Michael Novak

There I was, quietly eating my vegetable soup listening to ABC Classical radio when the next item came on:  it was Ralph Vaughan Williams ‘The Lark Ascending’ played by Emma McGrath with the West Australian Symphony Orchestra.  I had forgotten what an emotional piece it is: for me it’s very inward-looking, delineating a yearning to reach up for the ineffable, searching and seeking to grasp at an important realisation, but, always, frustratingly, not quite able to stretch far enough.  I had sat down a few minutes before, mulling over what I wanted to say about Michael Novak and his major work, The Spirit of Democratic Capitalism.  It was the perfect music for the moment, those soaring notes captured my views about Novak’s book, what I admired, and at the same time helping me see why it was limited by the very task he had set for himself.

Michael Novak is a fascinating figure.  In part I think it is because he one of those Catholic trained writers whose scholarship and analysis is always thoughtful, challenging, and rewarding.  In his later years, he was one of the leading neo-conservatives in the US (he was born in 1933, and died in 2017), but he was a Democrat for many years, and often supported ‘progressive causes’.  Above all, he was an unapologetic Christian, a Roman Catholic.  If I rejected some of his claims and assertions, my reasoning was often rather superficial;  he was always arguing from a position of deep analytical and theological understanding, and he forced me to think more clearly, and to attempt to justify my own positions and responses.

Born in Pennsylvania, he came from a European (Slovak) background.  After his first degree, he attended the Pontifical Gregorian University in Rome, graduating with a bachelor’s degree in Sacred Theology in 1958.  Returning to the USA, he completed a Master of Arts degree at Harvard, in the history and philosophy of religion in 1966.  He wrote some 40-odd books, including novels and many articles and books on capitalism, democracy and religion.

Among these was The Spirit of Democratic Capitalism, published in1982, which many regard as his most important contribution, and in which he sought to understand and assess  the theological assumptions of what he described as ‘democratic capitalism’.  Novak saw democratic capitalism as underpinned by a pluralistic social system, comprising three interdependent centres in society:  a political sector, an economic sector, and a moral-cultural sector, each needing the other two in a state of dynamic tension.  Central to his perspective was his view modern socialism had fallen away from a robust utopian program into a set of vague views on ‘idealism about equality’, and a sustained critique of capitalism.  Despite his increasingly Republican sentiments, he never abandoned his support for progressive social change and social equality.  How to square all that was a challenge, and his approach reminds me of the very different liberation theology of Latin American bishops in the 1960s through to the 1980s.  In the US, The Spirit of Democratic Capitalism was an important rejoinder to the faltering left-wing policies that had been so important just a couple of decades earlier.

I suppose the core of Novak’s approach was simple.  Capitalism is essentially amoral.  It is relatively easy to show how the political and economic systems in a country mesh together to provide the legal, financial and institutional parameters to allow business to flourish.  However, defining an acceptable moral basis for capitalism is somewhat tricky:  capitalism is self-sustaining, self-satisfying, and yet also unrelenting.  The logic of capitalism means it will always seek to increase returns, push aside the inefficient, and to do this even to the extent of consuming what it had previously created!  Certainly, there’s nothing especially moral about profit maximisation and cost minimisation: they’re essentially amoral insatiable imperatives.

How does Novak propose to square this circle?  The challenge had been thrown out by Milton Friedman.  In 1962, Friedman had published Capitalism and Freedom, littered with simplistic, gnomic assertions.  Many of these dealt with the relationships between the political and economic systems.  Friedman was far from modest: “Historical evidence speaks with a single voice on the relation between political freedom and a free market. I know of no example in time or place of a society that has been marked by a large measure of political freedom, and that has not also used something comparable to a free market to organise the bulk of economic activity”.  Confusing?  I seem to remember that the UK had had an elected socialist government which had introduced many centrally coordinated economic systems after the Second World War, of which the national health  service was a fine example.

No matter, Friedman was on a roll.  He was concerned about what he saw as a key challenge, which was how to coordinate the economic activities of large number of people, and allied with this how to allow for interdependence without compromising individual freedom.  As he saw it, “Fundamentally, there are only two ways of coordinating the economic activities of millions.  One is central direction involving the use of coercion – the technique of the army and of the modern totalitarian state.  The other is voluntary cooperation of individuals – the technique of the market place.”  In Friedman’s black-and-white world, there were no other choices.  In the real world, people cooperate on economic tasks in many ways, including on the basis of family ties, communal links, or through various types of voluntary organisations.

I’ve criticised Friedman before.  In my mind, he gets away with a lot because he sneaks in asides that are easily ignored. In his views on cooperation he adds, “The possibility of coordination through voluntary cooperation rests on the elementary – yet frequently denied – proposition that both parties to an economic transaction benefit from it, provided the transaction is bi-laterally voluntary and informed.”  Hmm.  That proviso at the end is tricky, since in the world I know most transactions are neither voluntary nor informed.  The majority of  people work because they have to, and many take low-paying jobs because they have little choice.  Most people buy goods and services with little information about the nature of the transaction, and in many cases can do nothing when the deal doesn’t work out:  it’s a world of ‘let the buyer beware’.  Friedman does see a role for government, but it is a tiny one:  “government is essential both as a forum for determining the ‘rules of the game’ [in making transactions] and as an umpire to interpret and enforce the rules decided on. What the market does is to reduce greatly the range of issues that must be decided through political means, and thereby to minimize the extent to which government need participate directly in the game.”

I’ve always loved where this ends up: “The great advantage of the market, on the other hand, is that it permits wide diversity. It is, in political terms, a system of proportional representation. Each man can vote, as it were, for the color of tie he wants and get it; he does not have to see what color the majority want and then, if he is in the minority, submit.”  You have to ask:  what had Friedman been smoking?  In the 40 years since Friedman wrote, we have seen the most extraordinary concentration of power in a tiny minority, and in that world it is your bad luck if the ‘colour of the tie you want’ is not in a design or colour made available by the Bezoses or Zuckerbergs who dominate ‘free enterprise’.

Novak is a much smarter analyst.  In his reformulation of Friedman, he argues there is “a differentiation of society into three power centers: a political sector, an economic sector, and a moral-cultural sector. Each sector needs the others.” Democratic capitalism creates a  society of “three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is pluralistic and, in the largest sense, liberal” (page 14).  At its core, the approach is you can only have democracy with a market economy, nourishing and nourished by a pluralistic liberal culture.

The first big idea that Novak advances in democratic capitalism is pluralism. He observes those promoting a traditional or socialist society claiming there is only one measure of what it good and true.  He uses a compelling image, of a ‘sacred canopy’ under which we “all share the same meanings, make similar moral and aesthetic judgements, laugh at the same jokes”.  Does that mean each group comes under the one sacred canopy.  No, Novak says, : “there is not just one sacred canopy.  By intention there is not.  At its spiritual core, there is an empty shrine.  That shrine is left empty in the knowledge no one word, image, or symbol is worthy of what we all seek here.  Its emptiness , therefore, represents the transcendence which is approached by free consciences from a virtually infinite number of directions.”  [Novak’s emphasis]  It is a powerful image, denying there can be one universally accepted and static centre.  In Novak’s approach, democratic capitalism is constantly renewed.

Such a perspective obviously lends itself to the free market.  Here Novak is like Friedman, emphasising that what matters is ensuring there are fair and legitimate rules to be followed.  For Novak these include ensuring the ‘soundness’ of the currency (a little tricky, nowadays), regulating the rules of domestic and international trade, through to moral principles such as hard work, discipline, sacrifice for the future and concern for the common good.  However, as is so often a source of concern, how can this succeed if there is no-one in control?  That was easy.  Novak reinforces the tripartite model of a good society, with economic institutions insulated from the state, and the power of clerical and state bureaucrats similarly limited to prevent them  meddling in the economy.  In Novak’s world, political activists compete in the political sector, economic activists in the economic sector and religious and intellectual activists in the moral-cultural sector.  “By designit is hard for any one person to get power over all three sectors. But the three sectors need each other. [Novak’s emphasis again]  Capitalism needs a moral culture to nourish ‘self-restraint, hard work, discipline and sacrifice’”.  It also relies on a democratic system, with the US setting the benchmark as to what this means in practice.

If all this seems unremarkable, the next stage in Novak’s model is less so.  He states that democratic capitalism must “deal with humans as they are”, and that includes a capacity for evil, not just good.  He suggests each system identifies its greatest evil.  For traditional societies it is disorder; for socialist societies, inequality; and for democratic capitalist societies it is tyranny.  There’s more.  If the concern of socialists is that capitalism creates selfishness and greed, Novak turns to quote from Friedman: “Self-interest is not myopic selfishness. It is whatever it is that interests the participants, whatever they value, whatever goals they pursue.”  From this perspective, democratic capitalism recognizes that sinfulness cannot be eradicated. It seeks to make sinful tendencies productive and creative.

It’s a nice twist.  It seems Gordon Gecko [as played by Michael Douglas] was right to proclaim, “greed is good”.  Why?  Well, you know the answer, it was Friedman’s point: the market creates order in the face of millions seeking advantage.  Economic activity promotes order; under scarcity people need one another and must coordinate their activities through the price system.  It is the old story from Adam Smith, with his metaphor of the ‘invisible hand’ which is clamed to show us the motives of individuals do not determine the social result of their actions.  Markets create rational order without any rational commands from above.

Where it not for that mention of evil, it would seem that Novak’s model of society is very much like Friedman’s, and by default, Friedman’s poorly understood view of Adam Smith.  Possibly to an even greater extent that Friedman, Novak argues the pluralism of democratic capitalism affects everything, not least the rivalries between the three systems: political, economic, and moral-cultural. Each has its ethos and creates problems for the other two. This is by design, (by design and by intention keep popping up) for the energy released by conflict powers progress and new accommodations.  In a way that echoes John Galbraith’s views, democratic capitalism is “a system intended to constitute a continuous revolution.”

However, Novak is concerned about the theological basis of democratic capitalism.  It was not by accident he titled his book The Spirit of Democratic Capitalism.  Novak sought a humane social system, one consistent with his religious principles.  To achieve that, he argued that it is necessary to create a ‘conscience of democratic capitalism’, and this required a reformulation of Christian theology in the light of knowledge about practical life under democratic capitalism, its economics, industry, manufacturing, trade, and finance.  To achieve this Novak’s analysis turns to examining the relevance of three key concepts, the Trinity, the Incarnation and Original Sin.

First, he suggests that whatever the Trinity means, it is the case that “God is to be conceived as a kind of community rather than solitary individual … What is most valued among humans is that community within which individuality is not lost.”  He takes the Trinity to be a potent symbol of mediation between communities.  As he sees it, in contemporary society, there are many kinds of community flourishing,  some based on family and kinship, others on location,  or work, and many other voluntary yet fluid  links, all clearly recognised and definable.  It is mediating between these communities that make the life of individuals and states possible.

If you are not quite clear about why this is the Trinity (by bringing together politics, economics and the moral universe, it seems), the next step requires an even bigger leap of understanding.  “The point of Incarnation is to respect the world as it is… to disbelieve any promises that the world is now or ever will be transformed into the City of God”,  but still to hope and aspire to see that.  Novak, like many before him, relies on what is claimed to be the character of the US Founding Fathers.  They chose as their  model citizen a free man of property and commerce.  Heroism and virtue were encouraged, but “the system as a system was cut to common cloth … They did not promise paradise, or peace and justice.”  To pull all that together, he suggests the task is “not to guide the ship but to make a voyage possible.”  More than that, a democratic capitalism needs bold leaders, and their desire for power must be made creative, not destroyed.  After all, he adds, “It does not seem to be inconsistent with the gospels for each human to struggle, under the spur of competition with his fellows, to become all he can become.”  Finally, the doctrine of original sin steels the mind against the utopian illusion that “the evils and inconstancies of the human heart are superable” or caused by “evil structures.”

If Novak offers more than the dry-eyed technical vision of Friedman, it is because he adds the importance of morality.  Capitalism tends to dangerous concentrations of power; even more evidently so today than when Novak was writing.  He believed democratic capitalism had “more moral and political resources to avoid catastrophe” than critics realised.  It seems a slight hope.  As we look at what’s happening in the US, many Christian groups have ignored pluralism, and sit under one sacred canopy, demonising others.  In theory, Christians should have the moral agenda that could create a better world for all, but so far, the theory has been obliterated by everyday greed.  Is it too late to change?  I hope not.

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