A Restatement Of Economic Liberalism Prologue: Capitalism and the permissive society Introduction :: The Historical Context :: Reasons For Suspicion :: The Rise Of The Word Man :: The Dilemma Of The Economic Liberal :: The New Left Attack :: Poverty And Equality :: 'Alienation' :: Student Dissent :: Contemporary Radicalism :: A turn of the tide?

Another characteristic of capitalism is that it tends to nourish in its own midst an anti-capitalistic culture. This was explained many years ago by Joseph Schumpeter in Capitalism, Socialism and Democracy, a work largely written before and at the beginning of the Second World War, and which is more up-to-date than most works currently off the press.¹ His basic thesis was that capitalism was killing itself by its own achievements.

Capitalist civilisation is above all rationalist. It is anti-heroic and anti-mystical. The spirit that animates it is the very opposite of 'Theirs not to reason why, theirs but to do or die'. The successful capitalist is forced by circumstances to query the way everything is done and endeavour to try and find a better way. If he relies on a traditional, mystical or ceremonial justification of existing practices, he will be overtaken by someone else and may well sink into oblivion. The breakdown of theological authority, the rise of the scientific spirit and the growth of capitalism were interrelated phenomena. A new ethic arose in the seventeenth century and had grown to fruition by the nineteenth, which blessed empirical and logical enquiry, denigrated the claims of authority and legitimised the profit motive (inter alia by removing the mediaeval restraints on usury and the notion of 'just price').

So long as the capitalist and the scientific segments were contained within an essentially aristocratic order, which preserved many traditions, superstitions and entrenched customs and, above all, deferential attitude towards a traditional ruling class - as was the case throughout most of the nineteenth century - capitalism could flourish. But in time the sceptical enquiring attitude was bound to turn on established institutions, and not only on kings or the restricted franchise, but on capitalism itself.

Unfortunately - and here Schumpeter makes no attempt to flatter his probable readers - a refusal to take on trust the customs and institutions of society (which is the negative part of th rational critique) does not itself bring a willingness to accept oi understand rational arguments. It requires an intellectual anc imaginative effort to understand the allocative function of th price mechanism, to see how a high (relative) price will set in motion forces that will remedy a shortage, how the shift ofworkert from bankrupt to expanding enterprises can increase prosperity. and eventually benefit even the workers who are transferred. Above all, it takes considerable insight or powers of analysis - and a rare freedom from envy - to see the harmful implications oI paying people according to presumed merit rather than market values, or to see the advantages as well as disadvantages of the private ownership of capital and the dangers of simply trying to suppress it. The hostile reaction to some of the features of capitalism just mentioned would be shared not only by collectivists, but by many conventional Tory voters of the middle class, who would simply exhort capitalists not to behave too selfishly, cite instances of bad trade union behaviour and fall back on anti-nationalisation prejudices - in other words, respond with anything but a reasoned defence of capitalism.

Not only does a capitalist civilisation engender a skin-deep rationalism, but growing wealth and the accompanying educational expansion encourage a great expansion in the demand for the spoken and written word and in the supply of those able to produce it. This argument has been elaborated further by F. A. Hayek,² who points out that those who gain the public ear consist of two elements: the communicators, who are expert at putting other people's ideas or information across, but are amateurs in the substance; and professional people theorising outside their own field - doctors reforming the political system, engineers putting the economy to right and so on. In both cases they will go for the more plausible rather than the more profound ideas; and failing to understand the logic (or for that matter the real weaknesses) of the capitalist system, they are easily tempted to utter the cheap gibe or go for the state-imposed solution to every problem.

A great deal of press and especially television comment is based on a vague mixture, sometimes watered down, of the Old and New Left. A survey by Jeremy Tunstall shows that 54-59 per cent of specialist journalists writing for Conservative quality and popular publications describe themselves as 'to the left' of their organisations - and 'Conservative' papers are defined to include The Times and Sunday Times. Only 4-11 per cent describe themselves as 'to the right'. For those working for Labour papers the deviations are much more even, while for the media as a whole, including broadcasting and agencies, there are 44 per cent of left-wing deviationists compared with 12 per cent of right wing ones.³ For the vast majority of those involved, 'to the left' means unfortunately, 'more opposed to the market economy'.

The detailed analysis of specialist categories is even more interesting. There is a strong Conservative bias among fashion and motoring correspondents - just the areas where the attitude to commercial products usually associated with Labour sympathies would be most helpful. On the other hand, a strong Labour bias was evident among trade union correspondents. In view of the harmful effects of union monopolies on employment, personal freedom and prosperity, this is just the area where a left bias is least required.

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1. Joseph Schumpeter, Capitalism, Socialism and Democracy, 4th edition (Allen & Unwin, 1954) Chapters 11-14.
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2. F. A. Hayek, Studies in Philosophy, Philosophy, Politics and Economics (Routledge & Kegan Paul, 1967) Chapter 12.
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3. Journalists at Work (Constable, 1971).
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