Front Page Titles (by Subject) Neoconservatism and Capitalism - Literature of Liberty, Autumn 1981, vol. 4, No. 3
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Neoconservatism and Capitalism - Leonard P. Liggio, Literature of Liberty, Autumn 1981, vol. 4, No. 3 
Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.
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Neoconservatism and Capitalism
“The New Defenders of Capitalism.” Harvard Business Review 1(March–April 1981):96–106.
The lack of attention businessmen have paid to defending their beliefs has proven costly. Hostile intellectuals have developed a powerful case against capitalism that largely went unanswered—until it eventually bore its fruit in the form of regulatory and other government policies that literally forced the businessman to pay attention.
Yet despite the intellectuals' traditional hostility to capitalism, there are signs that this attitude is reversing. Most intellectuals have always looked upon capitalism as an evil: a system unsound in itself and the cause of moral and spiritual depredations throughout society as a whole. To some extent, this attitude has been a response to the supposed record of capitalism—to periodic depressions, to the sorry lot of workers, to the rewarding of the rapacious and the greedy.
However, the past decade has been a time when many intellectuals have gradually shifted their ideas to neoconservatism. Formerly those thinkers trusted in the government's ability to solve a whole range of social and economic problems but, in response to the failure of so many of the social programs of the 1960s, these same intellectuals have become skeptical of government intervention. It is not so much that intellectuals have become unqualified partisans of capitalism, as that they are more disillusioned with the evils of socialism than those of capitalism.
The new defenders of capitalism have discovered that socialism coexists more comfortably with tyranny and totalitarianism than with liberty and democracy. Irving Kristol capsulizes the empirical argument against socialism in his book Two Cheers for Capitalism: “Never in human history has one seen a society of political liberty that was not based on a free economic system—i.e., a system based on private property, where normal economic activity consisted of commercial transactions between consenting adults. Never, never, never. No exceptions.”
If the main indictment these intellectuals direct against socialism is that it jeopardizes liberty and democracy, the main virtue they find in capitalism is, conversely, that it nurtures liberty and democracy. This is so, they argue, because the economic freedom on which capitalism rests is itself a form of liberty. Even in achieving the value of equality—the central value of the political culture of socialism—capitalism does a better job. Where the argument still rages is over inequal distribution of wealth. However, although...“Western society does not claim to be egalitarian, it is intellectually and socially free. The grosser forms of inequality and abuse in earning power, social benefits, and the like are at least kept under public scrutiny so that injustices can be identified and kept within limits. The end result is that Western capitalism is far more socially just than any other socialist society, and income in Western society is incomparably more fairly distributed than under socialist societies.”
Neoconservatives agree that while a market system cannot function properly without equality of opportunity, neither can it function without inequality of result. Unless all individuals are given a chance to compete, the economy is deprived of initiative and energy, yet if those who succeed in competition are not given a chance to reap extraordinary rewards, the economy will also be deprived of that same initiative and energy. This does not mean that those who fail need to be penalized by starvation. A safety net in the form of social insurance is, in this view, entirely compatible with a healthy market system (the only qualification being that the insurance should not be so generous as to destroy the individual's incentive to work).
Thus the main emphasis in the case for capitalism is not that it reduces inequality—although under certain political conditions it certainly does—rather that capitalism improves the lot of everyone. Rich and poor alike grow richer under capitalism. In capitalist societies the very idea of what constitutes poverty undergoes a change from absolute to relative deprivation. It is socialism that has turned out to be a system of increasing pauperization.
A reservation about capitalism is that it may fail to satisfy the spiritual hunger for something larger, more heroic, more exalted than “bettering one's condition.” In an ironic way, the very successes of democratic capitalism make it vulnerable to the charge of spiritual poverty. Yet this spiritual sickness cannot be cured by any set of economic or political arrangements, and perhaps it is a great virtue of capitalism that it refuses even to try. It is thus a bulwark against totalitarians, not only because it allows liberty but also because its claims are limited: “we are not required to worship it.”
Law, Liberty, and Political Thought
Literature of Liberty has repeatedly emphasized the necessity of sound legal and political philosophy in establishing a free society. In past issues, our journal has devoted numerous summaries to the interconnections of law, legislation, liberty, and rights [see for example Literature of Liberty 3(Autumn 1980), for both the editorial on Lon L. Fuller and the summary section on “Legal Theory and Rights”]. The topics treated in this section cover judicial interpretation of the First Amendment, the tort-crime distinction, the law and economics approach, the juristic notion of corporations, London's “first charter of liberties,” and historian J.G.A. Pocock's clarification of the distinction between the liberal tradition's notion of rights and liberty and the more politicized notions of virtue and manners.
To supplement the first summary ofThomas I. Emerson's article on the First Amendment, the reader may wish to consult two earlier summaries on First Amendment issues by the same author, appearing in Literature of Liberty 2(January–March 1979):64–65, and 3(Autumn 1980):70.