Thursday, October 11, 2007

What is so culturally different about American Capitalism?

In so many conversations about the ethics of business, corporate social responsibility, and social safety nets – especially in Europe – American capitalism has been singled out as being more harsh than other national versions of the free market economic system.

America, it is said, glorifies “cowboy” capitalism, a full adversarial, devil-take-the-hindmost, form of competitive advantage where the investor’s dollar trumps all other values and where the money kings of Wall Street set the goalposts of success.

It does seem to be true that the voice of free market fundamentalists is stronger in American culture and politics than it is in the UK, Canada, Australia and Europe, all of which share common cultural origins.

For these American secular fundamentalists, as seems to be the case for many other kinds of fundamentalism, a sense of self-righteousness about their beliefs and behaviors is palpable in their conversations and their judgments. They are convinced that wealth elevates and brings with it moral redemption.

So, for example, from this perspective, government taxation of private wealth is an invasion of one’s personal righteousness and an attack on one’s meritorious achievements. The approach is a curious blend of materialism and spiritual superiority, but it galvanized the politics of Ronald Reagan and George W. Bush, among others.

At the level of the corporation, this creed holds that seeking bottom line financial profits is sufficient to meet moral expectations of right conduct in business.

Where did this fundamentalism in business ethics come from?

I think I have finally stumbled across the foundational experience of this special American approach. It was in the 1880’s, especially in the year 1883 when Yale Professor William Graham Sumner wrote an article entitled “What Social Classes Owe to Each Other”.

Sumner created a fusion of old American Calvinism and Herbert Spencer’s Social Darwinism. The mixture proved to be a heady and powerful brew for subsequent generations of Americans. It became the gospel of the Republican Party which used it to win many elections.

Calvinism had sought eternal salvation from sin through faith and submission to the grace of Jesus Christ. Calvinists were sober, hard working, honest, reliable, trustworthy and, therefore, good credit risks. They gave birth to modern capitalism in Holland, England, Scotland, and the American colonies during the 16th, 17th and 18th centuries.

Calvinism did not set out to create the material advantages of capitalism; rather it appears that capitalism evolved as an unexpected consequence of Calvinist beliefs and behaviors. (This is the thesis of Max Weber, which is noted but controversial, especially on the part of Marxists.)

On the other hand, Herbert Spencer writing in 1851 did not seek to prove the truth of religious beliefs. He was a materialist looking for scientific laws about evolution and necessary human behaviors. Spencer argued that human society was a struggle where the fittest would survive best.

Sumner, in the American Calvinist tradition where correct conduct led to worldly success, fused Calvin’s theology with Spencer’s fascination with competition. Sumner asserted that those who succeeded in the capitalist race for wealth did so because of their character. They were worthy and so their dedication, self-sacrifice, and shouldering of risk were rewarded as if by the laws of nature and nature’s God with material success.

Those who did not succeed, suggested Sumner, were not morally worthy. They were slackers, he said, and received the just deserts of their inferior aptitude for virtue. Their sinfulness, as it were, produced their lower socio-economic condition.

We might say that Sumner’s vision has it that God loves winners; those who gain wealth are winners; those who don’t are losers; God doesn’t love them and so neither should we.

In particular, both Spencer and Sumner vigorously opposed public programs to tax the rich and subsidize the poor. As Sumner put it, the upper social class owed nothing to the lower class. How clear, simple and harsh. He wanted to “put down schemes for making ‘the rich’ pay for whatever ‘the poor’ want.

Sumner said that to learn how to live happily we should investigate “the laws of nature and deduce the rules of right living in the world as it is.” These rules, he said, call for labor and self-denial (how Calvinistic!) repeated over and over again in learning and doing.

Sumner concludes at one point: “Hence it appears that the man who has his self-denial before him, however good may be his intention, can not be as the man who has his self-denial behind him.”

To the victor in the competition demonstrating self-denial go the spoils. He or she becomes the successful capitalist and has wealth to prove his good character.

For Calvin, possession of a character worthy of God’s grace led to other worldly salvation; for Sumner, the American, possession of that same worthy self-discipline, humility and resolve led to capital accumulation and victory in the race of life in this world.

For Sumner then, as for many American social conservatives today, it is not the proper place of government to rearrange what nature and God have ordained.

So American “cowboy” capitalism may not be just run-of-the-mill Social Darwinism, but more exactly a kind of Calvinistic Darwinism.

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