Arthur Brooks and the Morality of Capitalism — Laissez FaireLaissez Faire

Arthur Brooks on the need for a moral case for capitalism. Brooks is right that this is the key issue we face if we want to limit government, and more than that, a lot of what Brooks has to say about capitalism’s morality is good—certainly far better than what most conservatives say.

But in my judgment, Brooks still falls short of what I think it takes to successfully make the moral case for capitalism. This is something Yaron and I discussed in an old Forbes.com column, “Can Arthur Brooks Beat Back Big Government?” The column is no longer up on the Forbes site for some reason, so I’m reprinting it below the fold.

Can Arthur Brooks Beat Back Big Government?

By Don Watkins and Yaron Brook

December 2010

Arthur Brooks has struck a mighty chord with his recent bestseller The Battle. Brooks, president of the American Enterprise Institute, has received endorsements and accolades from political heavyweights, from Paul Ryan to Newt Gingrich to Karl Rove. The Battle has become a battle cry for those seeking to reverse the alarming expansion of government under President Barack Obama (and, for that matter, under President George W. Bush).

But The Battle cannot win the war: It cannot stop the growth of the state.

What’s the central message of The Battle? That the advocates of big government have offered a potent moral case that wealth redistribution promotes the happiness of society, and that the supporters of free markets need to articulate their own moral defense of capitalism in reply. Brooks’ argument, in short, is that wealth redistribution does not make people happy. The source of genuine happiness is earned success, i.e., “the creation of value” by the individual — and it is capitalism that fosters earned success. To defend capitalism in moral terms, he concludes, is to defend it as the system of the pursuit of happiness.

There are important elements of truth in this narrative, but there is also a gaping hole. What Brooks doesn’t acknowledge is that the pursuit of your own happiness is at odds with the near-universal view that we have a moral obligation to sacrifice ourselves to the needs of others — and that the basic reason we live in an ever-expanding welfare state is because, when faced with a choice between the individual’s pursuit of happiness and his duty to serve others’ needs, we almost always choose the latter.

Consider a few of the steps that led to our current welfare state.

There was the creation of Social Security. Americans were faced with a choice: either leave each individual free to save and invest for his own retirement, or force him to sacrifice his wealth to serve his elderly neighbors’ needs. Americans decided that the needs of the elderly took precedence—and government grew.

Later came the creation of Medicare and Medicaid. Americans were faced with a choice: either leave each individual free to buy insurance and save for his own health care, or force him to sacrifice his wealth to buy health care for the elderly and the poor. The needs of the others took precedence–and once again, government grew.

That same pattern, on issue after issue, is what is responsible for the growth of America’s welfare state. Some group’s need is held to take moral precedence over the rights of individuals, and so the state grows. What was ObamaCare except an effort to meet the needs of the uninsured?

The question a defender of the free market would have to answer is: When do we side with the pursuit of happiness and when (if ever) do we side with the morality of need? How do we resolve such conflicts?

In The Battle, Brooks never addresses this question. The closest he comes is in a recent op-ed in the Wall Street Journal that he co-authored with Rep. Paul Ryan (R-Wis.), in which he suggests that we simply have to draw the line somewhere. While we need to sacrifice the pursuit of happiness to the needs of others sometimes, “income redistribution and government care should be the exception and not the rule.” We just have to decide—somehow, at some arbitrary point—that enough is enough.

But that is a failed prescription. As Brooks himself observes, it’s how we got into this mess in the first place. “Why not lift the safety net a few rungs higher up the income ladder? . . . More generous pensions for teachers? Hey, it’s only a few million tax dollars–and think of the kids, after all. Individually, these things might sound fine. Multiply them and add them all up, though, and you have a system that most Americans manifestly oppose.”

The fact is that however much we value individual happiness, in a contest between it and the needs of others, most of us believe the needs of others (“think of the kids”) should take priority. Isn’t that what morality teaches us?

The real battle for capitalism is the battle over the question: Is it moral to pursue our own happiness? If so, then why should we ever be forced to sacrifice for the needs of others? Is the moral call to sacrifice, which we’ve had drummed in our heads since childhood, right?

Only one thinker has ever challenged the morality of need and defended the moral right to pursue your own happiness: Ayn Rand. And it’s no accident that, with the ascendancy of Obama, her most famous book, Atlas Shrugged, has been selling better than ever.