The Roots of
"ANTICAPITALI
ERIK VON KUEHNELT-LEDDIHN
IN MANYMINDS, "capitalism" has ing the largely irrational resent-
come to be a bad word, nor does ment and desire to kill the goose
"free enterprise" sound muchbet- that lays the golden eggs.
ter. I rememberseeing posters in In Europe there still survives a
Russia in the early nineteen-thir- considerable conservative opposi-
ties depicting capitalists as Frank- tion against capitalism. The lead-
enstein monsters, as men with yel- ers of conservative thought and
low-green faces, crocodile teeth, action, more often than not, came
dressed in cutaways and adorned from the nobility which believed
by top hats. Whatis the reason for in an agragian-patriarchal order.
this widespread hatred for capital- They thought workers should be
ists and capitalism despite the ov- treated by manufacturers as noble-
erwhelming evidence that the sys- mentreated their agricultural em-
tem has truly "delivered. the ployees and household servants,
goods"? In its mature stage it in- providing them with total security
deed is providing, not just for a for their old age, care in the case
select few but for the masses, a of illness, and so forth. They also
standard of living cordially envied disliked the new business leaders
by those bound under other polit- who emerged from the middle
ico-economic arrangements. There classes: the grc~nd bourgeois was
are historic, psychological and their social competitor, the banker
moral reasons for this state of af- their disagreeable creditor, not
fairs. Once we recognize them, we their friend. The big cities with
might come to better understand- their smoking chimneys were
viewed as calamities and destroy-
Dr. E:uehnelt-Leddihn is a Europeanscholar, ers of the good old life.
linguist, worldtraveler, andlecturer. Of his
manypublished works,perhaps the best known We know that Marx and Engels
in America are Liberty or Equality? and The
TimeIess Christian. in the Communist Manifesto furi-
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ously attacked the aristocratic so- benefits which also characterize
cial movementas a potential threat Japanese business practice.)
to their own program. Actually, The real animosity against free
most of the leading minds of enterprise did not originate with
Christian anticapitalist thought the laborers. Bear in mind that in
(equally opposed to socialism) the early nineteenth century the
were aristocrats: Villeneuve- working class was miserably paid,
Bargemont, de Mun, Liechtenstein, and this for two reasons: (1) the
Vogelsang, Ketteler. income from manufacturing was
quite limited (true mass produc-
BiasAgainstCapitalism
tion camelater) and (2) the lion’s
Not of Worker Origin
share of the profits went into rein-
Armin Mohler, the brilliant vestments while the typical manu-
Swiss-German neo-conservative, facturers lived rather modestly. It
has recently explained that one of is this ascetic policy of early Eu-
the weakest points of contempo- ropean capitalism which made
rary conservative thought, still possible the phenomenal rise of
wrapped in the threads of its own working class standards. Seeing
obsolete agrarian romanticism, is that the manufacturers did not
its hostility against modern tech- live a life of splendor (as did the
nology. Howright he is! The ex- big landowners) the workers at
ception might have been Italy with first viewedtheir lot with surpris-
its tradition of urban nobility and ing equanimity. The Socialist im-
of patricians who, even before the petus came from middle class in-
Reformation, engaged in trade tellectuals, eccentric industrialists
and manufacture. Capitalism, in- (like Robert Owen and Engels)
deed, is of North-Italian origin. It and impoverished noblemen with
was a Franciscan, Fra Luigi di a feeling of resentment against the
Pacioli, whoinvented double-entry existing order.
bookkeeping. Calvinism gave a As one can imagine, the arti-
new impetus to capitalism but did ficially created ire then was turned
not invent it. (Aristocratic entre- first against the manufacturer
preneurs in Italy? Count Marzotto who, after all, is nothing but some
with his highly diversified busi- sort of broker between the worker
ness empire of textile plants, pa- and the public. He enables the
per mills, hotel chains and fisher- worker to transform his work into
ies is a typical example. His labor goods. In this process he incurs
relations are of a patriarchal na- various expenses, such as for tools,
ture involving substantial fringe and a part of the costs of market-
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ing. He hopes to make a profit tive, has to "look ahead" in a far
from these transactions in order more concrete way than does the
to render his efforts worth while. often improvident worker. The
Curiously enough, his responsi- business usually must be. planned
bility toward the enterprise is of years ahead. It not only has to
far greater scope than that of adopt the best means of produc-
many workers. No wonder that the tion (which means the purchase of
interest, once centered on acci- new expensiv~ machinery), but
dents in the factories, is shifting also needs .financial assets as re-
more and more to the manager serves. Finally, the wages have to
diseases. The entrepreneur sacri- be in a sound relationship to the
fices not only his "nerves" but also marketing possibilities, and also
his peace of mind. If he fails, he to the quality of the: work done,
fails not himself alone; the bread the sense of duty of the workers
of dozens, of hundreds, of thou- and eff~ployees. Virtue enters the
sands of families hang~in the bal- picture. Even the net profits paid
ance. The situation is not very out are not necessarily a "loss" to
different in a stock company. the workers, because a profitable
There, the stockholders sometimes enterprise attracts investors ; what
make profits in the form of divi- is good for the enterprise obvious-
dends-and sometimes they do ly is good for its workers.
not. The worker always expects to There is a commonalty of in-
be paid. The bigger risks are thus terests which can be gravely upset
at the top, not at the bottom. by either side. Needless to say, the
Yet, howwell the worker is paid most common way to upset the
depends on several factors, the applecart is through excessive
first of which is the readiness of wage demandswhich, if yielded to,
consumers to pay for the finished tend to eliminate the profits and
goods a price high enough to war- to make the merchandise unmar-
rant high wages. Here we come to ketable. Politically organized work-
the brokerage side of the capital- ers also may pressure govern-
ist. Secondly, there is the decision ments into inflationary policies.
of the entrepreneur (sometimes Strikes cancel production for a
the stockholders) how muchof the given period and mean economic
gross profits will be distributed loss. The inability to sell due to
(as dividends, bonuses, and the excessive wages and prices or to
like) and how much should be re- protracted strikes can bankrupt
invested or laid aside. It is evident the economy.
that the enterprise, being competi- This mutual relationship be-
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tween costs of production and pur- sons for this state of affairs.
chasing power is frequently over~ First, the Eastern Bloc with the
looked- especially in the so-called exception of Soviet-occupied Ger-
"developing nations." The insist- many, Latvia, and Estonia, com-
ence on "a living wage," often by pletely lacks the famous "Protest-
well-meaning Christian critics, in ant Work Ethic." Secondly, free
many cases cannot be met without enterprise is basically more pro-
pricing the products out of the ductive than state capitalism be-
market. Such critics forget that cause of: (a) the snowballing
workers might prefer to work at millions of individual ambitions
a low wage rather than not to into a huge avalanche, (b) the ele-
work at all. ment of competition based on free
consumer choice which improves
SavingBeginsat Home quality and efficiency, (c) the
One thing is certain: nascent strictly non-political management
industrial economies have to start based on efficiency and responsi-
on an ascetic, a Spartan level. This bility.
is true of all economies, free or So, whence comes the wave of
socialistic. The apologists of the hatred directed against free enter-
USSRcan well use this argument prise? Dissatisfied intellectuals
in the defense of Soviet economies designing utopias and decadent
in their initial stage, but only up noblemen do not account entirely
to ~ point: the introduction of so- for the phenomenon. Though nas-
cialism in Russia effected immedi- cent capitalism has not yet "de-
ately a tremendous decline of livered the goods" (children can
working-class, peasant-class, and only show promise, no more) ma-
middle-class living standards ture capitalism has proved that it
which, compared with 1916 levels, can provide. Empirically speaking,
have improved only in spots.Large capitalism has justified itself in
sectors still are worse off than be- comparison with socialism (for
fore the Revolution. A microscopic the existence of which we have to
minority, however, lives very well be grateful in this one respect).
indeed. 1 In the meantime, free The assaults against free enter-
economies have made such enor- prise are launched with the help
mous strides that the gap between of theories and of sentiments,
Russia and the West is greater sometimes working hand in hand.
than in 1916. There are two rea- Frequently these attacks are made
l See "Free Enterprise and the Rus- indirectly, for instance, by criticiz-
sians," The Freeman, August, 1972. ing technology. This critique
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might be genuine, but often serves labor market. Mancan choose the
as a detour. Much of the current place and conditions of his work.
antipollution campaign is subcon-
sciously directed at capitalism via ¯ (3) The critique of "monopoly
technology. (This particular prob- capitalism," shared in a milder
lem is less acute in the Socialist way by the "Neo-Liberal" school,
World only because it is less in- is opposed to all forms of bigness.
dustrialized; it is nevertheless Still, in the free world we find
amusing to see the Left embrac- that most countries have legisla-
ing all the idle dreams of the old tion against monopolies in order
conservative agrarian romanti- to keep competition alive, to give
cism.) However, if we examine the consumer a real choice. Any
closely the attack against free en- criticism of monopolies by a so-
terprise, we find the following cialist is hypocritical, because so-
elements: cialism means total monopoly, the
¯ (1) The charge that business state being the only entrepreneur.
cycles are the consequenceof free- DeeperResentments
dom rather than political inter-
vention, though proof to the con- Yet these attacks are frequentl:/
trary is well established. only rationalizations of muchdeep-
er resentments. At the very roots
¯ (2) The attack against the of anticapitalism we have the the-
man-consuming,soul-killing, slave- ological problem of man’s rebel-
driving forms of modern produc- lion against Original Sin or, to
tion. In this domain, however, the put it in secular terms, his vain
main culprit is the machine rather protest against the human condi-
than the human factor. Technol- tion. By this we mean the curse to
ogy per se is strictly disciplina- which we are subject, the neces-
rian. In this respect, socialism or sity to work by the sweat of our
communism would not bring the brow. The worker is in harness,
slightest alleviation. On the con- but so is the manager and so is
trary! Let us remember the ideal everybody else. For this uninspir-
of the Stakhanovite, the absence ing, sometimes unpleasant state of
in socialist countries of genu!ne affairs, the average manwill stick
labor unions, the limitless means the guilt on somebody; capitalism
the totalitarian state has for co- serves as the convenient scape-
ercion, regulations, and controls. goat. Of course, work could be
We must bear in mind that the greatly reduced if one were will-
free world also has a competitive ing to accept a muchlower living
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standard - which few people want fectly natural because a broker
to do. Without the opportunities must always be paid; and an en-
free enterprise provides for highly trepreneur, as we have said before,
profitable work, the living stand- is actually a broker between the
ards would go downto early medi- worker and the consumer by pro-
eval levels. Still, the resentment viding the former with the neces-
against this order is directed not sary tools and guidance in pro-
so much against an abstraction- duction. (The merchant is a sub-
such is humannature - as against broker between the manufacturer
persons. Thus, the culprit is taken and the public.) It is also natural
to be the "Establishment"- of the to pay for borrowed tools for the
"capitalists." simple reason that their value is
This gives us a hint as to the diminished by use. (Thus the trav-
nature of the anticapitalism which eling salesman will have to pay
has more and more surfaced since for a rented car, the commercial
the French Revolution and the de- photographer for a rented camera,
cline of Christianity: envy. Ever and so forth.) Beyon4 this, the
since 1789, the secret of political entrepreneur (who is, as we have
success has been the mobilization seen, a broker as well as a lender)
of majorities against unpopular takes the risk of failure and bank-
minorities endowed with certain ruptcy. This situation also may be
"privileges"- particularly finan- encountered in the USSR where
cial privileges. Thus, in the nine- anyone can get an "unearned in-
teenth century, the "capitalist" come" for money he puts into a
appeared to be the man who en- savings bank or where he can buy
joyed considerable wealth though a lottery ticket. The purchase of
he apparently "did not work" and such a ticket is based on an ex-
derived a vast income from the pectation (i.e., to make a profit)
toil of the workers "who have to but also entails a risk (i.e., not to
slave for him." Apart from the in- win anything).
controvertible fact that they most- Risk characterizes all of human
ly "slave for themselves," there is existence: to make an effort with-
some truth to this. out exactly foreseeing its success.
Thus, a writer starting a novel or
TheEntrepreneurial Role a painter putting the first lines on
Almost every worker will usu- his canvas is not sure whether he
ally contribute in a minor way to can transform his vision into re-
the income of the entrepreneur or ality. He might fail. Often he does.
of the stockholders. This is per- The farmer with his crop is in the
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same boat. But the typical worker compensation of employees
entering the factory can be cer- amountedto 71 per cent; the self-
tain that he will be paid at week’s employed earned 11.9 per cent, the
end. It should be noted here that farmers 3.1 per cent. Corporation
in Austria and Germany, for in- profits before taxes were 9.7 per
stance, the industrial laborer cent of the total national income
works an average of 43 hours a (after taxes only 4.9 per cent) and
week (the 40-hour week is in the dividends paid out were 3.4 per
offing), while the self-employed cent. Interest paid to creditors
put in an average of 62.5 hours a amounted to 4.7 per cent of the
week. In other words, the rule national income. Yet, were the re-
within our mature economy is cipients of these dividends and in-
this: the "higher up," the greater terest payments all "capitalists"?
the work effort-and the higher, Howmany workers, retired farm-
too, the work ethics; the slack em- ers, widows, benevolent associa-
ployee cheats the employer but the tions, and educational institutions
slack employer only cheats him- were among them? Would this
self. sum, evenly divided among all
Americans, materially improve
Facts and Fiction
their lot? Of course not.
The trouble, as Goetz Briefs In other parts of the world the
once pointed out, is that the cur- situation is not much different.
rent notions about the profits of According to earlier statistics
the capitalists are totally out of (1958), if all German incomes
touch with reality. ~- The reason for were to be reduced to a maximum
these wrong ideas is partly mathe- of 1000 Marks (then $250.00)
matical! Let us look at some sta- month and every citizen given an
tistics. Too manypeople think that even share of the surplus, this
a radical redistribution of profits share would have amounted to 4
would truly benefit "the little cents a day. A similar calculation,
man." But what do the figures tell expropriating all Austrian month-
us? According to the Economic ly incomes of 1000 dollars or more,
Almanac, 1962, published by the would in 1960 have given each
National Industrial Conference Austrian citizen an additional
Board, (page 115), of the national cents a day!
income in the United States, the But, let us return to corporate
profits. The 13 largest Italian
2 Das Gewe~’kschaftsproblem gestern
und heute. (Frankfurt am Main: Knapp, companies composed in 1965 a
1955), p. 98. full-page advertisement which
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they tried to place in the leading will get the reply that in a democ-
dailies of the Peninsula. This racy a fiscal policy which might
statement told at a glance what be economically sound could be
the dividends had been in 1963, politically unacceptable- and vice
what they were over a 10-year pe- versa. Pointing out that the spend-
riod, what salaries and wages ing of wealthy persons is good for
were paid, how much industry con- the nation as a whole may bring
tributed to social security and old- the snap reaction that "nobody
age pensions. The relationship be- .,~hould have that much money."
tween the dividends and labor "get, people who earn huge sums
cost was roughly 1 to 12. The com- usually have taken extraordinary
panies added that the estimated risks or are performing extraor-
number of shareholders (obvious- dinary services. Someof them are
ly from many walks of life) was :inventors. Let us assume that
over half a million-double the somebodyinvents an effective drug
number of the employees. Interest- against cancer and thereby earns
ingly and significantly enough, a hundred million dollars. (Cer-
two of the dailies refused to carry tainly, those who suffer from can-
the paid advertisement: one was cer would not begrudge him his
the Communist Unit~, the other wealth.) Unless he buries this
the Papal Osservatore Romano sum in his garden, he would help
whose excuse was that it was pub- by lending to others (through
lished in Vatican City, which banks, for instance) and by pur-
means outside of the Italian State. chasing liberally from others. The
only ~eason to object to his wealth
Rootedin Envy would be sheer envy. (I would add
To the advocate of equality, the here that had it not been for the
fact that certain individuals live liberality of monarchs, popes,
much better than others seems to bishops, aristocrats, and patricians
be "unbearable". The internal rev- it would not be worthwhile for an
enue policies which try to "soak American to pay a nickel to see
the rich" often have their roots in Europe. The landscape is more
man’s envy. It seems useless to grandiose in the NewWorld.)
demonstrate that a redistribution Still, it is significant that one of
of wealth would be of no advan- the few outstanding Christian so-
tage to the many or that an op- ciologists in Europe, Father Os-
pressive tax policy directed against wald yon Nell-Breuning, S J, not
the well-to-do is self-defeating for noted for conservative leanings,
a country’s economy. One usually has recently (Zur Deb~tte, Mu-
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nich, February 1972) taken a firm vate ownership existed de lure,
stand against the myths of the but certainly not de facto.) The
beneficient effects of the redistri- remark of Roepkeis only too true,
bution of wealth. As one of the that in a free enterprise system
architects of the Encyclical Quad- the supreme sanction comes from
ragesimo Anno he emphasized that the bailiff, but in a totalitarian
Pius XI was thoroughly cognizant tyranny from the hangman.
with this incontrovertible fact but The Christian insistence on
that, in the meantime, this knowl- freedom-the monastic vows are
edge has been nearly lost and that voluntary sacrifices of a select few
therefore demagogical ideas have -derives from the Christian con-
largely invaded Catholic sociolog- cept that man must be free in or-
ical and economic thinking. Espe- der to act morally. (A sleeping,
cially in the domain of "Third chained and clubbed, a drugged
World" economic problems, the person can neither be sinful nor
learned Jesuit hinted, the hue and virtuous.) Yet, the free world
cry for "distributive justice" has which is practically synonymous
done a great deal of mischief. with the world of free enterprise,
It has becomefashionable to at- alone provides a climate, a way of
tack free enterprise on moral life compatible with the dignity of
grounds. There are people among man who makes free decisions, en-
us, many of them well-meaning, joys privileges, assumes responsi-
idealistic Christians, who freely bilities, and develops his talents
admit that "capitalism delivers as he sees fit. He is truly the stew-
the goods," that it is far more ef- ard of his family. He can buy, sell,
ficient than socialism, but that it save, invest, gamble, plan the fu-
is ethically on a lower plane. It is ture, build, retrench, acquire capi-
denounced as egotistic and ma- tal, makedonations, take risks. In
terialistic. Of course, life on earth other words, he can be the master
is a vale of tears and no system, of his economic fate and act as a
political, social or economic, can man instead of a sheep in a herd
claim perfection. Yet, the means under a shepherd and his dogs. No
of production can only be owned doubt, free enterprise is a harsh
privately, or by the State. State system; it demands real men. But
ownership of all means of produc- socialism, which appeals to envi-
tion certainly is not conducive to ous people craving for security
liberty. It is totalitarianism. It in- and afraid to decide for them-
volves state control of all mediaof selves, impairs humandignity and
expression. (In Nazi Germanypri- crushes man utterly. ~
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The American Economy
ISNOT
HANS F. SENNHOLZ Depression-Proof
MOSTcontemporary economists are The sincerity of their intentions
fully convinced that a major de- is no more to be doubted than the
pression of the 1929-1941 variety good will of the policymakers of
cannot happen again¯ It is incon- the Hoover and Roosevelt era who
ceivable, they say, that the Ameri- were engulfed by the Great Depres-
can economy should fall again into sion. But it may be questioned that
such an abyss of despair when we have learned to avoid the dread-
more than 13 million Americans ful errors of policy that caused and
were unemployed, when banks and prolonged the disaster. If we re-
businesses failed by scores and peat the errors that generated the
countless farmers lost their land, Great Depression, inexorable eco-
when nearly everyone suffered nomic law assures that it must
painful losses of wealth and in- happen again.
come¯ The tragedy of the Great Have our policymakers learned
Depression lives on as a nightmare the lessons of the Great Depres-
that frightens everyone especially sion? Their explanations and in-
during periods of recession or stag- trepretations of economc decline
nation. But our politicians and differ little from those offered by
their learned advisors, the econo- the politicians of the 1920’s and
mists, assure us almost in unison 1930’s. And contemporary economic
that they will not let it happen policies, although far more com-
again¯ They are solemnly pledging prehensive and massive in scope
the awesome power of government and import, are similar to those
to prevent another depression. conducted by the Hoover and
Dr. Sennholz heads the Department of Eco-
Roosevelt Administrations.
nomics at Grove City College arid is e noted Most economists echo the expla-
writer and lecturer on monetary and economic
principles and practices. nation given by the most famous
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