The Spiritual Side of Capitalism – Part 1
The Spiritual Side of Capitalism – Part 1
BY Brink Lindsey
The free Market System
System has become, to an extent never before matched, an integrated global phenomenon. Moreover, its fundamental institutions have, at present, no serious step back from the buzz of recent events and think about the larger significance of the capitalist ascendance. How good is commercial society? Capitalism since its inception has been derided as a spiritually stunted system. And to be sure, it has its vices – the pettiness and destructiveness of greed, the hollowness of the cash nexus.
But to condemn commercial society as nothing but an empty rush for things is to engage in caricature and distortion. There is much more to capitalism than things: Capitalism is also about creativity, ingenuity, dedication, and perseverance; it is about teamwork and competition; it is about the fulfillment gained from working hard to do a job well; it is about pursuing your dreams, however humble or grand. Commercial life, at its best, generates spiritual as well material abundance. Pervasive misunderstanding of how the wealth creation process works has obscured this spiritual element of capitalism.
The enemies and disparages of capitalism have generally made the mistake of regarding the creation of wealth as a mechanistic and automatic process. In the Marxist view, productivity and growth result from the operation of unalterable historical laws. The capitalism phase of development has “solved “the “problem” of production once and for all: all that remains is to ensure that the fruits of this production are enjoyed by the right people. Never was this determinist conception of wealth creation more glaringly evident than in Lenin’s hopelessly naïve picture of socialist production: He thought that the requirements for planning and running an economy had already been “simplified” capitalism to utmost, till they have become the extraordinarily simple operations of watching , recording , and issuing receipts, within the reach of anybody who can read and write and knows the first four arithmetical rules.”
Such mechanistic understandings of economic life miss entirely the continuing and ever expanding dependence of capitalism on human creativity. In particular, they fail to grasp the central role of the entrepreneur in driving capitalist production. The source of all capitalist wealth creation is the new idea: the invention of new products, the development of new products technique, and the exploitation of a new market. It is entrepreneurs who take idea, often their own and transform it in reality, staking their own time and money, and that of others, all in the belief that the idea has value.
In the words of economist Joseph Schumpeter: “To undertake such new things is difficult and constitute a distinct economic function , first, because they lie outside of the routine task which everybody understands and , secondly, because the environment resists in many ways that vary , according to social conditions from simple refusal either to finance or buy a new thing, to physical attack on the man who tries to produce it.
To act with confidence beyond the range of familiar beacons and to overcome that resistance requires aptitudes that are present in only a small fraction of the population and that define the entrepreneurial type as well as the entrepreneurial function. “The motive of capitalism, then is not some historical auto-pilot or the fine tuning of technocrats, but rather the power of entrepreneurial imagination : first the power to conceive some new vision of untapped possibilities, and the will to remold reality in conformity with that vision. Apposite in the regards is economist Michael Novak’s observation that the root of the word Capitalism is caput, or head. The market process, contrary to what its detractors say, is fundamentally a spiritual phenomenon.
The great innovations of capitalism posses a species no less real than the genius that animates great works of art, or great discoveries of science, or great acts of statesmanship. They are persons whose vision carried them beyond the range familiar beacons into new worlds of their own making. Interestingly, Schumpeter himself, the great champion of the entrepreneur, mistakenly believed that entrepreneurship was becoming obsolete, that innovation was being routine within research and development departments of giant corporations. Inspiration and intellectual daring, he feared, were giving way to tepid bureaucratic rationality. What Schumpeter failed to see was the bureaucratic inertia would frequently render large corporation resistant to necessary change. As a result, the creative genius, the outsider with vision and no stake in the status quo, remains an essential element of capitalist vitality.
Brink Lindsey was the Director of Regulatory Studies at the Cato Institute in Washington.
Reprinted from Topic Magazine No.202
Watch out for part 2
