Perhaps the real difference between Smith, Belloc, and Marx on small businesses is the ability of reform to mitigate the damages wrought by the over-consolidation of wealth. Smith appears optimistic, but Marx disagrees. He writes in the Grundrisse (see our first post for Works Cited):
Laws may perpetuate an instrument of production, e.g. land, in certain families. . . . But can laws perpetuate the small-scale allotment? Despite these laws, ownership is again becoming concentrated. The influence of laws in stabilizing relations of distribution and hence their effect on production, requires to be determined in each specific instance. (Marx 235)
For Belloc, there are only two paths from which to choose: “either by putting property into the hands of many, or by putting it into the hands of none. There is no third course” (123-124). Like Marx, however, Belloc is less than persuaded that the force of law can serve as the corrective: “To build up property through thrift when once the mass have fallen into the proletarian trough is impossible unless you deliberately subsidize small savings, offering them a reward which, in competition, they could never obtain; and to do this the whole vast arrangement of credit must be worked backward” (Belloc 132).
In other words, deregulation is essential, but not sufficient in achieving true reform. Instead, cultural, moral and religious values must undergird the form and function of property for small landowners to prosper through the ages. For example, in ancient Israel, these principles were combined with a social and economic form that would endure (at least in part) for 1,500 years. As the New Bible Commentary summarizes:
The social structure of Israel was thus based on the theology of covenant [Gen 2:4-6; Exo 18:24-27; 20:15; Lev 25:23; Deu 4:21]. In this decentralized society, no-one was king but Yahweh, the God of Israel. The method of land-holding enabled the covenantal ideas of brotherhood, the participation of every Israelite in the covenant, to be expressed. The institutions of debt-release, slave-release and jubilee (Lv. 25; Dt. 15:1-19) were designed to preserve equity in land use and thus enjoyment of covenant blessings. Proper land possession was a duty to God and to the next generation of the clan and family [Num 27:1-11; 36]. It was for this reason that Naboth refused to sell his property to Ahab, and that Ahab’s act in taking it by force was so reprehensible (1 Ki. 21:1-16). (NBC 28)
In The Road to Serfdom, Hayek sees the significance of this trend in his own generation after the end of the Second World War. When reform becomes redistribution it soon either lashes out in revolution, or defaults to socialism. The issue that then arises, however, is who is calling the shots for whom. Hayek reminds us of socialism’s answer: “Who plans whom, who directs and dominates whom, who assigns to other people their station in life, and who is to have his due allotted by others? These become necessarily the central issues to be decided solely by the supreme power,” a role only the state has the strength to occupy (Hayek, ch. 8).
So while Marx sought freedom from both economic and political oligarchs, the system that bears his name takes a marked left turn toward absolutism. Thus the very middle class Marx tried to preserve, was ultimately destroyed by his own prescriptions (see Hayek 8). And as Hayek points out, “This is really the crux of the matter. Economic control is not merely control of a sector of human life which can be separated from the rest; it is the control of the means for all our ends” (7).
But Hayek noted the significant political irony of his generation, as well: “we might indeed find that we have defeated National Socialism merely to create a world of many national socialisms, differing in detail, but all equally totalitarian, nationalistic, and in recurrent conflict with each other” (Hayek 15). In other words, people may say they want Marx, but what they get is Hitler, Mussolini and, of course, Stalin. As one penitent Marxist points out, this is the chief fallacy of Communism’s dialectical approach to history and property:
It seems obvious to me now—though I have been slow, I must say, in coming to the conclusion—that the institution of private property is one of the main things that have given man that limited amount of free-and-equalness that Marx hoped to render infinite by abolishing this institution. Strangely enough Marx was the first to see this. He is the one who informed us, looking backwards, that the evolution of private capitalism with its free market had been a precondition for the evolution of all our democratic freedoms. It never occurred to him, looking forward, that if this was so, these other freedoms might disappear with the abolition of the free market. (Max Eastman, quoted in Hayek 8)
These words root political freedom in objective truth revealed through nature, but the words themselves also grow out of a Lockean tradition that integrally connects the roots of freedom to the right of private property and its free use. The Fifth Amendment to the Constitution even restores Locke’s original phrase: “nor shall any person . . . be deprived of life, liberty, or property, without due process of law” (emphasis added).
Still, though happiness presumes an adequate level of property, property remains insufficient to secure happiness by itself. As Aristotle writes, though “it seems clear that happiness needs the addition of external goods” – including wealth – this is not the same as happiness itself, which “has been described as a kind of virtuous activity of soul; whereas all the other goods either are necessary preconditions of happiness or naturally contribute to it and serve as its instruments” (NE 1099b).
Property therefore provides the material conditions for life, liberty and happiness, but should never replace these as the end of human existence, in the family, in the community, or as a nation. Smith, Belloc and Hayek all knew this well, but Marx chose equality rather than liberty, and lost both.
And since music makes everything better . . .