by Jack Bakunin

Dr. Bakunin, a historian specializing in the history of social thought, is the author of Pierre Leroux and the Birth of Democratic Socialism (Revisionist Press, 1976). This article appeared in the Christian Century September 21, 1977, p. 813. Copyright by the Christian Century Foundation and used by permission. Current articles and subscription information can be found at www.christiancentury.org. This material was prepared for Religion Online by Ted & Winnie Brock.

A renowned economist who served for six years as senior adviser in the International Monetary Fund contends that capitalism is undergoing a crisis of epic proportions -- a crisis rooted in what has until now been seen as the main strength of the system. In his important new book, Social Limits to Growth (Harvard University Press, $10.00), Fred Hirsch brings moral issues back to the center of economic debate. He argues that Adam Smith’s invisible hand, bringing benign results out of selfish actions in the economic arena, is no longer operative.

Hirsch shows that the individualism and competitiveness fostered by capitalism will not work in an affluent society in which people’s basic material needs for food, clothing and shelter are met. He sees an economic impasse stemming not primarily from the depletion of the world’s natural resources through unbridled economic growth, but from an unprecedented situation in which the main things people want from the economic system can be had only by a small minority at the top of the social hierarchy.

Capitalism’s great merit has been the goods it has been able to deliver. Each generation could count on seeing its children enjoy a host of new products. The luxuries of one generation became necessities for the next. Society was a column moving steadily forward, with the rich first tasting the fruits that eventually would be conveyed to the mass of humanity. Hirsch maintains that this process, which gave economic inequality its philosophical justification as the best spur for advancing the living conditions of all, is no longer functioning. In the future we can expect to see people competing in an ever more vicious rat race and completing the course frustrated at a sense of having fallen behind their starting point.

I

Hirsch bases his projection on the distinction between what he calls material and positional goods. Ownership of the former theoretically can be expanded indefinitely without any diminution in their quality. More Americans can enjoy better food, clothing and housing and such products of advanced technology as television sets and modern kitchen appliances without detracting from their value to those who first possess them. Positional goods, which include top jobs, mobility, recreation, services and leisure, may not be expanded so easily. In a situation of growing affluence, with more and more people seeking to attain the good things of life, such goods will either maintain their minority status by a steep price rise, or they will enter the hands of the general populace at the cost of a progressive loss in the satisfaction they bring to the individual.

For example, consumption that is labor-intensive -- servants or meals in high-class restaurants -- becomes ever more costly as more and more people meet their basic needs and compete for these goods and services. The sense of well-being that comes with, the completion of a university education or the ownership of an automobile or a piece of scenic country real estate decreases as more and more people come into possession of these positional goods. The value of a particular level of education as a path to a better job drops as more and more people attain such an education, for the supply of good jobs is limited. The mobility a car brings or the relaxation from the tension of the busy city that comes with a country cottage is lessened as crowding results from the spread of these commodities to more and more hands.

Dangerous pressures begin to threaten an individualistic order as false signals are given to people rationally pursuing their self-interests but failing to perceive the new collective forces of the affluent marketplace. Failure to understand that education operates as a screening device for entry into more desirable employment leads to increasing investment by young people in more schooling, with the frustrating result that the cost of the employment they seek in terms of years of schooling rises steadily.

People move to the suburbs in order to live in a strategic position midway between the city and the country so that with their automobile they can gain the benefits of both urban and rural life. As more and more people make the same move, suburban dwellers find it ever more difficult to enjoy a city whose tax base has been fatally undercut by the flight of its more affluent residents, and a countryside becoming more cluttered and distant with the advance of suburban sprawl. And suburban living based on widespread use of the automobile makes virtually impossible the support of a good public transportation system, which to be practical must be based upon travel between relatively dense population centers.

Society becomes more and more the arena of frantic competition as men and women pursue positional goods which only a few can attain or which lose much of their attractiveness as possession becomes more widespread. Many had expected that affluence would make people more generous -- that altruistic behavior would become more common with the taking for granted of elementary material needs. Instead, as more people compete for goods which are by their nature limited in quantity, each generation must have a higher income to achieve the same level of satisfaction; thus there is growing resistance among the middle classes in advanced countries to an income redistribution that would help those left out of the affluent society -- the poor and the minorities. The cost of generosity rises with the price of luxuries taken for granted by the well-to-do and with the escalation of the cost of placing one’s offspring in a suitable profession. At the same time, those lower on the economic pyramid become increasingly restive with the growing realization that the path to their advance has been substantially blocked by the advantages enjoyed by the already prosperous. The resulting conflicts threaten a catastrophic breakdown of the social order.

II.

No longer can social inequalities be justified on the ground that the poor will one day have what the rich now enjoy. Confrontation over the distribution of wealth is coming, writes Hirsch, unless the advanced countries are able to agree on methods of collective allocation for the intrinsically scarce goods sought by people in an affluent society.

Hirsch believes, however, that cooperative action has little chance of success In a society ruled by an individualistic ethos. Because he sees a new moral dimension to the problem, he finds government regulation of the economy to be far more difficult than was thought in the 1930s when John Maynard Keynes developed the, economic program of managed capitalism. Keynes assumed that because it was in the long-term interests of all, government regulation could be supported by the population on the basis of individual self-interest. Echoing this utilitarian view, Bertrand Russell wrote that if “men were actuated by self-interest -- the whole human race would cooperate.”

Hirsch uses Yossarian, the American bombardier who is the protagonist of Joseph Heller’s novel Catch-22 to refute the utilitarian idea that a person can be expected to support a collective enterprise in a society operating under an individualistic ethos if he shares the aim of the enterprise -- in this case the winning of World War II by the Allies. Yossarian decides that his main aim is to stay alive, for “it doesn’t make a damned bit of difference who wins the war to someone who’s dead.” Yossarian’s priorities illustrate how utilitarians ignore the distinction between projects that persons can complete by themselves and those that depend on the actions of others. Considerations of rational self-interest will make a person a shirker in situations of social cooperation, for he will recognize “that he does best when everyone else cooperates and he does not, for example, in ducking his contribution to a community project.”

The free-enterprise system worked as well as it did for as long as it did, Hirsch is convinced, only because it was able to depend upon the acceptance by the population of communal social norms that were the product of a preindustrial order. Indeed, Adam Smith felt secure in advising people to pursue their self-interest in the economic realm only because he assumed them to be subject to restrictions imposed by law and restrained by the forces of religion, morals, custom and education.

Hirsch maintains that economic individualism fosters a progressive commercialization of social life and that as the individualistic ethos spreads it undercuts what for Smith was the assumed social underpinning of the market economy. Over time, traditional morality, “with its stress on duty and obligation,” has been giving way before the market economy, which “encourages the strengthening of self-regarding individual objectives.” People are encouraged to look narrowly after their own interests and those of their families.

Hirsch points to the decline of elementary sociability in advanced societies -- where people can less and less be counted upon. to show friendliness toward a casual acquaintance or be ready to help someone attacked in the street -- as evidence that at a time when increased social cooperation is needed to resolve the economic impasse of the affluent society, people probably are less prepared for such cooperation than at any time in the history of the industrial order.

III

Hirsch argues that a shift may come in the social ethic if people recognize that competitive individualism leads only to painful frustration. It is crucial that they consent voluntarily to cooperate, because it is relatively easy for people to nullify the spirit of government regulations if they choose to do so. Cooperation must be forthcoming especially from the well-to-do, for it is they who control access to the goods which no longer can be expected to become the possession of the mass of humankind as a result of economic growth. Why should the rich agree to make sacrifices? Ideally they will see sacrifice as necessary to preserve social stability in an era of increasingly bitter conflict. They should be able to appreciate that “the airline pilot, the industrial manager and the administrator are much farther from the incomes they could rely on if society broke down than are the laborer and the craftsman.”

Hirsch believes that government action can provide the well-to-do with organizational means of making sacrifices and at the same time minimizing their risks. He proposes institutional adjustments through which society can be reoriented toward some equitable provision of goods that are intrinsically scarce. There are only a limited number of top jobs, and they bring with them both high income and great job satisfaction. Hirsch would lower the pay for these jobs in the hope of reducing competition for them by limiting applicants to those attracted by the work itself. At the same time the need for high income can be lessened by removing scarce goods from the commercial sector and making it possible for people to attain them with less money or without any money at all. Opportunities for leisure, education and medical care would be made “more available through public access or public allocation on a nonmarket basis.”

Paradoxically, Hirsch would have the well-to-do make what must appear to them as vast sacrifices on the basis of a utilitarianism which he has already shown convincingly to be of little value in fostering social cooperation. His solution is disappointing; with world capitalism beset by a universally acknowledged economic crisis, Hirsch, no friend of socialism, presents a set of newly discovered and seemingly irresolvable contradictions in the capitalist social and cultural order. The power of his criticism contrasts with the weakness of his prescriptions. After outlining the possibility of a catastrophic end of civilization he suggests that the rich agree to give up their monopoly of those very positional goods which he has just demonstrated to be the major advantage of being on the top of the social hierarchy.

It is entirely possible that despite recognition in many quarters of the depth of the crisis, people will nonetheless resist joining together on solutions. Hirsch expects cooperative action to arise from a shift in the social ethic occurring as people come to see that since new ethical norms are required to preserve the social order, these norms will be forthcoming.

But people do not accept new ideals in order to resolve an economic impasse; they approach the economy with ideals already in hand. There is, moreover, no historical basis for believing that a civilization will necessarily be able to readjust its basic norms fundamentally to meet a crisis that threatens its survival. The suspicion arises that Hirsch has no sense of the magnitude of the changes in human consciousness required to meet the crisis he describes, or that he refrains from indicating their scope in order to make the idea of change more palatable.

IV

Hirsch’s analysis really suggests that no solution is possible. For if he is right that the development of the capitalist order has been accompanied by a progressive unhinging of the social norms and religious obligations needed as a basis for social cooperation, we have no reason to hope that society will be able to reorient itself to meet the problems described in this valuable book. It is possible, however, that certain conditions which Hirsch identifies as elements of the problem might in fact become wellsprings of cooperative action.

The idea of equality of opportunity appears to Hirsch as the breeder of irresolvable social conflict, for it persuades people that they are entitled to those very positional goods which are, in a competitive market, the prerogative of a small minority. Yet the notion of equality of opportunity is a utopian ideal running parallel to the Judeo-Christian vision of the human family, and its widespread acceptance tends to refute the view that the growth of capitalism has been steadily removing all sense of social obligation from public consciousness.

Similarly, Hirsch is correct in his assertion that under conditions of contemporary capitalism, trade-union action fosters an inflationary spiral as workers seek vainly through higher wages to attain positional goods. On the moral level, however, trade-union solidarity reflects a sense of collective interest and obligation sadly lacking in the middle-class ethic of competitive individual advance at the expense of ones neighbors. This solidarity may, along with the ideal of equality of opportunity, serve as an ethical underpinning for social cooperation. The devotion and self-sacrifice exhibited by so many in the movements for social justice of the 1960s suggest that we retain more capacity for altruistic action than Hirsch’s analysis would imply.

Hirsch’s book is most successful, then, in fixing the limits beyond which most people should not expect to improve their lot under a market economy. Its weakness lies in the author’s failure to discuss adequately the capacity of persons for cooperative action in the present impasse.