Altruism and Capitalism

Ayn Rand stated that altruism and capitalism could not coexist in the same person or society for a long period of time.  In a recent book forum put on by the Cato Institute two libertarian Christians took issue with this.  I want to explore this issue a little, so as to shed light on the argument.

First, in order to resolve the issue we need to have some common understanding of what we mean by altruism and capitalism.  The argument against altruism is not based on the idea that actions taken for the purpose of helping others, turn out to hurt them in the end.  This may sometimes be the case, but altruism was originally defined as the idea that people have a moral obligation to serve others.  Capitalism is an economic system based on property rights and free exchange.  It is specifically contrasted from other economic systems in that the material resources used for production are privately owned.

It may be the case that some people object to this definition of altruism.  Many people use the term to mean different things, some of which may reflect well on the individual held to be an altruist.  However, it is the case that many people have the opinion that we have a moral obligation to serve others, and it is important that we have a word to describe such a point of view.  It will also be useful to determine whether such a point of view is compatible with capitalism.

Altruism follows from Christianity.  Christians believe that in the final judgment the righteous will be separated from the unrighteous.  The criteria used to tell the difference is that the righteous helped “the least of these” whereas the unrighteous did not.  Technically this is a form of extortion.  People are to be thrown into the lake of fire in return for failure to help others.  This goes against the principles of property rights and free exchange.  Extortion is not compatible with capitalism.

Having said this I should point out that Christianity does not necessarily imply that human beings are to enforce the altruistic principle.  God is supposed to be taking care of this.  For the unbeliever this belief would have no direct effect.  For this reason Christianity should be tolerated even if suppression wasn't obviously impractical, as is the case with such a popular point of view.  That is, even if it were the case that Christianity was a religion practiced by a small minority that could easily be suppressed, we shouldn't do it.

In general it does not follow from altruism that we should violate capitalistic principles.  Capitalism is only strictly incompatible with the use of coercion or violation of property rights in order to enforce the altruistic principle.  An altruist could stop at blaming an individual for failure to help others.

That having been said, it is the case that altruism usually involves a violation of capitalistic principles.  This is because it is difficult to come up with an argument that the honest acquisition of wealth should be tolerated if it is held to be worthy of blame.  Why should the harm that we do to others for failure to help be limited to blame?

The best arguments for capitalism point out that the honest acquisition of wealth is not only harmless, but beneficial.  For example, take Ludwig von Mises' argument against redistribution in Human Action.  By redistributing income or wealth from the rich to the poor, we are shifting goods from capital to consumption.  This will have a long term effect of reducing the ratio of capital to labor, which will in turn have a depressing impact on wages, and hence hurt the people that the program was designed to help.

This argument could apply equally to voluntary redistribution.  Blame directed against those who acquired wealth honestly would have much the same effect as taxation, except that it would impose a dead weight loss instead of raising revenue that would at least have the short term effect of helping the poor.  Insisting that people have a moral obligation to help others would be to stipulate that this blame should apply to such an individual unless he or she voluntarily gives money to the poor.  This would have the same impact as a tax designed to do much the same thing.

So it seems that in practice altruism and capitalism are incompatible.  Libertarian Christians can come close to supporting both, but their point of view depends on believing that God will enforce the altruistic principle.  Such enforcement would violate capitalism.  It would be a form of extortion.  It is possible that an individual could present an argument that failure to help others should be tolerated even though it is worthy of blame, I doubt that such an argument would be very persuasive.  However, I  am skeptical of arguments in favor of altruism in general.  Moreover, even if such an effort were successful, it would prevent our society from enjoying the full benefits of capitalism.  The honest acquisition of wealth is beneficial to others, hence it should be encouraged and not just tolerated.