The anticapitalist Left has devised a new intellectual attack on the market economy. The straw in the wind was a blistering article in The New York Times that appeared on May 8, 1994. The article, written by Peter Passell, was headlined “Life’s Hard? Blame the Market.” Like other attacks on market fundamentals, it complains about unequal income distribution. However, unlike others, this one objects to the high incomes of not only corporate capitalists but entertainers and sports stars, as well.
Formulating new attacks on the market has been the pastime of the Left for decades. The task has become ever more dreary since the irrationality and inhumanity of socialism were openly revealed in 1989. Those events deprived the Left of its pro-activist program, but an implacable disposition against capitalism and wealth creation remains.
This new assault asserts that private property and free markets offer disproportionately high awards to people and professions that society should not encourage. And they offer insufficient awards to people who are more essential to society. In particular, the market rewards entertainers, as opposed to artists; corporate executives, as opposed to teachers; and white-collar jobs, as opposed to blue-collar ones.
Mr. Passell notes that leftists are as worried as anyone about the ability to make ends meet, but they are reluctant to attach blame to the White House, as they have in the past. After all, a Democrat is in charge. “Who’s left to blame?” he asks. His startling reply: “The best answer is free markets — more specifically, the way markets divide the economic pie.”
“According to the Horatio Alger definition,” he continues, warming up to his thesis, “fairness is equality of opportunity, the idea that the prizes should go to the fleet as long as everyone starts at the same place. But people also like to believe that return should be related to virtue — that the reward for teaching school or inventing a new drug should be roughly proportional to its social value.” Citing the work of Robert Frank of Cornell University and Philip Cook of Duke University, Mr. Passell says that “winner-take-all” economics (his term for free enterprise) is unfair to people at the middle and the lower sections of the social strata. To remedy the matter, he proposes new taxes on the “superstars” — meaning the achievers in any line of work. The government will then redistribute the money to professions that offer little opportunity for financial success in the marketplace.
Mr. Passell also cites an argument advanced by the former president of Harvard University. In his book The Cost of Talent , Derek Bok says we should be miffed at people who reside in the sector of the economy that earns a well-above-average income. It’s intuitively wrong, says Professor Bok, that sports stars make millions while social workers can barely pay their bills. Yet, Mr. Bok asserts, the latter do so much more for society.
At the very least, this line of argument requires a demonstration that the wealth of one group necessarily comes at the expense of another group. If a country-music star’s millions assured poverty for others, there might be a case for declaring unjust the system that made it possible.
However, no such argument is forthcoming. And it would be very difficult to make the case.
The beauty and mystery of the market is that individuals can accumulate enormous sums of wealth without causing social harm. If wealth has come through providing services to others, or even in investing in the capital markets, such an investor has, in fact, done good for others by providing more capital and thus more prosperity.
There are, of course, natural limits to wealth production, but only those imposed by the law of scarcity: material wants are unlimited, but resources are finite. Nature’s scarcity is not best described in the phrase “winner take all.” If the winner did indeed take all, his money would cease to work for him, and he would lose it faster than he gained it.
If we drop the assumption of a zero-sum world, we are left only with the complaint that some people have too much money simply because they have more than others. The material signs of financial success ought to be eliminated simply because they exist; progressive taxation, in short, is its own reward. This line of thinking depends on an ethic of resentment and envy. If envy is the basis of these theorists’ opposition to the market, they ought to have the intellectual honesty to defend envy as an ethic, a task which might prove difficult, if not embarrassing.
Mr. Passell says financial return should be based on virtue. But why should we measure virtue solely in material terms? Some of our greatest thinkers and saints have eschewed wealth accumulation, yet have demonstrated virtue beyond measure. It was not too many decades ago that the New Left identified virtue with the state of poverty itself. That view is as much in error as suggesting moral goodness can be measured by riches.
Many academics have extraordinary intellectual talents that could have been put to use in the business world at a greater rate of return. But they have chosen the life of the mind, which has always meant some degree of sacrifice. The same is true for teachers and social workers; they would all like a raise, no doubt, but if making money were their first priority, they might have chosen another line of work. There is always virtue in fulfilling one’s own dreams.
Why, then, do these academics, who deserve our gratitude for having chosen to devote themselves to the world of ideas, turn around to denounce others who enrich themselves in markets, and then condemn the market itself? Assuming these scholars are not motivated by pure selfishness, they should try to recall the intellectual idealism that led them to be scholars rather than entrepreneurs.
Anticapitalism is a mind-set that can afflict individuals in any layer of the socio-economic strata. We are as likely to find it in Hollywood as in the inner city; it is as likely to appear at Harvard as on the loading dock. The root of the problem is intellectual error, regardless of whom it afflicts. The persistence of this error — a relic of the socialists from the 1920s through the 1950s — suggests that capitalism has not yet completed its educational task.
