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Confessions Of A Capitalist

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The recent remake of The Manchurian Candidate is a curious thing. While it repeats most of the plot of the 1962 original, the North Korean military is replaced by a private equity firm as the villain. These days, it seems that capitalists are easier to demonize than communists!

Culture warriors have had many villains, but the businessman – the capitalist – has long been a favorite. Nineteenth century Muckrakers portrayed the businessman as capricious, careless of the safety of his workers, and the exploiter of a hapless citizenry. Socialist reformers Sidney and Beatrice Webb denounced capitalism as “an elaborate system of…blackmail” and “a peculiar kind of tyranny now exercised…by a relatively small class of rich men over a mass of poor men.”

Those themes, their flames kept burning by the Naomi Kleins and Michael Moores of today, have come to dominate our novels, movies, and TV shows. And the attacks only seem to increase in both frequency and intensity.

Rhetoric matters, and the drumbeat of anti-business narratives has had an impact, not only on how the public views business, but on how businessmen view themselves. Carlyle Group co-founder David Rubenstein, one of America’s most successful private equity partners, summed it up well: “When I built Carlyle, my mother didn’t call to say, ‘I’m so proud.’ When I give a [charitable] gift to some place of importance, she calls and says, ‘I’m proud.’” Capitalism’s vast achievements have gained it little respect.

Businesspeople have responded weakly over the last century to these attacks, rarely mounting any strategic moral defense. Economist Joseph Schumpeter explained this passivity as the result of the rationalistic nature of capitalism. The rational attitude of businessmen, he argued, would lead them to believe that logical arguments, emphasizing capitalism’s economic achievements, would suffice. Jobs and tax payments are noted but the role of business in advancing a moral society is rarely mentioned.

But at least one businessman responded creatively and aggressively. That man was Ernest Benn. In 1925, in an England already well down the road to socialism, he wrote the memoir Confessions of a Capitalist. The book is a clear, cheerful discussion of the creative role of business in society. His opening comments are ironic but positive.

I am a business man, making and enjoying a very substantial income. I own two motorcars. I live amidst surroundings that to many would seem luxurious. I own a fair-sized business, and directly and indirectly, I suppose I am responsible for the activities of 2000 “wage slaves.” I am in fact the sort of person against whom the whole of the Socialist propaganda seems to be launched and, when I listen to current political discussion, I find myself regarded not only as a superfluity but as a bar to progress, as one of the causes of poverty, want and distress.

Benn reviewed that anti-business literature of his time, noting that it saw no positive role for businessmen in politics, that business and politics were separate spheres and should remain so.

Benn addressed many of the criticisms levied against business, including the case for wealth redistribution via the tax code. He asserted that “the whole movement for creating wealth by political agencies is a snare and a delusion.” He addressed the Marxist critique of “profits” – noting that if an individual built something and then sold it to another, he would be receiving something for both his labor and his management skills, the latter payment being profit. When a member of the then-socialist government announced that there were only 27,000 people in the UK with incomes over £5,000 a year, Benn commented that this fact was presented as if it were equivalent to a decline in the number of “bigamists or burglars.”

Much of the book defends business as an honorable profession. In his own life, Benn found that his early training was for a career for which he was not suited, but that he began to flourish as a “commercial traveler” (a salesman) – a role he describes as wonderful experience because it forces one to consider the interests of both producers and consumers. He is critical of efforts to help individuals find a “job,” arguing that the challenge faced by every individual is to find his role, one that allows him best to serve others. The individual who finds that role, in Benn’s estimation, will have found success.

He covers in some detail the value of bookkeeping – an essential reality check to ensure one’s enterprises are yielding a positive return. His discussions of publishing, his eventual lifetime career, explain in detail how one assembles costly material and labor and then organizes them creatively to yield profit. He observes that, “Doing business is doing real things. Things done in business carry with them a satisfaction which does not always attach to things done in the professions, politics or other walks of life.”

Benn grasps the essence of the market, noting that in business “everybody must be satisfied, there is an absolute and unqualified freedom on every hand…It is no good trying to impose your ideas upon others. You must secure complete agreement all round.”

Benn was highly critical of the growing intervention of government in the economy. “Energies that were at one time concentrated whole-heartedly upon the comfort of the customer or consumer are now dissipated in the intricate task of picking one’s way through the maze of legislation, regulation which twenty-five years of Socialist…government have created.” And, recall, this was in 1925! He adds, “If I had had to waste all the time in 1900 that I now waste in filling up forms, I am quite convinced that I should have given up.”

Benn’s chapter on his travel to America provides a sobering note. He admired greatly the entrepreneurial spirit he saw here, the belief that each person should carve out their own future. “Not heaven,” he cautioned, but “as near to an economic heaven as we mortals shall ever approach.” He would certainly have been chagrined at how far we’ve fallen from that ideal.

Long before Leonard Read penned his famous essay, “I, Pencil,” illustrating spontaneous order and the specialization of labor, Benn captured an allied idea, the decision process whereby an entrepreneur makes a capital investment. He describes a businessman deciding to invest in an innovative machine for making buttons.

His object is to earn a living, which is another way of saying that he intends to serve his fellow-creatures by exchanging with them buttons for other commodities. We have already noticed that it would take each one of us several weeks to carve out pieces of bone forming the buttons on our clothes. Our button maker therefore puts down a machine which is calculated to make a million buttons per annum for the next ten years, and he begins a process of exchange which will not be completed until the ten millionth button is made and stitched on to somebody’s shirt ten years hence.

Benn went on to note the risks borne by the innovator. The machine may indeed last ten years but that the buttons made by that machine may no longer be acceptable. Benn recognized that creative destruction both encourages innovation and raises obsolescent risks.

Overall, Benn’s book is delightful, addressing with wit and wisdom the various charges brought against business. Well aware of the moral and economic gains of capitalism and understanding how prosperity arises from voluntary exchange, he took the time and effort to write about his pride in being a businessman. He believed that his was a most honorable profession, and he took that public stance in a heavily politicized United Kingdom. Now almost ninety years later, with much of the developed world facing even more strident attacks on business and capitalism, the question is where are our Ernest Benns? Where are the businessmen today – in America or elsewhere – with the courage and the ability to defend capitalism?