Capitalism and Its Contradictions

Karl Marx famously maintained that capitalism contained the seeds of its own destruction, that the exploitation of labor would ultimately cause the emerging, alienated working classes to rise up and crush bourgeois society, replacing capitalist systems with socialist “dictatorships of the proletariat.” Although many of Marx's criticisms of capitalism were alarmingly accurate, he was notoriously wrong in his prediction of its demise. Indeed, free market democracies have proven to be the most resilient of all forms of sociopolitical organization.

In terms of social peace and economic productivity, the determinative question turns out to be not so much whether labor is or is not “exploited”⁶ or how big the gap may be between rich and poor.⁷ Instead, what seems to matter is whether or not citizens—including the poor especially—have a real opportunity to improve their condition on an absolute basis. If so, the relative size and stability of the resulting middle classes (the hated bourgeoisie of Marxist theory) will increase rapidly. This is, of course, exactly what has happened in all advanced industrial and postindustrial free market democracies.

In America, as elsewhere among free market democracies, the native⁸ poor have come to represent an ever-smaller percentage of the population, as poor families have tended to move into the middle classes—or even to become rich—in one or two generations. This phenomenon has occurred because the vigor of free market economic activity has been so great that massive opportunities were made available to virtually anyone who wished to seize them. As a result, poor families have cared less about whether they were being exploited and more about seizing opportunities to improve their circumstances. Certainly, of course, the poor (along with African Americans, women, the handicapped, gays, etc.) have historically faced more obstacles than others along the road to economic success, and it is an important part of the job of America, and of America's rich, to demolish those obstacles. But the effort to pull down obstacles to economic success is powerfully assisted by the need of free market societies for the talents of the disenfranchised.

Marx may have been wrong in his prognosis for capitalism, but history suggests that internal contradictions, albeit of a very different sort, do seem to threaten capitalist societies. If those societies fail they will likely do so not because of the exploitation of labor, but because absolute living standards rather quickly reach such an elevated point that the very character of the societies begins to change, causing them to become almost unrecognizably different from the societies that created the wealth in the first place. That is to say, citizens in wealthy capitalist societies gradually become so affluent, so comfortable, that they become more concerned about preserving their living standards than about improving them. When this happens, the vigor of the society quickly diminishes: Its citizens demand shorter work weeks, higher wages without corresponding productivity increases, longer vacations, easier jobs, more personal autonomy (“Who the hell is my boss to tell me what to do?”), and so on.

Much of this is, to be sure, simple human nature. Decades ago, psychologist Abraham Maslow postulated the existence of a “hierarchy of needs.”⁹ According to Maslow, human beings are motivated mainly by unsatisfied needs. Moreover, certain lower needs (or, as Maslow called them, deficiency needs) must to be satisfied before the higher needs can be fulfilled, or even aspired to. Subsidiary needs are, in Maslow's terms, prepotent:, powerful and requiring that they be fulfilled before the next need in the hierarchy can be addressed.

Physiological needs are basic human needs such as air, water, food, sleep, sex, and so on. If these needs remain long unsatisfied, we experience pain. Once they are satisfied, however, we can begin to think about safety needs, which Maslow associates with maintaining stability and consistency in a world that otherwise appears to us as chaotic and uncontrollable. Only then can we aspire toward love, esteem, and, ultimately, self-actualization, the highest level in Maslow's hierarchy of needs. Self-actualization has to do with the desire to become all that we are capable of becoming, to maximize our potential, whatever it may be. We may seek oneness with our God, personal peace, knowledge of various kinds, and so on.

Whether or not Maslow's hierarchy holds water in every detail, it seems intuitively correct, and in any event accurately describes the behavior of people in societies that offer them the opportunity to satisfy increasingly complex needs. Many forms of social organization can satisfy most of the deficiency needs. Indeed, some societies that seem in many ways appalling to us came to exist precisely because they at least supplied these basic deficiency needs of their citizens better than whatever (often chaos) preceded them.

But love needs require a sense of belonging, the opportunity to associate with and communicate openly with other human beings. And they require a society open enough to permit such associations—in other words, a largely democratic society. Esteem needs require that we master increasingly complex tasks for which we are naturally suited (self-esteem) and that we be viewed positively by our peers for our accomplishments (esteem by others). These are needs best addressed by a society with an open, competitive economic system that provides an enormous range of employment, volunteer, and other options, ensuring that virtually everyone can find something to be competent at—in other words, a free market economic system.

But here is a critical point: Self-actualization—“the desire … to become everything that one is capable of becoming,” in Maslow's words—is fundamentally different from the other needs. Self-actualization does not occur naturally among individuals whose previous needs have been satisfied. Satisfaction of those needs may be a necessary condition for the achievement of self-actualization, but they are not a sufficient condition. Assuming that the society in which we live offers the possibility to do so, we progress naturally up the hierarchy from the deficiency needs through love and esteem; these seem to be true needs to which human beings naturally aspire. But to make the leap to full self-actualization requires intense individual effort and, therefore, intense desire. Free market democracies are forms of social organization that can provide the platform that makes the leap possible, but it will not occur automatically. Indeed, once the incentive to become rich is eliminated, the tendency to become complacent dominates.

Thus, to a very considerable extent, the comfort that advanced postindustrial civilizations offer us seems positively to interfere with the further development of our potential. With all our other needs satisfied we tend not to gather our courage for yet one more struggle—the extraordinary leap to self-actualization. Instead, the lure of becoming everything we are capable of being is lost amid the creature comforts of our lives. Worse, our desire for continued progress is overwhelmed by the fear of losing what we have already attained. Hence the odd result that societies that appear to be ideal platforms for the full expression of humanness tend at some point in their development to impede further achievement—by producing citizens who are no longer willing to strive for it, to take the risks upon which all significant achievement depends. Instead, these societies produce citizens who spend most of their time building walls around what they have. The fear of losing ground dominates all else.

Capitalist societies, then, begin as robust, competitive communities, rapidly moving their citizens up the socioeconomic ladder (and, if you will, the Maslovian hierarchy). But all too often they decay into what appears to be middle-class comfort that is actually a surface calm underlain by apprehension. As we decline to risk our current, admittedly high, level of comfort, we forfeit any possibility of achieving more. We build walls around our prosperity, and those walls ultimately stifle us.

Because they are so wealthy, it is not immediately apparent how weak many formerly robust capitalist societies have become. But as productivity declines, fewer and fewer of those societies' products can compete internationally. Formerly free market governments must now impose high trade barriers or other forms of subsidy in order to continue to produce goods and services that were formerly competitive. Inefficient industries are thereby walled off from more efficient competitors elsewhere, excused from the competition that would make them more efficient.

And if we decline to place our jobs or our social status at risk, how must we feel about placing our very lives at risk, as, for example, in the defense of our country? Societies that become risk intolerant in the economic sphere tend to become risk intolerant in many ways. The emphasis on keeping what we have, rather than incurring risk to achieve more, softens the society, allowing it to become cautious, effete. To paraphrase Louise Bogan, these formerly vigorous capitalist societies now “have no wilderness in them, they are provident instead.”¹⁰