Capitalism, socialism, and democracy

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Socialism 17900 LAB

Title: Capitalism, socialism, and democracy
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SB Papers: 1

Capitalism,
Socialism,
and
Democracy

by

Sidney Hook
Bayard Rustin
Carl Gershman
Penn Kemble

mm

The University

of Michigan

Labadie Cotttctton

Reprinted by
Social Democrats, USA

275 Seventh Avenue

New York, N.Y. 10001

(212) 255-1390

Capitalism, Socialism, and Democracy

A Symposium

Earlier this year, the editors of Commentary addressed the following statement and
questions to a group of intellectuals of varying political views:

The idea that there may be an inescapable connection between capitalism and de-
mocracy has recently begun to seem plausible to a number of intellectuals who
would once have regarded such a view not only as wrong but even as politically dan-
gerous. So too with the idea that there may be something intrinsic to socialism which
exposes it ineluctably to the "totalitarian temptation." Thus far, the growing in-
fluence of these ideas has been especially marked in Europe— for example, among
the so-called "new philosophers" in France and in the work of Paul Johnson and
others in England— but they seem to be receiving more and more sympathetic at-
tention in the United States as well.

How significant do you judge this development to be? Do you yourself share
in it, either fully or even to the extent of feeling impelled to rethink your own
ideas about capitalism and socialism and the relation of each to democracy?

Appearing in this pamphlet are the responses by members of Social Democrats, USA.

Social Democrats, USA, wishes to thank the International Ladies' Garment Workers
Union for its kind assistance in making possible the publication of this pamphlet.

T U 1 *

o *.»■-■

Sidney Hook: ^he q ue stions asked about
socialism, capitalism, and
freedom were widely discussed long before the
socialist dream of a community in which all are
"free and equal" was transformed into a totalitar-
ian nightmare in the Soviet Union and its satel-
lites. But these questions became especially acute
for those among the intellectual classes who had
been drawn to socialism not so much because it
seemed a feasible means of abolishing poverty as
because of its promise to liberate human energies
and expand freedom.

The logic of the arguments was explored in
depth in my second series of debates with Max
Eastman almost thirty-five years ago after he had
been converted by Friedrich von Hayek to ardent
support of an unregulated free-enterprise system.*
I was struck at that time by an odd feature of the
discussion that has often reappeared in subsequent
exchanges on the theme. Staunch critics of Marx-
ism, in their effort to show that socialism necessar-
ily spells the end of political and cultural freedom,
seem to rely on the central dogma of orthodox
Marxism, namely, the theory of historical material-
ism. The orthodox Marxists maintain that the
mode of economic production determines the dom-
inant character of the culture of capitalist society,
as of all class societies, and that its politics, educa-
tion, art, philosophy, and religion "reflect" the
basic economic structure. The critics of Marxism
contend that the mode of economic production
would be no less decisive in determining the cul-
ture of a socialist society, but that its socialized
economy, far from providing the sound basis for a
leap from the kingdom of necessity into the king-
dom of freedom, would inescapably destroy the
political and cultural freedoms that were ushered
into the world in the wake of capitalism.

Both views suffer from the simplicities and
inadequacies of every historical monism. The
economy of a society excludes certain options and
always limits alternatives of action, just as the
foundation of a building excludes certain types of
superstructure. But on the same foundation one
can erect either a prison or a luxurious retire-
ment home. And no knowledge of the foundation
alone will enable us to predict the precise number
of stories that will be built on it, the materials
and style of its construction, its interior decorative
design, and a multiplicity of other important de-
tails.

The influence of economic organization on hu-
man ideas, ideals, and behaviors is a matter of
degree, and its strength varies from time to time.
Whatever may have been the case in the past, in
our own era, since the end of World War I, the
mode of political decision seems to me to have
had at least as much influence on our culture as
the mode of economic production. This is not a
matter that can be established by conceptual an-
alysis but by empirical, social, and historical in-
quiry.

Those who contend that any significant interven-
tion of the state in economic affairs either by way
of ownership or control ineluctably leads to po-
litical tyranny and cultural despotism must meet
some obvious difficulties:

1. Capitalism as an economic order has func-
tioned under political systems that have had var-
ied character, either more or less democratic or
authoritarian, and even in some countries like
Italy, Japan, and Germany that abandoned dem-
ocratic political forms entirely. If the economic
system of capitalism did not uniquely determine
the political and cultural institution of the so-
cieties in which it functioned, why should we as-
sume that a regulated or socialized economy, re-
gardless of the degree and extent of the regula-
tion or socialization, must sooner or later result in
totalitarianism?

2. Granted that every completely or predomin-
antly socialized economy today is characterized by
a despotism more pervasive and oppressive than
any that existed in the past. Nonetheless, the
historical record is clear and incontestable: in
every such case, political democracy was destroyed
before the economy was socialized. There is not
a single democratic country where the public
sector of the economy has grown substantially
over the years, either through socialization or
through governmental controls and subsidies
(whether it be England, Sweden, Norway, Hol-
land, or the U.S.), in which the dire predictions
concerning the extinction or even the radical re-
strictions of democratic freedoms have been real-
ized.

3. Compare the economies of the United States
and Great Britain and the state of their political
and cultural life as they were at the turn of the
20th century, and as they are today. In the past,
their economies, although not completely free
because of the tariff system, were certainly far
freer from state intervention or control than they
are at present. Yet with respect to freedom of ex-
pression in politics and all fields of art, freedom
of "life styles," openness to heresies within the
academy and without, tolerance of dissent, accep-
tance of unconventional sexual behavior, current
practices are so free that in some areas they border
on license, as in the violent disruption of public
debate. The increasing state control of the econ-
omy in democratic countries has not resulted in
the progressive diminution of freedoms in politi-
cal and cultural life.

4. Compare the American economy during and
shortly after World Wars I and II. In World War
I, business was conducted almost as usual, with
very little state control over the economy. During
this same period, however, we experienced the
worst political terror in American history. During

* The exchange is reproduced in my Political Power and
Personal Freedom (Macmillan, 1959). The first series, in
the late 1920's and early 1930's, was about the meaning of
Marx.

World War II, the government practically took
over the control of the American economy with
price controls and rationing. Yet the political
climate was such that representatives of both the
Socialist and Socialist Labor parties— neither of
which supported the war— were permitted to ad-
dress the armed forces. The one great lapse was
the cruel and needless internment of the Japanese
population in California, engineered by the then
Governor, Earl Warren. What made the differ-
ence? In part the nature of the enemy we were
combating, but even more, an awareness of the
excesses of World War I and a desire to avoid
them. The only call for the arrest of Norman
Thomas, who defended the right to strike in war
industries, came from the leaders of the Com-
munist party.

This is not to deny in the least the profound ways
in which the economic relations of any society in-
fluence its political institutions and behavior, but
the latter can, as the emergence of the welfare
state itself shows, have a far-reaching reciprocal
influence on tire development of the economy and
the redistribution of wealth within it. It is signi-
ficant that in none of the welfare states has govern-
ment control of the economy— regardless of the
wisdom and feasibility of the regulatory measures
—prevented the electorate from voting the
governing political party out of power. Here and
there extra-parliamentary efforts have been made
to throttle the political opposition, but they have
been no more frequent than comparable episodes
when the economy was unregulated, and they have
rarely succeeded when courageously resisted.

In the United States, the bureaucratic usurpa-
tion of academic functions by the Department of
Health, Education, and Welfare (HEW) through
the imposition of a disguised quota system, under
penalty of forfeiting all federal subsidies, has
sometimes been cited as evidence of the erosion of
traditional freedoms in consequence of economic
intervention by the state. It is more persuasive
evidence of the absence of moral courage on the
part of our major universities. Had they made a
concerted effort to defy the HEW guidelines and
taken their case to Congress and the courts, since
the defense capacity of the nation depended on
them, they could have stopped the bureaucrats of
HEW in their tracks. Sometimes it may be eco-
nomically costly to defy a government decree, even
jf it is legally mandated by Congress and the
courts. But fidelity to the academic mission of the
university may require it. Those who cite this un-
happy chapter in recent academic history as evi-
dence that encroachment on basic freedoms must
necessarily follow on government grants, would
interpret even graver capitulations to the power of
capital in an unregulated economy not as a viola-
tion of basic human rights but as a deplorable
weakness of moral fiber. Unpopularity and even
genteel poverty may be the costs of defending free-

dom against bureaucrats in a democratic welfare
state, but such defense does not require the cour-
age of a Sakharov or a Bukovsky.

Nonetheless, in the light of historical experience
—which only a fanatic or a fool can ignore— we
must recast the idea of socialism, whatever the
terms used to designate the revision. The em-
phasis must be placed not so much on the legal
form of property relations but on the moral ideals
of democracy as a way of life, conceived as an
equality of concern for all citizens of the com-
munity to develop themselves as persons to their
full growth. The economy should be considered
a means to that end. As far as the quality of hu-
man life is concerned, this approach is more
radical than mere measures of nationalization in
which, in the absence of free trade unions, work-
ers can be exploited more than in the private
sector of democratic welfare states.

If we do not place too great a stress on efficiency,
I believe that it is still formally possible to pro-
vide for freedom of choice in occupations and in
consumption even in an economy whose major in-
dustries have been collectivized. But the totalit-
arian potential in such a setup makes it too dan-
gerous. The loss of political freedom would trans-
form the economy into a most powerful engine of
human repression. Therefore, in the interests of
freedom, it is wiser and safer to limit carefully the
extent of socialization, relying on some regulated
industries, considerable private enterprise, public
corporations, cooperatives, increased worker parti-
cipation in the operation of plants as well as in
the directing boards of large corporations, and
other means of multiplying centers of economic
power.

It is significant that although in some fascist na-
tions political democracy has been restored with-
out civil war, not a single country in which Com-
munists have seized power has been permitted to
revert to democracy. The absolute control of the
economy by the Communist party has enabled it
to reinforce a kind of terror beyond anything pre-
viously known in human history, and to use the
bread-card and the work-card to enforce confor-
mity.

An additional reason for preserving a private
sector is that it can help provide greater incentives
to productivity and innovation without which a
minimum decent standard of living cannot be sus-
tained—a standard below which human beings
should not be permitted to sink in a civilized
society, and which could be raised with technologi-
cal advances. It is significant how little tech-
nological and industrial innovation exists in cur-
rent collectivist societies whose economies from
the very outset borrowed, bought, or stole the
techniques, know-how, and discoveries of the free
Western economies.

If we declare that "we put freedom first," is it
more likely to be furthered in the world today by
a return to an uncontrolled free-enterprise econo-

i-L,

my than by the judicious development of the
democratic welfare state pruned of its bureau-
cratic excrescences? By freedom here I do not
mean the right to do anything one pleases, which
would result in a Hobbesian war of all against
all, but the strategic freedoms of speech, press,
assembly, independent trade unions and judi-
ciary, and the cluster of rights associated with
democracy in its widest sense. Although they are
interrelated, there is an order of priority in free-
doms to guide us when they conflict. All but
anarchists understand that since every freedom
logically entails the curtailment of an opposite
freedom— if I am to be free to speak, others are not
free to prevent me from speaking— the state must
exist to enforce the exercise of these civic and
political freedoms. Any other functions we entrust
to it must be limited by the scrupulous adherence
to the strategic freedoms. In a democracy, the state
should be considered as a protector of human
rights, not its necessary enemy.

Some who say that they put freedom first mean
primarily the freedom to buy and sell, which is
tantamount to putting profit first. The capitalist
pur sang is not out of character when he does this.
But it is to be hoped that in the defense of the
democratic world against the totalitarian assault,
the capitalist will be a little less pure, giving
political freedom priority. However, when we
see the eagerness with which certain groups
of financiers, industrialists, and farmers fall all
over themselves to expand trade with Communist
countries and contrast it with the consistent and
principled struggle of the organized American
labor movement, the AFL-CIO, against the denial
of human rights anywhere in the world, we en-
counter a different order of priorities. The fact
that it was George Meany who gave a public plat-
form to Solzhenitsyn and Bukovsky and not Ford
or Carter is of more than symbolic significance
in the global struggle for human freedom.

Sidney Hook has written many books on philosophy
and politics, including The Hero in History; From
Hegel to Marx; Revolution, Reform, and Social Jus-
tice: and Pragmatism and the Tragic Sense of Life. He
is emeritus professor of philosophy, New York Univer-
sity, and is currently Senior Research Fellow at the
Hoover Institution at Stanford.

Bayard Rustin: The reasons for the re
emergence of the debate

about the relationship among socialism, capitalism,
and freedom are somewhat mysterious, but the
debate clearly exists as a serious intellectual pheno-
menon. For certain purposes, one can even identify
a new anti-socialist school of thought, though its
adherents have diverse beliefs, ranging from semi-
anarchism to liberalism, from conservatism to

religious mysticism.

The new anti-socialism shows every sign of be-
coming a counter-dogma, an ersatz faith every bit
as rigid and extreme as the stereotyped version of
socialism it criticizes. As such, it trivializes impor-
tant and complex issues by reducing them to an
abstract and one-dimensional framework that mis-
leads by presenting deceptive and unrealistic alter-
natives. The new anti-socialism may well evolve
into a positive social philosophy, but it also could
become little more than a vehicle for a broader
cynicism about democracy, the possibilities of re-
form, and the ideals of equality and social justice.
Rather than illuminating the issues between total-
itarianism and democracy or clarifying the chal-
lenges facing democratic societies, this current of
thought may turn out to be a dogma that obscures
the problem of how to strive for the general goals
of the community consciously and freely, in the
most rational way possible.

A serious barrier to evaluating the judgments
that socialism contains a totalitarian flaw and that
capitalism and democracy are inherently con-
nected is the great variety of socialisms or, more
accurately, the numerous and diverse movements
, and philosophies which claim the label. Unless
we agree on which socialism is being discussed,
we will have no prospect of determining the
validity of these anti-socialist and pro-capital-
ist propositions. For me, socialism has meaning
only if it is democratic. Of the many claimants to
socialism only one has a valid title— that socialism
which views democracy as valuable per se, which
stands for democracy unequivocally, and which
continually modifies socialist ideas and programs
in the light of democratic experience. This is the
socialism of the labor, social-democratic, and so-
cialist parties of Western Europe. To emphasize
that socialism is democratic by conviction and not
from mere expediency, I find it helpful to identify
this philosophy as social democracy. This has the
virtue of stressing that socialism or social democ-
racy is a variant of democracy while simultane-
ously rejecting the false notion that democratic
socialism is only one among many socialisms.

In their more charitable moods, some critics
of socialism recognize the democratic character
of social democracy, but suggest that there is an
incompatibility, a contradiction between that
movement's socialist ideas and its democratic
practice that either renders its avowed socialism
mere decoration or makes its democratic creden-
tials ultimately suspect. Although this argument
is sometimes developed with a certain subtlety
and sophistication, at bottom it takes the form of
a crude economic determinism. There is no ques-
tion that a totally collectivized and centrally
planned economy contains the seeds of totalitarian
domination. Conservatives and liberals are not
alone in recognizing this danger. Contemporary
socialists acknowledge this risk, in both their
governmental actions and in their programs. This

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danger, however, cannot form the basis for eco-
nomic policy or the substance of a responsible
social philosophy.

The other argument, that there is an inescapable
connection between capitalism and democracy,
often begins more as a rejection of totalitarianism
than as a positive endorsement of capitalism.
There is, however, a decided tendency for this line
of thought to become little more than an apology
for the status quo, an idealization of capitalism,
sometimes even in its most destructive manifesta-
tions. Historically, the relationship between capi-
talism and democracy has been indirect, uneasy,
and uncertain. It is often forgotten that political
terror can be systematic under free enterprise.
Capitalism, unless counteracted by other forces,
restricts and stifles democracy. There is ample
reason to be skeptical of the frequent assertions,
whether explicit or implicit, that only the existing
structure of capitalism is compatible with democ-
racy. Socialism's critics claim that social reforms
of the welfare-state type are the road to serfdom,
a charge that is demonstrably untrue. Far from
diminishing human freedoms, greater public in-
tervention in the economy, the expansion of
social legislation, and the introduction of signifi-
cant redistributive programs have very often en-
hanced them. By alleviating deprivation and in-
creasingly replacing hardship and uncertainty with
security and opportunity, the welfare state helped
democracy flourish. It is no accident that democ-
racy is most secure, and extremist groups weak-
est, in the welfare societies.

Nonetheless, it must be admitted that the pro-
capitalist argument does contain an important
kernel of truth. It cannot be dismissed as an ideo-
logical smokescreen, for it is possible to hold that
there is an important relationship between capital-
ism and democracy while at the same time being
critical of corporate power, the existing distribu-
tion of wealth and income, and other features of
capitalist societies. What would seem to be crucial
to the existence of democracy is not that there be
a system that would conventionally be identified
as capitalist, but that there be a diversity of insti-
tutions, widely distributed economic and political
power, and a democratic spirit anchored by consti-
tutional and institutional guarantees of political
and associational freedoms.

The fears and concerns which have led some to
reject socialism and embrace capitalism are genu-
ine, but they are not uniquely related to socialism.
Rather, the problems and tendencies which those
fears reflect seem almost inherent in the nature of
modern industrialized societies. There are, to cite
only one aspect of this problem, powerful pres-
sures moving these systems in the direction of
greater public control. Negatively, the task is to
prevent democratic society from being engulfed by
the concentration of undue, arbitrary, and socially
irresponsible power. The possibility of a mutually
enlightening dialogue among all who recognize

this problem— conservatives, liberals, and social-
ists—exists and should be encouraged. With-
in this dialogue, however, the perspective of
social democracy differs from that of conserva-
tives and some liberals in taking a broader,
and, I believe, more accurate, view of the need to
make power responsible. It locates the danger of
concentrated and unanswerable power as existing
both in the hands of the state bureaucracy and in
the hands of industrial ownership and manage-
ment. Given this opposition to excessive govern-
mental power, the social-democratic conviction,
shared by many liberals, that the expansion of
freedom and the achievement of a fuller democ-
racy require economic decisions to be subjected to
greater public control does tend to present a di-
lemma. This dilemma, however, is not unresolv-
able. It does not necessitate the abandonment of
socialist ideas and ideals, but their modification
and further development. Practically, this entails,
among other things, an opposition to governmen-
tal intervention that is obtrusive or meddlesome
and to policies which are socially or economically
inefficient or counterproductive. It is a recognition
that not only is the welfare state an instrument
of social control, but an institution that must itself
be socially and democratically controlled.

Socialism cannot be reduced to an economic for-
mula, a structure of ownership. It must be viewed
in social, political, and ethical as well as in eco-
nomic terms. Social democracy is a pragmatic
faith rooted in the aspirations and needs of work-
ing people. It is idealistic but not messianic. In
the most meaningful sense, social democracy is a
continuation and further development of liberal
values. This is sometimes overlooked in the
United States, where for complex historical and
sociological reasons we lack an explicitly social-
democratic mass movement. Nonetheless, in this
country, as in Europe, social democracy has fully
incorporated liberal aspirations: the liberation
of repressed groups, individual autonomy, intellec-
tual freedom, tolerance of dissent, and self-govern-
ment through representative institutions. Not only
do liberals and social democrats frequently find
themselves working side by side on the tasks of im
mediate social reform, but there is also broad
agreement about what constitutes a good society
and how to achieve it.

The complex relationship between social de-
mocracy and contemporary capitalism undoubt-
edly confuses many of its critics. Social democracy
is assailed from the Left as a junior partner in the
capitalist system, and from the Right as anti-capi-
talist. There is an element of truth in both views.
The current program of social democracy is far
less concerned with abolishing capitalism than
with initiating a process of reform that will trans-
form its injustices and inequities. This distinc-
tion is crucial and should be recognized by all
democrats, regardless of their attitudes toward
socialism. As it strives to transform society,

social democracy seeks to preserve and broaden
the two great positive features of liberal capital-
ism: political freedoms and the capacity to pro-
duce. Thus social democracy is neither pro-capital-
ist nor, for the present, rigidly anti-capitalist. In-
deed, social democracy (and in the United States,
a roughly analogous coalition of labor, liberals,
and minorities) has already greatly transformed
capitalism. Social democracy adopts a flexible ap-
proach to institutional arrangements and social re-
forms; it has no unalterable blueprint to impose
on society. Every social-democratic proposal is mo-
tivated and tested by its probable consequences
for the democratic life of the community. Social
democracy is more a method of social change than
a definition of what society should look like.

Within the industrialized democracies, the polit-
ical decisions of the future will largely be over
how to make the mixed economy work. Political
debate, if it is to be productive, will be framed in
terms of the proper synthesis of freedom and con-
trol, individualism and collectivism, planning and
the market, rather than on the choice between
pure systems. The fundamental division between
Left and Right will continue to be, as it has al-
ways been, a division over the distribution of
wealth, power, and class status.

The value and promise of social democracy, the
political philosophy that seeks to extend democ-
racy into all spheres of life, has not been dimin-
ished; if anything, it has grown. We will need
more than a technocratic pragmatism to solve the
complex problems of today and those that have al-
ready begun to appear on the horizon. We need a
philosophy that is thoroughly grounded in demo-
cratic values. I am convinced that social democ-
racy, though certainly capable of enrichment, re-
finement, and further development, is such a phi-
losophy. The concerns of social democracy— how
to achieve more security, more welfare, more jus-
tice, more freedom, and more participation in eco-
nomic decisions— are as relevant as ever.

Bayard Rustin, president of the A. Philip Randolph
Institute and national chairman of Social Democrats,
USA, is the author of Strategies for Freedom: The
Changing Pattern oE Black Protest.

Carl Gershman: what troubles me about
the trend described in the
Commentary questions is that too many peo-
ple seem willing to give up too much too quickly.
I am referring specifically to a tendency to reject
social democracy or to deny its very existence. If
the world is divided between capitalism (meaning
democracy) and socialism (meaning totalitarian-
ism), what place can there be for social democracy?
It is viewed as either indistinct from capitalism
(Michael Novak and other "democratic capital-
ists" have taken this view, along with countless

Left socialists and Communists), or as tending
ineluctably toward totalitarianism (Irving Kristol
is a leading proponent of this view). Poor social
democracy. It is damned for being capitalist and
socialist, democratic and totalitarian, and it is not
even granted the courtesy of having its existence
recognized.

Not all intellectuals have been so quick to damn
or deny social democracy. Jean-Francois Revel,
responding to the Left socialist "excommunica-
tion" of social democracy, has described it as "a
political-economic system that has rather effec-
tively reconciled socialism, freedom, and self-gov-
ernment; that has substantial achievements in both
the economy and social justice to its credit; a sys-
tem that offers the added advantage of existing."
Raymond Aron has written that all Western Euro-
pean societies and their institutions

will probably develop in the direction of a cer-
tain type of socialism (in the broad, vague sense
of the term). This, reduced to a minimum im-
posed by political democracy, involves: state
intervention to ensure an overall balance, to
manage the business cycle, and minimize the
impact on particular social groups of unexpected
fluctuations; social legislation guaranteeing fun-
damental rights, especially in the fields of educa-
tion and health; a direct, progressive (not pro-
portional) system of taxation; and a more-or-
less extensive public sector. . . .

The social-democratic system described by Revel
and Aron is not totalitarian. It is anti-totalitarian.
And it is not capitalist, though it includes capital-
ism within it. The relationship of capitalism to
social democracy is similar to that of a motor to a
car. The motor generates the power, but it does
not determine where the car will go. "The capital-
ist system of production," Revel has written, is
"socially neutral. Its calling is purely economic"
(emphasis added). It is concerned with "produc-
tion, profit, and investment," but as a "purely
economic system has no social purpose." Social
democracy provides it with a social purpose by
using the wealth produced by capitalism to ad-
vance social goals.

The social-democratic state, in countries such as
Sweden and West Germany, has encouraged in-
vestment and economic growth through tax pol-
icies that make it possible for efficient private firms
to survive and prosper; and it has tried to main-
tain production and employment during eco-
nomic slowdowns with counter-cyclical policies
that stimulate investment and the accumulation
of inventories. The social-democratic state has
"appropriated" a sufficient part of the wealth
generated by the economic system to provide ex-
tensive benefits for the citizenry, taking care to
leave enough of the surplus for reinvestment so
that industry can remain productive. If too much
of the surplus is diverted to the welfare state, in-
dustry declines and eventually there is not enough
wealth produced to provide "welfare." This is

what happened in Britain (a case, as Aron points
out, of social democracy "wrongly understood"),
but the system is now in the process of being
brought back into balance by a social-democratic
government.

The policies described above have been adopted
in one way or another by all the social-democratic
parties of Europe. (They have also been exten-
sively applied in this country in the name of lib-
eralism.) The French party has taken a different
view, but only because "the hard facts of electoral
arithmetic," in Aron's words, forced an alliance
(now highly tentative) with the Communists. In
a word, the social-democratic pragmatism of
Eduard Bernstein has triumphed over the utopian-
ism and dogmatism of his "socialist" opponents.

Leszek Kolakowski recently offered a helpful
definition of socialism: it is not "a state of per-
fection but rather a movement trying to satisfy
demands for equality, freedom, and efficiency, a
movement that is worth the trouble only as far
as it is aware not only of the complexity of prob-
lems hidden in each of these values separately,
but also of the fact that they limit each other
and can be implemented only through com-
promises." Critics to the Right and Left of social
democracy will charge that this is not really social-
ism. But to turn around a phrase of Irving
Kristol's (who was equating socialism with total-
itarianism), "Socialism is what socialism does."
Perhaps we can agree to call the phenomenon
social democracy, a term which clearly conveys
the spirit of democratic reform that guides mod-
ern democratic socialism.

Significantly, the left-socialist and capitalist
opponents of social democracy have no alternative
to offer to it. Some Left socialists propose worker
management of industry as an alternative. But
industrial democracy has already been introduced
to a large extent (and in different forms) by social
democrats and trade unionists, and its future
application will be determined according to the
desires of workers and the needs of society. Left '
socialists have little use for the market system
based upon the price mechanism. But so far no one
has indicated an alternative to this that does not
involve centralized command planning where all
decisions are made by an omnipotent bureaucracy
-a system that is demonstrably undemocratic and
inefficient. The capitalist opponents- of social
democracy resist all social-democratic reforms, but
generally speaking, they do nothing when they are
in power to roll back these reforms. They seem to
know that the repeal of the welfare state would be
neither feasible nor politically popular.

Social democracy has proven its ability to man-
age Western economy and society, and I think it
will even weather the current economic storm. If
it is in crisis today, as I think it is, the reasons have
more to do with politics than with social and eco-
nomic policy. The main challenge facing social

democracy is whether it can provide leadership
for the democratic world in the political and ideo-
logical rivalry with Communism. Its response to
ths challenge has been inadequate, owing largely
to the continuing division and political weakness
of Europe, where social democracy is based, and to
the deteriorating balance of power which has
strengthened tendencies toward neutralism within
social democracy.

It hardly follows from this, though, that one
must look to the anti-socia]-democratic advocates
of capitalism for a revival of democratic political
will. What must be remembered about capitalism
is that, in Revel's words, it is "a purely economic
system" that is simply incapable of engaging in
sustained political and ideological struggle. Joseph
Schumpeter applauded the economic achievements
of the capitalist class but accurately perceived that
it was "politically helpless and unable not only to
lead its nation but even to take care of its partic-
ular class interest." The bourgeois, he wrote, may
be "a genius in the business office," but he is
"utterly unable outside of it to say boo to a goose
—both in the drawing room and on the platform."
Schumpeter even foresaw, as the final irony, that
the bourgeois, whatever his convictions, would sell
his valuable wares to the Russian totalitarians.
"This is the way the bourgeois mind works," he
wrote, "—always will work even in sight of the
hangman's rope." Perhaps Schumpeter had read
the famous memorandum wherein Lenin had pre-
dicted that the capitalists would "open up credits
for us, which will serve us for the purpose of sup-
porting Communist parties in their countries.
They will supply us with the materials and tech-
nology which we lack and will restore our military
industry, which we need for our future victorious
attacks upon our suppliers. In other words, they
will work hard in order to prepare their own
suicide."

No wonder there is today a mood of defeatism
in the ranks of Western conservatives who have
nothing to throw into the political battle against
Communists schooled in Leninist tactics and the
art of "ideological struggle." Indeed, how can they
be expected to throw up an adequate defense, let
alone launch a counteroffensive, when the class to
which they have pledged their loyalty determines
its attitude toward Communism by the same yard-
stick that it judges everything else: profitability?
And on this basis it is quite willing to collude with
the devil.

This is why the Communists have always be-
lieved that they can coexist with and use capital-
ism, even as they look toward the moment when
they will ultimately defeat it. At the same time,
they have never for a moment doubted that social
democracy is a mortal enemy. Communists may
often seek tactical alliances with socialists— and
socialists may sometimes acquiesce out of weak-
ness, illusion, or for tactical reasons— but the ri-
valry persists between political parties, in trade
unions, among intellectuals, and at the level of

ideology where there can never be a compromise
between social democracy and totalitarianism.

Viewing the world contest as a struggle between
capitalism and socialism is self-defeating in that it
assigns capitalism a political task it cannot fulfill,
(Just defining the struggle in these terms involves
a crucial political concession to the totalitarian,
vvho should not be allowed to lay claim to any
aspect, socialist or non-socialist, of the Western
humanitarian tradition.) It is also inaccurate, for
it assumes that the struggle is economic when it is
really a political contest between democracy and
totalitarianism. The West has already decisively
won the economic rivalry with the Communist
world. By any criterion— economic growth, tech-
nological advancement, worker productivity— the
closed, oppressive societies of the East are no
match for the dynamic societies of the West- But
the basic question, posed by Aron, remains: do
these criteria "determine the destiny of states?
Does not virtu, in Machiavelli's sense of the term,
still consist in the capacity for collective action
and historic vitality, and do not these qualities
remain the ultimate cause of the fortune of na-
tions, of their ascent and their fall? Suddenly, the
perspectives are transformed, overturned."

The trend in the West is toward greater demo-
cracy, and the future lies with movements for
democratic reform. It is therefore to these move-
ments that we must look for a revival of the demo-
cratic political will. Only out of the genuine moti-
vation to reform, improve, and strengthen demo-
cratic society can there emerge that political will
to defend it and to apply democratic values inter-
nationally. This revival will not occur unless social
democracy (defined broadly as the fundamental
movement for democratic reform) is guided by the
view that Communism, not capitalism, is the main
obstacle. It will be less likely to occur if the de-
fenders of capitalism persist in portraying social
democracy as totalitarianism's unconscious agent.
It is, rather, the conscious agent of democracy—
not its enemy, but its main hope.

Carl Gehshman is executive director of Social Dem-
ocrats, USA.

Penn Keitlblc: ^ s trtere an "inescapable con-
nection between capitalism
and democracy"?

Today many social democrats would agree that
certain freedoms of the marketplace and of entre-
preneurship should be accepted as valuable ele-
ments of a democratic society. But to acknowledge
a place for these particular kinds of freedom is a
far cry from granting that democracy grows di-
rectly, inevitably, and exclusively out of capital-
ism.

In the United States and Western Europe, the
scope and authority of capitalist economic institu-
tions have been checked significantly in recent dec-
ades, while the size and importance of the public
sector have grown. But there is no evidence that as
a result of this changing balance the peoples of
these societies have suffered any loss of rights or
liberties. On the contrary, their liberties have flour-
ished—in some cases, like the green bay tree.

Has capitalism been immune to the "totalitar-
ian temptation"? Surely not. In Germany, aid
from the proprietors of heavy industry— Krupp,
Thyssen, Kirdorff— was essential to the eventual
success of the Nazis. As World War II came to a
close, capitalists and American statesmen with
sterling capitalist credentials were so carried along
by the spirit of the Popular Front and Russo-
American wartime cooperation that they gave way
to highly optimistic hopes about postwar Soviet
intentions. American troops stopped at the west
bank of the Elbe, and further concessions were
yielded at Yalta and Potsdam.

A similar tendency appeared in the last Republi-
can administration. Its policy of detente was per-
haps the most politically damaging concession to
the "totalitarian temptation" by the leaders of the
democratic world since the days of the Popular
Front. It gave the highest American sanction to
the belief that the cold war might be ended
through one-sided concessions by the democracies,
and to the notion that the Soviet Union could
be a responsible partner for peace. (One need
not excuse Western European socialists to point
out that the inclination of some of them today
toward electoral cooperation with Communists
owes something to this recent American diplomatic
example.)

The Republican policy of ddtente had support
from several quarters, but those whose support
was decisive were not socialists, but capitalists,
whose eagerness to share in the exploitation of the
workers, markets, and raw materials of- the Soviet
bloc opened the way for a momentous shift in
international politics. This same business consti-
tuency fights against the Jackson Amendment,
and is the chief influence at work when such Re-
publican leaders as former President Ford, Senate
Minority Leader Baker, and House Minority
Leader Rhodes belittle the Carter administra-
tion's cautious criticisms of Soviet human-rights
abuses. This is the constituency represented by the
delegations of American widget makers at the old
Havana Hilton, toasting Castro while gasping on
their Upmann Churchills.

From such evidence as this, one can argue that
there is something intrinsic to capitalism rather
than to socialism that exposes it to the "totalitar-
ian temptation." A capitalist is for the free market
up to a point— the point at which he discovers
some method for bringing the market under con-
trol in order to enhance his own position. The
same general rule applies to his concern for the

siutation of the "free world." He may be a staunch
cold warrior, but when his company is offered a
grain-export contract, a Siberian natural-gas con-
cession, or a bid on its new model computer, in all
likelihood he will experience a "conceptual break-
through." Suddenly he will realize that trade is
the cornerstone of peace, and that support for So-
viet dissidents and a concern for our military
"sufficiency" cannot be allowed to interfere with
the higher purposes of commerce. Such is the view
of the American Committee on U.S.-Soviet Rela-
tions, whose sponsors include Donald Kendall,
Chairman, Pepsico; George Prill, President, Lock-
heed International; Thomas Watson, Jr., of IBM;
and, inevitably, Professor Fred Warner Neal.

The impulse of capitalists to flout their own
long-term class interests in the pursuit of immedi-
ate profits is but one of their vulnerabilities to the
"totalitarian temptation." The others are more
subtle, but in the long run perhaps more influen-
tial. One is the tendency of capitalism, through its
emphasis on "value-free" rationalist education, to
create an intellectual class that is disposed to turn
against not only capitalism, but against all demo-
cratic culture, with loathing and ridicule. Joseph
Schumpeter's elegiac study of capitalism, from
which the title of this symposium is taken, spoke
of:

The extent to which the bourgeoisie, besides
educating its own enemies, allows itself to be
educated by them. It absorbs the slogans of cur-
rent radicalism, and seems quite willing to
undergo a process of conversion to a creed hos-
tile to its very existence.

Daniel Bell has developed another of Schumpe-
ter's insights into an equally powerful thesis. By
the mid-1960s, Bell argues, capitalism had created
a cultural milieu which was hostile to the values
which are necessary to a productive capitalist
economy:

American capitalism . . . has lost its traditional
legitimacy which was based on a moral system
of reward, rooted in the Protestant sanctifica-
tion of work. It has substituted in its place a
hedonism which promises a material ease and
luxury. . . .

In sum, there are strong grounds for arguing that
capitalism, not socialism, created both Tom Hay-
den and Timothy Leary: two figures who embody
certain of our chief difficulties in meeting the
"totalitarian temptation."

Is there "something intrinsic to socialism which
exposes it ineluctably to the 'totalitarian tempta-
tion' "? Exposes, yes; causes it inevitably to yield,
no.

Like every other political current of our times,
socialism is vulnerable. The socialist fathers took
democracy too much for granted. They scorned
the Utopians' "blueprints" for a socialist society
out of the belief that such a society would have to

be created by the living actors of socialist recon-
struction, but their romantic faith in spontaneity
left their tradition poorly defended against the
engineers of the Gulag Archipelago. They acknowl-
edged the great advance embodied in the capitalist
mode of industrial production, but underesti-
mated the momentous gain for civilization embod-
ied in "bourgeois democracy." They indulged
themselves in some dangerous rhetoric— the "dic-
tatorship of the proletariat"— which not even the
most painstaking exegesis has convicingly ex-
plained away. This inattention to democracy left
the socialist movement ill-equipped to understand
the totalitarian nature of the Soviet state. Was it
not anti-capitalist? Was industry not nationalized?
Was there not a planned economy? Yes— but the
question of who owned the state, and for whom
and for what the economy was planned, did not
thrust itself strongly enough upon the socialist
mind.

To concede this is not to acknowledge that the
Soviet barracks state is the inevitable product of
the Marxian tradition; it is only to concede that
the socialist tradition is vulnerable to Marxist-
Leninist sophistries. The Soviet state, it should be
recalled, was brought into being by a bloody revo-
lution against a government in which socialists
participated. That Communists have imprisoned
or destroyed socialists whenever it has been within
their means is familiar history, but its significance
is not widely appreciated, either by socialists or by
others. The late Max Schachtman developed the
idea that the Stalinist terror was neither the Jac-
obin phase of a socialist revolution— a traumatic
cleansing of the old order which would precede an
era of progress— nor the bloody "excess" of a de-
mented dictator. It was something far more mean-
ingful; the rise to power of a new bureaucratic
class through the extermination of what remained
of its socialist, working-class, and democratic heri-
tage. In this way the Stalinists, the supreme real-
ists of our time, have given their brutal opinion of
the proposition that socialists can ineluctably be
tempted into Communism.

Socialists cannot claim to be blameless for the
rise of Soviet totalitarianism, or for its strength
today. But, as Alexander Solzhenitsyn told the
AFL-CIO:

For all these fifty years, we see continuous and
steady support by the businessmen of the West
for the Soviet Communist leaders. The clumsy
and awkward Soviet economy, which could
never cope with its difficulties on its own, is
continually getting material and technological
assistance. The major construction projects in
the initial five-year plan were built exclusively
with American technology and materials. Even
Stalin recognized that two-thirds of what was
needed was obtained from the West. And if to-
day the Soviet Union has powerful military and
police forces— in a country which is poor by
contemporary standards— forces which are used
to crush our movement for freedom in the So-

10

viet Union— we have Western capital to thank
Eor this as well.

Despite all this, Communists still employ a rhet-
oric pirated from the socialist tradition. This de-
serves the same contempt that should be shown to-
ward their fraudulent use of the rhetoric of peace,
or the human-rights proclamations of the Soviet
constitution. Is there any conceivable way in
which a Communist state can be said to represent
a government of the working class? Yet those who
scoff at most Communist duplicities often over-
look this one, and in so doing make their own im-
portant concession to the "totalitarian tempta-
tion,"

The appeal of Communist ideas is still felt in
some quarters of the socialist world, and in some
it succeeds. But in others it is resisted, and in still
others it is combatively rejected. The Portuguese
socialists, aided by some Western European social-
ist parties, turned back the Communist challenge
in Portugal— the gravest challenge to the security
of the European democracies in more than a dec-
ade. (It has been reported that the American Sec-
retary of State in the administration of the party
of business grumbled about the futility of these so-
cialist efforts.) The social-democratic governments
in West Germany, the Netherlands, and Britain
have been responsible supporters of NATO— far
more so than their more conservative counterparts
in France and Italy. The Israeli Labor party shows
few pro-Communist inclinations. Our own Ameri-
can social-democratic movement, despite wounds
from without and within, has been the only Amer-
ican political organization on the liberal Left to
hold out for a decade and a half against the as-
saults of the revisionists. Nor, it might be added, is
it a mere aberration that the author of the phrase,
the "totalitarian temptation"— Jean-Francois Re-
vel—is himself an unabashed socialist.

What might account for a revival of these
charges against democratic socialism, and a cele-
bration of the democratic properties of capitalism?
It seems likely that some pro-democratic intellec-
tuals, in panic over the weakness of democracy,
have grasped at what appears to be a simple,
sturdy ideology with which to mount a defense.
They look to capitalism for a "materialist" foun-
dation for democracy that can be set against the
materialism professed by their adversaries.

This imitation is partly born of fear, and in
part represents a strain of economic determinism
that is an American habit of thought. (Lionel
Trilling has written of "the chronic American be-
lief that there exists an opposition between reality
and mind, and that one must enlist oneself in the
party of reality.") It is suggested that the "totali-
tarian temptation" can best be resisted by purify-
ing the economic substructure that underlies our
politics and ideas: provide the right economic soil,

and a host of democratic myrmidons will spring
up to protect us.

This is the sheerest fantasy. While there may be
some complaints today against "big government,"
there is not going to be any return to the petit-
bourgeois Utopia of the Hayeks and Friedmans.
The capitalists themselves do not want any such
thing. Both capitalists and social democrats today
are wedded to a mixed economy— our differences
are over the nature of the mix, and the goals and
interests that such a mix should serve.

But even if our economic clocks could be turned
back to the Gilded Age, and even if a generation
of rugged business leaders were to arise in conse-
quence, such a change in our economic life would
be of little use in meeting our international chal-
lenge. The "totalitarian temptation" is not some-
thing that creeps out of the economic woodwork
—it inhabits the realms of mind, the realms of
politics, culture, intellect, and morality. Both fas-
cism and Communism always have reached first
for political power and have then sought to use
this political power to reshape the economic order.
For them, as Sidney Hook has argued, politics de-
termines economics: totalitarianism is indeed a
"triumph of the will."

If democracy must be defended on the field of
politics, the ideas described by Commentary can
only be harmful. They turn the confrontation be-
tween democracy and totalitarianism into a con-
flict between capitalism and socialism. They make
the main issue economics, not human rights. They
invite us back to that period in American public
life when it was thought that anti-Communism
was the property of conservatives, and that liber-
alism required one to accept the American ver-
sion of the slogan "pas d'ennemis a gauche." That
experience does not deserve to be repeated— in no
small part because of the difficulty it has imposed
on the most effective leaders of the resistance to
the "totalitarian temptation": liberals like Henry
M. Jackson, George Meany, and Daniel P. Moyni-
han.

If it is repeated, much harm will be done to our
discussions of domestic economic issues as well as
to our posture in international politics. The
Keynesian era provided a pause in the great de-
bate between pro-capitalist and pro-socialist econo-
mists, but today there is again the need and the
possibility of resuming this debate within the
democratic family. That can /be done construc-
tively only when we can agree that the "totalitar-
ian temptation" comes from without, that we are
all vulnerable to it— and that we must unite to re-
sist it.

Penn Kemble is a research associate at the American
Enterprise Institute and a member of the National
Committee of Social Democrats, USA.

11

Reprinted from Commentary, April 1978, by permission; copyright © 1978 by the
American Jewish Committee.

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