Any system of social and economic life that aspires to be truly humane needs to reflect the nature of human beings. Communism imploded, at least in part, because it denied certain truths about humans, most notably the fact that we possess the unique ability to make free choices. By attempting to replace market mechanisms of supply and demand with a top-down command approach, both socialist and communist economic theory ascribed abilities to humans that are possessed by no individual or group. One was the assumption that any one of us can look ahead and foresee all the possible needs of an entire society at any one point of time in the near or distant future. No matter how sophisticated the available methods of economic modeling, such foresight is beyond any human intelligence. There are good reasons why economic forecasting is often described as more of an art than a science.
Another failure of real socialism to comprehend human nature was its inability to appreciate the observable fact that at most times, the vast majority of people prefer to place the ownership of things in private hands. This is not to claim that people are never willing to ascribe ownership of certain things to wider associations of people (such as businesses with multiple shareholders) or even the state. In some situations, such as wartime, people are willing to accept certain restrictions on their ownership. Nonetheless, private ownership remains the preferred norm in virtually all societies. With its in-principle opposition to private ownership, communism was unable to account for this reality.
Why then do people tend to favor private over communal ownership? One reason is that they are aware, as Aristotle and Aquinas witnessed long ago, that when things are owned in common, the responsibility and accountability for their use disappears, precisely because few are willing to assume responsibility for things that they do not own. Our everyday experience reminds us of the tragedy of the commons. The early advocates of socialism were well aware of these objections. Their response was to hold that all that was needed was a change of mind and heart on the part of people as well as profound structural change: a change that would not only produce a new system of ownership, but also a “new man” — the socialist man much trumpeted by the former Soviet Union.
Commercial society rejects this vision of man as well as the means proposed for realizing such an economic order. For the understanding of humans that pervades commercial society is one of realism . It does not assume that human beings can always be other-regarding when it comes to acts of economic exchange. Many of commercial society's legal and economic structures are thus predicated on a decidedly non-altruistic understanding of humans and their world. Contracts exist, in part, because there will always be some people who will unreasonably decide not to fulfill their promises. Likewise, the network of free exchange assumes that people normally engage in exchanges in order to meet their own needs rather than from a specific concern for the well-being of those with whom they are exchanging goods and services. The type of exchange characteristic of commercial society thus differs from the system of mutual obligation from that which existed in some medieval societies whereby peasants, for instance, were required to pay money to the nobility in return for the protection accorded by the nobility against brigands and foreign invaders. Commercial society requires free exchanges into which people enter in pursuit of their own interests.
Commercial society does not therefore attempt to eliminate human fallibility. Instead it holds that there is nothing unnatural about self-interest. To speak about self-interest, as the political philosopher Pierre Manent notes, is to “designate a powerful and universal resort of human action.” It is not an abstract principle without grounding in reality. Those who followed commercial society's early development noted its ability to align human weakness and self-regard with a society's overall progress toward a more prosperous state of well-being. Adam Smith's reference to the “invisible hand” perplexes some, but is simply a metaphor for the idea that through allowing people to pursue their self-interest, unintended but beneficial social consequences for others will follow.
As individuals pursue profit, they unintentionally add to the sum total of the wealth in society, unintentionally allow people from different nations to come to know each other, unintentionally promote civility and peace, unintentionally allow others to benefit from more and better jobs, and unintentionally contribute to technological development. None of this means that commercial society does not afford opportunities for people to act altruistically. Rather, it is precisely because increasingly large numbers of people in commercial society are able to accumulate sums of capital that exceed their immediate needs and acquired responsibilities, they begin to develop opportunities to be generous to others.
This article was excerpted from Samuel Gregg's The Commercial Society - Foundations and Challenges in a Global Age , a new book published this month by Lexington Books. Samuel Gregg is the director of research at the Acton Institute. The Commercial Society is available for purchase through the Acton Book Shoppe (www.acton.org/bookshoppe)
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