Paul Tillich published The Socialist Decision in 1933. It was quickly banned by the Nazis, and burned along with other books the Nazis found offensive.
As a prominent protestant theologian, Tillich wanted to infuse the historically atheistic socialist movement with a Christian ethos. He felt the two (Christianity and socialism) were naturally aligned, or could easily be made so. Thus, Tillich’s primary motive for writing The Socialist Decision.
What follows largely ignores the theological element of Tillich’s book, mostly because I am not qualified to evaluate the spiritual aspect of Tillich’s book, and also because I am more interested in his political economy. As I indicate in the summary:
Tillich’s socialism resembles, in its basic principles, socialistic thinking that exists today. This makes his book relevant and worthy of serious consideration.
I address specific elements of Tillich’s book, mostly in the order they appear. A couple of caveats: I don’t give Tillich enough credit for writing in his historical circumstances. In his view, one of two ideologies would some day control the world: Fascism or some form of socialism:
Since human action shares in the determination, the future of Western civilization can be either socialism or barbarism. But since human action has this freedom only within the framework of economic and social laws, there is basically no third possibility beyond these two. (p. 162)
He didn’t allow the possibility for a liberal democracy to survive, let alone my vision of a genuinely free society.
Also, he was writing in the midst of the worst depression in modern history, circumstances that were widely attributed to foundational elements of a free market. Virtually every line in his book reflects his conviction that such a system would continue to impoverish the masses.
In the forward, Tillich writes:
Socialism requires the clearest, most sober realism…[xxxvii]
This means that everything we consider must manifest into real-world consequences, that pragmatism rules. No room for fantasy, idealism, or wishful thinking. On this we agree. He goes on to assert:
Whoever has not struggled with the spirit of socialism can speak about it only from the outside, which is to say, in fact not at all. [p. 7]
This seems unnecessarily limiting. If we change ‘socialism’ to something like ‘political philosophy’, then perhaps we can agree. It is not necessary to engage ‘the spirit of socialism’ in order to engender critical debate, as the substance of socialism is quite worldly and accessible. Tillich sets further limits on the source of debate:
Socialism, as will be demonstrated, is the direct expression of the proletarian situation. How then is it possible, one could ask, to criticize socialism or to argue for it from a position that is not itself proletarian? [p. 8]
Several points to be made:
Tillich continues to limit the perspectives qualified to judge his point of view:
Thus socialism also is to be understood only in terms of a socialist principle that is gained only by a socialist decision, and which is the standpoint both for interpreting and for judging socialist reality. [p. 10]
‘Socialist reality’ doesn’t exist, independent of an individual’s perspective. In some respects, there is only one reality, and in another, as many realities as there are people. Regardless, every person can interpret and judge reality for themselves, socialist or no.
Tillich follows with an interesting basis for social cohesion:
Among the animals, the individual is assigned and held to a space or status in accordance, above all, with its prowess in battle. This applies also to the social group that sustains the individual by guaranteeing each person a share in the social space or sphere of existence and by requiring each in turn to be integrated into this sphere and its structures. [p. 17]
Tillich seems to suggest that individuals owe society their security and safety, and in return, the individuals become obligated to perform a specific role within that society. If we accept this social premise, we allow any social construct that might follow. We become social insects living to support, protect and defend the hive, and those that lead it.
Alternatively, we can view social constructs as serving autonomous individuals without imparting obligation, requiring only reasonable levels of respect for fellow citizens and for the laws that properly maintain civil order. In other words, there is no inherent duty assumed simply by being born into a particular society, unless we are considered some form of slave. This is really the basic question Tillich raises, one that will be echoed throughout what follows: either we are free subjects, owners of our own destiny, or we are subjects of the regime, obligated (and/or coerced) into living our lives by the order of others. This becomes manifest in the next excerpt, particularly in the final line:
Who is to be responsible for the structuring of society, and what guarantee is there that it will be done rationally?...It is at this point that the problem of how nature can be grasped through human knowledge and how society can be constructed through human activity is of the greatest urgency. We encounter here the subject-object problem, that great catalyst of Western philosophy, and, in strict correlation with it, the problem of freedom and authority, the catalyst of bourgeois political thought….
Two answers are possible, and two have been given…The first proceeds from the object…It affirms, further, that the free flow of human productive forces will lead inevitably to a rational formation of society, whether in the realm of culture (tolerance), economics (liberalism), or politics (theory of majority rule). It believes, thus, that an entity, as soon as it can unfold in freedom from the powers of origin, will arrive through a natural harmony at the fulfillment of being…
The second answer proceeds from the subject. It is based on the conviction that leaving the individual elements of nature and society to themselves will never lead to a rational knowledge of nature or a rational formation of society. The subject is the bearer of reason, in the sense that the spirit give nature its laws (Kant) and that the central government rationally directs and shapes all aspects of society, bringing the productive powers of every kind—spiritual, economic, and political—into effective harmony. Nature and society are to be subjected to human reason. The freedom of the individual must be circumscribed by an overarching law. [p. 49]
We need to break this down one piece at a time. Tillich asks:
Who is to be responsible for the structuring of society, and what guarantee is there that it will be done rationally?
Within a modern, complex society, nobody is responsible for its structure, and in fact, nobody, and no social construct (government or otherwise) is capable of designing and implementing one form of structure over another, one that completely encompasses the mass of society. There is no single capability, theoretical or otherwise, that can mold a complex social structure into a specified design with predictable results. The structure of society at any given moment owes its design to countless individuals, traditions, organizations, and institutions, both public and private, current and past. Elements can always be changed, enhanced, eliminated and created over time, yet nobody, not a democratically elected president, a socialist parliament, or a bloody dictator, can design the entire structure in any rational manner, such that any specific goals of such design (unless they be that of an anthill) will be realized in the end.
...It is at this point that the problem of how nature can be grasped through human knowledge and how society can be constructed through human activity is of the greatest urgency. We encounter here the subject-object problem, that great catalyst of Western philosophy, and, in strict correlation with it, the problem of freedom and authority, the catalyst of bourgeois political thought….
Tillich here echoes the mantra of all social engineers, concerned as they are with how ‘human activity’ constructs society, and the naïve belief that some form of rational intervention can improve the state of society, and presumably, by extension, the lives of human individuals.
Two answers are possible, and two have been given…The first proceeds from the object…It affirms, further, that the free flow of human productive forces will lead inevitably to a rational formation of society, whether in the realm of culture (tolerance), economics (liberalism), or politics (theory of majority rule). It believes, thus, that an entity, as soon as it can unfold in freedom from the powers of origin, will arrive through a natural harmony at the fulfillment of being…
Tillich is correct in identifying two primary answers, two alternative views, but I would characterize them a bit differently (remaining within the spirit of the question): Either humans are born free individuals, absent inherent social obligation, or they are born subjects of the regime, required to serve. Or, to put it another way, either government intervention into social life, the economy and culture improves the lives of individuals, or it reduces wealth and overall satisfaction. Regardless, neither option necessarily leads to ‘a rational formation of society’ (whatever that can be taken to mean) or ‘natural harmony’ (again, depending on the intent).
The second answer proceeds from the subject. It is based on the conviction that leaving the individual elements of nature and society to themselves will never lead to a rational knowledge of nature or a rational formation of society.
Both assertions (‘never lead to a rational knowledge of nature’ or ‘a rational formation of society’) are highly questionable. In the first case, the history of science and technology is replete with examples of progress towards the rational knowledge of nature. In fact, this might be taken as the principle core achievement of Western Civilization. In the second case, while we don’t understand what is meant by the ‘rational formation of society’, we do know that free individuals and the organizations they inhabit are far more likely to act ‘rationally’ then socially planned societies. They haven’t any choice, if they desire to survive and prosper in a free market. This is a simple matter of historical fact, well supported by theory. Just consider North/South Korea, or East/West Germany.
The subject is the bearer of reason, in the sense that the spirit give nature its laws (Kant) and that the central government rationally directs and shapes all aspects of society, bringing the productive powers of every kind—spiritual, economic, and political—into effective harmony. Nature and society are to be subjected to human reason.
In my book The Altruistic Libertarian, I go to some length to demonstrate the impossibility of effectively planning complex economies. More specifically, what planning aims to accomplish – increased output, new technology, higher standards of living – it fails to achieve. This occurs because the planners do not possess the information necessary to make good decisions (‘good’ in terms of what they want to achieve). In addition, there are typically no consequences – positive or negative – that accompany their efforts. As a result, planned economies (and by extension, planned societies) fail to achieve their desired results. In contrast, a large free market entity consists of thousands of decision makers (engineers, technicians, managers, directors, etc.) with the information, tools, motivation and organizational authority necessary to perform effectively. And there are consequences (positive and negative) for individuals and organizations for both success and failure. In a word, it’s simply not possible for the ‘central government’ to effectively direct and shape ‘all aspects of society’. They can affect all aspects of society, in extreme cases, but they cannot shape it into a specific form.
The freedom of the individual must be circumscribed by an overarching law.
To Tillich’s credit, he acknowledges the requirement of curtailing individual freedom in order to bring about a socialist society. Many socialists shy away from this reality, recognizing how unpalatable this fundamental requirement of establishing and maintaining a socialist society will be generally considered. But he is correct: to bring about, and maintain, a socialist society, individual freedom must be significantly curtailed. To address this, Tillich writes:
As the bearer of an indeterminate power of productivity, the individual will be taken into account by those responsible for planning. (p. 50)
How might this take place? In what form might the planners take into account the individual? What does this really mean? Tillich doesn’t say. Given the nature of government bureaucracies, we take little comfort in the thought of leaving our fate primarily in their hands.
On the other hand, even the most extreme liberalism, if it has not turned into a form of utopian anarchism, requires something to assure the unhindered working of the forces of production and the untrammeled development of intellectual and political freedom. Such a guarantee can be given only by a central authority that has the power to repel whatever might tend to limit, inwardly or outwardly, the natural development. (p. 50-51)
I would argue that in the ‘most extreme liberalism’ (such as that of the Altruistic Libertarian) intellectual and political freedom are included part and parcel within society, and such freedoms are universally respected and protected. The central authority can only guarantee such freedom if it is bound by the appropriate constitutional and legal limits, limits that wouldn’t (and couldn’t) exist in a socialist state, given the necessary extent of the state within society, the economy and culture. Despite the previous guarantees, Tillich goes on to indicate the limits, or the lack thereof, that may be required (will be required) in curtailing individual liberty:
One cannot say in advance to what extent this authority might have to intervene in order to overcome disturbances of the natural harmony. In some cases its interventions must go so far that the liberal principle is almost eliminated. This happens especially when the disturbances come from without, when a threat to the nation makes dictatorial measures necessary. (p. 50-51)
At this point, Tillich indicates his willingness to practically eliminate individual liberty (‘interventions must go so far that the liberal principle is almost eliminated.’) This in the service of overcoming ‘disturbances in the natural harmony.’ Given the inherent ambiguity in establishing and maintaining ‘natural harmony’, particularly during times of peace, this stated principle allows for the most egregious intervention into the lives of private citizens. As for times of war, if the nation is genuinely endangered, the need for ‘dictatorial measures’ remains questionable. A free people will fight to maintain their freedom, if the cause is just.
Tillich asserts that the ability to shape society is based on humans achieving rationality:
Society can be rationally shaped because the human race is involved in the process of education toward reason, the goal of which will somehow finally be reached. (p. 51)
Yet from a certain point of view (the Altruistic Libertarian’s, for instance) genuine rationality leads to increased levels of individual liberty, not less. The better one understands:
the more one will advocate (again, from the perspective of the Altruistic Libertarian) increased levels of universal human liberty.
And this perspective does not require perfect rationality: while individuals frequently behave irrationally, at least from the perspective of other individuals, a genuinely free society, unlike one socially engineered, doesn’t depend on, or demand, universal consensus, or universal modes of thought and living. Such modes forced upon people necessarily generate unrest, dissatisfaction and social upheaval, requiring increasing levels of suppression. And on and on indefinitely.
Tillich points out the weaknesses of European society, ones that provoke his socialist perspective:
The bourgeois principle as applied by liberalism does not lead to a harmonious society characterized by steady progress and contentment, but to crisis, class rule, and class struggle. The proletariat does not experience harmony, but disharmony. (p. 58)
This may be historically correct, for several reasons. Without examples or descriptions of what a ‘harmonious society’ might be, the Europe of his time was certainly socially contentious. By all accounts, ‘crisis, class rule and class struggle’ certainly existed. Traditional European society was far more socially stratified than New World societies, given their history of Royalty, the power of the church, and historically rigid class structures. The power of law and tradition maintained this rigidity, protected the aristocracy and landed gentry, and prevented social justice from overcoming these sacred barriers. Which is another way of saying that none of these barriers would exist in a genuinely liberal, that is, a genuinely free society. Many, if not most, of the ills that Tillich objects to arise from the very power structures he proposes to enhance. While different individual may be involved after bringing about a Socialist Decision (as, when for example, Bolsheviks executed the tsar and his family) institutional power will increase above and beyond what formerly existed. It is these power structures, and only these power structures, that allow for such class rigidity, and social injustice, regardless of any good intent.
As for instigating ‘steady progress’, government institutions, like those favored in a Socialist Decision, are incapable of providing such progress, both from a theoretical and/or historical perspective. As for ‘contentment’, aside from that enjoyed by zoo animals and social insects, government structures in themselves are inadequate for such guarantees. We don’t know what makes our neighbor truly content, let alone the billions of people on earth. We are all different, with various histories, genetic structures, and inclinations. Many people don’t even strive for contentment, as they pursue more challenging goals. Every person strives for what they want (right or wrong from my perspective or yours). That is the only universal social truth. Whether they achieve what they desire does depend on the political influence on society. And some political structures are far better than others for nurturing such achievement.
Tillich elaborates in the following:
At present, disharmony dominates; it is too deeply and necessarily grounded in the social situation to be overcome by progress. Only through the compulsory power of the whole over against all individuals, that is, through a centralized democracy with a real power of rulership, can the fragmentation of social unity be overcome. The free play of forces is to be replaced by deliberate planning. The authorities without accountability that arise on liberal soil are to be replaced by a democratically based, accountable, central authority. (p. 58)
Again, he could well be right, on both counts: one, that disharmony at that time in Europe predominated, and two, that simply progressing from that point, without radical social change, was unlikely to overcome existing social injustice. But his suggested solution, ‘compulsory power of the whole over against all individuals,’ would simply lead to exacerbating social injustice. We know this from history: Nazi Germany and Soviet Russia developed into the two most brutal regimes ever seen. It can be argued that both the Nazis and the Soviets achieved some level of ‘social unity,’ but at what cost? Tillich follows with a naïve pipedream of a ‘democratically based, accountable, central authority.’ Such entities don’t exist in any real world. Once such power is granted to an institution, attempting to dislodge misuses of power becomes a useless—and often dangerous—occupation.
Tillich expects to mitigate the increase in powerful institutions ‘through a centralized democracy with a real power of rulership.’ He elaborates in the following:
As long as socialism rests on democratic presuppositions, it must acknowledge that this power comes into being through the free decisions of all individuals—in practice, through majority vote. (p. 59)
These ‘democratic presuppositions’ are highly problematic on at least two counts. In the first place, democracy is seriously flawed when left unchecked by other political institutions. Hitler was originally elected, as was Donald Trump, examples that should give us pause. In addition, three nominally democratic civilizations – Greek, Roman and American – all supported slavery at some point in their history, an evil institution that in principle can prosper when the majority rules. Secondly, it is impossible in a complex society to make important decisions ‘through the free decisions of all individuals.’ In the society that Tillich proposes, most of the decisions that impact individuals will be made by others, often without the knowledge of those affected. In such a society, many important decisions will be made by those in power, independent of what the majority thinks. That is what happens today, when specialists, experts, executives and directors make decisions that most people are simply unqualified to make. Which is one good reason not to depend on majorities to elect the top executive in the nation, risking as they do, elevating somebody well beyond their level of competence.
One of the severe weaknesses of socialism, one shared by most social engineers, is the notion that individuals are sufficiently the same, or can be so made, that one optimal social design can be created. For instance, Tillich writes:
Socialism shares the belief in the possibility of rational control of the world, and in the possibility of creating, through the human capacity to know and to shape the external world, an economic and social order that is adequate to the natural purposes of all people. (p. 69)
There are very few things that are ‘natural purposes of all people’, and the promise of rationally creating ‘an economic and social order that is adequate’ to provide them is a very low bar. Western Civilization has realized lifestyles that far surpass ‘natural purposes,’ if we take that to mean food, shelter and basic security. We generally aspire to far more than the basics, and modern society has the potential to offer everybody – including the poor, sick, uneducated and stupid – greater levels of fulfillment.
In his idea of socialism, Tillich agrees with Marx concerning a dictatorship of the proletariat, along with the promise of the state withering away:
The goal of the conquest of the state is the abolition of state, power, and class. In the present, power is opposed by power so that in the future, power can renounce power….The proletariat, or, more precisely, the militant and power-bearing group of the proletariat, is to give up voluntarily the power that it has won. (p. 76)
This reflects an utterly naïve and idealist perspective. Abolishing one state simply means the creation of a new one. Political power can only be abolished by reducing the scope of the state; that is, by significantly decreasing taxes, reducing restrictive laws and regulations, and the shuttering of government bureaucracies. Socialist solutions do the opposite, by increasing the span of government intrusion and establishing a comprehensive planning apparatus, and in doing so, creating new centers of power that otherwise wouldn’t exist. Eliminating one class structure will simply lead to establishing another one, as can be seen in every communist state, from the ex-Soviet Union to North Korea.
As for voluntarily relinquishing power, there is nothing to ensure that once the state has been forcefully overcome, the victors will hand over the political spoils to anyone but themselves. Possible, but highly unlikely in any particular case.
In Tillich’s attitude towards the nation state, I completely agree:
In accordance with the bourgeois principle, socialism breaks through national limitations and advocates an international ideal of humanity. In the last analysis, it must place humankind above the nation. (p. 87)
All foreign and domestic policy should be based on this principle, that humanity should be considered in the whole, and people treated with the same respect and dignity no matter where they live. In terms of industry, immigration, education, climate, medicine, tourism, science, sports and the arts, we should maintain an inclusive global view, and turn to the nation only when overt threats appear. Jingoism should be left in the past; imperialistic behavior should cease. For America in the early 21st century, that means bringing the troops home; cease meddling in the internal affairs of others; shut down the countless military installations scattered over the world.
Tillich goes on the make serious charges against the ‘liberal idea’:
The fullest expression of the bourgeois belief in harmony is the liberal idea of economics. Here the notion of laissez faire with regard to all forces of production, of unrestrained competition, has its true home. The laws of the market are the rational basis of the belief in harmony. They demonstrate how, out of conflict, harmony must result, i.e., the greatest possible advantage for all….The actual result of liberal economics was class rule and imperialistic war, the crisis of the proletarian masses and their utter insecurity. (p. 89)
A couple of quick points:
Tillich indicates that there was a time when the proletariat was drawn towards a liberal state:
Above all [socialism] had to reject the disturbance of the market laws that flowed from nationalism. It had to range itself on the side of free trade against import duties, on the side of the independent entrepreneur against governmental protectionism. It had to reject the idea of a national autarky…with its agrarian political background….Thus everything appears to drive the proletariat toward an affirmation of the free market. (p. 89-90)
He is correct in this fragment, in that free international trade would generally favor the working masses. But Tillich continues with the following assertions:
But at the same time, everything speaks against it….It knows from experience that the liberal method in economics leads to periods of terrible pauperization…(p. 89-90)
This is empirically and theoretically incorrect. Business cycles are caused and exacerbated by improper monetary policies. The uncontrolled and/or irresponsible expansion or contraction of the money supply distorts pricing signals through excessive inflation/deflation that trigger poor investment and spending decisions across the economy, resulting in contractions, recessions and depressions. When mal-investment occurs, when capital resources are mistakenly consumed, the adjustment period requires economic retrenchment, unemployment, and bank/business failures that would otherwise not occur, had the proper monetary policy been pursued. The general stagnation that we have experienced in the past several decades can be linked to excessive government spending, unending wars overseas, huge budget deficits and the drag of federal, state and local bureaucracies. As for the alternative, establishing a socialist solution would simply put the entire economy in a perpetual state of depression.
…It experiences the class struggle as a reality that is inseparably bound up with the free enterprise economy (p. 89-90)
The class struggle, such that it exists, or ever existed, has nothing to do with free enterprise. A genuinely free economy would allow for both upward and downward mobility, independent of historical classes. Class rigidity, and therefore class warfare, can only exist when the state’s legal apparatus protects certain people from commercial competition, or social change. Tillich indicates the needed changes:
Thus the anti-liberal economic premise of socialism arises: the demand that free disposition over the means of production be abolished and that the crisis-creating state of unrestrained competition be replaced by centralized planning. Socialism places itself on the side of the anti-liberal position in economics: central control instead of laissez faire, leadership from above instead of faith in harmony from below (p. 89-90)
As already stated, placing the economy in the hands of central planners will not achieve the results that Tillich envisions:
….Rationality in economics is not to be abrogated but is to be placed into the hands of human beings. They are to accomplish what nature could not: the best possible supply of economic goods for all. (p. 89-90)
It’s conceivable that a purely socialist state might bring about social conditions that some people might favor. We can’t say because the claims of most socialists are unrealistic, so we cannot judge. What we can assert with assurance, though, is that a socialist solution could not possibly provide ‘the best possible supply of economic goods for all.’ If Tillich was proposing a simpler life, one that limited the basics to running water, shelter from the rain, simple foodstuffs and uncomplicated leisure, and if that social vision appealed to the multitudes, then we could see how a socialist solution might benefit. If the socialist acknowledged their social reality that included unchanging conditions, little to no choice of vocation, stagnate technology, state-run industry, and state-approved art and entertainment, then we could better debate the values of one system over another. But very few socialist are able, or willing, to examine or analyze the implications of what they propose.
Tillich asks an important question concerning who, in his socialist framework, would make the important decisions:
“Who is the agent that shall accomplish what the natural laws of economics could not accomplish?” The only kind of agent that would be capable of doing this would be one that was united with pure reason, both in theoretical superiority and in thoroughness of practical expertise. (p.90)
One of the principle facts that socialists don’t understand about a complicated society is the sheer impossibility of effectively making decisions absent relevant pricing and logistical information. What does money cost? Raw material? Finished furniture? Within a free economy, tens of hundreds of thousands of people make decisions every moment based on such information. What to invest? What to build? What to save? Where to move? What job to take? Who to hire, and for how much? What project to cancel, what project to fund? The complexities and the ensuing actions of countless decision-making agents make effective central planning (effective in terms of the specific goals) absolutely impossible. It doesn’t matter how smart, how much reason or experience they possess, the demands of central planning exceed the capability of any human, any group of humans, and any information system (outside of the actual market itself) that can be invented.
Tillich raises another interesting question, one that acknowledges the politics of the situation:
It remains unclear, however, where this pure consciousness is supposed to come from, of which power group one can presuppose that its own interests at the same time represent pure economic reason….It appears as if socialism must work for an economic leadership that is carried out through the cooperation and compromise of different power groups. (p. 91)
Even if somebody was actually qualified to centrally plan a complex economy, the likelihood of their appointment is quite small, given the political nature of the position. Whether staffed by the emergent power group, or popularly elected, the odds of placing the best person in such a position of economic leadership are long indeed. This applies to the world we live in today, where judges are nominated to life-long federal benches that have never tried a case, and cannot answer the simplest legal questions. (Fortunately these individuals were forced to withdraw during their confirmation hearings.)
In Tillich’s demand for equality, he touches upon interesting conflicts inherent in the ideal:
This is the deeper meaning of egalitarianism, of the demand for equality, in prophetism and socialism. The inescapabilty of the demand, a demand that is addressed to everyone, makes all persons equal. That which one has, the fullness of one’s being, with its luminous power, becomes insignificant in the presence of the unconditionality of the demand. Thereby the extraordinary possibility arises that human being may be fulfilled through the severest diminution of being. Hence the value that the prophetic and Christian viewpoint places on lowliness. In the same way, however, the demand arises that each person shall be treated in accordance with his or her destiny, that each person shall be allowed to enjoy the fullness of being without which, normally, one’s humanity is destroyed. The ideal of maximal fulfillment of each person’s being and the extreme case of a radical diminution of being are thus inclusive, and not exclusive, of each other. (p. 105-106)
On the one hand, he makes an extraordinary assertion that ‘human being may be fulfilled through the severest diminution of being.’ This seems counterintuitive and contrary to our experience; many of us seek constantly to expand our spirits, our experience, wealth, achievement, and personal growth, all the time avoiding unnecessary ‘diminution’. He goes on to claim that in a socialist society, that the individual will somehow ‘be allowed to enjoy the fullness of being’ despite the necessary ‘diminution.’ He asserts that the ‘ideal of maximal fulfillment of each person’s being’ can be achieved in these limiting circumstances, in a society that demands equality and enforces it through compulsive means (the only way to bring it about). In saying so, he contends to know what is best for each of us, that living a humble existence will better serve our spirit. This is no doubt true in many cases (mine for instance) but the effort to humble the mass will generate practical and sustained resistance, no matter how properly served. In a word, nobody can assert with confidence any single way to live for anybody else. Creating severe limits does just that, by clipping the wings of the creative, the unconventional, and pounding so many square pegs into tiny round holes, causing so much spiritual, physical, intellectual and social damage in the process.
As in many social revolutionaries, Tillich doesn’t balk at the possibility of sacrificing the lives of others:
This struggle against oppression and exploitation by no means excludes the possibility that in a particular case the sacrifice even of one’s very existence might be required. (p. 106)
…socialism cannot win its social victory without the support of aggressive groups ready for ultimate sacrifice. (p. 131)
Political and intellectual leaders routinely call for bloodshed, the single most humanly destructive force in history. In doing so, these men (rarely women) frequently (if not always) commit acts of evil, that is, visit the unnecessary, unjustified and unwanted pain, suffering and death upon others. To call for such violence and/or sacrifice in the service of questionable political aims (socialism in this case) thrusts the entire intellectual argument beyond the pale. It’s one thing to advocate for a democratically established socialist state, like the Utopian Socialists, for example; it’s another to insist on violently overthrowing one regime to establish another. The application of violent means should only be advocated in the most dire of political circumstances, and only as a last resort.
Human nature as we have come to know it will not abide socialism, for many of the reasons already stated. We know this both theoretically and empirically. Tillich moves beyond this anthropological fact by seeing in socialism the means to change human nature, and not only that, but nature itself:
The same fluctuation can be found in the content of socialist expectation. It appears to be totally immanent: equality, freedom, the satisfying of human needs, etc. But when one examines the content of socialism’s final expectation more closely, one finds that it presupposes a radical transformation of human nature, and in the last instance—since human nature constantly grows out of nature as such—a transformation of nature and its laws. (p. 111)
This is a remarkable assertion, and he is not wrong. Humans can change, and can adjust to the most demanding environments, both physical and social. There is no doubt that humans can be conditioned to live a certain way, to expect some things over others, and to accept a particular fate. As to altering nature itself, George Orwell has provided an example, where 2+2 is made to equal 5. History can be re-written, physical laws can be denied, we can stop the rain. For most of us, these are frightening possibilities, but they lie within the realm of the possible. Tillich doesn’t shy away from what is required to bring about his socialist vision:
The possibility of social power is based in the necessity of creating a unified social will. A unified will, however, comes to expression only through a leading group, or through individuals designated by the group, in whom this unity is represented and through whom it is expressed. Thus power is the actualization of social unity. Tendencies toward fragmentation are overcome by the entity possessing power, and opposing forces are brought into subjection. One will is created out of many. (p. 138)
In Tillich’s version of ideal, somebody, or some group of people, will decide the form and content of the ‘unified social will.’ Anyone who opposes this will, or strives towards a different vision, or simply wishes to be left alone, will be ‘brought into subjection’. In practical terms, this means imprisoning those who don’t behave as if they share the official view; secret police to ferret out pockets of resistance; propaganda to maintain the singular party line; repression of all free-thinking artists, writers and journalists; control of individual travel, identity, income, social status, and privilege. And Tillich is right to assert the need for this social control, as those in power will not remain, and the socialist society will cease to exist, if the social pressure on dissidents is not properly maintained.
If Tillich’s social construct becomes manifest, it approaches completion when the following Orwellian goal is achieved:
The exercise of power appears to be just when all members of a society can acknowledge that their own will is contained in the will of the whole. (p. 139)
Tillich also calls for a change to democratic ideals:
The evaluation of democracy as corrective, rather than constitutive, for the structuring of society implies that socialism must restrict democracy on the one hand, while radicalizing it on the other. (p. 144)
On this point we agree. Democracy has a place in a genuinely free society, but should be restricted in specific instances. For example, a different process should be created for selecting chief executives, including the president. Both theoretically and historically, we have seen voters demonstrate their incompetence for such decisions. Also, certain areas of personal liberty should be placed beyond the scope of the democratic masses, and not allow voting majorities to infringe. An expanded Bill of Rights say, or some other constitutional guarantees.
Of course, this is not what Tillich has in mind. A socialist state cannot allow popular elections about anything. Any elections that take place will be for show, as those in power take no political risks. If allowed, any form of free election will fragment the ‘unified social will.’
Most socialists, including Karl Marx, George Orwell, Terry Eagleton and Tillich, want the right thing for the right reasons: they want social justice and personal security; a world where people can live without want; where everyone can live a fully actualized existence, without spending the majority of their time and effort simply getting by. Socialists want more time for leisurely pursuits, time to serve the higher potentials of being human. They want everyone to have the same opportunity, to live without class restraints, to enjoy modern technology more or less equally and without anyone garnering special privilege. Tillich hints at this when he writes:
Socialism is oriented toward autonomy. (p. 149)
I consider myself ‘autonomous’ when I behave and think how I please (with general respect for the law), without reference to social norms, cultural fads, professional expectations, political parties, ‘unified social wills’ or intellectual movements. Such ‘autonomy’ simply doesn’t exist in socialist societies, given the overall structure that people are required to submit. This is one of the oxymoronic aspects of socialist ideology, when such assertions are made. Terry Eagleton also believes that such individual autonomy would exist within a socialist society (more on that below). Theory, reality and history argue otherwise.
Tillich offers another oxymoronic assertion when he speaks of ‘critical reason’:
Culture cannot be “saved” by muzzling critical reason. It is saved only when the reality in which it is rooted proves itself to be the stronger—not by repressing reason, but by revealing to reason the inner infinity of being, and at the same time, by offering it support and structure. (p. 150)
Every thinking person should remain critical of that which is. Maintaining a critical stance is the only truly honest intellectual way to be. But few people – particularly those in power – want to hear it. Those in absolute power ensure they never have to.
Very few people are capable of generating genuine criticism – in art, politics, or society. Most people accept that which is, fear real change, and attempt to hold things utterly still. Sure, they will bitch and moan about one thing or another, as long as it doesn’t cost them anything, but harbor little desire, energy or insight to actually engage in real change.
It is autonomous individuals, those people who think, create, invent, expand, criticize, explore, transcend the ‘inner infinity of being’ and transgress society that generate new, better and more exciting tomorrows, and these are the class of people less likely to thrive within a society that offers ‘support and structure’. Socialist societies quash these dangerous tendencies, as they threaten the ‘unified social will’.
The following excerpt, more so than any in the book, generates pure agreement for me:
As to the idea of the nation, what can be said on the basis of the socialist principle is the following. Undeterred by ideological talk of a national community, socialism must decisively and courageously unveil the bourgeois perversion of the national idea, revealing that the spirit of patriotism is being used to justify and defend class domination at home and economic imperialism abroad. (p. 150)
Whatever the source of this ‘idea of the nation’, bourgeois or otherwise, Tillich is correct in how nationalism has been used and abused historically, and today. A broader, global, more inclusive perspective would greatly enhance the quality of the future, including the commercial realm, the global environment, quality of life, reduction in violent conflicts, and generally improving human lives everywhere. The Nation State, and the attendant nationalistic ideology, is responsible for the greatest crimes in history. Paul Johnson, in Modern Times, summarizes as follows:
The [nation] state had proved itself an insatiable spender, an unrivalled waster. It had also proved itself the greatest killer of all time. By the 1990s, state action had been responsible for the violent or unnatural deaths of some 125 million people during the century, more perhaps than it had succeeded in destroying during the whole of human history up to 1900. Its inhuman malevolence had more than kept pace with its growing size and expanding means.
The question was raised as to who is to be in charge of this central planning, and how a locus of pure economic reason might be found. (p. 153)
As already discussed, the information, the technology, the social network to effectively perform central planning in a complex economy doesn’t exist. Providing effective planning and management in a free market economy depends upon pricing information, understanding the nature of quantities bought and sold, the existence of free capital markets, a sound monetary system, rule of law that provides protection of property rights and contracts, and actual markets that provide opportunity for low-cost exchange. In a free market, consequences exist, both positive and negative, for every transaction, every project, every business endeavor. Some people experience wild success, while others utterly fail. Most land somewhere in the middle. With these consequences people – and organizations – learn and adjust.
Such consequences generally do not exist within a socialist economy. It’s not that failure doesn’t occur in a socialist economy: failure (relative to the explicit purpose) is actually the norm. But nobody knows, as the information about pricing, production value, the value of what is created or destroyed, and actual human demand, remains unknown. This is how I put it in my book on Executive Management, The Humble Executive:
Imagine yourself as the quarterback of a football team, and you need to call the play. But you don’t know:
What play do you call?
You can’t manage what you don’t know, and in a complex business, you don’t know what you can’t measure. Executives that go to work and receive inadequate indication of operational and financial performance might as well be wandering the moors in a deep fog at night with no light or compass. They have about as much chance of finding their way home in those circumstances as the business has of sustaining itself.
The negative impact of operating without proper measurements gets magnified when attempting to manage an entire economy. The canal may get built, but at what cost? Nobody knows. The building gets built, the cars produced, the computers manufactured, but nobody knows what actual value these products provide, or what it cost to provide them. The information simply doesn’t exist, either before the project begins, or anytime after. Nobody knows, in a socialist economy, what people really want, or what they are willing to provide (in terms of money, labor or trade) for any product or service. In addition, nobody benefits with economic success, or suffers from failure, in a socialist society. No consequences, in other words, for effectively or ineffectively running a factory or building a bridge. Tillich does not understand this (most socialists don’t) and goes on to provide his answers as to who should perform the planning within his socialist construct:
This question finds its basic answer in the theory of social structure that we have developed. There is no such thing as a point of pure reason in economics, any more than there is any such thing as abstract democracy or abstract justice. Economics, too, is the expression of a concrete social situation, decisively influenced by certain groups. What shall be produced? At what expenditure of psychological and social power? To what extent, and in what form, is technological progress to be permitted? What level of international economic interdependence is necessary or tolerable? None of these is a question of pure economic reason. The answers given to them reflect concrete human existence, the powers of origin and the goals of leading social groups. (p. 153)
Tillich forms the central economic question when he writes, ‘What shall be produced? At what expenditure of psychological and social power?’ These questions simply cannot be effectively answered at a macro level, by central planners. Effective, that is, in terms of employing available resources, including labor, capital and technology, with the notion of achieving specific social gains. In every situation, even the wealthiest of economies, limits always exist. Choices must be made in allocating scarce resources between various priorities, as infinite resources do not exist, whereas demand, in principle, possesses no limits.
Tillich goes on indicate that these central planners will decide: ‘To what extent, and in what form, is technological progress to be permitted?’ He also asserts later that
There need be no fear that this will interfere with such technological progress as is economically possible; in any case, no more so than in the capitalistic system itself…(p. 156)
The only thing a central authority can do relative to new technology is prevent it from being created. Advances in technology require a relatively free environment of experimentation, market testing, venture capital investment, and lots of failure. Central planners cannot determine the ‘form’ of new technology, as they are addressing something that doesn’t yet exist (in any particular case). Predicting the next viable technology is very difficult, even in the freest of societies. Impossible within a centrally planned one. What happens to innovation and constantly improving technology within a centrally planned society is that it virtually ceases. We witnessed this in telecommunications in the US (demonstrated in Chapter 3 of The Altruistic Libertarian – Case Study of AT&T) and ground transportation (Chapter 7 of the same book). A central planning entity can certainly prevent change, at least to some extent. In general, that is what they tend to do. There is too much political risk in trying something new, especially something radical. A purely political entity (a suitable description for the central planning organization) can only make decisions and pass judgment based on political criteria, that is, what somebody else thinks, the opinion of those with power. Such opinions can only be based on anecdotal information, incomplete data, and personal biases, because the relevant economic data doesn’t exist. In such a social environment, very little technological progress gets made and implemented.
Then Tillich asks a very important question relative to international relations: ‘What level of international economic interdependence is necessary or tolerable?’ Based on his position relative to nationalism, I would think he would favor greater levels of international cooperation, both politically and economically, than the autarkic road that many socialist states choose, Brazil and India some decades past, for instance. The challenge would be, for a socialist state, to effectively engage in international markets, as buyer, seller, lender or borrower. Doing so also poses a threat to the ‘unified social will’, as any contact with the rest of the world will provide stark contrasts in how people live both inside the country, and elsewhere. The comparisons will not flatter the socialists, creating internal pressure that will need to be subdued.
Tillich demonstrates his lack of understanding of how markets work, when he writes:
The natural determination that occurs through the market mechanism, in view of the complexity of the productive enterprise, usually takes place too late for the strength and direction of the demand to play a role in the shaping of production. This accounts in part for the wrong investments that lead to continual disruptions, but nevertheless are inherent in a free market economy. (p. 155)
He is correct to point out how complex the market is. What he doesn’t seem to understand is that tens of millions of decision daily reflect market demand. Yes, in every specific case, for every individual product, in every single specific market, production levels are planned based on demand projections. But within any particular industry, at any particular time, there exist multiple products and services with various demand projections. Some are more correct than others. Regardless, the actual market quickly provides feedback that translates into countless adjustments. For those products that are over-produced, they get cleared in various ways (commonly through price reductions). For those products and services where the demand was under-forecast, efforts are made almost instantly to ramp production and/or move the product from other markets to satisfy the demand. It’s in everybody’s interest to do so.
It’s true that private entities misjudge the market and fail. In such cases, the capital resources expended were misspent, in that they didn’t return the expected value. This happens every year, in every industry, at least on some scale. It may just be a failed project attempting to develop a new application to support business processes, say, or an instance where a multi-year effort to enter a market doesn’t succeed, resulting in a major write-off for the company. These examples, however, do not lead to ‘continual disruptions’. These failures are endemic to the free market system, and utterly necessary and positive. At any point in time, some industries will be expanding, while others will decline. Within any industry, some firms will thrive while others will struggle to get by. In a healthy free market, new businesses will arise every day, and some will even succeed. Every day businesses fail, for one reason or another, and every day, in a healthy free market, more wealth is created and the economy improves, along with the standard of living. This is all to the good. It takes something else to ignite a ‘disruption’, or a ‘contraction’, or a ‘depression’, something that interferes with the normal operation of the economy. Aside from wars or major natural disasters, the only commonality in all industries at all times that can cause major disruptions across an economy is money. Money is the only thing that touches every buyer and seller, every manufacturer and mining concern, every investment and employer, every market and everybody, all the time. Only changes in the money supply can effect (outside of major non-economic events) an entire economy.
In general, when the money supply increases over and above economic expansion, prices increase (we call this inflation). With inflation, every dollar becomes worth less. When the money supply decreases, prices fall (we call this deflation). Both inflation and deflation cause economic harm. In this uber-simplified version of events, in an inflationary cycle, people and businesses across the economy make poor spend/invest decisions, resulting in capital consumption. When capital is consumed, productivity, and thus production, eventually declines. This provides a temporary appearance of economic growth. It seems like incomes are rising along with profits. But this is an illusion, and when a certain point is reached, it becomes apparent (to the economy) that mal-investment has been made, and the necessary adjustment is called a ‘recession’.
This may seem counterintuitive, but imagine for a moment a family farm with cows, chickens, pigs and wheat fields. They harvest the wheat, store seed stock for the coming year, and sell the rest. But let’s imagine they get the pricing information wrong, due to inflation. Based on this information, during the winter, they consume some of their seed stock (homemade bread, beer), roast half of their laying hens, and slaughter several heads of beef. Thus, consuming part of their capital (that is, resources intended to create more resources) temporarily creates the appearance of prosperity and economic expansion. Come Spring, they discover they don’t have enough seed stock to plant every field, having consumed a portion of it; egg production is way down, as they have fewer egg-laying hens, and they get half as many spring calves as they projected. Adjustments must be made as farm production declines. This is the recession, when it occurs in every industry at the same time. In this hypothetical example, the farmer would know better than to eat his seed stock and his laying hens; yet in a complex commercial environment, the causal links are obscured, and spending/investment mistakes are made across the economy, leading to the inevitable adjustment.
The business cycle is a poorly understood phenomenon, and there is little consensus as to its cause:
Contemporary economic comment was hardly distinguished by the correctness or profundity of understanding of the economic forces at work during the [Great Depression]. (Milton Friedman, A Monetary History of the United States)
Paul Tillich, along with virtually every contemporary intellectual, was greatly influenced by the Great Depression. He was certain that free markets were flawed, and that such events were inevitable absent a socialist solution. According to one prominent point of view (one I adhere to) this simply isn’t so:
The monetary system collapsed [1929-1933], but it clearly need not have done so.
The actions required to prevent monetary collapse did not call for a level of knowledge of the operation of the banking system or of the workings of monetary forces or of economic fluctuations which was developed only later and was not available to the Reserve System. On the contrary…pursuit of the policies outline by the System itself in the 1920’s, or for that matter by Bagehot in 1873, would have prevented the catastrophe. (Milton Friedman, A Monetary History of the United States)
Friedman goes on to provide a historical analysis of why the appropriate policy wasn’t implemented, the analysis revolving around specific men in positions of leadership, and the organizational impediments to operating effectively. Regardless, the terrible depression in the early thirties was caused when the reserve system allowed the money supply to decline by a full third between 1929 and 1933. Such declines are not natural, and are easily prevented with proper monetary controls.
Some form of monetary stability is essential for continuous economic growth. The government has a major part to play in this. In recent decades we have seen continuous inflation with the attendant adjustments. This happens when the government spends more than it receives in taxes, and prints dollars to cover some of the difference (borrowing being the other method to cover deficits). In any case, the ‘disruptions’ that Tillich refers to are not inherent within a free market. In his time, these disruptions were common and harmful to many. The cause was primarily monetary, in that the modern economies of the 19th and early 20th century experienced volatile money supplies due to influx/outflow of gold, various national currencies and structured exchange rates, along with the occurrence of multiple currencies introduced by various entities (private/public banks, for instance). Maintaining a stable money supply, one that grew with the economy, would result in a rough maintenance of overall price levels, ensuring that pricing signals would be properly analyzed and projected, leading to better spend/investment decisions across the economy. This would dampen business cycles to more of a steady increase in output, fluctuations due almost entirely to major unnatural shocks (breakthrough in technology for positive effects, major environmental catastrophe for the negative).
Tillich provides a different solution for the business cycle:
In the socialist scheme of things, this unlimited possibility of stimulating new needs is excluded, for the following reasons. First, because decisions concerning the capital to be invested in creating the means of production are determined by a central planning unit according to the measure of actually existing needs and the urgency they have in the social consciousness. (p. 155)
Tillich believes that artificial stimulation of demand is largely responsible for the self-defeating cycle, where people demand more, produce more, want still more, work hard to produce more, but aren’t satisfied so work even harder to possess some new product that they have just learned they must have so work harder still. While a free market no doubt produces things of questionable value (spinners, to use a recent example) new products often get introduced that genuinely improve our standard of living. Those who wish to halt this progression need to consider where they intend to draw the line. Tillich proposes that the central planners will determine ‘the measure of actually existing needs’. (italics original) In 1933, this would potentially leave out such innovations introduced since then as commercial air travel, kidney dialysis machines, polio vaccines, microwave ovens, contraceptive pills, transistors, seat belts, television, personal computers, fiber optics, the internet, iPods, DVRs, smart phones, wireless headphones, and countless other products and services we currently enjoy. Could we live without them? Most of them, sure. Would we choose to? No. They make our lives better, healthier, and more interesting. We have every reason to believe, if the government doesn’t interfere, that more interesting technologies, medical breakthroughs, and new discoveries will take place that will continue to improve our quality of life. There is no reason to stop the cycle of dynamic creation now, or settle on what was available to Tillich in 1933, let alone go back even further in time and settle for what civilization could provide any time in the past. Most of us prefer in-door plumbing, especially those of us who live in the North Country.
Tillich goes on to enumerate the reasons that a traditional business cycle will cease under socialism:
Second, because the equalization of incomes is bound to have as a consequence a significant standardization of needs. (p. 155)
Even if incomes could be equalized within a society (highly problematic) doing so would do nothing to infringe upon individual desires, that is, what they would demand. Perhaps the most valid and tempting argument from socialists is that a socialist state would provide the opportunity for each individual to live a fully actualized existence, given the burden of making a living having been lifted. Shorter hours and more leisure would supposedly lead to more self-actualizing activities, whether it be art, physical fitness, scholarship, social functions, etc. Tillich suggests such a thing in the following:
In the socialist society, work must no longer be permitted to dominate as it does today in the form of a limitless demand for work…. (p. 157)
Terry Eagleton provides more explicit examples of such thinking:
If the liberal state is fearful that socialism would limit the plurality of goods available to individuals, I think this fear can be shown to be baseless. First of all, socialism, which like widespread virtue is only feasible if you are reasonably well-heeled as a society, would considerably augment the primary goods available to each individual for her pursuit of happiness, by seeking to eliminate want. Moreover, not only would it construct the institutions of community without any necessary detriment to other, more personally selected goods; it would actually expand that area of personal choice, by (for example) shortening the working day and so increasing leisure time. One of the best reasons for being a socialist is that one is averse to doing too much work. (Terry Eagleton, Illusions of Postmodernism)
The goal of socialism is to fashion a society in which we would no longer have to justify our activities at the tribunal of utility—in which the realization of our powers and capacities would become a self-delighting end in itself. (Terry Eagleton, Illusions of Postmodernism)
Should this be the case, in that a socialist society would provide every opportunity to live a self-actuating existence, then needs would be anything but standardized. Needs in such a society would actually be quite diverse, as autonomous individuals sought various products and services to pursue their particular form of ‘self delighting’.
Alternatively (and the more likely case) the ‘standardization of needs’ that Tillich mentions would devolve into the mediocre unchanging sameness of living conditions, entertainment, opportunity, creative endeavors, and intellectual pursuits. In this sense, he is correct, in that a socialist state is perfectly capable of forcing society until such standardization.
As for the final reason, Tillich writes:
Third, because of the increasing assimilation into socialism of origin-related groups, need traditions will be developed that make it possible to determine the direction of needs. (p. 155)
The notion that central planners can determine the ‘direction of needs’ within society as we know it is mistaken. They can only determine the direction of needs through formal dictates, through forcibly limiting the scope and content of human needs and desires. But to project what individuals actually want, in every particular case, is both impossible and impractical, and no authoritarian planners would even make the attempt. People in our pluralist world are far too distinct; only by compressing everybody into pre-set forms, not unlike the castes of social insects, can such global human needs be determined, and their inherent multiplicity restricted. Tillich seems to acknowledge this in the following excerpt:
What is required is only the determination of actual needs, and, in the case of conflict among them, arbitration by the central authority. In the case of equally strong demands, the central authority will decide in favor of the need having priority in terms of social value. (p. 155)
Tillich, like Marx, acknowledges the achievement of Western Civilization:
Ever since the projection of the utopias of the Renaissance and the discoveries of mathematical natural science, Western civilization has been systematically transforming the possibility of technological progress—which in itself is infinite—into reality. This is the world historical achievement of bourgeois society. It has led the masses out of mute bondage and, frequently, from subhuman subjection to nature into a domination of nature. (p. 155-156)
The challenge for all of us who consider such things is to understand what specific aspects of historical society contributed to such progress, and what hampered it. To keep from throwing out the baby with the bathwater, so to speak. Many socialists (I would count Tillich, Marx, Orwell and Eagleton among them) see the horrors of modern industrial society and project a world where the best of it can be kept, while everything that creates distress, injustice and cyclical depressions be suppressed. I happen to agree with them. I too would like to keep what works best, and eliminate the impediments to increasing quality of life, along with the social/legal institutions that protect an unjust minority. So the debate is not about ultimate end goals (although our visions of the optimal future are quite different); it’s more about what changes to our legal, social, political and economic structure will most likely lead to the improvements that most of us seek.
From my perspective, the structures that many socialists believe will lead to a favorable society are flawed. For example, what Tillich asserts in the following is both theoretically and empirically incorrect:
Competition forced the individual entrepreneur or group of entrepreneurs to improve the technical means of production to such an extent and to rationalize the methods of production so broadly that on one hand, a large labor force was permanently excluded from employment, while on the other hand, the market was not able to absorb the products that could be produced by the existing apparatus, indeed, not even a fraction of what had to be produced under the pressure to make use of the invested capital. Technological rationalization within the framework of free competition thus proved to be the chief factor in the economic crisis. It led to the absurd result that with the ever-increasing, indeed nearly limitless, possibilities of production, an immense impoverishment occurred which to an unprecedented extent made it impossible to satisfy basic needs. (p. 156)
Technical innovation does not lead to widespread or lengthy unemployment. The changes are gradual as things change, and new opportunities continue to arise, absorbing those temporarily displaced. From Milton Friedman’s Monetary Analysis:
All sorts of frictions and rigidities may interfere with the attainment of a hypothetical long-run equilibrium position at full employment; dynamic changes in technology, resources, and social and economic institutions may continually change the characteristics of that equilibrium position; but there is no fundamental “flaw in the price system [Keynes]” that makes unemployment the natural outcome of a fully operative market mechanism.
One quick example: in college I worked in a gas station pumping gas. Today, nobody gets paid to do this. We all pump our own gas. Technical innovation and the market’s unwillingness to pay extra for the service led to the ubiquity of self-serve gas stations. We know this because for years you had a choice – full serve or self-serve. Had we been willing to pay extra, we would still have full service gas stations. And yet we don’t see tens of thousands of unemployed station attendants loitering on street corners or living on welfare. More generally, we have seen one occupation after another disappear or greatly decline in recent decades without permanently increasing unemployment. As for the myth of overproduction, this simply doesn’t take place within a free market. All markets clear, and feedback remains continuous, allowing nearly instant adjustment.
Review of Paul Tillich's The Socialist Decision
Humble Executive. Literary Artist. Altruistic Libertarian.