At the same time that Cassady's class reading has been leading him to re-litigate the age old debate over the costs and benefits of various economic systems, I have been coming across an interesting quote from Hayek's Road to Serfdom. RTS is, of course, held up by libertarians as the Bible for its (layman's terms here...) description of how increasing state intervention in economic affairs snowballs into a repressive state that comes to exert control over all aspects of its citizens' lives -- far from the "free, happy and social existence" that Cassady thinks capitalism has squelched. Here is the quote:
Nor is there any reason why the state should not assist individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance, where, in short, we deal with genuinely insurable risks, the case for the state helping to organise a comprehensive system of social insurance is very strong. There are many points of detail where those wishing to preserve the competitive system and those wishing to supersede it by something different will disagree on the details of such schemes; and it is possible under the name of social insurance to introduce measures which tend to make competition more or less ineffective. But there is no incompatibility in principle between the state providing greater security in this way and the preservation of individual freedom. (Italics Yglesias')
So it appears that Hayek, the god of the libertarian right, is defending as common sense the idea that the dread State should intervene to provide a basic level of social services, and here he refers specifically to health care.
I bring this up because one of the best things I have ever read on the trade-offs between capitalism and socialism is this essay on Hayek. Its a bit long, but clearer than the many, many books I have read on the subject, and it lays out a path of compromise between the Cassadys and the Spencers of the world.
What the article makes clear is that the heart of capitalism, its most basic insight, centers on the nature of knowledge and its communication. Human desires are subjective, often implicit, and ever-changing based on context and circumstance. How much a person values, say, a pair of shoes changes based on location, weather, and social circle. The utility of a pricing system is that it is an aggregator and sorter of constantly shifting desires. It is the only mechanism ever conceived that can take the unspoken wants that reside in the hearts of millions of simultaneously interacting individuals and make that tacit information visible and useful in real time. Its incredible really -- and in that sense, a market is infinitely more sensitive to the wants and needs of its participants than a system of socialist production and distribution could ever be.
But that is not to say that a large part of Cassady's critique is not also true. Market outcomes produce winners and losers in often arbitrary and unpredictable ways. Bad luck of birth, illness, injury all mean lots of people have much less, if any, ability to make of their lives and themselves what they want. Many men and women are denied the pursuit of happiness that is guaranteed to them by Jefferson's founding poetry. This is obvious to any observer now, as it was even to Hayek in his day. And to Hayek's moral and intellectual credit, he did not let his ideology paper over or explain away this basic injustice, nor did he retreat behind the offensive notion that "it is my job to critique only".
And so many modern economists such as Amartya Sen have sought a synthesis in which the redistributive powers of the state are used to guarantee that each citizen has the opportunity to lead what they call "choiceworthy" lives within the capitalist framework. "Choiceworthy" is a fancy academic jargon for a state of affairs in which citizens have a reasonable ability to live a dignified, healthy, and creative life -- in other words, a happy, fulfilled life which Cassady in his more strident moments doesn't seem to think is possible under capitalism. In practice, this can take many forms. The "traditional" progressive/European model is heavy state investment in the basic building blocks of a stable, healthy life -- health care, child care, education and other safety net programs. Other ideas include a large "stake holder" grant provided to each citizen upon their reaching the age of majority. For instance, in one proposal each person upon turning 18 would receive a one time lump sum grant of $80,000 to begin their lives with. In another, the state would provide a minimum yearly income of $10,000.
To my mind, a commitment on the part of the state to provide generous access to these "foundational goods" answers many of the legitimate complaints that Cassady raises, without significantly attacking the basic structure of competition based on price signals that is at the heart of capitalism's success. There may still be more metaphysical grounds on which Cassady critiques capitalism -- specifically his charges about its fundamentally "exploitative" nature. To which I say: sure. Life is exploitation. The trick is managing that basic evolutionary reality in a humane, sustainable, and productive way.