In the early decades of the Cold War, the Lutheran theologian Reinhold Niebuhr attracted a considerable following among American intellectuals who influenced foreign policy. People such as the historian Arthur M. Schlesinger Jr., who wanted to found a group called Atheists for Niebuhr, maintained that Niebuhr provided a new, realistic basis for America’s battle against Soviet communism that avoided the discredited idealistic moralism of Woodrow Wilson. In this week’s column, I’d like to look at Niebuhr’s book The Children of Light and the Children of Darkness, based on a series of lectures that Niebuhr gave at Stanford University in 1944. In particular, I’d like to examine Niebuhr’s charge that supporters of the free market are guilty of naïve optimism about how capitalism works. I’ll try to show not only that the charge is false but also that Niebuhr’s own economic views are based on a naïve and discredited Marxism.
To understand Niebuhr’s argument, we first need to grasp his distinction between the “children of light” and the “children of darkness,” as he uses these biblical expressions. The “children of light” believe the world can be brought under natural law but are naïve, underestimating the power of self-love to cause people to deviate from the proper path. The “children of darkness,” by contrast, understand the power of self-love but are cynical about it. They reject natural law as an ideal, speaking only of power. Niebuhr says,
Those who believe that self-interest should be brought under the discipline of a higher law could then be termed “the children of light.” This is no mere arbitrary device; for evil is always the assertion of some self-interest without regard to the whole, whether the whole be conceived as the immediate community, or the total community of mankind, or the total order of the world…. Our democratic civilization has been built, not by children of darkness but by foolish children of light…. The children of darkness are evil because they know no law beyond the self. (pp. 9–10)
Though this doesn’t directly affect the main point I’m trying to make about Niebuhr’s view of the free market, the passage just quoted has a disturbing implication, though it can be interpreted to avoid this. Niebuhr seems to be equating “evil” with “self-interest.” An evil person is one who pursues his own interest, without taking into account the good of the whole. You need not be a follower of Ayn Rand to be startled by this interpretation. Does Niebuhr believe in an ethics of absolute self-sacrifice? The passage admits of another interpretation, in which all that is being condemned is the pursuit of self-interest in a way that violates the rights of others, rather than achieving your self-interested goals in cooperation with others. I doubt that Niebuhr intends what he says in this anodyne way. The Bible commands, “Thou shalt love thy neighbor as thyself,” but some twentieth-century theologians, Karl Barth being the most notable, reject self-love altogether, and I suspect Niebuhr is among these.
To turn from this speculation to Niebuhr’s criticism of the free market, he makes two main complaints. His first is that a
conflict between monopolistic and smaller units of economic power … is not a “natural” contest. The unequal power of one contestant is the product of the tendency toward centralization of power in the processes of a technical civilization. The power is a social and historical accretion; and the community must decide whether it is in the interest of justice to reduce monopolistic control artificially for the sake of re-establishing the old pattern of “fair competition,” or whether it is wiser to allow the process of centralization of economic power to continue until the monopolistic centers have destroyed all competition. (p. 65)
As Ludwig von Mises has noted, there is no such tendency toward concentration on the free market: the claim to the contrary is a Marxist myth.
The Law of the Optimal Combination of the factors of production indicates the most profitable size of the establishment. Net profit is greater according to the degree to which its size permits all factors of production to be employed without residue. In this way alone is to be estimated the superiority which the size of one particular establishment gives it over another establishment—at the given level of productive technique. It was a mistake to think that enlargement of the industrial establishment must always lead to an economy of costs, a mistake of which Marx and his school have been guilty, although occasional remarks betray the fact that he recognized the true state of affairs. For here, too, there is a limit beyond which enlargement of the establishment does not result in a more economical application of the factors of production. (Socialism, p. 368)
Niebuhr’s point about concentration is wrong, but what is even worse is the way he arrives at it. He offers no evidence in support of what he says but repeats an outworn Marxist bromide. This is the thinker viewed as an oracle by the foreign policy establishment?
Niebuhr fares no better with his second assault on the free market.
The most glaring contradiction between bourgeois individualism and the social function of property became apparent as commercial civilization was gradually transmuted into an industrial society in which collective production became the primary source of wealth. The modern factory is a great collective process…. The “private” ownership of such a process is anachronistic and incongruous; and the individual control of such centralized power is an invitation to injustice. (p. 103)
Once more we have an old Marxist dogma resurrected. According to Marx, as the forces of production develop under capitalism, production increasingly becomes collective and the legal forms of individual ownership of the means of production come into conflict with the actuality of the economic situation. The “anarchy of production” needs to be replaced by socialist planning. Niebuhr shows no acquaintance with Mises’s calculation argument against socialist planning. For him, it is enough to repeat what he professed in his days as a self-avowed Marxist, though, in fairness to him—and here he has progressed—he recognizes that central planning poses dangers by giving the planners too much power and thus calls for caution in putting socialism into practice.
Niebuhr is far more in the grip of illusion than those he criticizes for this failing, a circumstance of truly Niebuhrian irony.