Academic Social Science and our Capitalist Economy

The overall focus of academic social science over the past century on economic and cultural Marxism has led to misguided education, moral mistake, rising inequality, class conflict, and a slowed economy, diminishing the prospects for personal prosperity that the American system of capitalism uniquely provided from the founding.

Ironically, academic social science: considers failed Marxism more moral than capitalism; rails against economic inequality but increases it by focusing on “social justice” throughout education; turned America from our revolutionary ideal of social equality based on merit rather than birth toward Marxist envy and class hostility; and influenced government to overregulate the economy, slowing the economic growth and wealth creation necessary to pay for desired redistribution by the state. Social science’s latest answer—sustainability (zero growth)—would leave America more uniformly poor, including its academic and elite true believers.  

America was founded as a commercial republic with a market economy utilizing private property and entrepreneurial capitalism. The American economy is based on mutually beneficial exchange—of private property by individuals, or products by producers, applying the economic theories of Adam Smith expressed in The Wealth of Nations (1776). Smith introduced the insights that voluntary exchange benefits both parties and private economic transactions add up to produce a societal good. He introduced the revolutionary idea that economic growth can create additional wealth, challenging the pre-modern assumption that wealth is a limited pie over which governments and men fight to get the biggest piece. More than two centuries ago, capitalism began to produce widespread per capita income growth—for the first time in human history. (See my earlier articles Capitalism and Western Civilization – The Founding, Exchange, and Metamorphosis.)

In The Moral Consequences of Economic Growth (2005), Harvard economist Benjamin Friedman shows that economic growth from capitalism, and the benefits it confers, fosters greater opportunity, social mobility, tolerance of diversity, commitment to fairness, and dedication to democracy. He also argues that a distinguishing feature of the American founding was classlessness.

By opening the opportunity for advancement, classlessness heightened the incentives—indeed it acted as a discomfiting spur—prodding economic effort.

Opportunity unfettered by class background provided an impetus—along with the Protestant work ethic carried here by the Puritans—for the unprecedented economic growth that Americans as a whole have long enjoyed.[1]

But a century ago, academic social science (other than business economics) began to replace the market doctrine of Adam Smith with that of Karl Marx, starting with progressive historian Charles Beard’s adoption of the Marxist idea of economic determinism—American history was really a story of economic stratification and class struggle.[2] Brown historian Gordon Wood explains in The Radicalism of the American Revolution (1992) that the theories of progressive historians such as Beard “have not been fulfilled….because the social conditions that generally are supposed to lie behind all revolutions—poverty and economic deprivation—were not present in colonial America.”[3]

Despite that corrected historical perspective, the high school textbook, United States History (1997), used by my granddaughter in 2008 states:

Progressive historians reexamined American and European history, applying critical methods of scholarship. The United States Constitution, argued Charles Beard, a Columbia University historian, was not an inevitable product of social evolution. It was, he wrote in An Economic Interpretation of the Constitution (1913), an economic document designed to protect men of property.[4]

Our schoolchildren continue to be indoctrinated in Beard’s Marxist view of America.

The textbook also laments that “all people had not shared equally in the blessings of industrial wealth,” adding that Richard T. Ely

rejected the idea that inequality of wealth was natural and inevitable. It could be explained by an analysis of banks, corporations, and other institutions that helped concentrate wealth in the hands of the few.

Ely was a socialist economist hostile to private property. By the time most American students leave high school they have been inculcated with Marxist theory, anti-capitalism, and class envy rather than classlessness by public education.[5]

During the 1960s, with One-Dimensional Man (1964), Herbert Marcuse denounced the false consciousness and existential alienation that he believed characterized our consumer society in which Americans found their “selves” only in their possessions. His solution was to destroy the existing capitalist order and Protestant ethic. Academic social science embraced the cultural Marxism of Marcuse and Antonio Gramsci, in which identity groups are seen as victims of an oppressive capitalism, which I explain in Ordering America (2010).[6]

George Leef of the Pope Center points out that American college professors are predominantly hostile to capitalism, ranging from liberals who want “ever-increasing economic regulation” to Marxists, who would “abolish private property,” with socialists in between.[7] Many students leave their courses without an understanding of how commercial societies work, societies in which everyone lives by exchanging, explains Paul T. Heyne of the University of Washington. Many believe that:

The activity of pursuing one’s own interests, which generates supply and demand functions and through them the prices that coordinate production, is, if not wicked, at least somewhat immoral….In a commercial society, everyone uses others as a means to their own ends. They see that as basically immoral.[8]

Our college graduates gain little or no comprehension of the true moral nature of capitalism.

Inequality is an inherent and important feature of capitalism. The extent of inequality in some segments of capitalism and markets sometimes requires particular corrective action. But academic social science sees inequality through Marxist eyes. Charlotte Allen argues that since 2009, “the sharp political focus on inequality, driven into the public mind by the Occupy movement and endorsed by President Obama…was born, not on the street, but on the campus.” She describes numerous university programs and courses that offer

Marxist and quasi-Marxist critiques of capitalism, [with] the core presumption that there is something inherently wrong with all inequality [and that] inequality is somehow the fault of those who do better in society.[9]

But it is our education system, following academic social science, which has increased inequality in America. A 2012 study by Stanford sociologist Sean A. Reardon found that:

The gap in standardized test scores between affluent and low-income students had grown by about 40 percent since the 1960s, and is now double the testing gap between blacks and whites….We have moved from a society…in which race was more consequential than family income, to one today in which family income appears more determinative of educational success than race.[10]

Higher education’s “diversity” policies—focused on elites from every race rather than more broadly on economic disadvantage—have amplified the inequality of capitalism that it condemns.

Charlotte Allen also points out the academy’s contribution to class envy and conflict:

It is only a slight exaggeration to say that most recent college graduates learned everything they know about capitalism from Barbara…Ehrenreich’s 2001 book Nickel and Dimed….Ehrenreich, a self-proclaimed socialist, makes the Marxist zero-sum argument that “people are poor because the rich systematically steal from them.”[11]

A 2012 Pew Research poll, conducted in the weeks after the Occupy Wall Street movement focused national attention on the disparity between the poor and the “one percent,” found that:

About two-thirds of the public (66%) believes there are ‘very strong’ or ‘strong’ conflicts between the rich and the poor, an increase of 19 percentage points since 2009….In the public’s evaluations of divisions within American society, conflicts between rich and poor now rank ahead of three other potential sources of group tension—between immigrants and the native born; between blacks and whites; and between young and old….

The Pew findings showed that the sense of serious disagreement between the rich and the poor grew by 15 to 24 percent in virtual lock step across all categories: all income groups; young and old; women and men; whites and minorities; Democrats, Republicans, and Independents; and liberals, moderates, and conservatives.[12]

The academic vision of class conflict also entered national politics in 2012, as I reported in my article Class Warfare on the Left:

Today the Campaign for America’s Future launches a new website—WageClassWar.org—to detail the new terrain of American politics,” announced one of its officials, Robert Borosage, on November 20, 2012. He added: “This was the first class warfare election of the new Gilded Age…More and more of our elections going forward will feature class warfare.”[13]

In Capitalism, Socialism, and Democracy (1942), Harvard economist Joseph Schumpeter foresaw that capitalism would create a class of prosperous intellectuals and progeny of the wealthy who would turn against it, indulging in a sense of moral superiority over the materialistic culture that nurtured them, and impose a form of socialism. Schumpeter added another of the subversions of capitalism:

Perhaps the most striking feature of the picture is the extent to which the bourgeoisie, besides educating its own enemies, allows itself in turn to be educated by them. It absorbs the slogans of current radicalism and seems quite willing to undergo a process of conversion to a creed hostile to its very existence.[14]

Academic social science has filled the heads of our bourgeoisie progeny with such a creed.

Schumpeter closed the Third Edition (1950) of his book with the following words:

The Stagnationists are wrong in their diagnosis of the reasons why the capitalist process should stagnate; they may still turn out to be right in their prognosis that it will stagnate with sufficient help from the public sector.[15]

The American economy has stagnated with that help from the public sector over many years, in the form of runaway regulation and policies detrimental to entrepreneurship and job formation, which I discussed in Law and Growth and Governance. Between 1970 and 2000, the average rate of growth of Gross Domestic Product (GDP) was about 3 percent per year, raising wages and living standards and generating tax revenue to pay for generous welfare benefits. Since 2000, the average rate of growth has slowed to about 2 percent per year. That may seem like a small difference, but it’s not. The federal government could lose as much as $50 trillion in tax revenues by 2050[16]—about the looming cost of unfunded liabilities for Social Security, Medicare, and Medicaid.

Benjamin Friedman notes that while economic growth confers many benefits, the converse is true with economic stagnation, which has serious moral as well as economic consequences.

The experience of widely shared economic growth…creates a legacy from which a society can benefit—socially, politically, morally—for decades. And conversely, a significant stretch of years during which incomes stagnate imposes a burden that may well persist long after an economy has once again begun to grow.[17]

Yet what is the solution for America’s future now proposed by academic social science: sustainability—zero growth enforced by a command economy controlled by global governance, as I described in my series (here and here) on The Reverse Metamorphosis of Sustainability. Adam Smith’s successful wealth-producing economics would be replaced by Marxist ecological economics, in which the state redistributes all resources—which will produce pre-modern poverty, rather than modern wealth.

The purveyors of academic social science are unencumbered by knowledge of how Western and American capitalism and the exchange economy work. Rather their view of the world combines economic and cultural Marxism, radical environmentalism and egalitarianism, and progressive statist redistribution—imagining a utopia that is a postmodern ideological illusion.

But the dystopia of a zero-growth economy could be made a self-fulfilling prophecy by the continued focus of academic social science on social justice in American education. Since around 1980, American educational institutions have not provided enough workers with the higher skills needed to keep pace with technological advance, according to Harvard economists Claudia Goldin and Lawrence F. Katz in The Race Between Education and Technology (2008).[18] The adverse effects of such a skills deficit on the economy and workers—limiting opportunity and slowing growth while increasing inequality—are illustrated in my previous articles Middle Class and Governance and Growth and Governance.

Instead of inculcating cultural and economic Marxism through social justice, public education in particular needs to improve the teaching of such skills so that our youth can earn wealth in the economy rather than seek it from the work of others through government. And our colleges and universities should again teach the knowledge of Western civilization and American history, as NAS has long sought—including our economic system— rather than leading their students down the path of discredited Marxist theory (in its new costume of sustainability) that will ensure penury and class war.

Contrary to academic social science, capitalism, properly regulated, is still the best and most moral system for creating wealth and prosperity for the many as well as adequately protecting nature.

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This is one of a series of occasional articles applying the lessons of Western civilization to contemporary issues relevant to the academy.

The Honorable William H. Young was appointed by President George H. W. Bush to be Assistant Secretary for Nuclear Energy and served in that position from November 1989 to January 1993. He is the author of Ordering America: Fulfilling the Ideals of Western Civilization (2010) and Centering America: Resurrecting the Local Progressive Ideal (2002).