Beyond Capitalism and Socialism

I tend to think I am doing something right if people from both ends of the political spectrum are rabidly attacking me. The notion that one ideological camp has a monopoly on truth and justice is repugnant to me, even if I lean one way or another at times. At the same time, I never enjoy seeing civil discussion degenerate into uncharitable attacks.

Attachment to labels is part of the problem I encounter when putting forth alternative economic ideas. People on the political right are as agitated by the mere word "socialism" as people on the left are by the word "capitalism". It doesn't help that both sides hold radically different definitions of each word.

I'll start with the right. On the right, "socialism" (or these days, "fascism" as well) is what happens whenever government gets involved in the economy in almost any way, shape or form. But how it is applied is usually very selective - I doubt the average "tea party" protester would call Benjamin Franklin a "socialist" for establishing the post office. Meanwhile, "capitalism" is merely the freedom to own private property, start a business and participate in the free market.

Next, on the left, "capitalism" is the root of all evil, and is what happens whenever a person makes money for themselves somehow. It is by definition exploitative and must be either violently overthrown or withered away through government intervention. How it is applied is again very selective; if a business is "green" or "socially conscious", enough leftists may look the other way for it to be acceptable among their numbers. Meanwhile "socialism" is what happens when ordinary people, instead of fat cats and tycoons, have control of the economic system.

I realize of course that I simplify positions here a great deal, and that not everyone identifying themselves as left or right would necessarily agree - my apologies, but not every possible permutation can be explored in a small blog post. There are people on both sides who understand that political realities, not to mention political history and political theory, are far more complex than the rhetoric that emerges from popular movements, magazines, news shows, etc.

The point here is that the two sides have more in common than they realize. How the right typically understands capitalism, and how the left typically understands socialism, consist of two ideas that are not that radically opposed to one another. So it may be time to take a cue from my favorite political theorist, Aristotle. In the Politics, Aristotle presents us with the "true" forms and the false forms of each system of government. For Aristotle the possibilities are rule by a single man, rule by the few, or rule by the many.

Each of these types has a true form and a false form (which today, I suppose, we would substitute for a good form and a bad form): the true form of rule by a single man is monarchy, while the false is tyranny; the true form of rule by the few is aristocracy while the false is oligarchy; the true form of rule by the people is constitutional government, while the false is democracy. How Aristotle used these words and how we use them might vary to some degree; we might say democracy is the true form while anarchy or mob rule is the false form of rule by the many.

Might I suggest, in keeping with Aristotle's approach, that there are true forms and false forms of both capitalism and socialism? I think most of us already understand what they would be, but here is how I would set them forth: the true form of capitalism is "free enterprise", defined by the freedom to own private property, start one's own business, and engage in trade, while the false form is "plutocracy", defined by rigid economic stratification, the subordination of all social interests to the profit motive, and the disproportionate power of wealthy corporations. On the other hand, the true form of socialism is "economic democracy", whereby the people have varying yet substantial degrees of ownership and control of economic processes, while the false form is "command economy", whereby the state has the lion's share of ownership and control.

If we can at least temporarily agree to this understanding of terms, we might then take our next cues from a group of political theorists that looked to classical theorists such as Aristotle, among others, as they set out to apply their ideas to the real world: the American founding fathers. As students of their political thought may already know, the founders were interested in combining each of the true forms of government into a single system in order to get the best of each - monarchy, aristocracy, and what we would today call democracy each had a representative in the structure of the new American government. A system of checks and balances were to hold each element in its proper place, and prevent them from degenerating into their false forms.

Can the same be done with economic ideas? I believe it can, and I believe we find the answers in Catholic social thought, and particularly Distributist thought. Here the true forms of both capitalism and socialism are combined in a way originally envisioned by Aristotle himself, while the false forms are rejected and held in check. What I defined as "free enterprise" and "economic democracy" above are entirely compatible, provided only that society - be it through a national or, better yet, local government - have as its practical aim the gradual elimination of the unskilled or semi-skilled labor market by providing as many positive incentives as possible for the establishment of Employee Owned and Controlled Companies (EOCCs).

Why the labor market? Because it is here that human beings are ultimately reduced to the amount of profit they can provide an employer. Within Catholic social thought, labor always has primacy over capital - the human rights and dignity of the worker always take a great moral precedence over profit. When a worker is reduced to a cog in a profit-making machine, to be granted the necessities of life while it is convenient and yet denied them when it is not, it is a violation of human rights.


And yet the elimination of the market in unskilled labor would not deny anyone's right to private property, their own business, or trade in material goods. It simply means that a person who wishes to profit for himself by such means must now be a person in search of partners instead of a buyer in search of a "means of production" in human beings. This again must not be done in a single day in order for it to remain a goal towards which workers, investors, entrepreneurs and politicians alike can work towards. Between the typical business and the one envisioned, there are many transitory forms (profit-sharing plans, Employee Stock Ownership Plans, etc).

To those who might complain that this would result in less effective or efficient businesses, I would point to research that clearly shows that there is a positive relationship between ownership and productivity. When people are treated like people with dignity - even if not as equals in every respect - they do their jobs better, and everyone benefits. The reason for this should not be surprising to Christians; it is God who made it such that we should live in society with one another, and God who commands us to love our neighbor as ourself. God would not command that which was detrimental to ourselves. The moral law is not only good, but results in good.

To achieve these ends it is absolutely necessary that we change the way we think and speak. We must begin to agree upon the meaning of words and phrases so that petty disputes are finally put to rest. Leftists and rightists alike must embrace the true forms of the economic systems they criticize, and more loudly condemn the false forms. They must seek points of contact and agreement, and I think this can be done by finding ways to marry free enterprise to economic democracy while holding plutocracy and command economy at bay. In spite of our differences on other moral issues, particularly sexual ethics, modern technology offers us ways in which both freedom and equality, the rallying points of right and left respectively, can be effectively and efficiently combined.

The Distributist Review: Beyond Capitalism and Socialism