a blog by Elisabeth Young-Bruehl

While I was a graduate student in the late 1960s at the New School for Social Research in New York City, I knew I was in an outpost of Europe. But I really had no idea how different from the rest of American academia this outpost was. In my department there, Philosophy, the European émigré faculty completely ignored –some even distained– the prevailing American mode of doing philosophy, which was called “Anglo-American Analytic.” An idle pastime for Luftmenschen, irrelevant, that was the verdict. Over in the Economics Department, the range of theories taught was a bit Americanized, but the eminence gris was a German, Adolf Lowe, and one of his students, Robert Heilbroner, was the teacher that graduate students from all of the school’s five departments eagerly went to hear. Until Heilbroner’s American-born colleague and friend from Harvard, Paul Sweezy, editor of the Monthly Review, arrived to teach Marxian economics, Heilbroner’s book The World Philosophers plus Heilbroner’s own up-datings of it in his lectures was what Economics seemed to be. So the entire student body was either to the left or to the way far left –while the rest of academia was mostly studying statistics and marching rightward to the drumbeat from the Chicago School free-marketeers.

Heilbroner’s The Worldly Philosophers was a phenomenon –and still is. He had published it in 1953 when he was a 34 year-old graduate student at the New School, studying with Lowe. Immediately, it became a best-seller. Among Economics books, only Paul Samuelson’s basic textbook has had a bigger readership. Right through its seventh edition, published in 1999 with a new post-face essay, The World Philosophers evolved with the times, but it remained the entrance-way into Economics for generation after generation of “general reader” Americans and for people world-wide reading it in dozens of languages. The popularity of the book is amazing, but even more amazing is the fact that its popularity began deep in the conservative McCarthyite 1950s and remained while Economics in America became decisively neo-conservative and the political elites became more and more hostile to Heilbroner’s social democratic vision. Even when he conceded “the triumph of capitalism” (the title of his famous 1989 New Yorker article), Heilbroner held –in his wry, urbane, witty way—to a “slightly idealized Sweden” of his imagination and a hope for “participatory economics.” With justification, considering his publishing experience and his continually huge readership, he assumed that the Economics thoughtful non-specialist Americans really wanted was not the one they had gotten.

There were, of course, reasons why the little Chicago-based tribe of free-market economists came to have such influence on big-time American capitalists, Wall Streeters, and political elites. And nobody was better positioned to understand those reasons than Heilbroner himself. In The Worldly Philosophers, he had described the emerging free market philosophy lucidly, noting its 18th century roots: the state should have as little control over capital markets as possible and those markets, left alone, would regulate themselves, making the capitalists wealthy and eventually making everyone else–the workers of all sorts– less miserable than they had been in the past. And he had pointed to the fallacy in this philosophy: in the history of capitalism, there are two recurrent, intractable problems. First, although the lot of the workers may slowly improve or improve for a brief time, a system that demands more and more capitalization will have to get it either from the state or from the workers, and either way –or a combination of both–will hurt the workers. And second, the money-hungry headlong growth system is inherently prone to periodic crises –recessions, depressions, and even a Great Depression— which hurt everyone, especially the workers hit with unemployment and tossed out of the system. The free marketeers had tremendous appeal because they, in effect, denied both problems. Heilbroner had a great appreciation for the allure in America of delusional optimism and of reality-denial. That is what all his work after The Worldly Philosophers studies –that allure.

Heibroner had set out to answer the question ‘what did the great economists of the 18th and 19th century think would become of capitalism?’ It was –as we say in psychoanalysis—a developmental question; and to take it up Heilbroner had to explore what each ‘worldly philosopher’ thought about the origins and infant development of capitalism and what each thought motivated people, generally, and inside a capitalist system. It was in their assessments of human motivation that he located the potentiality for delusion or reality-denial among economists.

The forbearers of the free-marketeers, particularly Adam Smith, had thought that capitalism was ultimately unsustainable because it was motivated by an acquisitive drive common to all humans. How could that lead to anything but an economic war of all against all? But in the meanwhile capitalism would be regulated by an “invisible hand” of rational calculative market decision-making on the part of capitalists, who would want it to keep laying its golden eggs as long as possible. The free-marketeers emphasized the near term prospect and ignored the prediction of ultimate unsustainability. They did not want to consider human acquisitiveness or ask what restraints on acquisition would be necessary for the long term. Instead, they lied to themselves and asserted that danger would come not from acquisitiveness but from a heavy hand of regimentation. The possibility that acquisitiveness is not innate, built into “human nature,” but a function of capitalism, an effect on human beings, could not be discussed. Acquisitiveness had to be normal, something we should admire.

After The Worldly Philosophers and through the 1970s, Heilbroner set forth his own ideas about how capitalism might develop –for example, in The Future as History (1959) and An Inquiry Into The Human Prospect (1974). Much more than any of the worldly philosophers, he tried to put the development of capitalism in a bigger context. Simplifying without ever being simplistic, he explored from many angles three huge trends that appeared in the 19th century and came to define the 20th century. The rise of capitalism was the first. The second was the incredible acceleration of scientific and technological development and innovation, which had such impact on the organizations of societies and on people’s social attitudes and traditional beliefs. And the third was the spread of revolutionary movements after the American and French Revolutions, which brought the working class –once serfs and slaves—into the political arena as citizens and eventually extended political participation to women as well. Taken together, these trends meant that the economic realm, once clearly distinct from the political realm, from which its commands had come, could no longer be kept separate or thought about as separate in the classical way –it was everywhere, and its laborers, the vast majority of the population, had at least the potentiality of coming out of obscurity and devaluation. The state control question needed to be asked on all three fronts –should states try to control or plan the economy? the knowledge production and innovation processes? and the ideal of political freedom, nationally and internationally?

One of the most illuminating features of Heilbroner’s exploration of this three-pronged key question was that he understood so clearly that America’s development on all three fronts had been fundamentally different than that of any other nation—and this fact has made us not “exceptional,” but naieve, ill-informed, unaware of the rest of the world. America’s development was different than that of the western European nation-states; certainly completely different than that of the states (chiefly, the Soviet Union and then China) which, by-passing capitalist development, had leapt into communism in the 20th century after prolonged feudal periods. And America’s experience was nothing like that of the underdeveloped colonial states of Asia, Africa, and South America that emerged out of the ruins of 19th European capitalist imperialisms —many of them as socialist states, creating democratic institutions for the first time, and many as home-grown dictatorships in which colonial elites took over from the retreating Europeans.

America had been uniquely endowed at its birth with huge open lands to expand into, plentiful natural resources of all sorts, geographical isolation from invaders, relative classlessness or lack of social and political inequality heritage, a well-made Constitution. The existence of slaves and indentured children and displaced native peoples being accepted as good for productivity and overlooked as a challenge to the nation’s founding political principles, all was well for capitalism to take root and flourish. Which it did, right through the Civil War and up to the recessions and banking crises of the late 19th century, when post-slavery capitalism became robber baronish and imperialistic in a quite European manner, white hot in speed of change, devouring of new overseas labor and immigrant labor groups, and quite beyond the reach of the invisible hand’s guidance. That is, American capitalism had a century to get established and become culturally and socially normal before it began to show signs of needing state regulation. Every American region had its capitalist winner ideal –plantation gentlemen turned textile kings, cowboys, old WASP and new pull-yourself-up-by-the bootstraps WASP industrialists; optimistic individualists one and all.

The western European capitalists never had such a period of full-throttle, individualistic freedom from involvement with their governments. Having no open land to expand into, they became overseas adventurers, but their imperialisms were state-sponsored and dependent on state projects like the building of the canals in the Suez and in Panama that opened the world’s oceans to traffic. Their restive workers were infused with revolutionary aspirations and then with the example of Russia. Then began the 20th century battering of European capitalism, first in WWI and then in WWII. After WWII, the western European states were forced to modify their war-ruptured capitalisms, introducing many elements of control and planning under social democratic leadership. They became –each one differently—socialist capitalisms or capitalist socialisms, with the main purposes of their modifications being, socialistically, to redistribute wealth sufficiently to keep inequality (and unemployment) from becoming extreme and to provide certain fundamental social services universally.

America had modified its capitalism somewhat, too, in response to the Depression, but the purpose served was different: it was to stimulate and hold the system together while it righted itself –which it did on a wave of economic activity in the defense and transportation industries during and after WWII. The war cured capitalism of its greatest crisis, the Great Depression. In the 1950s, when Heilbroner wrote The Worldly Philosophers, the economic and political elites assumed that this boom would go on and on, guided only by the invisible hand. As he pointed out, this was the decade in which reality-denying optimism got deeply entrenched.

I went back this week to read Heilbroner’s writings during the 1960s, up to the moment when I listened so intently to his lectures. His three-pronged analysis served him so well for seeing what a juncture point the 1960s were. He had warned in The Future as History that Americans really ought to rein in their general optimism, be more realistic about the pluralistic state of the world and the complex historical forces at work in it, and join with the aspirations of the populations struggling to pull themselves out of their colonial pasts instead of treating these people –particularly in South America—as populations to exploit for their resources and their labor. In 1960, he judged the globe to be divided into two worlds, which we now call the North and the South, and he saw the whole of the South going in the direction of one form or another of socialism (not in the direction of either Soviet or Chinese Communism). Similarly, he saw Europe continuing in the direction of democratic socialism, although he recognized that there were many factors drawing different European states away from their post-War commitments to wealth redistribution and social services. The best thing Americans could do for themselves and the world was to join this trend and do everything possible to help it remain allied with maximally free political institutions, to avoid the extremes of rigid socialist economic planning.

This, of course, is not at all what happened. America did move in the direction of a somewhat more social democratic domestic policy under John Kennedy’s and then Lyndon Johnson’s leaderships – accepting the premise that this direction demanded Civil Rights legislation that would finally end the discrimination that had kept African Americans politically marginalized and economically pushed toward the lowest rungs of the working class or into unemployment. But, at the same time, the country moved into overseas imperialist ventures –under the guise of stopping Communism’s advance—in South America and then in southeast Asia. The capitalist imperialist project destroyed the social democratic one.

In response to this tragic development, Robert Heilbroner decided to look again at his expectation for American capitalism’s trajectory, and to change his question. Thinking he might have missed something, he posed his new question sharply: what is capitalism?
The resulting book was The Nature and Logic of Capitalism (1985), which Heilbroner revisited after the collapse of the Soviet Union in a short book called Twenty-first Century Capitalism, his 1992 Massey Lectures here in Toronto. I’ll write about his answer in my next post, as it seems to me supremely relevant for the present moment, when capitalism, morphed again, has shown its dangers even more clearly.

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