XIV. Socialism in the Behavioral Sciences

America's Unknown Enemy: Beyond Conspiracy

Editorial Staff of the
American Institute for Economic Research


In economics, 1986 could be described as the year that marked the rediscovery of the obvious. The Nobel prize in economics was awarded for scholarship that, boiled down, suggested that politicians often act in their own interests rather than for the public good. And, with the appearance that year of Professor Peter L. Berger's The Capitalist Revolution, it was openly asserted that capitalist societies tend to "work" better than socialist ones.[1] Among the conjectures offered by Professor Berger were propositions that "Industrial capitalism has generated the greatest productive power in human history"; that "it continues to generate ... the highest material standard of living for large masses of people in human history"; that "If capitalist development is successful in generating economic growth from which a sizable proportion of the population benefits, pressures toward democracy are likely to appear"; that "Capitalist development is more likely than socialist development to improve the material standard of life of people in the contemporary Third World, including the poorest groups"; and that "There is an affinity between socialism and the totalitarian project for modern society."

These, and many other conjectures contained in this wide-ranging volume, are scarcely new -- and many of them, such as the ones above -- seem to be fairly indisputable. What does give novelty to The Capitalist Revolution, however, is Professor Berger's insistence that a useful approach to the debate between capitalists and socialists must rely on scientific procedures of inquiry that are grounded in empirical evidence. Although his analysis sometimes falls short of meeting the requirements of such scientific analysis, it has generated interest among behavioral-science academics who say it could open the door to more useful inquiry. This, of course, remains to be seen.

Perhaps most provocative from a social-science perspective are Professor Berger's conjectures as to why socialism seems to retain appeal in Western intellectual circles in spite of its failures. As he says, the vast majority of intellectuals in communist-bloc countries have long since declined to take it seriously. Of equal consequence is the opposite question of why capitalism has largely failed to gain an intellectual following given its obvious successes. This two-sided problem seems of considerable consequence, since the Western intelligentsia continue to exert influence in circles of power despite their often anticapitalist animus.

The Persistent Lure of Socialism

In brief, Professor Berger - accepting some elements of Marxist notions of "class" -- identifies a "knowledge class" that has a primary "interest in having privilege based on educational credentials, in which this class has an obvious advantage." He asserts that "This interest could well underlie a general antagonism against privilege based on 'raw' achievement in economic terms and thus against the capitalist market system that, in principle, is open to anyone regardless of education or other extra-economic certification." Beyond this is the fact that "a large proportion of this knowledge class depends for its livelihood on government payrolls or subsidies. Put differently, the knowledge class has an interest in the distributive machinery of government, as against the production system, and this naturally pushes it to the left in the context of Western politics." Why Professor Berger adopts this notion of "class" to describe academic special interests is not clear. In any event, his analysis is a reminder of the extent to which Western behavioral scientists have depended on governments for their livelihoods.

However, central to Professor Berger's analysis of the intellectuals' flirtation with socialism is the notion of "legitimation" -- that is, the idea "that an enduring human community requires a belief in its essential rightness." According to this line of thought, the strongest "intellectual" lure of socialism derives from its "myth-generating potency," which capitalism generally lacks: "Capitalism, as an institutional arrangement, has been singularly devoid of plausible myths; by contrast, socialism, its major alternative under modern conditions, has been singularly blessed with myth-generating potency."

Professor Berger observes with some irony (in view of the supposed Marxist antipathy toward religious belief of any kind) the appeal that may derive from a number of broad similarities between Marxist doctrine and biblical eschatology - and which currently may help to propel the efforts of the so-called liberation theologians. (He observes: "The final irony here might be that those who would marry Marxism and religion, along the lines of 'liberation theology,' might yet produce the sort of ultimate legitimation of the totalitarian project that will make the latter perdure for centuries.")

But regardless of whether its expression is overtly "religious," Professor Berger suggests "It is possible that the root cause for the mythic superiority is the fact that ... its realization never takes place. ...Thus there is the unending quest for the first case of 'true socialism,' always just out of reach, the quest taken up again after each disappointment. There is no capitalist equivalent of this (profoundly mythological, indeed religious) quest."

The Quest for Certainty

The foregoing analysis may sound vaguely familiar to long-time readers of AIER publications. Put in slightly different context, it describes what the philosopher John Dewey named the "quest for certainty." He observed this quest in a wide variety of human situations throughout the course of history and viewed it as a major obstacle to solving the problems of humans in society. As Dewey observed, this quest ignores the disproportions and uncertainties of the actual world in preference for some technical construction that postulates the existence of absolutes and perfections (in this case, the perfect socialist society).

We often have stated our view that such quests serve no useful purpose, and that a more constructive approach to human progress may be realized by applying the results of scientific procedures of inquiry to human problems. In the past, we have cited numerous failures related to attempts to impose visions of a "better world" that defy human behavior -- as well as the bundle of new problems that they usually create. We also have observed, as does Professor Berger, that such failures almost never have been taken as evidence that the quest is futile. Rather, the failures often have generated new and bigger plans involving ever4arger visions of the "better world."

The book also provides occasion for an assessment of the difficulties that the promotion and preservation of capitalism are apt to face so long as humans continue to be prone to the "quest for certainty." Given what Professor Berger calls capitalism's "mythic deprivation," one might reasonably question how capitalist societies will fare should conditions change much. He asserts that capitalist societies generally have received only indirect legitimation -- and even that only when they are working reasonably smoothly. He further notes that some (procapitalist) scholars -- notably Joseph Schumpeter -- have "believed that the very success of capitalism as an economic system undermines the cultural foundations on which it rests." This idea has "led to the notion that contemporary capitalism is undergoing a crisis of legitimacy. The notion then translated into a prediction that, divested of its legitimacy, capitalism is headed for its demise."

Professor Berger suggests that "This interpretation should be taken with a grain of salt." First, "there is nothing new about the incapacity of capitalism to legitimate itself directly (let alone to generate myths about itself). It was characterized by such an incapacity from the beginning." "Second, legitimations are most needed when a society or a social institution is in trouble.... [W]hen a society is working reasonably well, most people will look upon it as 'natural."' Western societies are "working" today -- at least far better than socialist societies -- and there would thus seem to be little empirical basis for believing that capitalism will imminently face a "legitimacy crisis."

Accordingly, Professor Berger says there is no need to "invent" a countervailing capitalist mythology. For example, Adam Smith, capitalism's "theoretical father," believed that the economic system he was describing (of course he did not use the later term 'capitalism') was, quite simply, the natural ordering of society; that which is natural, almost by definition, does not require legitimation, mythic or otherwise (who would think of legitimating the law of gravity, or of concocting myths so that people will be inspired to act in accordance with it?)." He suggests that recent attempts "to put together something that one might call a capitalist myth" will be "irrelevant unless they acquire plausibility among groups of living human beings." In his view, this is not apt to happen: capitalism simply is not inspiring, and "Legitimation is as legitimation does."

The Lure of Capitalism

There is much that one might dispute about Professor Berger's assertions respecting the barrenness of capitalism as ground for human inspiration. One need only reflect on the behavior since World War II of the many individuals who have tried (some successfully many at the cost of their lives) to escape from Iron Curtain countries so that they might have a chance to become "capitalists" to see that something involved with capitalism has a potent lure of its own. Surely it belies the assertion that "'capitalism' is not plausible as a motive for self-sacrificing heroism."

Indeed, capitalism - not as a narrowly confined and culturally burdened intellectual construct but as a name that conveys the totality of human transactions involved with meeting the requirements of production and consumption in free markets -- deserves far better than it has received even from Professor Berger. His analysis seems to depend on a notion of capitalism as a separate and confined entity -- a something apart -- that humans may interact with but which finally is divorced from "the total human experience." It also seems to depend, contrary to his own call for a closer relation between conjecture and observation, on the careful separation of "theory" from "results." This predisposition is fairly captured in his curious statement (given his procapitalist propositions) that capitalism is "an economic system and nothing else" whereas "socialism is a comprehensive view of human society." It is implied that "economic systems," especially capitalist ones, involve somehow-restricted, less-comprehensive, and therefore less-fulfilling types of human behavior than the grand sch('mes of socialist or other visionaries.

Nothing could be further from the actual; indeed, the opposite seems to be the case. Economic endeavor under a competitive capitalist system embraces the whole of human aspirations. Success in such a system requires adjustment to virtually the entire span of human activity. By contrast, "legitimate" economic activities in dirigiste regimes, far from being "comprehensive," are narrowly prescribed by those in power.

The Social Implications of Free-Market Behavior

Some years ago, E. C. Harwood, AIER's founder, suggested a behavioral approach toward understanding the complex transactions involved in market economies that suggested the extent to which economic processes under competitive market systems usually have been misrepresented. He offered an analysis that described characteristics of free-market behavior that are overlooked by capitalism's critics but that have highiy favorable social implications. In reference to the phrase "free competition," he wrote: "Many writers who use this phrase 'free competition' fail to realize that competition implies action in accordance with certain rules of procedure. Free competition, therefore, does not carry any implication of a 'free for all' fight, with gouging, biting, kicking, and scratching all permitted.

"Evidently, the rules and regulations governing or affecting competition may tend to create a fair field with no favor; or they may, on the other hand, through the award of special privileges of one kind or another, give advantages to some that are denied to their fellows. The phrase 'free competition' implies the former condition. 'Free competition,' therefore, implies that each individual concerned must of course comply with the rules, but that the rules, including all the customs, institutions, and laws of the social group, are such as to ensure a fair field with no favor. ...In short, where there is free competition the competitors are striving to perform those economic functions that are most desirable from the viewpoint of the consumer, and of course nearly all of the consumers are likewise competitive producers.

"If now we enlarge our viewpoint, so that instead of considering only a few individuals, we regard the social group in its entirety, free competition is seen to be that situation in which men are voluntarily cooperating. All of the group, by purchasing what they prefer, encourage those best qualified to provide the desired economic things including services. Each of the group who is offering things in the markets voluntarily seeks to cooperate by performing in the economic role where he can most effectively serve his fellows and thereby maximize his own reward in the marketplace. ...Thus, 'competition' and 'cooperation' become, under such conditions, merely different labels for the same highly efficient economic behavior."[2]

E. C. Harwood qualified his analysis with the remark -- equally applicable today that "there is no implication that free competition has ever actually existed or does now exist in any locality. It may have existed in the past, may exist somewhere at present, and conceivably may exist in the future at some time or place, but the fact that it does not now exist in the United States, for example, docs not lessen the usefulness of the notion for the purpose of this discussion." He also cautioned repeatedly over the years that any expectations that there could be any ''quick fix'' to human woes -- whether from socialists or capitalists -- were bound to be disappointed. In his view, progress in human civilization, if it is attainable at all, comes very slowly.


As Professor Berger says, capitalism is not "on its last legs." But neither may be socialism. The lure of the better world promised by socialists often has proved strong even in the face of the better world delivered by (relatively) free-market endeavors. This could be problematic if down-turns in economic activity or political disruptions become severe. Today, popular tolerance even for minor reversals or perceived threats to economic "security" seems extraordinarily slight compared with that of previous generations.

Today many adjustments that from an economic perspective ought properly to be viewed as usual market developments are portrayed as crises of major proportions. A severe recession or depression could foster greater intolerance of markets and enhance the appeal of socialist visions and policies. In short, the lure of socialist "solutions" to human problems may persist, no matter how great the genuine advances made via capitalism. Despite its shortcomings, Professor Berger's book underscores the need to persist against that lure. In our view, the most useful way to do so is to continue to educate the public about the results of empirical inquiry into human affairs and to foster conditions that permit markets to function more freely and so allow them to continue to create the social and economic "facts" that justify them in the public mind.


  1. Peter L. Berger, The Capitalist Revolution; Fifty Propositions About Prosperity, Equality~ & Liberty, New York, 1986, Basic Books. Dr. Berger is University Professor and Director of the Institute for the Study of Economic Culture at Boston University.
  2. See the Economic Education Bulletin, "Free Competition Is Voluntary Cooperation" (March 1986)