The Capitalist Manifesto by Louis O. Kelso and Mortimer J. Adler: turning the 1% into the 100%

The Capitalist ManifestoThe Capitalist Manifesto by Louis O. Kelso

My rating: 5 of 5 stars

This mature, rational examination of what kind of economy a modern democracy needs to have is even more relevant today than it was in 1958.

I bought this book in 2010, a well-worn hardback that had belonged formerly to the University of Keele (“withdrawn from stock” is stamped faintly over the bookplate). I guess not enough people in Keele were borrowing it. But they should have been: for this is a work of cogent economic and philosophical analysis of the growing predicament of the United States, and, by extension, all other developed industrial economies. That predicament, as the authors see it, is that the form of capitalism that has evolved there is fundamentally inconsistent with a free and democratic society, and if things are simply allowed to progress along the same path, this inconsistency must eventually produce a society that is entirely unfree and undemocratic. That is, it will produce a totalitarian socialist state—a state in which all political and economic power is concentrated in the hands of the ruling elite, as was the case in the USSR at the time when these men were writing, and as is the case today in countries such as Cuba and North Korea.

The United States becoming like the USSR—or North Korea? Alarmist hogwash! Adolescent hyperbole! That’s what I would think if I were simply presented with the propositions I’ve stated above. But these authors, Louis O. Kelso and Mortimer J. Adler, are the opposite of writers who might engage in such rhetorical tactics; these are serious, deep thinkers, steeped in the ideas of the Great Books. Despite what might appear to be the impishness of their title, which is clearly riffing on that of the Communist Manifesto of Marx and Engels, Kelso and Adler are no firebrands; rather, they are philosophers, seeking to move their audience not with passion and rhetorical figures (“you have nothing to lose but your chains!”), but with the depth of their learning and the sure-footedness of their reasoning. Although they make no reference to Ludwig von Mises, whose Human Action: A Treatise on Economics appeared 9 years earlier, I’m sure they would concur with Mises that economic arguments can only be settled, finally, by ratiocination. Economic questions will be settled by the Mr. Spocks of the world, not by the Dr. McCoys.

And here we have not just an economic treatise, but a manifesto, written by a pair of Spocks. The book contains not just an analysis of the situation, but practical suggestions as to how the country might change course and avert economic and political disaster. For although they are not alarmists, they are alarmed, and believe that action is urgently needed.

The basic problem, as they see it, is that the modern version of capitalism, the so-called mixed economy that has arisen in response to some of the injustices of the early, laissez-faire capitalism of the Industrial Revolution, has itself become an engine of injustice. But the injustice is no longer against—or no longer directly against—the industrial workers whose plight so aroused the indignation of Marx; now the injustice is against the capitalist. And the injustice is specifically that the rewards of the industrial system, the wealth that it produces, are being distributed, increasingly, to the wrong people—that is, to those who have not earned them. For the authors observe that the contribution of labor to the production of wealth has steadily declined since the Industrial Revolution, while the contribution of capital has steadily increased, such that, by the time of their writing, the respective contributions were 10% and 90%, while the respective shares of the proceeds were more like 70% and 30%. And the authors assert that anyone who is generating 90% of the result, but receiving only 30% of the benefit, is enduring an injustice. It’s hard to argue with that. Certainly, any of us who was in that position personally would be quick to point it out and bring things into balance.

Does this mean that Bill Gates has not got his full due? Should we care? According to the authors we should care, if we care about justice. And we do care about justice, as soon as we feel that we or people we care about are suffering from its lack. And as soon as justice becomes selective, it ceases to be justice.

The problem with the mixed economy, according to the authors, is that it has abandoned justice in favor of a different value: charity. The enthronement of this value is announced most vividly in the Communist Manifesto: “from each according to his ability, to each according to his need.” People are to receive a share of the wealth not on the basis of what they have contributed, on the basis of their need. And this is the guiding principle of the welfare state, the mixed economy.

But it’s not just the recipients of actual state welfare who are wards of the wealth-redistributing state; all those who earn their living through employment are similar wards, in that they are beneficiaries of ongoing government efforts to create “full employment”: suppressed interest rates to juice business, deficit spending, make-work projects, steeply progressive income-tax rates, and the ever-swelling payroll of government itself, to name only a few. All of these measures are conceived of as necessary in order not just to ensure that citizens have a living, but to enable the mass consumption that is thought key to an industrial economy. “Take from the rich and give to the poor so that the poor can spend money and keep each other employed.”

This course, while it may have seemed expedient for a time, is not sustainable, according to the authors. For not only is this system unjust in itself, it is sowing the seeds of its own destruction. For by diverting an ever greater share of wealth into workers’ hands, it is crimping the formation and deployment of capital—that which actually creates the wealth. And it has this further unintended consequence: it concentrates capital in the hands of an elite—the now notorious “one percent.”

So what is the answer? The answer is the Capitalist Revolution: the transformation of the United States (or any industrial economy) from a socialistic mixed economy to a truly Capitalist (and the authors capitalize Capitalism when they refer to its true, final form) economy. And in a truly Capitalist economy, everyone is a capitalist. The answer is not to take more and more from the capitalists and share it out among the workers; the answer is for workers themselves to become owners of the means of production—to become shareholders, to become capitalists. The aim is for every household to have a viable income from capital alone.

And this is possible precisely because capital is so productive. The advance of technology has made human labor less and less a factor in the production of wealth; and the nature of technology is such that this process can continue without limit. The authors, writing in 1958, were looking at nuclear power as a technology that would provide enormous gains in productive power, and therefore in wealth. While that hasn’t proceeded in the straight line they may have imagined, there have been tremendous advances in computing and robotics that have made possible huge advances in industrial productivity.

This is significant, for our word robot comes from the Czech word for “slave,” and the authors of this book point back to the liberal societies of the ancient world, in which men of leisure could engage in liberal pursuits because the toil of subsistence was performed by slaves. But while slavery is unjust, the use of robots is not; so while the liberal life of leisure that was enjoyed by Aristotle and his contemporaries was sustainable only because of the injustice of slavery, a modern life of such leisure can be sustained by the “slaves” of today—robots—with no such injustice. Because of the wealth created by technology, a truly free and democratic life is possible for us today.

Possible, but not actual—not yet. Its possibility lies on the far side of the Capitalist Revolution. And this was the specific connection that brought Mortimer J. Adler to join with Louis O. Kelso in authoring this book. For while Kelso was the expert on capitalism (he would later release a large book on it), Adler had arrived in his own political thinking at the conclusion that, in his own words:

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.

And, he became convinced, freedom in the economic sphere cannot be attained as long as one must toil for one’s living. This was Aristotle’s view, and the reason that he denied that working men and tradesmen, even if free, could be citizens: their time was eaten up with subsistence labor, and they were beholden to their employers or their customers, and thus did not enjoy the freedom of action and of conscience of a man of property.

The idea of America as a nation of free, propertied citizens was the vision of Thomas Jefferson and other Founding Fathers of the United States. They assumed that this meant a nation of freehold farmers, and efforts were made over the years, such as the Homestead Act of 1862, to realize this vision. According to Kelso and Adler, this vision can still be realized, but it will not take the form of a nation of farmers; rather, it will be a nation of stockholders, who, living on a stream of income from the wealth produced by machines, can realize their human potential by engaging in the liberal work that is the privilege, the duty, and the joy of the man of leisure.

I left off reading this book sometime in 2011. What brought me back to it recently was a rash of journal articles about the tremendous recent advances in machine or artificial intelligence—AI. In just a few years, computers and machines will be able to perform the majority of human labor, at a higher level of quality and quantity than what humans can achieve. Thoughtful people are wondering how we can prepare for such a society. What can we do if the majority of us are displaced from our jobs?

Kelso and Adler foresaw this day, and the answer is in their book. Its proposals will not be easy to implement, and many of their suggestions are tentative, intended only to get the ball of discussion rolling. And, large as the obstacles are to the practical implementation of the Capitalist Revolution, they are as nothing compared with the deeper problem of educating people to be full citizens. We live in a culture that either celebrates toil for its own sake (the Protestant work ethic) or, on the other hand, imagines freedom from it as an endless playtime, filled with shopping, vacations, games, and entertainment.

But it was not for any of these things that we were born. Human happiness, according to these authors, is attainable only by developing and fulfilling our specifically human characteristics, such as our capacity for thought, language, spirituality, and creativity. When we are doing these things we are not toiling for our subsistence, but performing the work of civilization. Such work is both harder and more rewarding that toil. Not monetarily rewarding—that is not its aim. The work of civilization is intrinsically rewarding; as human beings we are rewarded in the mere doing of it.

In the ancient world this was made possible by slaves; in the modern world it is made possible by technology. But even with the enabling technology, it can’t happen unless similarly enabling political, economic, and educational factors are in place. The United States and other advanced industrial economies have at least the makings of a genuinely democratic society, which is the political requirement; this book sketches a path to the creation of the economic requirement. The educational requirement is a separate and possibly even more radical topic of discussion.

But according to these authors, these are discussions that we need to have. The questions were already urgent in 1958; now, after 57 years of pushing ahead with the mixed economy, we have advanced even further in the direction of a society of impoverished wage-slaves and wards of the state. For, in the words of Kelso and Adler:

Unless the ultimate resolution of the class war is found in Capitalism through justice for all and with freedom for all, it will be found in socialism and the totalitarian state—that caricature of the classless society in which all men are equally enslaved, for none has the political freedom of a citizen or the economic freedom of a capitalist.

Lacking the emotion, sarcasm, and calls to armed revolt of the Communist Manifesto, The Capitalist Manifesto will not set hearts on fire. It makes its appeals to that most human part of us: our reason. And it is not advocating violence, but discussion—the means to change chosen by free, reasonable people. Whether we are collectively up to such a challenge is an open question, but as talk about the wholesale displacement of human labor by robot labor in our society gains urgency, I humbly suggest that this book be added to the list of core texts to enlighten the debate.

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