capitalism and ethics . comparing it next to the philippine model

http://www.libertyhaven.com/theoreticalorphilosophicalissues/ethics/capunder.shtml
Capitalism Under The
Tests of Ethics
by Arthur Shenfield

Picture a system which positively aims to nurture morality. Suppose,
however, that its productive power is miserably low. Inevitably the
masses will be poor. Even with-out oppression life will be short and
labor will be cheap. Inevitably the few who are above the masses will
treat labor as one naturally treats what is cheap, at least with little
regard and most likely with insolence and arrogance. Indeed the masses
will offer themselves for such treatment, their alternative being
starvation. In such a system the exhortations of preachers or
philosophers will not alleviate the treatment. The most likely message
of preachers and philosophers to the masses will be to urge them to see
their situation as ordained by God or Nature and to accept it with
resignation.

Now picture a system which is morally neutral but whose productive
power is great and grows ever greater. Inevitably the masses climb the
ladder of advancement. Simple arithmetic ordains that by far the
greater part of the wealth produced goes to them. They do not need to
sell themselves cheap or to abide insolence or arrogance. Those who use
their services find it necessary, in due course natural and habitual,
to treat them with respect. Without being the positive aim of the
system, the treatment of man by man becomes humane.

whereas mercantile capitalism began by principally serving the
consumption of the rich, industrial capitalism centered more and more
upon the consumption of the poor. The largest fortunes were made no
longer from fine silks but from cheap woolens and cottons, no longer
from rare spices and perfumes but from the tea, coffee, sugar,
margarine and the expanding range of other goods for the masses. Wealth
arose not from the seizure of persons or property, but from the
enhancement of men's consumption and welfare. However, since envy
abides powerfully among most of us, the desire of other men to be rich
remains a prominent object of our censure; and since capitalism is the
most effective agent for making all men rich, especially the erstwhile
poor, its very success makes it the target for hostility, particularly
from intellectuals who can see nothing in it but getting and spending.
But men still want to get rich. The alternative to serving other men's
wants is seizing power over them, as it always has been. Hence it is
not surprising that wherever the enemies of capitalism have prevailed,
the result has been not only the debasement of consumption standards
for the masses but also their reduction to serfdom by the new
privileged class of socialist rulers.
First, there is the institution of private property, basic to the whole
system. Prima facie it is consistent with egoistic or altruistic,
honorable or dishonorable behavior, or any blend of them. Yet on
balance it is a powerful force for moral training. Every time we treat
property with diligence and care, we learn a lesson in morality. We see
this in the behavior of the good husband-man, who has traditionally
aroused our admiration. We see it also as we look back on the attitudes
of those imbued with what used to be called the Protestant ethic,
though in fact it was also to be found in non-Protestant societies
where work, saving, and enterprise were admired. The reason for the
moral training of private property is that it induces at least some of
its owners to treat it as a trust, even if only for their children or
children's children; and those who so treat it tend to be best at
accumulating it, contrary to popular notions about the conspicuous
consumption of the rich, the incidence of luck or of gambling. Contrast
our attitudes to private property with our treatment of public
property. Every army quartermaster, every state school administrator,
every bureaucratic office controller, knows with what carelessness and
lack of diligence most of us deal with it. This applies everywhere, but
especially in socialist countries where most property is
publicSecondly, there is the sanctity of contract. There are many who
have no respect for it. But the thrust of the capitalist system is to
favor those who keep their contracts and to hamper those who do not.
Sanctity of contract is one of the most important elements in the
cement which binds a civilized society together, and it tends to arise
naturally in a society where private property is respected. At the same
time it has an elevating effect on men's character.

Sanctity of contract tends to be nurtured by capitalism not merely
between individuals but also between states. Pacta sunt servanda is a
venerable principle, and it applied to states as it did to individuals.
But it was only with the development of ideas in international law
which were of the same provenance as the ideas which produced the rise
of capitalism, that states gave it a serious, though admittedly
incomplete, measure of respect in their dealings with each other.
However, the more striking change took place in the dealings of states
with their citizens. It is obvious that in both pre-capitalist and
post-capitalist societies, states have shown little respect for the
rights of their citizens or for standards of probity even in
contractual dealings with them. This is displayed most prominently in
the history of money. In the centuries-old story of the debasement of
money by pre-capitalist monarchs and modem socialist and semi-socialist
governments, there is only one substantial interlude when states
eschewed the expropriation of their citizens by the misuse of such
power as they had over the monetary system. This was in the century
from the end of the Napoleonic wars to the outbreak of World War I, the
great century of capitalism. Then it was that only states on the fringe
of the civilized world tended to default on their loan obligations or
to defend their citizens by the debasement of currency.

Thirdly, there is the work ethic. Much derided by superior persons who
see themselves as the champions of the life of culture, or elegance, or
contemplation (and by British and American workers who console
themselves for competitive failure by calling Japanese workers mere
workaholics), it is in fact a prime agent of moral training and
character elevation. To know that we must work for what we want, that
there are few free goods in the world, that almost everything has a
cost which must be met, is to understand the fundamental truth of our
situation as human beings. Under capitalism this is brought home to
everyone. In a world of collectivism everything still has a cost, but
everyone is tempted, even urged, to behave as if there is no cost or as
if the cost will be borne by somebody else. This is one of the most
corrosive effects of collectivism upon the moral character of the
people.
we want others to respect our individuality, independence, and status
as responsible human beings. We do not want to be treated as children
or wards of our benefactors, not to mention slaves, serfs, prisoners or
conscripts, however generous or indulgent the treatment may be.

This is the fundamental morality which capitalism requires and which it
nurtures. It alone among economic systems operates on the basis of
respect for free, independent, responsible persons. All other systems
in varying degrees treat men as less than this. Socialist systems above
all treat men as pawns to be moved about by the authorities, or as
children to be given what the rulers decide is good for them, or as
serfs or slaves. The rulers begin by boasting about their compassion,
which in any case is fraudulent, but after a time they drop this
pretense which they find unnecessary for the maintenance of power. In
all things they act on the presumption that they know best. Therefore
they and their systems are morally stunted. Only the free system, the
much assailed capitalism, is morally mature.


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At the time of the original publication, Arthur Shenfield, British
economist and barrister, served as a visiting professor at the
University of Chicago and Temple University, and visiting distinguished
professor at Rockford College, Illinois. He had been economic director
of the Confederation of British Industry and director of the
International Institute for Economic Research. Among other
appointments, he had been president of the Mont Pelerin Society,
economic adviser to the Government of Trinidad, and chairman of the
group of fiscal experts of the Business and Industry Commission of the
Organization for Economic Cooperation and Development.
Dr. Shenfield delivered this paper at Hillsdale College during the
Ludwig von Mises Centenary Conference in September 1981.
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Reprinted by permission from Imprimis, the monthly journal of Hillsdale
College. December 1981, Vol. 10, No. 12.



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