The Immoral Attack on Capitalism

By Kevin D. Williamson

Tuesday, November 19, 2019

This is a time of great forgetting, and one of the things that has been forgotten is why we have a federal government and what it is there to do.

From Senator Marco Rubio and his “common-good capitalism” to Senator Elizabeth Warren and her “accountable capitalism,” politicians right and left who want politicians to have more power over private economic decisions assume a dilemma in which something called “capitalism” must be balanced against or made subordinate to something called the “common good.” This is the great forgetful stupidity of our time.

Capitalism is not a rival to the common good. Capitalism, meaning security in one’s own property and in the right to work and to trade, is the common good that governments exist to secure.

The U.S. government exists to see to the liberty of the American people. That is it. That is its only reason for being. It is an instrument and a convenience, the purpose of which is to ensure that Americans are able to enjoy their liberty and property — liberty and property being overlapping concepts.

What is contemplated by Senator Rubio and Senator Warren — along with a few batty adherents of the primitive nonidea known in Catholic circles as “integralism” and everywhere else more forthrightly as “totalitarianism” — is to invert the purpose of the U.S. government. Protecting Americans against those who would use force to curtail their liberty and take control of their property for their own ends is the duty of government; Rubio, Warren, et al. would have the government become the party that curtails Americans’ liberty and takes control of their property for its own ends. Which is to say, in the name of the “common good,” they would organize an assault on the actual common good the U.S. government was in fact constituted to protect. This account isn’t fringe libertarianism — it’s right there in the founding documents.

Being the nightwatchman is a difficult and generally thankless job, one that tends to receive attention only for its failures. But that is the job Senator Rubio and Senator Warren asked for and campaigned for. But there is a lot more political juice in being the bandit, taking control of other people’s property for your own purposes. And let’s have no more high-minded talk about the national interest from Senator Rubio, whose idea of the national interest is broad enough to encompass shilling for billionaire sugar barons, or from Senator Warren, who has never met a tax increase on rich people she didn’t like except for the one on medical-device manufacturers, who are (surprise!) clustered around Boston.

We’re supposed to give up our property rights so that these two and their ilk can use corporate welfare to fortify their own political interests? Hard pass. And considering how obvious it is that political incentives control this kind of decision-making and control it utterly, the notion that the internal management of any given firm presents us with questions of unconflicted and unitary “national interests” that can be discerned and evaluated by a committee of lawyers in Washington and acted upon honestly is absurd. It is indefensibly stupid.

The sentimental rhetoric of our time obscures facts that used to be obvious. For example: Corporations do not have shareholders — corporations are shareholders, and those shareholders have employees. Shareholders are the people who actually own a company, and everybody from the CEO on down works for them. The “stakeholder” thesis put forward by Rubio and Warren would strip shareholders of control of their own property and use that property in the service of interests of other parties, who are not its rightful owners. Control of property is effectively ownership of that property, which is why you hear so often in Mafia cases about a certain gangster who “owned or controlled” this or that business, exercising effective ownership irrespective of whether his name is on the title. Milton Friedman, who apparently has gone out of fashion among conservatives currently fascinated by the vacuous shiny object called nationalism, called this notion “shareholder primacy,” but it is simply the exercise of property rights in a particular institutional context.

Shareholders are not “capital providers.” Shareholders are owners, and they own their shares the same way you own your house, or a farmer owns his farm. Stripping them of their property rights is robbery, just as it would be if the government took away your house or your car or your savings. (Senator Warren also proposes to seize Americans’ savings.) You can dress it up in whatever half-baked political notions or theoretical window-dressing you like, but it’s the same old might-makes-right politics: “We want to take control of what you have and use it for our own purposes, we have the numbers and the guns to make that happen.”

One of the things you will not hear from Senator Warren is that many CEOs are extremely sympathetic to reforms that would diminish the power of shareholders over their own property. That is because shareholders, especially well-organized ones, can be a giant pain in the ass for underperforming CEOs and for corporate management more generally, and shareholders’ metrics of performance tend to be things that can be quantified rather more robustly than the goo-goo do-goodism demanded by the Left or the “national greatness” horsepucky in vogue among the Right. There is nothing a CEO likes less than a bunch of angry shareholders saying, “Where’s my money?” Rubio and Warren would give them a pretext to partly ignore such uncomfortable questions.

Pope Francis and other moralistic critics of capitalism reliably overlook the fact that the great prosperity currently enjoyed by North Americans and Western Europeans — and, increasingly, by the rest of the world — is a product of the very model of capitalism they so intensely disdain. They spend a great deal of time and energy thinking about how to divvy up the goods without giving a second’s serious thought to how it is we came to have such a vast pile of goods. Like prosperity just happens by magic. Pope Francis can talk about feeding the poor — Monsanto actually does it while spending considerably less time inflicting ignorant homilies on the world. This prosperity came from somewhere. It wasn’t magic. It wasn’t the cleverness of Senator Rubio or Senator Warren. It wasn’t the big ideas of Pope Francis, to the modest extent that he has any economic ideas worth identifying as such.

(Increasingly, I take the same view of popes that I do of presidents: They have important work that needs doing, and I could stand to hear a good deal less from them until they have figured out how to run their own organizations; the deficiencies of the U.S. government are much discussed in these pages, but who thinks the Catholic Church is a well-administered organization? Every now and then you need an Abraham Lincoln or a Pope John Paul II, but mostly what’s needed is quiet, competent administration.)

The “stakeholder” ideology would simply redefine away the property rights of millions of Americans and others who could have bought cars and sneakers but chose instead to buy assets with the goal of making a return on those investments — putting money at risk while providing the financial basis for a great deal of the innovation and growth (and jobs and tax payments) associated with what we call, for lack of a better word, capitalism. Creating uncertainty regarding the basic property-rights regime imposes real costs on the economy, and those costs are, almost invariably, borne disproportionately by the poor and by less-skilled workers — i.e., by the very people all this nonsense is supposed to be helping.

“Life, liberty, and property” in a sense constitutes three different ways of saying the same thing. To undermine the intellectual and moral basis of the pattern of life that has given rise to the great prosperity we now enjoy — and “we” in this case very much encompasses the poor — is backward and destructive. To do it in a spirit of political careerism, and the need to put something seemingly new and exciting in front of a mob that has grown jaded and bored by its own prosperity, is morally indefensible.