1. Skip to navigation
  2. Skip to content
  3. Skip to sidebar

The Ludwig von Mises Institute

Advancing Austrian Economics, Liberty, and Peace

Advancing the scholarship of liberty in the tradition of the Austrian School

Search Mises.org

Are We a Self-Hating Commercial Society?

Mises Daily: Tuesday, April 20, 2010 by

A
A

[An MP3 audio file of this article, read by Steven Ng, is available for download.]

I'm on a Sunday walk and a nice boy tries to sell me lemonade. A budding entrepreneur! Still, I decline. So he strengthens his pitch:

"I'm donating the profits to stop child abuse."

Still I decline, and more easily now that he has linked his praiseworthy commercial venture with a big social pathology that a 12-year-old boy can't possibly solve — unless he is saving money to run away from home?

In one short day, it was about the tenth time that I'd been assaulted by social consciousness in the course of just going about my business. At the grocery store, I was assured that I would save the planet by purchasing this cereal and that bag of potato chips. If I bought this instead of that coffee, I would help poor peasants in some far-flung place achieve social justice. Some pennies from a sports drink were supposedly donated to cure muscular dystrophy. My coffee cup is so socially aware that it saves trees and thereby stabilizes the global temperature. If I use the following search engine, I help fund charities that are making the world a better place.

I have two reactions to all this static interference on what would otherwise be the clean lines of commercial society:

  1. This proves that the traditional rap on capitalism is false. It is not only about private gain for the few. Business can be as enlightened as the individuals running them. Note that all this praiseworthy other-directedness is being accomplished within the matrix of exchange, which has wrongly been maligned as selfish. As we can see, there is no contradiction between doing good and doing well. All these innovations that merge the third sector of charity with the first sector of profiteering illustrate that capitalism can adapt itself to an age of broad-minded social concern.

  2. Can we all please cut the sham and go back to plain old buying and selling?

Reaction #2 is dominating my thoughts here.

Very few of the claims of these enterprises really stand up to any serious scrutiny. Take the coffee-cup case as an example. If buying this cup saves trees, an even better way to save trees is not to buy coffee at all. And it's not clear that lowering the demand for paper is going to actually save trees at all, since a lower demand would eventually mean less reason to plant and renew the resource. And do we really need to save trees anyway? Does someone know the optimal number of trees that are supposed to be alive on the planet at any one time?

The case of socially just coffee is the one that really gets my goat. The coffee plantations that pay the highest wages and offer the most benefits to their workers are the largest, most established, and most well-connected plantations. The smaller, family-owned plantations can't afford all these things, but they are less likely to have access to the rating agencies and export companies. Why, precisely, are consumers supposed to favor the corporate big shots over the family farms, and do so in the name of enlightened social consciousness? The whole campaign for fair-trade coffee is one of the most bizarre and contradictory schemes that the dumb-dumb Left has ever dreamed up.

"There is no contradiction between doing good and doing well."

On the one hand, it is part of the genius of capitalism that it gives rise to a class of entrepreneurs that can use any fashionable culture shift to make a buck. Whether a cereal is called "Sugar Smacks" or "Earthen Honey Morsels" is neither here nor there to me, and if some marketing genius figures that the cereal company can make more money with one name over another, good for him and the company. Capitalism is so darn good at what it does that it can even bamboozle muddleheaded socialists to cough up money for its products; that's wonderful.

And yet, I'm pretty fed up with the duplicity of the whole scheme. Consider that kid who tried to sell me lemonade. It is an admirable thing to set up a lemonade stand. He used his energy and time. He has to keep the ice cold and provide cups and persuade people to buy. He has to choose a good corner of the subdivision to do this. He might have had to buy his own ingredients. Will he make a profit? Nothing is for sure in this world. Most likely he will not and he will have to be subsidized by mom and dad. But what if he does make a profit? Wouldn't that be wonderful? There would be nothing at all wrong with the world in which this kid, who gave up his Sunday to sell refreshment, could put $5 in a piggy bank as a result.

But no, we can't have that! Instead, he has learned from the social ethos that he must never, ever admit to making private gain. He has to manufacture some phony tale about how he will donate all proceeds to achieving some grand social vision of a world without child abuse. Isn't it enough that he gives a dozen people some Sunday refreshment and takes away a few bucks?

Let's review the oldest contribution of liberal thought: The market society uses private gain to achieve social good, via the mechanism of mutually beneficial exchange. I buy a jug of milk and the shopkeeper takes my money. We both say "thank you" to each other because we have both given each other a gift and we are both better off. The profits in the form of money, if there are any after expenses, are used to expand production so that there are ever more opportunities for trade. Multiply these little exchanges and investments by the world's population and you have an ever-more beautiful and fruitful garden of peace and prosperity.

In this scheme, what is the role of giving to charitable causes? This is provided for by the growth of capital and wealth. When there is enough left over after providing for basic survival needs, people turn their attention to widows, orphans, the sick, the symphonies, art galleries, saving salamanders, promoting religion, establishing quilt-weaving societies, and billions of other causes — all of which are evidence of rising prosperity.

The direction of causation here is important. First: markets. Second: investment and exchange. Third: prosperity. Fourth: a zillion social causes that fall into the category of charity, social justice, and the like. Why is it that we are so fearful of telling the truth about this step-by-step plan for building civilization? Why are we so anxious to blur the distinctions between the stages?

What's more, if I want to give to charity, I'm perfectly capable of doing this on my own and according to my own values. I do not need business enterprises to intervene to help me along and show me the path to true enlightenment. When someone comes along to dictate to me what my values should be, I tend to push back. I just want products and services; I'll take care of the rest on my own dime. What is so complicated about this?

During the Haitian crisis earlier this year, I could hardly move from place to place without someone's demanding that I cough up for Haiti. It didn't matter if I had given $1,000 at the last stop, the not-so-subtle push at the next stop was for me to demonstrate that I care yet again. At some point during this mania, the number of people collecting for Haiti seemed to outnumber the number of people giving to Haiti by two to one. It's like there is some special social status to the class of charity collector, and we are all required to honor that.

How to account for all this giving mania? Maybe it is all just a racket. Call it the "cause racket." There are more bucks to be made by spreading guilt and pity than by offering goods and services. Therefore, everyone gets in on the act.

 

That's one theory, but it only goes so far. My own theory is that the anticapitalistic mentality has taken a serious toll. It hasn't yet destroyed commercial society, but it has caused commercial society to no longer be proud of the magic and glory embedded within its structures and logic. Why is this? Because we no longer understand how it is that markets convert private interest to public good. The simplest lesson of economics, proven again and again and again for 500 years, is lost on people today.

By the way, when that kid told me that he was raising money to stop child abuse, I replied as follows: "I hope you keep some for yourself. You have to make a living somehow."

His mouth fell open in shock. I hope he remembers what I told him, and I hope his parents don't hunt me down to accuse me of child abuse.