Capitalists, Arise!

THE CAPITALIST MANIFESTO (265 pp.) --Louis O. Kelso and Mortimer J. Adler --Random House ($3.75).

The overriding merit of this book is a reminder to the reader--a reminder that capitalism is a revolutionary force in human affairs offering still unplumbed promise for the future.

Significantly, the book is not the work of a professional economist, but springs from the collaboration of a lawyer and a philosopher. Four years ago Philosopher Mortimer (The Syntopicon) Adler decided that the 400 Great Books were about to have company. That was when a 600-page manuscript on the theory of capitalism thudded onto his desk at his Institute for Philosophical Research in San Francisco. The author: a hornrimmed, bow-tied corporation lawyer named Louis O. Kelso. Except for Kelso's wife, Adler was the first person to see the book; U.S. readers will see it shortly under the sweepingly simple title Capitalism. So challenging did Adler find Kelso's ideas that he proposed the two men collaborate on a kind of popular preview. Says Adler confidently: "The Capitalist Manifesto is to Capitalism what The Communist Manifesto was to Das Kapital."

The styles are scarcely comparable. Marx-Engels wrote in fire; Kelso-Adler seem to be writing under water. Yet the book achieves a triumph of grey matter over grey manner. Four points stand out:

1) The Capitalist Manifesto approaches economics and political science, where expediency is apt to rule, in terms of morality and natural law. It asks not only "Will it work?" but above all "Is it just?"

2) It sees capitalism as the only just form of economic life, paralleling democracy which the authors regard as the only just form of political life.

3) It asserts that the moral aim of capitalism is not toil but leisure (leisure here defined not as play but as the "liberal work" of civilization). Real capitalism should bring not only full employment but full enjoyment by men "of the leisure work that machine-produced wealth can make possible for all."

4) It warns that the U.S.'s mixed capitalism, however great its performance and promise, will not lead to this capitalist ideal but to more and more socialism.

Economic Citizenship. The vision at the heart of The Capitalist Manifesto is that automation will make the machine the superslave of man. Just as in the Greek state the slave-owning few were freed from toil to pursue the duties of citizenship and the work of civilization, so all men could be similarly freed (argue K. & A.) in a future society where machines are slaves. In such a society, men could shun the "subsistence work" and "drudgery" involved in the production of "goods of the body" and--apart from the necessary tasks of management--turn to the arts and sciences, religion, education and all the other "goods of the soul."

Marx knew capitalism at its 19th century worst, decided it could never reform, and remanded it to the custody of the state. Result: tyranny. Marx's error, say K. & A., was his failure to see that the culprit was not the institution of private property itself, but undue concentration of capital in a few hands. The Kelso-Adler answer: decentralize capital, make everybody a "citizen-capitalist."

Creeping Socialism. Since capital "owned by about 5 percent of the households, [in the U.S. economy] produces 90 percent of the wealth," the U.S. has yet to apply the full logic of K. & A.'s citizen-capitalism. Instead of broadening the base of capitalism, they argue, the U.S. merely redistributes earnings through an elaborate, makeshift system including the steeply graduated income tax, arbitrarily fixed high wages, surplus-producing subsidies, featherbedding, Keynesian deficit financing, etc. Through such "creeping socialism," labor's share of the wealth produced has increased from an estimated 50% in 1870-80 to 70% in 1956. Yet this redistribution, argue K. & A., while it may have been necessary to boost mass purchasing power, is unjust.

Their reasoning: increased productivity is not due primarily to labor but to capital, i.e., improved machines and methods; relative to the whole economy, labor's contribution has actually diminished. The basic point is easier to accept than the statistics K. & A. attach to it: they flatly claim that workers in the U.S. account for less than 10% of the wealth produced, while capital instruments account for more than 90%. To K. & A., this means expropriation of capital as unjust in its way as the exploitation of labor was in "primitive" 19th century capitalism.

The Robin Hood Fallacy. How to get away from this situation, which might be called the Robin Hood fallacy? K. & A.'s solution does not lie in cutting up larger slices of an ever-larger "economic pie." Instead, "the task of a truly capitalistic society is to broaden the ownership of the pie-making machinery and to build a vast number of new pie-making machines that will be owned by people who do not now own such machines."

If this is apt to sound like pie-machine-in-the-sky, Kelso-Adler back up their ideas with concrete--and controversial --proposals. Among their suggestions: equity-sharing plans, distribution to stockholders of all corporate profits in the case of "mature" corporations, abolition of corporate income taxes and revision of personal income taxes, abolition of inheritance taxes. (At times, the program has the ring of "Capitalists of the world, unite. You have nothing to lose but your tax forms.") All capitalists--meaning, eventually, all citizens--would get a just return for their investments, limited only by another requirement of justice: that all men must be assured of a "viable income."

Indignity of Labor? Adler and Kelso expect economists to "clobber the book," and the possible objections are indeed strong. The scheme to diffuse capital might require more governmental control than the present pump-priming devices that K. & A. condemn. If the prescribed spreading of capital were more or less limited, would it give workers (except in theory) relatively more than they have today under high wage scales? Or, if the redistribution of capital were sizable enough to make a real difference, would there be enough capital concentration for new enterprise? Furthermore, the K. & A. vision of a coupon-clipping mass aristocracy engaged in "the pursuit of civilization" may be hard on men without the taste or the IQ to qualify for it. Indeed, in implying the indignity of labor and downgrading "the pursuit of wealth," K. & A. may unwittingly be removing the intellectual pistons that keep capitalism functioning as a great wealth-producer.

Despite violent objections, The Capitalist Manifesto, by its very existence, refutes the charge that capitalist thought has lost the imaginative flexibility to cope with the challenges of the age. Above all, the book forces the reader to re-examine the foundation and the future of capitalism, not merely as an economic but as an ethical system. As the authors put it: "We cannot [unlike Marx and Engels] exhort them to engage in violence, and to do so without fear because they have nothing to lose but their chains . . . Men who think they already have all the liberty and justice they can expect . . . can only be asked to think again."

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