This book is included in the US Government: Educational, Informational & Motivational section.
The Capitalist Manifesto
By Louis O. Kelso
and
Mortimer J. Adler
~ : ~
As Published By: RANDOM HOUSE.
New York; 1958
PREFACE
While signing my name to
THE CAPITALIST MANIFESTO as coauthor
with Louis Kelso, I wish to disclaim any credit for the original
and basic theory of capitalism on which this Manifesto is based.
That theory is entirely Mr. Kelso’s. It is the product of many years
of inquiry and thought on his part. The full statement of it will
soon be published in Capitalism, of which Mr. Kelso is sole author.
I would also like to explain how I came to appreciate the critical
importance of the theory of capitalism; and why I felt that its
revolutionary insights and program should be briefly summarized
in the form of a manifesto addressed to all Americans who are
concerned with the future of a democratic society, with the
achievement of the fullest freedom and justice for all men, and,
above all, with a twentieth-century reinterpretation of everyone’s
right to life, liberty, and the pursuit of happiness.
In the twenty years or more in which I have been developing a
theory of democracy as the only perfectly just form of government,
I slowly came to realize that political democracy cannot flourish
under all economic conditions. Democracy requires an economic
system which supports the political ideals of liberty and equality for
all. Men cannot exercise freedom in the political sphere when they
are deprived of it in the economic sphere.
John Adams and Alexander Hamilton observed that a man
who is dependent for his subsistence on the arbitrary will of another
man is not economically free and so should not be admitted
to citizenship because he cannot use the political liberty which belongs
to that status. If they had stated this point as a prediction, it
would have been confirmed by later historic facts. The progressive
political enfranchisement of the working classes has followed their
progressive economic emancipation from slavery and serfdom, or
from abject dependence on their employers.
As I first saw the problem, it came to this: What is the economic
counterpart of political democracy? What type of economic
organization is needed to support the institutions of a politically
free society? The answer suggests itself at once, at least verbally:
“economic democracy.” But we do not really have an answer
unless we can give concrete meaning to those words.
We begin to form some notion of the economic counterpart of
political democracy, or of the economic substructure needed to
support free political institutions, when we recognize that it must
involve two things: (1) economic liberty, i.e., the abolition of all economic
slavery, servitude, or dependence; and (2) economic equality,
i.e., the enjoyment by all men of the same economic status and,
therewith, of the same opportunities to live well.
But what do we mean by the abolition of all forms of economic
servitude or dependence? Certainly, that no man should
work as a slave. But that by itself would hardly seem to be enough.
In the whole of the pre-industrial past, economic freedom was
thought to depend on the possession of sufficient property to enable
a man to obtain subsistence for himself and his family without
recourse to grinding toil.
In the oligarchical republics or feudal aristocracies of the past,
the few who enjoyed the political freedom of citizenship or noble
rank were always men of relatively independent means. The principle
of universal suffrage in our democratic republic now confers
the political freedom of citizenship on all. If that is effective only
when it is accompanied by economic freedom, are we called on to
envisage a society in which all men will have the same kind of economic
independence and security that only the few enjoyed in the
past?
The question of what is meant by economic equality is even more
difficult. We can be sure of only one thing. Economic equality
cannot mean equality of possessions any more than political equality
means equality of functions. Yet if we proceed by analogy with the
ideal of political democracy, which we conceive as a politically
classless society with a rotating aristocracy of leaders, we can at
least surmise that an economic democracy must somehow be conceived
as an economically classless society, and that, too, with a
rotating aristocracy of managers.
Until very recently, as I thought about these questions, I had
grave doubts that what has come to be called “capitalism” could
establish the kind of economic democracy which political democracy
required as its counterpart. I now understand the reasons for
my doubts. They were based on an understanding of “capitalism”
which was colored by the sound criticisms that had been leveled
against its injustices and inequities, not only by Marx and Engels,
and by socialists generally, but also by Popes Leo XIII and Pius XI,
and by social philosophers or reformers as diverse as Alexis de
Tocqueville, Horace Mann, Henry George, Theodore Roosevelt,
Woodrow Wilson, Hilaire Belloc, Jacques Maritain, Amintore Fanfani,
and Karl Polanyi. Of these, only Marx, Engels and their followers
proposed communism as the remedy.
What all these men were criticizing was nineteenth-century capitalism
as it existed in England and the United States, the two countries in
the world most advanced industrially. That nineteenth-century
capitalism was unjust, no one can question. But there is a question
as to whether nineteenth-century capitalism conforms to the idea
or ideal of capitalism; and with this goes the question whether the
historic injustices committed by the capitalism of the nineteenth
century are historic accidents or are intrinsic to the very idea of
capitalism itself.
Ten years ago, at a time when I did not understand the idea or
ideal of capitalism as something quite different from what existed
under that name in the nineteenth century, I naturally tended to
suppose that the economic injustices perpetrated in the nineteenth
century were intrinsic to capitalism. If that were so, then they could
not be remedied without giving up capitalism itself, and finding
some alternative to it—socialism, a co-operative system, a corporative
order, or something else.
In that state of mind, I was also bothered by the fact that the
very expression I had been forced to use in order to give some
meaning to economic democracy—the expression “classless society”—
was the slogan and banner of the communists. The Communist
Manifesto called for the overthrow of the class-structured bourgeois
society, divided into owners and workers, oppressors and
oppressed, and set before men’s minds the ideal of a classless society,
achieved through the dictatorship of the proletariat, in which
the state itself would be the sole owner of the means of production,
and all men would be “equally liable to labor.”
I could not help agreeing with those who pointed out the fatal
flaws in the communists’ revolutionary program. If men are dependent
for their subsistence upon the arbitrary will of the state, or
on that of its bureaucrats who manage the state-owned means of
production, they are as unfree economically as when they are dependent
upon the arbitrary will of private owners. Furthermore,
“the equal liability of all to labor,” which is a basic principle in the
communist program, impedes rather than promotes economic
freedom. The communist classless society is, therefore, hardly the
economic democracy we are looking for as the counterpart of political
democracy.
But while proponents of capitalism have argued against communism
as the foe of political liberty and quality, they have not
offered a positive program for establishing an economically classless
society. They have not countered the call for a communist
revolution by proposing a capitalist revolution which, by carrying
out the true principles of capitalism, would produce the economic
democracy we need as the basis for political democracy.
One other fact obscured my understanding of the problem, or
at least led me to consider a wrong solution of it. That was the extraordinary
change which had taken place in the American economy
during my lifetime. Beginning with Theodore Roosevelt and
Woodrow Wilson, and running through all the administrations of
Franklin Roosevelt and his successors, Republican as well as Democratic,
capitalism in twentieth-century America has undergone a
remarkable transformation which puzzles many European observers
who cannot understand precisely how America has managed to
remain a capitalist country, and yet has succeeded in avoiding the
Marxist prediction that capitalism would be destroyed by its own
imbalance between production and consumption. Or, to put it another
way, they wonder whether capitalism in twentieth-century
American is still capitalism in essence. They suspect that it is really one
of the “many paths to socialism.”
This suspicion is not unfamiliar to Americans. Many of them,
especially the most outspoken opponents of the New Deal, have
voiced it themselves. They have deplored, again and again, the
“creeping socialism” which has been eroding, if not overthrowing,
the institutions and principles of capitalism. If the charge of creeping
socialism is correct, then it can be argued that America has
produced an economy which supports political democracy only by
gradually, and perhaps self-deceptively, substituting socialist for
capitalist principles. What is true of America is also true of England,
with a little less self-deception in the latter case.
To understand the charge of “creeping socialism,” one need
only make a check-list out of the ten-point program which Marx
and Engels proposed in 1848 and which they described as a way of
making progressive “inroads on the rights of property, and on the
conditions of bourgeois production.” The measures they proposed
for “socializing” the economy by wresting “all capital from the
bourgeoisie” and centralizing “all instruments of production in the
hands of the State,” are as follows:
1. Abolition of property in land and application of all rents of land to public purposes.
2. A heavy progressive or graduated income tax.
3. Abolition of all right of inheritance.
4. Confiscation of the property of all emigrants and rebels.
5. Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.
6. Centralization of the means of communication and transport in the hands of the State.
7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.
8. Equal liability of all to labor. Establishment of industrial armies, especially for agriculture.
9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equable distribution of population over the country.
10. Free education for all children in public schools. Abolition of children’s factory labor in its present form. Combination of education with industrial production, etc., etc.
In his recent book, Contemporary Capitalism, John Strachey, the
leading English Marxist, refers to the industrial economy of the
mid-nineteenth century as “early stage capitalism.” That was capitalism
prior to political democracy, prior to the technological advances
which accelerated capitalization, and prior to the enactment,
in whole or in part, of the revolutionary measures proposed by
Marx and Engels.
Strachey refers to contemporary capitalism—the capitalism of England
and the United States in the middle of the twentieth century—as
“latest stage capitalism.” That is not only a technologically advanced
economy with ever increasing accumulations of capital. It is not only
a capitalistic system that is being operated by a democratic society. It
is also, in Strachey’s judgment, a partly socialized capitalism which
has been brought into being by the legislative enactment of much of
the Marxist program and without the violent revolution Marx
thought would be necessary. But in his view it is a revolution nonetheless—
a revolution still in process, the ultimate goal of which, according
to his projection, is “last stage capitalism,” or the completely
socialized industrial economy in which the State is the only capitalist.
Strachey’s account of what has happened in the last hundred
years is not far from the truth. The radical differences he points
out between “early stage” and “latest stage” capitalism are unquestionable.
His description of the present economy of England and
the United States as partly socialized capitalism is accurate. But his
notion that the process of socialization must be completed to remove
the inherent conflicts between capitalism and democracy is
as wrong as it can be.
The socialization of the economy can be completed, according
to Strachey, only when the abolition of private property in the
means of production replaces the present highly attenuated private
ownership of capital. But when that happens, all capital property
must be vested in the State; and then, as Milovan Djilas has
pointed out, you have a new class of “owners”? the bureaucrats
who form the managerial class in a totalitarian state. Djilas’s book,
The New Class, offers irrefutable evidence that a completely socialized
economy, far from creating a free and classless society, creates
one in which there is sharp class division between the rulers who
are, in effect, the owners and the workers who are economically as
well as politically enslaved. In the light of it, we can see clearly that
it is socialism, not capitalism, which is essentially incompatible with
democracy.
For many years I was prone to some of the errors and fallacies
which blind socialists to the truth about capitalism and democracy.
They are shared by many Americans, including our leading economists,
who, while they would not go as far as Strachey, nevertheless
think that the progressive socialization of the economy during the
last fifty years has been an advance toward the ideal of the democratic
society. It was precisely these errors in my own thinking
which made me doubt that capitalism as such (i.e., not creeping
socialism disguised as capitalism) could create the economic democracy—
the economically free and classless society—which
would provide the very soil and atmosphere in which political democracy
can prosper.
These errors remained with me until I became acquainted with
the thought of Louis Kelso. According to Mr. Kelso’s theory, capitalism
perfected in the line of its own principles, and without any
admixture of socialism, can create the economically free and classless
society which will support political democracy and which,
above all, will help us to preserve the institutions of a free society.
In what we have become accustomed to call “the world-wide
struggle for men’s minds,” this conception of capitalism offers the
only real alternative to communism, for our partly socialized
capitalism is an unstable mixture of conflicting principles, a halfway
house from which we must go forward in one direction or the
other.
No one with any sense of justice or devotion to democracy
would wish to go back to capitalism in its original or primitive
form. No one with any sense of the scientific-industrial revolution
that is just beginning, and which will transform our society in the
next hundred years, would regard our present partly capitalistic and
partly socialistic arrangements as constituting a system that is capable
of maintaining itself statically in spite of its obviously unstable
equilibrium between two opposing forces.
One is the tendency toward socialization and the attenuation of
property rights in capital. The other is the effort to retain the vestiges
of private property in capital. In one direction lies the goal of
the socialist or communist revolution. In the other, by means of
giving full strength to the rights of private property in capital while
at the same time harmonizing those rights with the applicable principles
of economic justice, lies the goal of the capitalist revolution.
The latter is clearly the better of the two revolutions, even if
both, by virtue of technological advances administered for the welfare
of all men, were able to achieve the same high standard of living
for all. A high standard of living is at its best a plentiful subsistence,
consisting of the comforts and conveniences of life. It does
not by itself ensure freedom or the good life. It is compatible with
slavery to a totalitarian State, and with subservience to the wrong
ends.
There is all the difference in the world between a good living
and living well. The goal of the capitalist revolution, as Mr. Kelso
sees it, is not economic welfare as an end in itself, but rather the
good human life for all. In achieving this end, the capitalist revolution
will not sacrifice freedom for welfare. It will secure liberty as
well as equality for all men. It will subordinate economic to political
activity—the management of things to the government of men.
Mr. Kelso gave me the opportunity to read the manuscript of a
book about capitalism which he first drafted some ten years ago. In
the last two years, I have had many conversations with him while
he has been in the process of rewriting that book, which is now
completed. In the course of these conversations, we have both
come to see the broad philosophical and historical significance of
the fundamental tenets of a sound theory of capitalism. It was with
these discoveries in mind that I persuaded Louis Kelso to engage
with me in the writing of THE CAPITALIST MANIFESTO.
The first part of this Manifesto explains the philosophical and historical
ideas that are involved in a sound understanding of the principles of
capitalism and of the revolution to which those principles lead.
The second part sets forth a practical program which we believe
is a feasible way of accomplishing the capitalist revolution in
the United States within the next fifty years. By making our society
a pilot model of democratic capitalism we can also make the
United States the world’s leader in the march toward freedom and
justice for men everywhere.
Mortimer J. Adler
San Francisco, February, 1958
Part 1. THE IDEA OF THE CAPITALIST REVOLUTION
CHAPTER 1. WHY A CAPITALIST MANIFESTO?
THEN AND NOW
THE PREVAILING SENSE OF WELL-BEING
OUR MACHINE-PRODUCED HAPPINESS
OUR FEELING ABOUT SOCIALISM
THE AMBUSH
AN APPEAL TO REASON
CHAPTER II. ECONOMIC FREEDOM: PROPERTY AND LEISURE
THE THREE ELEMENTS OF ECONOMIC FREEDOM
LABOR, LEISURE AND FREEDOM
THE FORM AND CHARACTER OF HUMAN WORK
THE IMAGE OF AN ECONOMICALLY FREE SOCIETY
CHAPTER III. SOME PROBLEMS TO BE SOLVED
THE PROBLEM OF ORGANIZING PRODUCTION
THE PROBLEM OF DIFFUSING OWNERSHIP
THE PROBLEM OF LIBERTY AND EQUALITY
CHAPTER IV. ELEMENTARY ECONOMICS
FACTORS IN THE PRODUCTION OF WEALTH
THE ROLE OF MAN AS A FACTOR IN THE PRODUCTION OF WEALTH
A TECHNICAL NOTE ON THE PRODUCTIVITY OF LABOR
THE FORMS OF PROPERTY
PRIMARY AND SECONDARY DISTRIBUTION
CHAPTER V. ECONOMIC JUSTICE AND ECONOMIC RIGHTS
PROPERTY AND JUSTICE
FREE COMPETITION AS THE DETERMINANT OF VALUE
THE PROBLEM OF JUSTICE AND WELFARE IN AN INDUSTRIAL ECONOMY
THE THREE RELEVANT PRINCIPLES OF JUSTICE
1. THE PRINCIPLE OF DISTRIBUTION
2. THE PRINCIPLE OF PARTICIPATION
3. THE PRINCIPLE OF LIMITATION
THE ORGANIZATION OF A JUST ECONOMY
CHAPTER VI. ECONOMIC HISTORY: THE CLASSIFICATION OF ECONOMIES
FIRST STAGE: FROM THE BEGINNING TO THE NINETEENTH CENTURY
SECOND STAGE: FROM 1800 TO THE PRESENT DAY
THE CLASSIFICATION OF ECONOMIES
THE FORMS OF CAPITALISM
CHAPTER VII. THE ECONOMIC FUTURE
THE FOUR CAPITALISMS
THE THREE ALTERNATIVES
THE TWO SOCIALIST REVOLUTIONS
MIXED CAPITALISM’S INSOLUBLE PROBLEM: INFLATION
OUR ONLY CHOICE –– CAPITALISM
CHAPTER VIII. THE THEORY OF CAPITALISM
THE ECONOMICS OF CAPITALISM
THE POLITICS OF CAPITALISM
THE ETHICS OF CAPITALISM
Part 2. THE PROGRAM OF THE CAPITALIST REVOLUTION.
CHAPTER IX. SUMMARY OF THE PRACTICAL PROGRAM
THE NATURE OF THE PROPOSALS
GENERAL POLICIES
SPECIFIC RECOMMENDATIONS
CHAPTER X. THE POINT OF DEPARTURE FOR THE REFORMS PROPOSED
THE SITUATION FROM WHICH WE START
THE ROLE OF PRIMARY DISTRIBUTION IN A CAPITALISTIC ECONOMY
INDIVIDUAL SECURITY VS. SECURITY FOR ALL INDIVIDUALS
THE DEGREE OF CONCENTRATION IN THE OWNERSHIP OF CAPITAL
THE FORMS OF CONCENTRATED OWNERSHIP OF CAPITAL
HOW MIXED CAPITALISM DEALS WITH THE EFFECTS OF CONCENTRATED OWNERSHIP
CHAPTER XI. MEASURES AIMED AT BROADENING THE OWNERSHIP OF EXISTING ENTERPRISES
EQUITY-SHARING PLANS
MODIFICATION OF DEATH TAX LAWS AND GIFT TAX LAWS
MODIFICATION OF PERSONAL INCOME TAX LAWS
TERMINATING DELIBERATE GOVERNMENTAL PROMOTION OF CONCENTRATION OF OWNERSHIP AND OF MARKET MONOPOLY
CHAPTER XII. THE MODERN CORPORATION AND THE CAPITALIST REVOLUTION
CORPORATIONS IN THE PRESENT MIXED ECONOMY
CORPORATIONS IN THE TRANSITION TO CAPITALISM
RESTORING EFFECTIVE OWNERSHIP OF CAPITAL TO THE STOCKHOLDERS OF BUSINESS CORPORATIONS
FINANCIAL EFFICIENCY IN BUSINESS CORPORATIONS VS. TECHNICAL EFFICIENCY
OTHER CHANGES AFFECTING BUSINESS CORPORATIONS
CHAPTER XIII. MEASURES AIMED AT DETERRING AN EXCESSIVE OWNERSHIP OF CAPITAL BY INDIVIDUAL HOUSEHOLDS
INVESTMENT PREFERENCE FOR SMALL OR NEW CAPITALISTS
INCOME TAX DETERRENTS TO PERSONAL CONCENTRATION
CHAPTER XIV. MEASURES AIMED AT DIRECTLY STIMULATING AN INCREASE IN THE NUMBER OF NEW CAPITALISTS
THE PRIMARY FUNCTION OF CREDIT IN A CAPITALISTIC SOCIETY
HISTORICAL PRECEDENTS
CREDIT AND THE DIFFUSION OF CAPITAL OWNERSHIP
FINANCED CAPITALISTS
THE NEED FOR NEW TYPES OF INSURANCE
THE NEW CAPITALISTS
CHAPTER XV. CONCLUDING SUMMARY
Appendix: THE CONCEALMENT OF THE DECLINING PRODUCTIVITY OF LABOR IN OUR PRESENT ECONOMY
End of Preview.
RETURN to
Main Titles Index or
US Government: Educational, Informational & Motivational
Please Read The Website Disclaimer!
Copyright 1986-2012, The Survival & Self-Reliance Studies Institute (SSRsi), All
Rights Reserved
Site conceptualized, designed, created & maintained by MEG Raven
Snail Mail: SSRsi, PO Box 2572 Dillon, CO. 80435-2572