Mark T. Mitchell is a professor of government at Patrick Henry College, a religious college in Virginia. In his recent book Plutocratic Socialism, he argues:

  • Certain virtues are necessary for the maintenance of a free society.
  • Those virtues are typical of the middle class and are much more likely to flourish in a society based on widespread ownership of property.
  • In societies like the United States where there has been a decline in the widespread ownership of property, a growth of economic inequality, and the rise of a powerful welfare state, a plutocracy will ally itself with a socialist and woke state to control society.

I will argue that most of Mitchell’s claims are doubtful or, at least, in need of better specifications and demonstrations.

Which virtues? / To what extent does a free society and its maintenance require certain virtues of its members? Many economists believe that, on the market model, self-interest is sufficient because each individual can only pursue his own interest by serving other people’s interests. One dissenter of this view was Nobel economist James Buchanan, the main founder of the public choice school of economics. Buchanan argued that a widely shared ethics of natural equality between individuals is required. (See “An Enlightenment Thinker,” Spring 2022.)

Mitchell’s long list of virtues is very different from Buchanan’s parsimony. To less controversial virtues such as independence and personal responsibility, Mitchell adds self-control, “a willingness to defer physical pleasure rooted in appetitive desire,” thrift, frugality, concern for others and for the future, neighborliness, a sense of duty, an ethics of stewardship, and even “belonging.” He believes that the “ownership of property” fosters these virtues.

Mitchell criticizes what he takes to be the hedonism of economic theory. He apparently is unaware that modern economics assumes that the individual seeks utility, which means nothing more than improving one’s situation given one’s preferences (and the constraints one faces). Those preferences may include traditional virtues.

Mitchell seems to play on two meanings of “self-government”: the moral government of an individual by himself, and government by 50 percent plus 1, which is to say democracy. As long of individuals are not identical, these two meanings are contradictory: democracy conceived as “the rule by the people” means that some people rule over others. (See “Populist Choices Are Meaningless,” Spring 2021.)

Which middle class? / Mitchell’s concepts of “middle class” and “property” seem arbitrary and not useful to analyze what is and has been happening in society. He characterizes the middle class as comprised of those who have the virtues that he believes are necessary to a free society and are roughly those of the yeoman farmer, which Thomas Jefferson saw as the representation of American society. This middle class disappeared following the great improvements in agricultural productivity and the shift of consumer demand toward other goods and especially services such as education and health.

As a matter of historical fact and analytical usefulness, it is preferable to view the middle class as economist Deirdre McCloskey sees it: the commercial bourgeoisie—that is, the merchants, manufacturers, entrepreneurs, inventors, and specialized workers who were at the forefront of the Industrial Revolution and of the Great Enrichment that followed. This middle class developed different values, influenced by the desire for material betterment, progress, and tolerance. Things changed, and for the better as far as ordinary people are concerned. Think of the dramatic and unprecedented increase in the standard of living and what goes with it, such as improved health and life expectancy.

Although he claims to defend private property rights, Mitchell focuses on property ownership. But private property rights, rather than some configuration of property ownership, are what is important for economic efficiency, prosperity and, I would argue, the real possibility of virtue. It is the protection of property rights that prevents constant conflicts over resources and allows extended exchange, market competition, and economic growth. Viewed from another angle, a “broadly disseminated private property” is the result, not the cause, of individual liberty.

Capital and property / There is more to property than what Mitchell considers. Economists see wealth as anything that produces utility over time, as opposed to rapidly consumed goods or services. Capital is a sort of wealth that produces returns in terms of money or in terms of goods or services that may be exchanged for money. It is useful to distinguish physical capital (a machine, a business building, an inventory of inputs, land), financial capital (a title to physical capital), or human capital (a stock of technical knowledge or other productive skills that reside in an individual). A farm is only one sort of physical capital; its returns over time are goods that can be consumed directly or exchanged for something else.

Capital, which Mitchell calls “productive property,” is not limited to a yeoman farmer’s land and implements. He admits this but seems to maintain a romantic view of the yeoman farmer who, on his little piece of land, produces food to feed his family and who is supposedly self-sufficient on that account. But unless the family is very poor and practices subsistence farming, most farmers’ produce is sold on the market to acquire other goods and services. When Mitchell contrasts “the ideal of productive property” on farms to “the era of exchange” through wages, or when he laments that property has come “to be seen in terms of exchange and use rather than production,” he is making scholastic distinctions that are not useful to understanding the social and economic world.

The employee—whether blue-collar or white, skilled or unskilled—does essentially the same thing as the farmer. In return for wages, he rents his human capital to his employer, who uses it to produce goods or services. Equivalently, we may say that the employee produces stuff that he exchanges with his employer for wages, which he then uses to buy goods and services for himself and his family. Similarly, the owner of financial (and often physical) capital lends or invests it against an expected financial return. These other economic actors are not necessarily less self-sufficient, or less independent, or less hard-working than the farmer.

A construction worker may have human capital worth $500,000, which is the same as saying that he uses it to earn $50,000 a year (assuming a 10% rate of return on capital) over his working life. A highly educated and skilled surgeon may own human capital of 10 or 20 times as much. But Mitchell, following Marx, claims that the proletarian has no capital. As Nobel economics laureate Gary Becker discovered half a century ago, it is more analytically useful—it helps explain the social world better—to consider that the proletarian owns his human capital; it is his capital, not the master’s capital as would be the case for a slave (including a slave of society). Interestingly, Mitchell has foreclosed this analytical avenue by suggesting (or assuming) that an individual is not the owner of his body, but only the steward of a body that belongs to God.

It is not clear how the ownership of capital other than farmland could not instill the same middle-class virtues. The pension funds and urban and suburban houses of middle-class members are capital. To quote Holy Cross political scientist Davis Lewis Schaefer in a recent book review:

The authors conclude by reminding us that prior to the Enlightenment, “the major source of income and wealth was land,” the quantity of which was fixed: hence (except to a limited extent under the Roman empire) no economic growth.… By contrast, the modern commercial republic offers ordinary folk the “open field” and “fair chance” that Abraham Lincoln espoused to advance themselves through their own labor and talents.

Mitchell argues that a property “owner” is the steward of future generations. But it is one thing to argue, as George Mason University economist Tyler Cowen does, that the welfare of future generations must not be discounted at the market interest rate (see “An Open and Enlightened Libertarianism,” Spring 2019); it is quite another to say that individuals of future generations own what current individuals now think is theirs. If individuals of future generations are wealthier than we are, it would be a redistribution from the poor to the rich.

Among Mitchell’s economic errors is the claim that an individual’s utility maximization leads to a situation where “the horizon of my concerns extends no further than the horizon of my own life or the duration of my desires.” As a matter of fact, many people spend money on their children and accumulate capital to leave an inheritance, sometimes to charities. It is, of course, not true that the rate at which an individual discounts the future is close to infinity. Moreover, the owner of capital who wants to consume it does that by selling it to another individual whose discount rate is lower. When an impatient owner wants to consume the future returns of his capital now, he merely transfers it to a new owner.

In other words, from all we know about our world, the market is the best possible steward. Nobody burns downs a forest he owns, which means a forest that he may sell, if it has a positive market value—that is, if it is expected to yield returns that someone in the future is likely to want.

The welfare state and plutocrats / According to Mitchell, the decline of middle-class ownership of “productive property” has led to increasing inequality, economic insecurity, and the consequent growth of the welfare state. It is not clear how the decline of the farm-owning “middle class” could have, by itself, yielded this chain of events. To believe this, we would have to accept that the virtues of independence and self-reliance are exclusively attached to the ownership of small pieces of agricultural land. As suggested above, the new commercial and industrial bourgeoisie also carried similar values, without the dislike of pleasure and material goods, and with the added benefit that it produced the Great Enrichment.

Mitchell also is not clear on how the middle class, as opposed to the poor, became more economically insecure and ran into the arms of the welfare state. Did “they”—the two classes—switch places? Whatever relative mobility there was—down for some and up for others—and whatever the measures we use, the net result is that nearly everybody became absolutely richer because of economic growth. Recent research by economists Justin Callais and Vincent Geloso concludes that economic growth fueled by economic freedom more than compensates for the starting handicap of poorer parents’ children.

Moreover, the causality may have gone at least partly the other way around: from the welfare state—and the powerful state more generally—to more income inequality. According to Brookings economist Jonathan Rothwell, without the different sorts of “barriers to free exchange, put up in place by powerful interest groups,” income inequality would fall by half. (See “The One-Percenter State,” Spring 2020.) Mitchell, who is rightly concerned with the growth of government power, should consider this argument, which incidentally negates his protectionist intuitions. He seems to believe that “globalization” increases the centralization of power, while—if globalization means free trade—it is the exact opposite: it reduces the power of Leviathan.

The most interesting feature of Plutocratic Socialism is Mitchell’s claim that a plutocracy has allied itself with the socialist and woke state. The poor and the economically insecure are being taken care of and dehumanized by the welfare state while the plutocrats maintain their wealth under government protection against competition, including through tax and subsidy privileges. This would explain why the plutocracy has joined the woke activists as illustrated by the Davos crowd (i.e., the World Economic Forum) and its apparent support for a “Great Reset,” that is, the substitution of woke socialism for the market. This hypothesis of an alliance between the woke and the socialist state on the one hand and the plutocrats on the other hand could have been better explored. (See “The Problem with Politicizing Corporations,” Summer 2021.)

Mitchell does not explain why the individual plutocrat behaves this way. Mancur Olson’s theory of collective action points out that, contrary to what Marx assumed, a social class does not act; only individuals can. Mitchell would have to explain why it is in the interest of a corporate leader or major capitalist (World Economic Forum has a large list of “partners”) to espouse the woke–socialist ideology.

Ignored by Mitchell, public choice theory goes a long way to solving this puzzle. Under a state that is not strictly limited, small interest groups are more capable of organizing themselves to control government in their own interests. These special interest groups include large corporations and big trade unions. America is home to some 700 billionaires, who may (thanks to the World Economic Forum and similar business groups in America) constitute a special interest group by themselves. Most of them are not philosophically streetwise and hang out in political and artistic circles enamored with collectivist visions. And they want to avoid expropriation. Plutocratic socialism may be a product of these incentives.

A disappointing book / Have I been unfair to Plutocratic Socialism? Its author is often motivated by worthy concerns and defends some ideas that may look appealing to a classical liberal. Yet, Mitchell’s song belongs to the sirens of an old European conservatism. Aesthetically, he doesn’t even appreciate “the endless charms of our electronic devices.” For him, it goes without saying that manufacturing physical things should be a darling of America. The book is surprisingly unmoored from modern economics. Will some readers find it redeemable as an essay on some Christian ethics and theology?

Mitchell would obviously reject Buchanan and Gordon Tullock’s observation in The Calculus of Consent:

Christian idealism, to be effective in leading to a more harmonious social order, must be tempered by an acceptance of the moral imperative of individualism, the rule of equal freedom. The acceptance of the right of the individual to do as he desires so long as his action does not infringe on the freedom of other individuals to do likewise must be a characteristic trait in any “good” society. The precept “Love thy neighbor, but also let him alone when he desires to be let alone” may, in one sense, be said to be the overriding ethical principle for Western liberal society.

A free society is by necessity a place where people have different opinions about religion and different preferences regarding the good life. It is imprudent to aim at a society governed by what some think God wants. (ISIS tried that recently.) One advantage of a free society is that individuals can, for example, ban pleasure in their lives or consider themselves stewards of their property; but those who have different preferences can also live a congenial life. This sort of society is what classical liberalism has been defending. Live and let live.

Paradoxically, Plutocratic Socialism suffers from the same irremediable vice as wokism and socialism: the devilish temptation to impose on all individuals the politically empowereds’ conceptions of the “common good.”

Readings

  • Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World, by Deirdre Nansen McCloskey. University of Chicago Press, 2016.
  • “False Narratives of Inequality,” by David Lewis Schaefer. Law & Liberty, December 27, 2022.
  • “Intergenerational Income Mobility and Economic Freedom,” by Justin T. Callais and Vincent Geloso. Southern Economic Journal, forthcoming.
  • The Calculus of Consent: Logical Foundations of Constitutional Democracy, by James M. Buchanan and Gordon Tullock. University of Michigan Press, 1962.
  • The Logic of Collective Action: Public Goods and the Theory of Groups, by Mancur Olson. Harvard University Press, 1965, 1971.