Death of capitalism? No, of modern liberal economics

Let me be the first to say that capitalism is imperfect, and is a terrible singular principle for leadership. Like democracy, it encourages a growth in what is popular over what is sensible, which generates a form of mob rule and race to the lowest common denominator.

However, in a nation with good leadership, capitalism provides a more organic framework than command economies like socialism, communism and some types of fascism. It is far more granular: individuals see opportunities, exploit them, and are rewarded. Gradually, the more productive generally rise to the top.

By generally, I mean statistically; demographically; on average. These roughly similar terms mean that we can’t say much about a given individual case, but across the board and looking at the situation from above, we see that it usually works. Social organizations and charity need to be there to organically address the exceptions: starving genius inventors and artists, injustices, and incompetence.

For all of its imperfections, capitalism provides the best system because it is natural or close as we’re going to get. A contract-based, reward-pulled system works a lot like our environment, in that opportunities reward those who exploit them. There’s not a need for a whole lot of control. This is why conservatives like soft Social Darwinism: we can’t promise you that in every case justice is done, but there is always at least one way for motivated individuals to have a good life.

Liberalism works on the opposite principle, which is that instead of providing opportunity, we divide up our wealth and distribute it evenly and hope that this avoids conflict and injustices. As the last 400 years shows us, it doesn’t avoid injustices — it just transfers them to members of the successful groups. Liberal societies carefully cannibalize their most productive so that everyone can be equal. It’s like a form of cancer.

We’ve heard a lot in the liberal media about how this most recent recession is the “death of capitalism” or “the end of American exceptionalism.” I think as usual, the left-biased media are misreading the situation: this is probably not the end of anything, but it’s closer to being the end of trust in liberal economic and social policies, which amount to the same thing: a redistribution of wealth.

How does redistribution of wealth occur? Tax the productive, and take their money and spread it around through entitlements which are a form of social spending. Welfare, public health programs, “awareness raising” campaigns, anti-drug programs, publicly-funded charities, bureaucracies that fight against discrimination and inequality — all of these are social spending. And what has been rising since 1950 in the USA? Social spending.

In 1960, when John F. Kennedy was elected — after the Korean War and before Vietnam — defense spending was 52 percent of the budget and 9 percent of GDP. In the 1980s, Ronald Reagan’s defense build-up, which ultimately defeated the Soviet Union in the Cold War, averaged 26 percent of the budget and 6 percent of GDP. Today, defense spending is 19 percent of the budget and 5 percent of GDP.

By contrast, social spending (what the Office of Management and Budget categorizes as “payments for individuals”) was a mere 26 percent of the budget in 1960. By 1989, the year Reagan left office, it was 47 percent. Today, it’s 64 percent, and growing. In 1960, non-defense spending was 8 percent of GDP; today it’s 20 percent. And that’s only at the federal level, not including state and local spending for social programs and government employees. This, not defense spending, is what’s driving the U.S. and the Euro- socialist democracies (that spend a lot less on defense) toward bankruptcy.

Providing for the national defense is the single most essential responsibility of our federal government, without which we have nothing — no freedom, no treasure, no country. The only thing more expensive than war is losing one. Leon Trotsky got one thing right when he observed that, “You may not be interested in war, but war is interested in you.” – Denver Post

A country as wealth as the USA, without a strong national defense, faces a series of problems. First, other nations who want to be top dog cut off your trade opportunities with their military might. Then they take out your allies. Then they cut off your energy supply, and finally they move in on you. Over a series of decades, this chokes your country into bankruptcy and makes you easy prey for the final military showdown. Realpolitik? Machiavellian? You bet. It’s reality and if that offends you I’m very, very sorry but it ain’t gonna change.

So we need national defense. And yet we’re not spending much on it. What are we spending our money on? Social spending. Just like Europe. And where has it gotten us? Bankruptcy, on both a national level and at the state level.

Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.

Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care. Some members of Congress fear that it is just a matter of time before a state seeks a bailout, say bankruptcy lawyers who have been consulted by Congressional aides. – NYT

The people liked entitlements. Or at least, a lot of people liked them. Because we insist on everyone being equal, we figure one warm body is as good as the next, and so we reward them. Then more appear. And more. And soon, we’re drowning in debt.

Politicians know that to point out the cost and its impossibility, in a democracy, means sure career suicide. So they don’t. They pass the buck between generations and different political offices, shuffle paper and make more promises, and hand out more money, all while knowing that someday the piper must be paid.

That piper comes in two forms: first, at some point bankruptcy must be declared because to pay off the debt burden would destroy our ability to have current services and to fund our own economy; second, in the meantime we will steadily devalue our own currency to the point where to be competitive, our products and services are of a mediocre and very cheap level. So no one wants to talk about paying the piper.

Any society — like the US or Europe — that is voting in such entitlements to random people has forgotten its own realism. That realism states that not all people are equal, and so we want to reward the productive, intelligent, healthy and morally good ones instead of random ones. But that’s impolite and socially unacceptable so instead, we vote in the entitlements. Such thinking comes only from wealth societies where people have the luxury of denying reality, or rather, deferring consequences.

Our great experiment in entitlements in America has snowballed since 1945, when we won the last big war to end all wars, and thought ourselves on top of the world. Feeling wealthy made us happy, so like big tippers at exclusive restaurants, we just handed it out — for years. Then in 1965 we stopped discriminating by race, IQ and nationality and invited everyone in. Send us your poor huddled masses. Feels good like a church service, or giving candy to children. But it is like many things a cruel illusion because it is illogicall, and to double the cruelty, consequences arrive later.

Fast-forward to 2008 when we elect Barack Obama for the same reasons we elected Bill Clinton. Multiculturalism has been part of our entitlement program for some time, and white voters wanted to finally elect a black president so that we could pacify black America, consider past wrongs righted, etc. I remember when Clinton was running for office a woman saying to me in an airport: “I don’t really trust him, but I’m voting for him because I think he’ll improve race relations.” This is how white America thinks: we want to pacify, hand out entitlements, and spread the wealth and then, and maybe only then, will we end the constant chain of racial antagonism. The LA riots of the early 1990s elected Bill Clinton more than any actions he personally undertook.

Yet things didn’t turn out that way. Obama, to his credit, is not the unmitigated disaster he could have been. However, he is a leftist, and he’s continuing the leftist program of expanding entitlements; governments like to do this because it keeps social order and removes competition from the upper middle class. White America got to see then that despite electing a black guy, we were still going down the path (following Europe) of spending ourselves into oblivion while failing to subsidize growth as China, India and Russia (our competition) are doing. Liberals also got a shock, which was that no matter how liberal the candidate, in office he has to face the hard realities of leading a superpower and starts to act like a Republican.

White voters preferred Republican candidates by almost two-to-one in the midterms last year. Their support helped the GOP win 22 seats in the states that make up the Old Confederacy. The Democrats’ only pickup in the region was the New Orleans district where the party holds a registration advantage.

Since November, there have been a string of defections by Southern Democratic state lawmakers, which has prompted renewed speculation about the party’s future in the region. Former Alabama Rep. Artur Davis (D) said Democrats should even consider running as Independents if they want to succeed.

Lewis, who was a civil rights activist before being elected to Congress in 1986, said he’s concerned the party is losing its diversity, which will make it difficult to reclaim the lost seats.

“We’ve got to go all out and get white voters, especially white men, to come back to the Democratic Party,” he told The Ballot Box. “I just think it’s important for the Democratic Party to roll out and try to reveal itself and not become a party that is split along racial lines.” – The Hill

Too late, I’m afraid: the Democrats by being the party of entitlements have set their own interests against those of white America. White America is not necessarily conservative, but it is relatively pragmatic, and that means that it generally supports Christian social values (or at least does after its kids hit puberty), conservative economics, free markets and small government because it recognizes the inefficiency and incompetence of bureaucracies and the people they tend to hire. Republicans should in the next election not look to their most vocal base, but people who are compatible with their values, even if they aren’t the archetypal Republican voter. This group comprises the most productive segment of our society and tend toward practical solutions, which conservatives offer. This group has finally seen that entitlements are not only not a practical solution, but create more of the same problems they claim to prevent, and also bankrupt us.

That is why that if anything, we’re not witnessing the death of capitalism — or of conservatism, or the Tea Party, although the impractical cases like Sarah Palin are on their way out. What we’re seeing is Europe and the USA waking up, slowly and starting with the unsung community leaders who might not be “intellectuals” or “elites” but are the people who keep their communities solvent. They’re realizing that the entitlement state was always a dream, and we just deferred the bill. Now it’s time to pay, and instead of sacrificing our future, we’re going to declare bankruptcy and move on — but without the entitlement programs.


  1. John says:

    Look at states like Sweden, which have welfare spending far greater than the US or Europe. Look at its economic productivity. By your logic it should be pitifully weak, yet it’s not. Sweden proves that a generous welfare state need not affect economic prosperity.

    Also the idea that increasing defence spending necessarily provides greater economic prosperity is flawed. Especially coming from the nation that has spent trillions to lose two wars in the middle east.

    Your entire philosophy can be basically summed up as “blame liberalism”. A massively simplistic conclusion that you cannot back up with hard evidence and scientifically verified data.

    One also notes the irony of pointing out the state communist societies ended up in and then providing the example of Nazi Germany as the source of a superior world view. Most monarchs ended up beheaded, are you seriously suggesting that in even the majority of cases their societies would have been better without their rule becoming interrupted? Without the French revolution, the country would have fallen apart and been consumed and divided up by each of the invading armies pushing against its borders. Your fetishism for the aristocracy and “elite” surely cannot blind you to the numerous instances in history were that which raises them into their own “superior” status amongst their fellow man is also the force which separates them so completely from the reality of life in their countries that they “fiddle while Rome burns” as the saying goes.

    “Any society — like the US or Europe — that is voting in such entitlements to random people has forgotten its own realism. That realism states that not all people are equal, and so we want to reward the productive, intelligent, healthy and morally good ones instead of random ones. But that’s impolite and socially unacceptable so instead, we vote in the entitlements. Such thinking comes only from wealth societies where people have the luxury of denying reality, or rather, deferring consequences.”

    Can you really not grasp that the reason society attempts to avoid these kind of value judgements is not because of fear that they are “impolite” but because of a rational assessment of the inability of people to correctly MAKE these kind of judgements? Why is it that someone with a conservative view of humanity, so obsessed with clearly grasping reality cannot see that in real life people never reward the best and the healthy. They reward their friends, they make judgements with prejudice, based on their own flawed and ignorant subjective viewpoints. Is it not obvious that the politics of equality are a way of circumventing the innate propensity for despotic and irrational judgement in the individual? I simply do not TRUST individuals in a society to reward the most “healthy” or “productive” because at what point does any individual attain the type of view of his surroundings that can realistically make these assessments? Never, because no man has the eyes of a God. If allowed to discriminate, people instead hoard and are prone to nepotism. It is the very mechanisms of the welfare state that allow people to not starve and become reduced to homelessness so they can even approach a position were they can become highly productive and live stable and healthy lives. Attempting to purge and punish the “lesser” due to your own self assessment of your Nietzschean superiority is far more disastrous to the social body than the liberalism you are obsessed with unmasking as the root of all evil.

  2. [...] Brett Stevens – “Could Liberalism be a Bad Mental Habit?“, “Death of Capitalism? No, of Modern Liberal Economics” [...]

  3. Miguel says:

    Capitalism is not ecologically viable. In fact, industrial mass society is not ecologically viable.

    Its time to get rid of all the garbage we have inherited from the “enlightment”, and to embrace more radical solutions. More TRADITIONAL solution.

    The idea of Guillaume Faye, Archeofuturism, is a good starting point: an economy of “two velocities”, in wich technology is restricted for a small elite, and the rest of the society returns to a simple, and happier way of life. This is not only necesary to solve the ecological catastrophe, but is necesary to end the disaster of mass society, and rebuild an organic civilization.

  4. John says:

    Some people think getting rid of mother nature was the best thing capitalism ever did.

    My first caution to you would be to make sure you don’t fall into the old hippie trap. That of idealising nature from the stand point of a modern human living completely cut off from it. It’s only someone in these kind of positions that could foolishly hallucinate a conception of nature that was “organic” or benevolent. No, nature wants us dead, and it wins 100% of the time. There is no organic or wholesome past to return to. We could not go back even if we tried. This idea that modernity is artificial/man made and therefore a sort of disease like corruption when compared to the healing powers of the “natural” is a viewpoint that could only come from the confused and paranoid excesses of modernity itself.

    You know what’s an excellent illustration of this? George Romero’s film “Survival of the Dead”. The 2009 version. It may be a flawed and largely disliked film, but it makes my point well. In it, a group of survivalists and ex military people escape from the zombie apocalypse onto an island. On it, they find two opposing clans involved in a bitter rivalry that stretches back longer than they can remember. In this scenario, a group of people have fled the crumbling and largely resource depleted ruins of modernity, and have an opportunity to set up a new society. Exactly the type of scenario Miguel is advocating. However, what they find on the island is not any kind of a paradise, there is no traditional purity to return to. The two clans are locked into a destructive battle as pointless, deadly and ultimately defeating as any conception of modernities inherently “suicidal” character you want to contrast it with.

    So I see no redemption in any sort of traditionalism that modernity might have caused us to forget. Only regression. None of this is to claim that it’s necessarily a bad thing to grow your own vegetables etc. It just seems to me to be pointless survivalism. I mean, what really is the point of survivalism? It’s a right wing fantasy, but where the hell does it actually get you. Say you have a certain date set for when industrial civilisation collapses, what exactly is the POINT in going off to live alone in the middle of nowhere and surviving off the land? Are you just going to live in your secluded forest until you die? So you can prove to yourself you are totally self sufficient? Hardly a realistic solution to societies problems.

    No, I don’t see either traditionalists or survivalists producing the kind of technologies we will need in the future. I don’t see them making the breakthroughs we need in electrical circuitry made from organic matter. I don’t see them being to organise or even reasonably spread information across the social body. You need modern technology to do that. You have to keep burning the coal or oil or whatever it is until its scarcity FORCES the market to innovate and come up with alternative energy solutions.

    You cannot make these innovations in the type of massively divided society you are proposing. There is nothing “happy” about a life pitted against nature and denied the technological means to subdue its excesses. Your proles revolt in this scenario. Besides, how can technology innovate when its usage is restricted to the specific needs of a minority? This way it grows stagnant and inefficient when not confronted with shifting and varying needs and challenges.

    However, I do agree that capitalism has set us on a course that is probably eventually fatal to ourselves and the planet. But it’s impossible to somehow regress from modernity and escape this fate any other way. We will end up extinct eventually, you shun technology or attempt to restrict its use to a small circle then you’re less likely to notice that asteroid or ice age as it creeps up behind you.

  5. Miguel says:

    First of all, forgive me for my poor english. I’m writing from southamerica and this is not my first language.

    First of all, it’s obvious to me you don’t know what TRADITIONALISM really means. You need to read Julius Evola if you want to know what I’m really talking about.

    Oswald Spengler demonstrated that cultures, like all living things, decline and díe. And he also demostrated western civilization was in it’s decline. The symptoms were clear: democracy, equalitarism, mob rule, decline of the “auctoritas”. Every healthy civilization is aristocratic, autoritarian, and anti-equalitarian, and base his hierarchy in a spiritual and tracendental principle. From ancient egypt to the Incas.

    And by the way, History is in fact cyclical, so “progress” is a nothing more than a modern myth. The “eternal return” Nietzsche talked about. So, it’s not only possible to “regress” form modernity but is inevitable. Modern society is a dying civilization. A sick civilization that not only bad for nature, but bad for humanity too. We are living in the most opresive system ever created.

    And modern society is the most unhappy of the planet. In Europe almost one third of the population has some kind of mental disease. Sweden is the world capital of suicide. Happiness is not a simple matter of economics. Human psyche is designed to live in organic comunities, not in mass societies. Modern “progress” is intrinsecally opressive. You want to know where is the most happy place of the Earth? BUTAN. A Buddhist monarchy between India and China. They are probably the last traditional regime in the world. And the most ecological by far.

    So, don’t think we are superior, or better, than ancient societies, only because we have invented cellphones and other garbage.

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