Wednesday, March 26, 2014

Psychological Roots for the Denigration of Capitalism

We just finished exploring the distinguishing features of a capitalist society. This time we will explore the psychological roots for the denigration of capitalism. The material in this article is taken from Ludwig von Mises' "The Anti-Capitalistic Mentality" chapter 1 numbers 4 to 9.

Mises identified six psychological roots. Among these six, he described four of them as "resentment": of frustrated ambition, of the intellectuals, of the white collar workers, and of the "cousins". I want to re-describe these six roots as I understand them. 

Search for Scapegoat

The first psychological root is the natural inclination of man to find a scapegoat for his own failure. Mises described this as "the resentment of frustrated ambition" (p. 11). 

Under an aristocratic society, people could place the blame on social situation beyond their control. If they remain poor, they could simply excuse themselves and point fingers to a society without social mobility.

On the other hand, under a capitalist society, a man can blame no one for his failure except himself. Perhaps, he is thinking that he is virtuous enough and he possesses the qualities to be successful. However, his personal assessment will be counter-checked by the assessment of the market, and if it finds him wanting, such deficiency will also be reflected in his income. 

Reading this economic insight shows that if anyone wants bigger income or profit he must place himself in the industry that has big demand and he must equip himself with the necessary skills required by the market. If he is not willing to do this, he cannot blame anyone for his meager income. 

At this point, Mises mentioned Justus Moser who "opened" "the long line of German authors who radically rejected the 'Western' ideas of the Enlightenment and the social philosophy of rationalism, utilitarianism and laissez faire. . . ." (p. 13). Mises explained that "one of the novel principles which aroused Moser's anger was the demand that the promotion of army officers and civil servants should depend on personal merit and ability and not on the incumbent's ancestry and noble lineage, his age and length of service" (ibid.). For Moser, a society that depends on personal merit as a requirement to success is simply unbearable. 

Free market is such a society. Those who fail resent the achievements of those who succeed. A fool releases his indignation by verbally maligning the achievers. A more refined one resorts into philosophical justification against the free market. The blame is not on the individual, but on the perverse socio-economic order called capitalism. In such a system, it is not enough to be brilliant, efficient, and industrious to be successful. Honesty and decency are punished. One must resort to trickery and deception to reach the top. Capitalism "crowns the dishonest unscrupulous scoundrel, the swindler, the exploiter, the 'rugged individualist' " (p. 14). The sophisticated thinker is glad and comforts himself that he made a better decision by choosing "virtue and poverty" over "vice and riches" (ibid.). 

Cover-up for Hatred

The second psychological root for the vilification of capitalism is coming from intellectuals' hatred and envy of the success of their colleagues. In this case, resentment for capitalism is just used as a kind of "cover-up" in order that such ill-feeling will not be exposed. Mises called this "the resentment of intellectuals" (p. 15) or "mere blind" for "hatred of some successful 'colleagues' " (p. 18). 

By "intellectuals" Mises meant the "physicians" (p. 16), "lawyers and teachers, artists and actors, writers and journalists, architects and scientific research workers, engineers and chemists" (p. 17). 

Mises explained the nature of this hatred. Unlike ordinary men who do not have the opportunity to associate with those who succeed in life, the intellectuals know personally and encounter daily their colleagues who went ahead of them. In the case of ordinary men, their resentment towards the successful is directed to "abstractions" like 'management,' 'capital,' and 'Wall Street' " (p. 16). But in the case of intellectuals, it is different "because they engender hatred of concrete living beings" (ibid.). They hate capitalism because this economic sytem has given the status to their colleagues that they desire for themselves (ibid.). Public appreciation and high income assigned to these "winners" gave them feeling of inferiority as if they "now belong to another class of men" (p. 17). 

However, an intellectual who harbors such ill-feeling must cautiously guard himself so that no one will recognize "his resentment and envy" for they are considered as "bad manners" (ibid.). And so the remaining option is to find a "vicarious target," the "unfair" economic system known as capitalism. Mises summed up the nature of this "cover-up": 
"To understand the intellectual's abhorrence of capitalism one must realize that in his mind this system is incarnated in a definite number of compeers whose success he resents and whom he makes responsible for the frustration of his own farflung ambitions. His passionate dislike of capitalism is a mere blind for his hatred of some successful 'colleagues ' " (p. 18). 
Socialites' Isolation

We now come to the third root, socialites' isolation. In order to understand this root, one must first see the difference in the concept of "society" between Europe and the United States.

In Europe, which specifically started in France, "society" is understood as a gathering of men and women who are "eminent in any sphere of activity" (p. 18). Mises identified the members of this gathering as the "statesmen and parliamentary leaders, the heads of the various departments of the civil service, publishers and editors of the main newspapers and magazines, prominent writers, scientists, artists, actors, musicians, engineers, lawyers and physicians" and "together with outstanding businessmen," "scions of aristocratic and patrician families" (ibid.). These people meet in different kinds of settings such as "dinner and tea parties, charity balls and bazaars, at first-nights, and varnishing days" (ibid.). They visit "the same restaurants, hotels and resorts" (ibid.). In their meeting, they enjoy intellectual conversation, and welcome "new ideas and ideologies" (p. 19). In this society, access is available to anyone who made great accomplishments in their field. Its distinguishing feature is the central influence of the intellectuals. 

On the other hand, the composition of "society" in the United States is different. It is exclusively composed "of the richest families" (ibid.), which the interests of most of them are playing cards, gossips, and sports rather than books and ideas or cultural matters (pp. 19-20). With such orientation, it is natural to expect that there is little communication between the intellectuals and the businessmen. The members of the society "do not meet socially the molders of public opinion and the harbingers of the ideas that will determine the future of the nation" (p. 19). 

As a result of such gap, the intellectuals "are prone to consider the wealthy businessman as a barbarian, as a man exclusively intent upon making money" (p. 20). "The men whose research has given rise to new methods of production hate the businessmen who are merely interested in the cash value of their research work" (ibid.). Such situation later developed into an unfortunate event that "a large number of American research physicists sympathize with socialism or communism" (ibid.). Since they do not know "economics and realize that the university teachers of economics are also opposed to" capitalism, there is no other attitude that can be expected from them, but resentment (ibid.). The isolation of the socialites from the intellectuals and the public made the former the object of hostility and criticism. Such exclusivism "kindles animosities which make the intellectuals inclined to favor anticapitalistic policies" (p. 21). 

Conceit and Resentment of White Collar Workers

Let us now proceed to the fourth psychological root. This time, it refers to the experience of white collar workers. Mises described it as resentment, but I see it as more of conceit. Mises explained that a white collar worker has "two special afflictions peculiar to his own category" (p. 21). By afflictions, Mises meant the tendency on the part of white collar worker to overestimate the value of his work and like the "intellectuals" previously considered, he is daily exposed to the reality that some of his fellow employees have advanced in their career better than him. 

The white collar worker due to apparent similarity, tends to equate his task with his boss', and considers his "intellectual" assignment higher than the manual workers of the firm. He cannot understand and it makes him angry to see that the manual workers receive more respect and higher salary. He considers it unfair that capitalism fails to recognize his real worth. This white collar worker fails to see the significance of advanced mechanical and technical skills on the part of manual workers for them to have the ability to operate complicated machinery. Compare such skills to his routine "intellectual" work, he basically needs a "simple training" (p. 22). 

The above description appears so naive for someone to believe it as one of the psychological roots for the denigration of capitalism. If such idea has no basis in Lenin's work, it can easily be dismissed as mere fabrication. However, Mises claimed that such "classical expression of the clerks' conceit and their fanciful belief that their own subaltern jobs are a part of the entrepreneurial activities and congeneric with the work of their bosses is to be found in Lenin's description of the 'control of production and distribution' as provided by his most popular essay" (pp. 22-23). Mises further argued that "Lenin himself and most of his fellow conspirators never learned anything about the operation of the market economy and never wanted to" (p. 23). Their knowledge of capitalism is so distorted and they simply accepted Marx's conclusion that it is "the worst of all evils" (ibid.). 

Lenin's idea of capitalism is so deficient. He simply depended on the information provided by his comrades when the latter prior to 1917 found "routine jobs in business firms" (ibid.) while exiles in Western and Central Europe. Mises elaborated this ignorance and summarized it as "the philosophy of the filing clerk" (p. 25): 
"As a Marxian he (referring to Lenin) was unaware of the problems the conduct of production activities has to face under any imaginable system of social organization: the inevitable scarcity of the factors of production, the uncertainty of future conditions for which production has to provide, and the necessity of picking out from the bewildering multitude of technological methods suitable for the attainment of ends already chosen those which obstruct as little as possible the attainment of other ends-i.e., those with which the cost of production is lowest. No allusion to these matters can be found in the writings of Marx and Engels. All that Lenin learned about business from the tales of his comrades who occasionally sat in business offices was that it required a lot of scribbling, recording and ciphering. Thus, he declares that 'accounting and control' are the chief things necessary for the organizing and correct functioning of society. But 'accounting and control,' he goes on saying, have already been 'simplified by capitalism to the utmost, till they have become the extraordinarily simple operations of watching, recording and issuing receipts, within the reach of anybody who can read and write and knows the first four rules of arithmetic' " (pp. 24-25). 
Disgruntled Relatives of Capitalist Families

Another interesting psychological root for the vilification of capitalism can be traced from disgruntled relatives of capitalist families. Mises described them as "cousins" referring to the "brothers, cousins, nephews of the bosses, more often their sisters, widowed sisters-in-law, female cousins, nieces and so on" (p. 27). These relatives financially support various types of projects that promote anti-capitalistic mentality. They do this due to their quarrel with their "bosses" over their perceived unfairness of the amount of revenues they received from the company. They support "progressive" projects to annoy their bosses. 

The quarrel between these two groups within the capitalistic families started with the fact that not all members of the "patrician families" (referring to rich families who were able to preserve and increase their wealth through several generations due to the talents and skills of one or two of their members) possess the necessary qualities for the successful operation of big business. As a result, one or two among them are chosen as "bosses" of the company, and such arrangement created a scenario that divided the family into two categories: "bosses" and "cousins" (p. 27). 

Mises further divided the "cousins" into two groups, the useless and the achievers. Both groups "are foreign to business life and know nothing about the problems an entrepreneur has to face" and "have been brought up in fashionable boarding schools and colleges" (p. 28). Mises described the "useless" as people who "pass their time in night clubs and other places of amusement, bet and gamble, feast and revel, and indulge in expensive debauchery" (ibid.). On the other hand, the achievers are either those who became "most eminent authors, scholars and statesmen," "pioneers of new ideas" or financial donors of artists (ibid.). Mises claimed that the role of "moneyed men played in Great Britain's intellectual and political evolution has been stressed by many historians" (p. 28). 

And so this quarrel started first within the capitalistic families, but later influenced society at large. Mises recapitulated this evolution as follows: 
"The family feud between the bosses and the cousins concerns only the members of the clan. But it attains general importance when the cousins, in order to annoy the bosses, join the anticapitalistic camp and provide the funds for all kinds of 'progressive' ventures. The cousins are enthusiastic in supporting strikes, even strikes in the factories from which their own revenues originate. It is a well-known fact that most of the 'progressive' magazines and many 'progressive' newspapers entirely depend on the subsidies lavishly granted by them. These cousins endow progressive universities and colleges and institutes for 'social research' and sponsor all sorts of communist party activities. As 'parlor socialists' and 'penthouse Bolsheviks,' they play an important role in the 'proletarian army' fighting against the 'dismal system of capitalism' " (p. 30). 
Entertainers' Expectation of Deliverance from Public Capriciousness

The final psychological root comes from the entertainment industry. As we all know, many entertainers live an affluent lifestyle, and so it is difficult to accept that "Hollywood and Broadway, the world-famous centers of the entertainment industry, are hotbeds of communism" (p. 31). Diverse interpretations have been offered to explain this phenomenon, but insufficient. For Mises, "they all fail to take account of the main motive that drives champions of the stage and the screen into the ranks of revolutionaries" (ibid.).

To understand this phenomenon, one must first start with a comparison between the products offered by manufacturers and the entertainers. In the case of manufacturers, they sell tangible goods, which provide to some extent a measure of stability that entertainment industry does not have. In the case of entertainers, they are primarily dependent on the wishes and capriciousness of the public. People are bored, and that is why they "buy" the entertainers' "products." But people are very difficult to please for they crave for something "new," "unexpected," and "surprising" (p. 32). Once an entertainer fails to provide what the public expect, that's the beginning of his decline. This is why those who are famous today will be forgotten tomorrow. For those in the entertainment industry, this gives them instability and uncertainty. 

Mises accepts the very nature of the public and no relief can be found to cure the uneasiness of stage performers. However, in their search for remedy, some of them think that communism will give them deliverance. Since none of them "has ever studied the writings of any socialist author and still less any serious analysis of the market economy," (ibid.) they naively believe the ideas of reputable thinkers that the evils caused by capitalism can only be wiped out by communism.