Problem: Neither Capitalism nor Socialism satisfy the needs of the modern age as technology has made their basis obsolete.

Solution: A new economic system must evolve where its basis are service and cooperation.


"Economics and Moral Values: Part II - The New Basis for Economic System"
William S. Hatcher,Steklov Mathematical Institute of the Russian Academy of Sciences, St. Petersburg, Russia.


The organized economic life of a society is built on division of labor. The first level of this division is the production and consumption of material goods, and the second level is the production of ideas and services necessary to the maintaining of the first level at a desired pitch of efficiency. The whole organization presupposes the existence of a certain morality involving mutual trust, willingness to work within the system, and so on. Such an organization can exist without any particularly advanced technology, but technology can significantly affect the form of the organization such as, for example, allowing for the elimination of slavery.

What is it that makes the individual willing to specialize and accept his place in the system? What gives him the confidence that the things he needs but does not produce will be furnished to him? What, in short, is the motivational basis of the mutual trust so necessary to the continuation of the system? Clearly different answers are possible to these questions. Each answer will determine a particular kind of economic system, a system which may rightly be said to be defined by this basic motivation of its underlying morality. We will consider several possible bases which are related to contemporary economic systems.

One possible motivation is the individual's desire for increasing consumption - that is, the individual consents to play his role because he desires more and more goods and services. "I produce in order to get more and you do the same" is the unwritten watchword. This is the motivation of the morality on which contemporary capitalism is based. Production is a function of desire for increasing consumption. In order for the system to work this motivation must be universal or nearly so. If a significant proportion of the population ceases to desire increased consumption, the system is in difficulty.

One feature of such a system is its dynamism. Since desires are potentially unlimited (as opposed to needs which are limited), there is no natural or necessary saturation point. There is a never-ending spiral in which desire for increased consumption yields increased production which again leads to new desires. Desire for consumption is a spark that goes directly from consumer to producer and back. It needs no intermediary. Nor does the individual producer-consumer need much formal assurance by government or other agencies that others are being made to produce. He "knows" they will produce because he knows they want to consume as much as he does. Thus in a capitalistic system the role of government is largely directed towards assuring that the "rules" of the game are respected in some minimal way.

In recent years Western countries have also felt an increasing need for governmental control and restriction in order to ensure greater economic justice ( that is, a more equitable distribution of goods). The point is that the dynamic of the system is independent of the government which appears rather as a regulatory agency in various ways.

The ability of the capitalistic economic system to function with so much independence allows the government to appear somewhat more stable than it actually is. Any number of crisis can occur in the political realm without the economic system's being noticeably affected.

More directly antithetical to the basis of capitalism than subversion of the government is anything which tends to weaken the basic motivation of the system. Hippies and other "dropouts" are perceived as a considerable threat since they reject the "increasing consumption" motivation. One can see that the extraordinary anger directed towards these generally innocuous people is tacit recognition by the public of the seriousness of the threat to the system posed by an erosion of this motivation.

The other major economic system is socialism and its variants. The motivation which characterizes socialism is similar to that of capitalism - except that the emphasis is on satisfaction of needs before desires. But this necessitates some agent, usually the state, which determines what needs are. Moreover, socialist distribution of goods differs from capitalist distribution. While the latter is governed primarily by the market, the former is governed by both the market and the state (though in theory the state should have withered away and should not be a part of a socialist society. Thus under socialism the government has turned out to be much more important to the functioning of the system than under capitalism.

In a socialist system the individual must have confidence not only in those who produce the things he needs but also in the fairness and efficiency of the government as a determiner of needs and an agency of distribution. In capitalism an individual can have little confidence in the government and still have complete confidence that the desire of the producer for consumption will motivate him independently of government functioning. Thus critical attitudes towards the government in socialistic economic system are much less easily tolerated than in capitalist systems. Confidence in and loyalty to the government are crucial to the continued functioning of a socialist system, much more so than in capitalism. This helps to explain why ideology is much more important in socialist countries. The government must continually make efforts to convince the public that it is a fair and efficient agent of regulation and distribution, and this entails continued efforts to inculcate the public with a certain philosophical attitude. In capitalism, on the contrary, we see rather the "end of ideology". Problems are viewed not as philosophical but as "pratical" problems of increasing production, increasing the desire for consumption, and increasing the efficiency of distribution.

This necessity for individual confidence in government under socialism also explains, at least to some extent, the repressive features of many socialist governments. Since the individual is no longer motivated to produce by the hope of increased consumption, he must be made to produce if he does not want to. And if he ever goes so far as to call into question publicity the fairness or efficiency of the government as a regulatory agency, he must be dealt with stringently.

Thinking people everywhere are beginning to feel that neither of these two basic systems is adequate for the world in which we now live. Socialism was born in the midst of the nineteenth century when slavery and industrial servitude were still widespread even in technologically advanced nations. However, late twentieth-century technology and automation have radically changed the ratio between the quantity of production and the quantity of physical labor necessary to production. This change, occurring in a fairly short period of time, has eliminated the necessity of economic slavery. In fact, not only is there no need for slavery, but underemployment has become the major problem, so powerful are the new means of production. In one century we have gone from slavery to massive unemployment. Even the term "overproduction" has become a part of our economic vocabulary.

Since satisfying basic needs is no longer the prime problem in countries with advanced technology, the very "raison d'ętre" of socialism has been largely undermined. Socialism appears more and more as an anachronism, a system designed primarily to fight a problem which no longer exists.

However, capitalism has produced problems just as great, if not greater, than socialism. Since capitalism feeds on the continued desire for increased consumption, the desire to consume must be artificially stimulated. This leads to manipulation of the public and a squandering of natural resources. The quality of products tend to decline in order to foster continued consumption of new items. Growth becomes an end in itself, and the quality of life is often sacrificed in the name of some vaguely defined notion of progress. Decisions as to the use of resources are made for the short-term profit of a few rather than for the long-term profit of everyone. When local markets become impossibly saturated, there is a frantic search for foreign ones, leading to the phenomenon of economic imperialism.

Recent research by the "Club of Rome" group has shown that if capital investment, unbridled growth, and unchecked exploitation of natural resources continue at anything like the present exponential rate, a major economic and social catastrophe is inevitable within about a generation. What is truly frightening is that the basic motivation of our system tends to reduce the possibility that the right decision will be made in time. The myths abound and are firmly entrenched: Growth is always good and is to be sought for its own sake; that which is new or different is necessarily better; and so forth.

Both capitalism and socialism were developed before the twentieth-century technological revolution. Both systems have had to adapt to the changes wrought by this new technology, but each system has dragged with it certain basic conceptions and myths which were too close to the spiritual heart of the system to be abandoned. Technology has made the basis of socialism obsolete and the basis of capitalism dangerous.

TO CHANGE these systems we must change the underlying motivation on which they are based. But what new basis to offer? The Bahá'i Faith proposes a solution to this dilemma. According to its teachings the basis of our economy in this new age should be twofold: SERVICE and COOPERATION. The individual's basic motivation to produce should be service to others. This basic motivation should supplant both the socialist motivation of security and satisfaction of need and the capitalist motivation of desire for increasing consumption. Moreover the service motive must express itself individually and collectively through cooperation rather than through competition.

Undoubtedly the motivation of service represents a higher level of morality than the basic motivation of either socialism or capitalism. Service implies a generally a less egoistic approach to life than satisfaction of need or satisfaction of desire. Similarly, cooperation rather than competition implies a less selfish kind of relationship between groups.

In view of this, many will certainly object to the Bahá'i approach as being too "idealistic." It is often felt that human nature is basically selfish and that the desire for increasing consumption will always be the natural basic motive for man. Let us recall, however, that the function of an economic system is that it liberates the individual for greater self-realization. In the past lack of technology put severe restraints on the possible forms of social and economic organization. Work was viewed as being only for survival; and the majority of people were forced to do jobs which were distasteful, boring, or otherwise uncreative. Work, then, carried a rather negative connotation.

In this framework the opposite of "work" was "leisure"; and leisure, previously available only to a few, became more generally available once the first fruits of modern technology were harvested. It was, therefore, a natural and easy step to consider that the ultimate fruits of technology would be more and more leisure made pleasurable by more and more consumption. Thus, imperceptibly but devastatingly, materialism became the philosophy and practice underlying our economic system and indeed our whole collective life.

Although it was natural that materialism be the result of twentieth-century economic abundance, it was not logically necessary. This is an increasing realization in every segment of society that this way of life has not made people truly happy. The massive unhappiness of the affluent young people, the tensions, nervous disorders, and misery which are so generally found in society today, the steady deterioration of family life and the quality of human relationships, the profound sense of uselessness which accompanies the vast majority of jobs in society (even those at "high" levels) - all of this things bear witness to the gross failure of materialism to satisfy the deeper, intangible needs of the individual.

The quickness of the transition from slavery and the old economic pattern to the new economy of abundance and leisure has hidden from us the fact that work has an intangible, spiritual component as well as an external, economic one. No one is happier than when he is doing work he truly loves. Creative, satisfying work is necessary to the self-realization of the individual. Technology, by relieving mankind of the necessity of doing boring, dull, and uncreative jobs offers the possibility of a society in which people work for motives others then pure economic necessity. It is the first time in history that we have been faced with this possibility on such a large scale. In a paradoxical way technology, which is material progress, has allowed us to realize the spiritual values of work. Rather than viewing the new abundance as a promise of liberation from work, we can see it as an opportunity to work in a new way and from an entirely new point of view. It is liberation not from work but rather from certain kinds of work which were all too pervasive in the past.

In highly industrialized countries technology has already created massive unemployment and drastically reduced working hours, all pointing to the inadequacy of the old concept of work. Without the fantastic waste due to war and senseless competition it is clearly possible to reduce the "necessary" component of work far beyond the present level.

Thus the Bahá'í motivation of work as service is actually reinforced by human nature and by the individual's desire for self-fulfillment. Rather than contradicting human nature, this new basis gives expression to the deepest that is in every individual. Rather than being impractical or idealistic, it is really the only practical way in which to organize a society in the face of the new and powerful means of production which history has thrust in our hands. The whole process of economic evolution, which began with a crude division of labor thousands of years ago, has arrived at a new stage of maturity in which work has been lifted up from its most immediate function of physical survival to a higher spiritual function. This "lifting up" process might be compared with other area of life, for example sexual relations which clearly performed a biological function at the beginning of man's evolution but which have, over the years, come to be regarded as capable of expressing deeper, spiritual aspects of man's nature when appropriately channeled.

Objections might also be forthcoming regarding cooperation. The virtues of competition are extolled as being the incarnation of the evolutionary principle of "survival of the fittest". Competition, it is said, is necessary to progress. It weeds out weak and inadequate organisms and allows the strong, healthy ones to survive

The fault with this argument is that it presumes the "criterion" of survival to remain constant throughout all stages of evolution. True, only the fittest will survive; but what is the criterion of fitness? In biological evolution there was clearly a point when brains and intellect represented superior fitness to physical strength or physical size ("growth"), for man survived against creatures who were physically stronger in every way. Thus we are clearly wrong to think that physical force and sheer size ("growth" again) are the sole criteria of survival. The criterion of fitness may vary drastically from one stage of evolution to another.

Indeed, in a world which has become a neighborhood overnight, cooperation is clearly the only means of survival. Competition may have served as a stimulus to progress at a certain stage of development, but it clearly hampers progress now. Evolution now challenges us to cooperate.

The modern situation cries out for cooperation on every level: between nations, between races, between religions, between peoples. Consider, for example, the economic waste that results from nationalistic economic competition.. Wheat, oranges, and other food-stuffs desperately needed in one place have been burned in another. We talk of "overproduction" when in reality we should be talking about inefficient distribution. Even so tentative and halting a step as was the European Economic Community has proved to be a s success beyond the expectations (mostly cynical) of anyone because it is based on cooperation rather than competition. The world is a neighborhood, and the attempt to maintain economics with artificially created local markets will not long endure.

Not only must there be cooperation on an international level. Even a single enterprise should be organized as a partnership between all parts, according to the Bahá'í teachings. In this way, the traditional conflicts between capital and labor disappears since now all share in the profits and benefits of the enterprise.

According to the Bahá'í conception these principles of service and cooperation do not operate in a vacuum. Rather, they operate in the context of a system called the "World Order" of Bahá'u'lláh.


Resume: William S. Hatcher is a mathematician, logician, and philosopher who currently divides his time between his duties as professor of mathematics at Laval University in Quebec City, Canada and his activities as visiting researcher in logic at the Steklov Mathematical Institute of the Russian Academy of Sciences, St. Petersburg, Russia.


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