The Commercial Society: Foundations and Challenges in a Global Age
by Samuel Gregg.
Lexington Books (Lanham, Maryland), 190 pp. cloth, $75.00; paper, $18.00, 2007.
This book is a valuable examination of the historical, social, cultural, and legal bases for commercial society, i.e., capitalism, and in a larger, and perhaps more important sense, an analysis of the uneasy dynamic between commercial endeavor and democratic politics. Gregg begins by identifying Christian morality, the breakup of the guild system, and the acceptance of private property in both economic and legal terms as keys to the early emergence of commercial society.
In the next chapter, the author examines in detail the meaning of selfinterest in the commercial context. Self-interest as it has developed and contributed to commercial society and economic prosperity has been more than “selfishness and acquisitiveness.” (30) For commercial society, it has been the driving force fostering both free exchange and the recognition that it, contract, and self-discipline are integrally related. Commercial society does not operate on a zero-sum basis under which one person’s gain is another’s loss. Entrepreneurs recognize that it is in their self-interest to trust the intentions of others through contracts and the use of commercial banking. In this respect, commercial society prospers under peace-time conditions because there is less cause for the state to intervene in private activities. During wartime the state is inevitably strengthenedand private relationships suffer as a consequence. Private trust is replaced by public dictate.
In chapter three, Gregg illustrates how individual liberty enables commercial society to achieve the widespread distribution of wealth. He argues that the assumptions of scarcity that frame economists’ explanations of behavior are far too narrow to encompass the actual contributions of commercial society to material prosperity and social progress. Commercial society is instead more accurately seen as the myriad activities of entrepreneurs utilizing contracts for a wide variety of enterprises and in the process distributing wealth, engendering prosperity, and stimulating creative change. Gregg emphasizes that competition and free information flow are essential to these endeavors. Attempts to use the state, no matter how well intentioned, to modify the commercial efforts of entrepreneurs will inevitably suppress many of the advantages to be gained from freely operating commercial societies, which have again and again demonstrated their ability to distribute wealth widely.
Gregg’s attention to the role of the state allows him to segue into the importance of the rule of law for commercial society. As many others have observed, the rule of law is essential to capitalism, but Gregg is careful to specify that this rule of law requires impartiality by the state. Authoritative state power must be invoked to insure the validity of privately negotiated arrangements, namely contracts. However, contract law is not, and was never intended to be, a means of distributive justice. Contracts are private affairs and the law should protect them as such, not attempt to refashion them for some higher state good. Gregg clearly recognizes that this higher good, often based on considerations entirely external to the needs of commercial society, is really a definition constructed by the politically influential. To offset the debilitating effects of such influence, he argues strongly for the importance of a constitutional system that utilizes the separation of powers and judicial review, although he concedes that even where these exist, there is constant pressure to invoke state intervention.
In part two of this book, Gregg engages the really difficult issues facing commercial society in the contemporary world. To this point in his analysis, he has identified the forces that have combined to establish the preeminence of commercial society as the source of liberty and prosperity in the modern era. But he cautions the reader that democracy and capitalism do not necessarily coexist comfortably. In his words, “the relationship between democracy and commercial order is more ambiguous than often supposed.” (119) The demise of communism has not by any means resulted in a free ride for capitalism. Although the tactics of democratic systems are more subtle than the heavy handed policies of communist and other totalitarian states, democratic activists pushing the limits of democracy itself often pose threats to commercial society and to the social and moral foundations that are essential to constructive commercial intercourse.
In his ensuing chapter, appropriately titled “The Temptations of Politics,” Gregg contends that claims for greater equality areat the root of many of the democratic encroachments on commercial society. He divides the equality “conundrum” into two parts: advocacy for equality in results and advocacy for equality of opportunity. Clearly, the former runs counter to the free and open competition required in commercial society, a competition that will naturally result in inequalities. But, Gregg notes, arguments for equality of opportunity contain hidden dangers. What exactly constitutes equality of opportunity? When is this condition attained? Under this rubric, legislators have been only too eager to urge redistributive policies and courts have taken it upon themselves to impose external considerations onto freely negotiated contracts. The former actions lead to enlarged bureaucracies and increased taxes; the latter disrupt the free functioning of the contractual relationship that is so vital to a healthy commercial society.
Looking directly at “The Dilemma of Democracy” in chapter six, Gregg focuses on the difficulty of controlling the democratic state, or perhaps more precisely the elected leaders of the democratic state. As he so aptly notes, in a democracy, a majority is considered authoritative; whereas, this is definitely not the case in commercial enterprises. Moreover, in democratic politics, the ability to exercise self-restraint is far more difficult than it is in the business world. Interests are continually importuning their representatives for more largesse or other benefits, usually at the expense of commercial enterprises. The trend, then, is inherently toward bigger, more restrictive government, perhaps even arbitrary government. As Gregg shows, Wilhelm Roepke argued persuasively that the expanded welfare state contains disincentives for the kind of behavior—self-discipline, hard work, saving—that is important to commercial activity. While he fully recognizes that there is no definitive way of obtaining a stable balance between commercial needs and democratic interests, Gregg suggests that limiting expectations that democracy necessarily expands rights and utilizing a federal structure of government may be of some help in reconciling the two.
In his concluding chapter, Gregg argues for a renewed appreciation of the importance of cultural foundations to commercial society. Just as he has shown that it is important to understand how culture and social arrangements engendered early capitalism, it is incumbent on contemporary intellectuals and political leaders to acknowledge the continued value of such mores for protecting commercial society. Gregg firmly believes that such people are important for articulating the civilizing nature of commercial society. At times, he points out, a single individual, presented with a window of opportunity and secure in his or her understanding of the commercial dynamic, can in fact stimulate major change in a constructive direction. This was graphically the case when, against all advice, Ludwig Erhard removed price controls from the post-war economy of West Germany, and, thereby, provided the catalyst for astonishing economic growth. But, the more common need, Gregg contends, is for the underlying beliefs and expectations of commercial society to become part of the policy epistemology of decision makers and opinion leaders, and he notes that even Erhard operated within a firmly grounded continental commercial tradition. There is, and this is what Gregg conclusively establishes, a tradition of commercial humanism in western society.
At the outset of this book, Gregg suggests that his analysis may be especially useful for those in developing nations and in the countries of the European Union, but he is far too modest in this respect. This short, exceptionally well written volume should be read by anyone concerned about human freedom and progress. It is an invaluable antidote to those, especially those in America colleges and universities, who refuse, or fail, to acknowledge the essential linkage between the West’s commercial traditions, broadly understood, and its material and political successes.
Robert Heineman is a professor of political science at Alfred University in New York and author of Authority and Liberal Tradition among other works.