The Capitalist Commandments: Ten Ways for Businessmen to Promote Social Justice

Our century has witnessed a titanic struggle between the forces of collectivism and the forces of free enterprise, a struggle, if you like, between socialism and capitalism. As we approach the last decade, it appears that the battle, which began in earnest with Lenin’s seizure of power in Russia in 1917, will end in decisive victory for capitalism. All over the world, in the advanced economies of the West and the Pacific rim, in the Third World and even in the Communist world itself, collectivist impulses are on the retreat and the virtues of the market are being recognized. After 70 years of costly and unsuccessful experiments, even those who were once most wholeheartedly committed to socialism are now, by their actions if not yet by their words, repudiating it, for the simple reason that it has failed to produce the goods. This is clearly an economic victory. It is a political victory too. But also, and perhaps even more important, it is above all a moral victory.

How so? Is there not a paradox here? Is not socialism, with all its faults, about generous, moral impulses? And is not capitalism, with all its practical virtues, about greed? Now it is certainly true that socialism, in so far as it seeks to create an earthly utopia, enshrines a fundamental moral impulse. It aims to better the lot of entire societies, indeed of humanity as a whole. Most socialists, like Lenin, or Marx himself, tend to be middle-class intellectuals, who see themselves as idealists, fighting on behalf of the poor and underprivileged.

Unfortunately, the study of history, and usually our own personal experience of how the world works, shows that the moral impulse of socialism is only too easily corrupted by the far more compelling desire to assert authority over others. I often think that St. Paul was mistaken when he asserted: “The love of money is the root of all evil.” He would have been closer to the truth had he argued that the root of evil is the love of power. The pursuit of power destroys idealism more surely than any other force, and nowhere is this maxim more conclusively demonstrated than in the history of socialism.

Marx fiddled and bent the evidence on which his whole theory of capitalism was based. Lenin corrupted himself and his cause by his ruthless elimination of rivals long before he acquired any state authority. In the struggle to seize, retain, and exercise power, the ideals of humanitarian socialism were rapidly abandoned and replaced by the most brutal form of tyranny. The horrific phenomenon we know as Stalinism was merely a superstructure, logically and inevitably built on its Marxist-Leninist foundations. All other thoroughgoing socialist systems have repeated this grim pattern, with varying degrees of ignominy. None has been able to combine the pursuit of equality with the practice of democracy. All have perpetuated themselves by force. (We have recently witnessed a horrifying example in China.) All Communist regimes illustrate the truth that economic and political freedom are inseparable and that when one is denied, the other must soon be extinguished too.

Moreover, in the all-enveloping moral decay such closed, collectivist states generate, ordinary personal honesty is among the first of the victims. For when the market system is made unlawful, clandestine markets are certain to develop, in which the state itself and still more those who exercise authority over it inevitably become enmeshed. Hence the most striking unifying characteristic of socialist states—more marked even than such features as the secret police, labor camps, absence of the rule of law, faked elections, and the denial of a free press—is corruption. The corruption of their Communist rulers stood at the head of the complaints recently voiced by the Chinese students and workers. Official corruption, at every level of government activity from top to bottom, is to be found in a high degree in every single realized Marxist-Leninist society, and in the Third World regimes which practice collectivism in one form or another. There is absolutely no exception to this depressing rule. The first part of the paradox, therefore, is that socialism, far from producing an ideal community, leads rapidly and seemingly inevitably to the nemesis of morality.

The second half of the paradox is even more piquant. The energizing force behind free enterprise operating in an open, competitive market is the desire to make profits. Realized capitalism, therefore, ought to be the apotheosis of greed, the free-for-all jungle society which its critics portray. Marx indeed argued in Das Kapital that the evil propensities and inherent compulsions of capitalism were such that, even when a capitalist happened to be well-intentioned by nature—something Marx thought unlikely but conceivable—the role he played in the system forced him to act out evil deeds.

Yet historical and economic evidence, as well as common experience, show that free markets are not the hell on earth which utopian socialist theory might lead us to suppose. In fact where ordinary individuals have the choice, which regrettably does not often happen, of living in a collectivist or a capitalist society, they invariably choose the latter. Why is this? It is not just that capitalist societies produce the goods, and collectivist societies do not, though this is clearly part of the explanation. Equally important, I think, is that capitalism, unlike collectivism, can successfully cohabit with democracy. More than that, precisely because economic and political freedom are inseparable, capitalism tends to encourage democracy. Free markets are the most hospitable environment for universal suffrage and parliamentary systems, as the history of the United States and Britain in the nineteenth century abundantly shows.

All human beings enjoy freedom, which can take many forms. It may well be that, for most people, the economic freedoms are more important that the political ones. After all, political democracy allows us to vote with our ballot slips, but only once every four or five years. With market democracy, we can vote with our wallets every day of our lives. In a collectivist society, the voting in either case is meaningless: you queue up to vote and find the choice of only one political party at the end of it. You queue for the shops and, whether you like it or not, must buy whatever is on offer when you finally get to the counter. Under capitalism, by contrast, you have by definition the right to vote with your wallet, provided there is something in it, and experience shows that where people can freely exercise economic power, it is not long before they win the right to exercise political power, too. Ordinary people, I think, intuitively grasp this connection and that is why they reject collectivism even when, in theory, it might be supposed to better their economic condition.

Innocent Pursuit

There is, in addition, a third reason why free enterprise societies are not as immoral as might be supposed. That great practical moral philosopher, Dr. Samuel Johnson, put his finger on it. “Sir,” he remarked, “A man is seldom so innocently employed as when making money.” Dr. Johnson was speaking, of course, in comparative terms. Believing man to be inherently sinful, he was looking for relative innocence. The business of making a profit might not be entirely pure, he reasoned, but by absorbing a man’s energies and satisfying his desires, it deflected him from far more reprehensible activities. I have no doubt that he, like myself, felt that St. Paul was in error, and that the active pursuit of power was far less innocent than the pursuit of gain—and liable to be much more damaging to society. The point was made with great force by Lord Keynes in his General Theory of Employment, Interest and Money (1936).

Pointing out that “there are valuable human activities which require the motive of money-making and the environment of private wealth ownership for their full fruition,” he added:

Moreover, dangerous human proclivities can be canalised into comparatively harmless channels by the existence of opportunities for money-making and private wealth which, if they cannot be satisfied in this way, may find their outlet in cruelty, the reckless pursuit of personal power and authority, and other forms of self-aggrandizement. It is better that a man should tyrannize over his bank-balance than over his fellow citizens.

If Dr. Johnson and Keynes regarded money-making as an acceptable, albeit morally suspect, alternative to more pernicious activities, there have always been those who have invested it with positive moral virtues. They range from the great Jewish theologian and philosopher Maimonides, who saw the legitimate returns of merchants as the basis on which divine scholarship was financed and himself engaged in trading from time to time through the pious Merchant of Prato of the fourteenth century, who placed at the head of every page of his account-book, which has survived, the Latin words, Ad Maiorem Dei Gloriam (“to the greater glory of God”) to, in our own time, a writer like George Gilder, who refers to not only what he calls “the high adventure” of capitalism but also to its “redemptive morality.”

I prefer to see the entrepreneurial spirit, of which capitalism is the result, not as positively virtuous, or for that matter as intrinsically sinful, but as morally neutral. It seems to me that capitalism is an impersonal force and therefore incapable of moral choices. Capitalism, including the market system which gives it its efficiency and its power, is single-minded in its thrust, and that is why it is so productive. Focused solely on its own materialistic objectives, it has no room for idealism. It responds with great speed and accuracy to all the market factors. In a way it is like a marvelous natural computer. But it cannot make distinctions for which it is not programmed. Acutely responsive to market factors, it is blind to all others—blind to class, race, and color, to religion and sex, to nationality and creed, to good and evil. Capitalism respects God because of His high reputation for probity, but it will trade with the Devil if he is able to establish his creditworthiness at any rate within the time-scale of the transaction.

Clerical Qualms

It is because capitalism is morally neutral that clergymen find it so difficult to give it their spiritual imprimatur. They find it repugnant that a system so central to our well-being, which penetrates every corner of our societies and occupies so many human beings throughout their mortal existence, should be so constitutionally indifferent to moral choices. Personally, I think that if capitalism embodied idealistic elements it would not work so well. The reason why feudalism proved so inefficient, and so was replaced, was that, in addition to its functional properties, it sought to uphold all kinds of principles and loyalties which it could not sustain.

Capitalism does not seek to promote an ideal society. It has much humbler and therefore attainable objectives: to produce goods as cheaply as current market conditions will allow and to get them to the right place, at the right time, and in sufficient quantities, as expeditiously as possible. It does this very well, if left to its own devices. If we seek to invest it with moral purposes—the redistribution of incomes, for instance, or the promotion of equality—it becomes progressively less efficient and dynamic. As the lamentable history of social democracy shows, this artificial “moral” form of capitalism not only fails to attain the social objectives it sets, but produces less wealth for all. If you pump too much moral purpose into capitalism, it ceases to function altogether.

None of this means that capitalism cannot be run in tandem with public policies which make use of its energy while steering society as a whole in a moral direction. The great art of modern government, indeed, is how to give the thrust of our laws and administration a moral purpose without damaging the capitalist dynamic. The fact that capitalism is finally triumphing over collectivism, and is now being universally recognized as likely to be, for the foreseeable future, the primary way in which the world conducts its economic affairs, makes the solution of this problem more, not less, urgent.

In a paper dealing with capitalism and morality in the late twentieth century, the gist of which was published in the Wall Street Journal, I suggested six ways in which this problem should be tackled. Today I am not so much concerned with what government can do, as with what businessmen can and should do.

For we have to distinguish between capitalism and the capitalist. For if capitalism as a system is morally neutral, if it is necessarily materialistic, impersonal, and non-human, the capitalist himself, or herself, is a quite different entity. The capitalist is a spiritual as well as a material being, is personal and human, and subject to moral discipline as much as anyone else. The moral neutrality of the system and the moral responsibility of those who operate it are reconciled by the fact that, in our societies, capitalism operates under a system of business law which capitalists must observe.

It goes without saying that such obedience to the law is vital to the health of the system, to its efficient functioning, and to its acceptability to the public. Widespread transgression of business law by a substantial section of the business community must be, in the long run, fatal to the political claims of free enterprise to be reasonably free from social interference. Hence a business community which has its own long-term interests at heart will not be content with the enforcement of the law by external authority. It will be self-policing, too, and will seek to create, and enforce, a climate of probity and fair-dealing which goes well beyond the strict requirements of statute.

But I wish to go even further than that. If a society whose dynamic is capitalism is to have a firm moral basis, if it is to cultivate the esteem of its members by persuading them that it is a true commonwealth, striving to promote the good of all, the men and women who operate its capitalist machinery must not be content with the negative virtue of mere legal observance. They must indeed be law-abiding, but they should strive to do more than that. What I propose to outline is a positive code for those who practice free enterprise—what might be called a Capitalist Decalogue, or Ten Commandments for Capitalists.

The First Commandment is in a way the most important because it is a key to all the others: Never let your business standards fall below your personal ones. No one should ever try to kid himself that there is one system of morality for private life and another for business life. Morality, like freedom, is indivisible. There is no such thing as a corporate conscience, as opposed to an individual conscience. What the individual perceives to be wrong in private dealings the corporation executive must likewise reject as impermissible. There is an analogy here with a government’s handling of the economy. Keynesian theory gave many people the impression that a course of financial improvidence we would not dream of adopting in our private life is perfectly acceptable, even commendable, for governments. The experience of the last 20 years has taught the world that such wishful thinking is false, and it was Ronald Reagan and Margaret Thatcher who forcefully reiterated the salutary truth that the same essential rules of good housekeeping apply to states as to families.

So it is with morals and business. We adopt in our private dealings a higher code of probity and honor than the law strictly requires and the same voluntary standards ought to apply to the conduct of a publicly-quoted company. In the long run, unspoken but accepted codes of practice, forming an outer fence for the law, and based on moral as opposed to strictly legal imperatives, are in the interests not only of the public but of all businessmen and the spirit of capitalism itself. A strong sense of personal morality, respected as the norm in dealings, is the best of all correctives to the moral neutrality of the market system.

If businessmen are encouraged to develop this high-minded approach, a number of consequences follow which form the bulk of my decalogue. The Second Commandment is obvious enough but nonetheless worth stressing. The businessman must observe the law. But if he is to bring into his dealings the same moral assumptions that govern his private life, he must observe not merely the letter of the law but its spirit, that is, the intention of the legislative in enacting it.

In my opinion this is good practical as well as good moral advice, for in the increasingly complex ideas which are now mounted—I am thinking, for instance, of takeovers—there are large grey areas where the law is open to different interpretations, and businessmen who make a point of pushing on the legal frontiers, albeit on legal advice, may find the advice proves mistaken and may thus become involved in inquiries which will ruin them long before they ever come to trial. By acting in the spirit of the law they will avoid any such risk. More important, however, a due regard for the law’s spirit by businessmen generally will create a climate of confidence and fair-dealing in which enterprise can thrive and dispel those reflexes of suspicion which are the enemies of rapid and honorable commerce.

My Third Commandment is: Be loyal. Loyalty, again, is one of those great intangibles, which cannot be defined or enforced by law, but whose existence is indispensable to the healthy functioning of all social systems and enterprises. There are many layers of loyalty: to God, to religion, to one’s country and family; but loyalty to one’s firm and to the best standards of one’s trade are not the least valuable of such attachments. Of course there are conflicts of loyalties, and times where loyalty is misplaced. Difficult moral problems arise when loyalty to one’s firm may place one in legal jeopardy or conflict with basic self-interest and duty to one’s family. Everyone must solve these in the light of his or her conscience. And of course it is a two-way process. A firm can successfully demand loyalty from its partners and employees in direct proportion to the loyalty it gives to them. A climate of loyalty, and of competitive loyalties, thus created, is no bad environment for business.

Equal Opportunity

My Fourth Commandment illustrates one vital way in which a firm shows loyalty to its employees: by giving them equality of opportunity. We do not live in a perfect world and never will, and history shows that attempts to create equality of result invariably end in failure and often in disaster. But equality of opportunity is quite a different matter. It is a viable, attainable human objective. Moreover, it is one of those cases where doing the right thing is also the right thing to do: efficiency and justice walk hand in hand. A firm which hires strictly on the basis of talent and qualifications, which deliberately sets out to discover, reinforce, provide opportunities for, and promote capacities wherever they are to be found, is likely to be a well-run firm, which inspires loyalty in return.

Equality of opportunity is an essential part of what all of us call fairness: we may not be able to define fairness philosophically, but we recognize it as one of the great desiderata of humanity. I know of no way in which firms can contribute more surely to the moral acceptability of capitalism than by pursuing successful equal opportunity policies. Not just its moral acceptability either: its dynamism, too, for the widest possible market in talent is an essential part of the free enterprise system.

My Fifth Commandment follows from the Fourth. Genuine equality of opportunity is not attainable without vast and radical improvements in our education system. There is no country on earth to which this proposition does not apply. Moreover, it applies as much in business as in education generally. As technology and business sophistication advance, business training becomes more desirable at all levels, from the shop floor to the boardroom. It is no use proclaiming a policy of equal opportunities if the training programs which make it a reality are not available. And if they are not, it is no excuse to blame government.

Firms have their own responsibilities, to their employees and to themselves, too. Firms must bring pressure to bear on government, individually and through their associations, to make public provision where this is appropriate. But in the last resort they must act for themselves. Education in and for and beyond the job is now an essential part of business activity, as important as research and development, and here is another case where self-interest and morality point in the same direction.

Striving to educate employees to the limit of their capacities and to form a workforce selected and promoted on a strict basis of talent strengthens the claims of the free enterprise system to be seen not merely as a wealth-producing force but as a creative one. I have long believed that what drives an entrepreneur, what inspires him, is not just the desire to make profits and acquire wealth, important and legitimate though this is, but the urge to create. A factory built from scratch to turn out a new product, a mine located, planned and excavated, are realized ideas not different, in essentials, from a symphony, a poem, or a painting.

Creative Virtue

Entrepreneurs are not artists but they are creators. They see visions as well as balance sheets. That is why my Sixth Commandment is: Stress creativity. The business community should present itself to the world, and equally vital feel itself to be, the possessor of a collegiate spirit of fertility and invention, engaged in devising and realizing the new, the useful, and the affordable, a competitive community whose task is to create jobs, products, and services which did not exist before. The stress on creativity is particularly important to counter the notion, deep-rooted in human minds and expressed in so much socialist theory, that the resources and goods of the world are somehow limited and that acquisition in one place must produce shortage in another. The unleashing of capitalist creativity, not least by policies of equal opportunities and training, is the best answer to the economics of shortage and the politics of envy.

Capitalism is a creative force, then, but it is liable to be an unselective one. Where the creative entrepreneur differs from the creative artist is that he does not necessarily strive for excellence. I think he should. So my Seventh Commandment enjoins precisely that: Seek to excel. No product is ever as good, or as cheap, or as readily available as it might be; no service quite so dependable and comprehensive as human ingenuity can command. Needless to say, business must operate with the limits of what is possible at the time, and the balance sheet must be superimposed on the vision. There is no surer way to bankruptcy than not to recognize that the best is often the enemy of the good. Montague Burton, one of my favorite entrepreneurs, set out to dress working men like gentlemen, and succeeded; yet he did not seek to put them into Brooks Brothers suits.

But what helps to make capitalism dynamic in terms of quality as well as quantity is the continual raising of sights which the quest for excellence promotes. It is the great social merit of capitalism, in my view, that it is continually transforming desirable luxuries into routine possessions, even essentials, and to ensure that what the rich enjoy today the poor will get tomorrow. The democratization of excellence is a prime function of capitalism and that is what my Seventh Commandment is about.

But, in their reasonable desire to bring excellence to the mass-market, entrepreneurs must not expect to produce in a social vacuum. A strict awareness of consequences is my Eighth Capitalist Commandment. Nothing is more foolish, and costly, than to ask businessmen to operate like welfare workers or politicians, to expect them to operate race-relations or poverty programs, to buy and sell for nationalist ends, or to do the job of government. But businessmen have a plain moral duty to take account of the immediate and foreseeable consequences of their decisions.

Whether a firm is siting a factory to create jobs or closing one down and ending them, to take obvious examples, the effects on the communities concerned must be an element in the decision-making process right from the start. This is awkward and contentious ground, for there are clearly limits to what any firm, however high-minded, can accept as its social responsibilities: indeed you might argue that its first social responsibility is efficiency and so survival. But granted this, what my Eighth Commandment insists is that the habit of thinking in terms of commercial cause and social effect should be instinctive in business psychology, which it plainly is not at present. Until it is, there will continue to be a question mark over the moral acceptability of capitalism.

My Ninth Commandment follows from the Eighth: Business has a specific duty to the environment beyond the call of legal obligation. In a capitalist society, business occupies so important a place, wields so much physical power, and has so transforming an effect, that it cannot be seen as distinct from its environment. The two are inseparable, so that for business to damage its environment is a self-inflicted wound. To grasp this, I think, is the proper approach business should adopt to legislation designed to protect the environment from commercial operations.

Just as safety at work is now seen, quite correctly, as an essential element in the efficiency of the operation, so business must come to see a prudent and farsighted concern for the physical context in which it exists as part of its commercial functions, built into its decisions, costs, and future plans. A firm which acts in a way hostile to its environment is an inefficient firm; an executive who regards legislation against pollution as irksome is a man who does not know his business. Indeed in a capitalist society, firms should not leave such laws to the Greens,’ but take the lead in shaping them, and so ensuring that they are judicious.

My Tenth and last Commandment insists that business obligation does not end with protecting the environment. It has a positive duty, too: promote beauty. By this I do not mean that business should endow art galleries and finance operas and award literary prizes. Of course it may do all these things, but they are optional. Obligation comes in when a firm performs positive acts in the way of its business. It erects buildings. It pushes products onto the market. All of them have a visual impact, sometimes an enormous one. Indeed the cumulative visual impact of business is always enormous.

Here is one way in which the drive for excellence can take concrete form. Some firms have always paid close attention to design; others have not. I think it is true to say that, perhaps by coincidence, the most design-conscious firms have tended to be flourishing, profitable, and long-lived. But what is clear today is that a concern for beauty, perhaps I should call it visual quality, is no longer an optional extra but a positive requirement, if capitalism is to be given a moral face.

Those then are my Ten Commandments of Capitalism. I do not think the free enterprise system, driven as it must be by the quest for profits, in order to service the capital which makes it all possible, will ever be totally acceptable to society, especially to the moralizing classes: the clergy, the media, the intelligentsia, the teaching profession. Nor perhaps should it be. It is likely to function more efficiently and more honorably if it is constantly subjected to critical examination. Equally, such a system, by its very nature, will always attract a high proportion of corner-cutters and downright rogues. And again, I am not so sure it is desirable capitalism should be wholly deprived not of its rogues but of what might be called its buccaneering element.

But what is clear is that, to ensure its acceptability in democratic societies, equipped with parliaments and government agencies ever-anxious to impose restraints on free enterprise, those who operate the capitalist system should continually strive to improve its standards of morality, as well as its standards of efficiency. The two are complementary. But ever-increasing efficiency is a natural consequence of the free market process, whereas rising moral norms require deliberate and systematic human intervention.

Author

  • Paul Johnson

    Educated at the Jesuit independent school Stonyhurst College, and at Magdalen College, Oxford, Johnson first came to prominence in the 1950s as a journalist writing for, and later editing, the New Statesman magazine. A prolific writer, his books are acknowledged masterpieces of historical analysis.

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