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Full text of "Capitalism, socialism, and democracy"

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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 



-,1K 



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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