Capitalism & Socialism Rightly Understood

Tibor R. Machan

In a recent Op Ed for The New York Times, Professor Gar Arperovitz of the University of Maryland, who teaches political economy there, has written that “something different [from what OWS wants] has been quietly brewing in recent decades: more and more Americans are involved in co-ops, worker-owned companies and other alternatives to the traditional capitalist model. We may, in fact, be moving toward a hybrid system, something different from both traditional capitalism and socialism, without anyone even noticing.”

Well, this comment shows, among other things, a profound misunderstanding of both capitalism and socialism. In the formers system there is no prohibition of pockets of communitarian associations, kibbutzes, communes, cooperatives, and so forth. This is a point made emphatically by one of the 20th century’s foremost philosophical defenders of capitalism--or, as he put it, “capitalist acts between consenting adults”--the late professor Robert Nozick, in his famous book Anarchy, State, and Utopia (Basic Books 1973).

Nozick pointed out that in the libertarian system he presented in his book there is every chance to experiment with a great variety of human associations--he called the “utopias”--provided these do not sanction the coercion of some people by others. And since the kind of associations that “worker owned companies” are need by no stretch of the imagination involve any kind of coercion, they are entirely compatible with capitalism wherein the major element is freedom of association, not the pursuit of any particular goal (including profit).

It is odd that Professor Alperovitz would not be up front about this. Is he perhaps intent on misrepresenting the nature of a capitalist political economy, making it appear to be something it isn’t, namely, limited to promoting only certain types of human associations such as business firms? What about the thousands of churches in the semi-capitalist system of America which are on record promoting various spiritual goals? What about the Amish, the Moonies, the Roman Catholics, the Salvation Army, the Red Cross and many others, including clubs, fraternal organizations, and so forth, that have nothing to do with seeking the ends that most business enterprises seek? All these are fully compatible with the basic principles of capitalism but not so much with socialism. None of these are permitted in countries like North Korea or Cuba, let alone in the former Soviet Union which attempted to implement socialism, namely, the state ownership of the major means of production and the total abolition of the right to private property, a right that indeed facilitates the variety of ways people may freely associate with one another.

Professor Alperovitz is a teacher of political economy so he must certainly know about the point Nozick made and about how a near-capitalist society such as the United States of America and many other Western countries are hospitable to, indeed promote, the great variety of communal associations he misleadingly identifies as socialist? Why would he do this?

If Professor Alperovitz wants to defend socialism or some hybrid of true capitalism and true socialism--whatever that might be--he should do this up front. He should acknowledge that socialism involves state coercion, especially on the economic front, and capitalism doesn’t. The various non-economic human associations he misidentifies as socialist do not involve coercion, which makes them fit within a capitalist but not within a socialist political economy.

But I guess Professor Alperovitz isn’t really willing to put his money where his mouth is, to come out four square for a genuine socialist/capitalist hybrid. He is, instead, defending something no bona fide capitalist or libertarian--e.g., Milton Friedman, F. A. Hayek, Ayn Rand, Murray N. Rothbard, Ron Paul et al.--opposes. Every one of these champions of capitalism accepts that in a genuine free country there can be innumerable human groupings and these include worker owned firms and farms.