itself economically in the market system. Frederich Hayek calls this an emergent order, rather than a contrived, coerced, or controlled order. Such complex interactions affect family ties, social custom, price fluctuations, and legal traditions. Such a system assumes the brokenness of the human condition but modifies it through the freedom of exchange. People trying to satisfy their material needs unconsciously organize themselves into an economy through myriad individual acts of buying and selling; it happens without anyone being in charge or consciously planning it. Nevertheless, individuals within the system promote the common good within a structured system. Free enterprise is decentralized planning, in which every member of the culture becomes part of the plan that emerges. The genius of the free enterprise system is the creativity, quality, and leadership of individual entrepreneurs. Success here involves learning to offer the gift one has in a way that responds to the needs of others. Such awareness is a dimension of love. One sacrifices to achieve in a way that is life-giving for self and others. Investing imagination and creativity toward an objective is not a selfish act. Even division of labor makes us rely upon the work of others in profound ways. Giving, risking, and creating are the characteristic roles of the capitalist, the key producer of the wealth of nations, from the least developed to the most advanced. Poverty is part of every economic arrangement. Political powers can increase and deepen poverty. The key is to provide movement out of poverty. To take personal conduct off the table is to denigrate the humanity of the poor. They have the power to make judgments about their conduct and their future. The freedom individuals have and the values by which they live remain significant contributors to economic life, even if they do not determine it. Values like thrift, sacrifice, job skill, and education are still important for the poor to possess. The only dependable route from poverty is to reorient oneself toward the cultural institutions of the free society. Faith, hope, self-esteem, development of skill, and entering contacts with others, are important ways out of poverty. Marriage and family are important to this process. Compassion by those who “have” toward those who do not yet “have” is important. Government policy that creates dependence upon an entitlement is not a dependable way out of poverty.
Such a political ordering is logically untidy and flexible and an ambiguous compromise. Less messianic fervor and enlightened skepticism of what politicians, bureaucrats, and agencies can do, would be welcome, as well as more toleration of idiosyncrasies, and more room for personal taste and belief. We need less mechanical and fanatical application of general principles and a more cautious and less arrogant self-confident application of accepted, scientifically tested general solutions to unexamined individual cases. We need a loose texture and toleration of a minimum of inefficiency, indulgence in idle talk and curiosity, and aimless pursuit of this or that without authorization. Even the experience of alienation on the part of some individuals and groups reveals the desire that such an ethical state become a home-world for them as well. The welfare state does not provide a lasting substitute for such legitimation since no state can permanently satisfy all the needs of its citizens and guarantee their happiness. The recognition that happiness is personal pursuit, and not a guarantee from political leaders, provides a limit to political ideology and opens the door for religion.
The ethical state I am envisioning is a liberal democracy. Liberal democracy creates a social order that exists more like a dance with moves that have reckless abandonment to it, while at the same time possessing subtle dimensions of order. The institutions of liberal democracy do not exist by means of force. They exist through an incredibly complex means of inter-connections that, with no one managing them, works together for the improvement of human life together.
The intellectual courage we will need is to rethink the Great Depression, the roles of Herbert Hoover and Franklin Roosevelt in extending it, and the disastrous influence of the expansion of government that Roosevelt began. Roosevelt was able to sell his notion of what created the Great Depression and the government spending he said the nation needed to get out of it. History books continue to sell his interpretation. Many of my fellow citizens would agree with my step-grandfather, who lived during the 1930's, “Thanks be to Roosevelt.” From what I read, that was a common conception, and helped form Democrat Party majorities in many elections for Congress since then.
Sometimes, however, progress means looking back to when you had a fork in the road, took what you thought was the right path, and discover you took the wrong road. You then must make your way back to where you took the wrong path and chart another course. I like to think that my fellow citizens might be building some courage to do that. Programs that are now making the United States bankrupt began during this period. George Will calls Social Security a ponzi scheme, the demographics of an aging population pushing the nation into bankruptcy.
Given that those who have a liberal orientation have done quite well in persuading people to their version of history, I would like to focus upon a few areas of American history that will require come intellectual courage, meaning willingness to move against what may feel like a dominant story, and be willing to explore other possibilities.
Michael Gerson, in a February 26, 2010, article, points out that Theodore Roosevelt is a part of political conservatism. He warned that socialism “would spell sheer destruction.” "It would produce grosser wrong and outrage, fouler immorality, than any existing system." Modern corporate capitalism, he believed, was inevitable, even admirable. He also believed that overly centralized and unaccountable power in a capitalist system creates destructive clashes of labor and capital, rich and poor. So, he busted monopolistic trusts, imposed health standards on filthy meat-packing plants and promoted a more professional, merit-based civil service. Roosevelt’s progressivism could sound a bit like socialism. When courts struck down laws allowing strikes and limiting maximum work hours, Roosevelt warned, "If the spirit which lies behind these ... decisions obtained in all the actions of the ... courts, we should not only have a revolution, but it would be absolutely necessary to have a revolution because the condition of the worker would become intolerable. However, it was Roosevelt's political purpose to avoid a revolution. He sought to preserve the market system by regulating its health, safety, and fairness. This is not laissez faire, and therefore does not please the libertarian. However, another part of the conservative tradition is the use of incremental reform to diffuse radicalism. Today, few would wish to return to 19th-century labor, health, and antitrust standards. The political conservative, while wary of government interference, recognizes the importance of proper laws within which individuals and businesses carry out their free interactions.
One way to begin thinking courageously is to re-think Warren Harding and Calvin Coolidge. Have you ever heard of the great depression of 1920? Of course not. Larry Schweikart has written an interesting analysis of this period, summarizing it in a February 24, 2010 article. The recession that began after the end of World War I never became a depression. As one can imagine, returning soldiers and the shift from wartime production would be a shock to the culture and economics of the country. Woodrow Wilson started the income tax to finance the war. He was able to sell the idea by making the ridiculously low, many people paying no taxes, the bottom bracket 1%, and the top bracket 6%. However, it did not take him long to nearly confiscate the wealthiest at 75 % and the bottom rate became 25%. James Cox, the Democrat Party nominee, ran on a platform of reducing wartime debt through a policy of maintaining the high taxes Wilson imposed. Wilson got away with this because of war. After the war, Americans expected to get their country back to the way it was. However, those who favored the income tax were not interested only in financing government. The progressives who proposed the idea always had as their primary end redistribution of wealth. Warren Harding, the Republican Party candidate, wanted to return the country to pre-war “normal” economy and freedoms. In 1920-21, the recession meant a drop of 2.4% to 6.9% of GNP. Unemployment was between 7% and 8%. Andrew Mellon, the new treasury secretary, noticed that every time Wilson raised taxes, the relative return from those rates fell steadily. Mellon convinced Harding to ask Congress for tax cut. Harding died in office, but Calvin Coolidge remained committed to steeply cutting taxes. The top rate became 25% and the bottom rate 5%, both rates above the pre-war rates. The economy quickly recovered. Unemployment dropped to 4%, and the share of taxes paid by the rich skyrocketed. What happened was the “Roaring '20s,” a time when average Americans started owning cars, radios, appliances, and electricity.
As Paul Johnson (Modern Times, 1983) says it, Harding was the last president to take a laissez-faire approach to an economic downturn. The result was that the decline that began in autumn of 1920 was over by July 1921.
Amity Shales (The Forgotten Man: A New History of the Great Depression, 2007) summarizes the common misunderstanding of the period. The 1920's represented the excesses of capitalism. For the Roosevelt-progressive-liberal, the Great Depression was the natural outcome of this excess, representing the failure of capitalism. Again, it will take a certain form of courage to move against such common assumptions.
Another step in intellectual courage is to re-think Hoover and Roosevelt. It will take intellectual courage to view the Great Depression as the result of the Hoover-Roosevelt policies of increased spending and increased taxes. The common view assumes that Hoover did little to deal with the depression, and that Franklin Roosevelt was instrumental in recovery through government spending. The depression could have been nothing more than a needed free market correction. However, as Amity Shales points out, the tariff backed by Hoover, the increases in taxes by Hoover, and expanded federal spending by Hoover, placed America in jeopardy. The new deal promised by Roosevelt was expanded Hoover programs. Due to the tariff, America did not have the trading partners necessary to lift it out of what should have been only a deep market correction. One could also make a case that the entitlement programs that puzzle both political parties today got their start after the 1936 election. On the Republican side, the failure of its leaders to provide a viable alternative to the Roosevelt story of the depression would hurt the nation even to the present. Many people forget that the period had two depressions, one in 1929, and the other in 1937, a year that would see over 15% unemployment. The Dow would not return to its pre-depression numbers until the 1950's. To put it bluntly, with all the government activity, it was not until Eisenhower restored confidence in the market and the future of the country that the country began to feel what it was like to grow economically again. It was government that made the depression “great.” Roosevelt started interest group politics, pitting one set of Americans against another. Roosevelt justified giving to one “forgotten man,” farmers and workers, by having a scapegoat against whom he could act. Two presidents, Hoover and Roosevelt, as well as their respective political parties, failed the American people at a time of crisis. The failure of the political class during this period was not the first time it failed the nation. One could argue that leading up to the Civil War, and the Jim Crow laws after it was over, were also colossal failures of the political class to guide the nation rightly.
This nation has already had laboratory of progressive ideas that required the constant intervention of government in the economy. Prosperity depends on knowledge dispersed among millions of people about consumer wants, available resources, local business conditions, and many other factors. This knowledge always changes. Government policymakers cannot gather and assimilate it. People must be free to use their knowledge. They must have incentives to do so. Market prices must be free because they are crucial signals indicating whether things are abundant or scarce, unwanted or wanted. The most important thing government officials can do is get out of the way. Business recovery, like prosperity, comes from the ground up, and not from the top down. The irony, of course, is that when Roosevelt described his opposition as “trickle-down economics,” he was describing his policies. For him, taking money from others through taxes, regulating others because you know better than them, and then having the government spend the money, is the true “trickle-down economics,” if wealth will flow from government to individuals. The expansion of the economic downturn of 1929 into a great depression could have been avoided had government not increased taxes, not soaked the rich, not increase the cost of government through jobs programs, and not manipulate wages and prices. The temptation politicians experience to interfere with economic freedom is one they must resist, if they have, they have the common good at heart.
The effect of the expansion of government since the depression is due to a false reading of the Great Depression. Today, according to the Tax Foundation, 60 percent of the population now gets more in government benefits than it pays in taxes. What does it say about a society in which more than half the people live at the expense of the rest? Worse, the dependent class is growing. The 60 percent will soon be 70 percent. More people have a stake in the persistence of the Welfare state than they do in capitalism. In my pessimistic moments, it seems as if the American people have already changed into becoming takers of the wealth of others rather than makers of new wealth. They have accepted the dominance of the nanny or mommy state. However, a side of me at least hopes that the American idea of freedom and independence are still in our minds and hearts somewhere.
Star Parker, in her February 15, 2010, article, says that the awakening that needs to occur is to appreciate that the breakdown of Social Security, as well as Medicare, reflects the inevitable failure of social engineering. It seemed like such a bright idea 75 years ago, when there were more than 40 individuals working for every retiree, to provide a government retirement stipend financed with a payroll tax. However, it does not work quite as well when there are three, on the way to two, working and paying for each retiree -- today's reality. Of course, tax increases and benefit cuts, with the goal to make the existing Social Security system solvent, would only make a bad deal even worse for every working American.
[1]
[2] A. C. Gleason, “Why Jonah Goldberg is Right About ‘The Suicide of the West,” The Federalist, May 22, 2018. Robert Tracinski, “Dear Conservatives: The Enlightenment is Not the Enemy,” May 18, 2018.
[3] Wright, Robert. Nonzero: The Logic of Human Destiny (New York: Pantheon Books, 2000).
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