Chapter 12
The Constitution and Capitalism
In any discussion of capitalism, it is appropriate to begin with a definition of terms. This is because attempts have been made for many years by those who would destroy freedom to give a false impression of what capitalism means. They have tried to promote the image of a capitalist as a wealthy, heartless tycoon greedily increasing his wealth by taking advantage of his poor struggling employees.
Unfortunately, many well meaning people, particularly those aware of instances where employers have been less than generous with their employees, have accepted one of the various forms of this class struggle concept of capitalism. In doing so they have failed to realize that they were falling for a cleverly planted idea. The two concepts are not so connected. The fact that some employers take advantage of their employees does not mean that capitalism is the system under which greedy bosses take advantage of poor struggling workers.
A similar illogical conclusion is that free agency is bad because some people abuse it. In fact, this really is a variation of Lucifer's argument that it is to people's advantage not to be free. He argued that people would best be served by protecting them from the unwise choices they would make if they were given the right to choose. This is, of course, also one of the basic arguments in favor of socialism—that because the people cannot be relied upon to make right choices, government planners should make right choices for them.
What then is capitalism? [p. 110]
Capitalism, The Freedom System
A somewhat oversimplified definition of capitalism, but one sufficiently accurate for present purposes is that capitalism is the economic and social system under which an individual's free agency includes not only his person, but also his property. It doesn't matter whether he's the boss or the worker, or whether the fruit of his efforts comes to him as wages or profits.
Actually, the implications of capitalism are more far reaching than the above simplified definition may seem to indicate. Most government regulation and control of people is through laws pertaining to their property rights. Under capitalism those laws are kept to a minimum with the result that in a capitalistic society a person has the right to live the sort of life he chooses with a minimum of compulsion.
While those who would destroy freedom have been promoting the idea that it is possible to be free through maintaining personal rights inviolate without having inviolate property rights, Latter-day Saints should clearly recognize that idea as unsound. Without property rights, personal rights become meaningless. Realization of this fact was expressed in The Federalist in these words:
There are men who could neither be distressed nor won into a sacrifice of their duty; but this stern virtue is the growth of few soils; and in the main it will be found that a power over a man's support is a power over his will.(1)
Realization of the necessity of property rights as an essential element of freedom was well expressed by George Sutherland, a former Justice of the United States Supreme Court, in the following statement made when he was President of the American Bar Association:
Property, per se, has no rights; but the individual—the man—has three great rights, equally sacred from arbitrary interference; the RIGHT TO HIS LIFE, the RIGHT TO HIS [p. 111] LIBERTY, and the RIGHT TO HIS PROPERTY. The three rights are so bound together as to be essentially ONE right. To give a man his life, but deny him his liberty, is to take from him all that makes life worth living. To give him liberty but take from him the property which is the fruit and badge of his liberty, is to still leave him a slave.(2)
President David O. McKay, whom Latter-day Saints regard as the Lord's prophet in this day, has made the following statement evidencing a clear awareness of the deceptiveness of the class struggle concept of capitalism and a realization that capitalism really is the economic and social system of freedom.
Free enterprise is the right to open a gas station or a grocery store, or to buy a farm . . . or to change your job. . . . Free enterprise has nothing to do with politics nor wealth nor class. It is a way of living in which you as an individual are important. . . . Free enterprise has nothing to do with how much money you have or don't have, nor what your job is or is not. Free enterprise means the right to be yourself instead of some nameless number in a horde bossed by a few despots. Free enterprise is the sum of many little things—but how miserable you'd be if someone stole it from you.(3)
It may be argued that the above comments on capitalism as the economic system of free agency are unfair because there is a middle ground between complete socialism, with its loss of freedom, and complete capitalism, with its lack of restraint. There probably is such a middle ground, although there seems to be much evidence that it is an unstable condition which prevents capitalism from functioning properly and provides an excuse for increasing [p. 112] government intervention.(4) At any rate it should be kept clearly in mind that it is a fundamental Latter-day Saint belief that the Constitution was written by the Lord through the Framers and that He declared it to be the correct system.(5) It should also be recalled that the economic and social system set up by the Constitution was solidly capitalistic, as is more particularly indicated by the material presented in the following paragraphs.
The Framers Believed in Capitalism
A most interesting presentation of the Framers' belief in capitalism is found in a paper published by the Center for the Study of Democratic Institutions. The author of the paper is Rexford G. Tugwell, one of the original New Dealers and still a strong proponent of more socialism. The gist of his paper is that because the original Constitution was designed for an eighteenth century society, a new Constitution is needed to fit modern social, economic, and political needs.
In explaining why he believes the Constitution designed by the Framers is out of step with these times, he made the following comment concerning it.
The Constitution was a negative document, meant mostly to protect citizens from their government, not to define its duties to them or theirs to it. They were to require of it none but the most common services—protection from enemies, the regulation of commerce . . . the furnishing of common coinage, and the establishment of a standard of weights and measures.(6)
On the subject of the Framers' attitude towards government regulation of business as opposed to more complete free enterprise, Mr. Tugwell declared: [p. 113]
It would have been . . . fantastic to suggest that individuals ought to be made secure from the risks of their occupations, or to be protected from the hazards of life. . . . Men were to be free to do as they liked, and since the government was likely to intervene, and because prosperity was to be found in the free management of their affairs, a constitution was needed to prevent such intervention.(7)
In addition to recognizing the free enterprise nature of the American constitutional system, Mr. Tugwell makes another significant statement in the above quotation. That statement is his indication that the Framers believed that a free enterprise system would result in prosperity. A brief background comment may be helpful in better understanding the Framers' point of view that prosperity would result from avoiding government regulation of business.
Preparation for Gospel Restoration
Latter-day Saints often refer to their belief that the Lord prepared the way for the restoration of the gospel. This preparation included discovering America by Columbus,(8) the raising up of the religious Reformers, bringing to America humble people having the spirit and power of the Lord with them,(9) and fighting the Revolutionary War for political freedom.(10)
There is another historical concept consistent with these beliefs and as a further necessary part of preparing the way for the restoration of the gospel. This additional concept is that the Lord also raised up men who planted the seeds of the political, social, and economic system of freedom. This was done at the proper time so that acceptance of this freedom system could reach sufficient fruition in the minds and hearts of the Framers and the people of the United States to be incorporated into the American constitutional system which was constructed by the Framers, [p. 114] but which the Lord declared was actually designed by Him.(11)
These new concepts of freedom arose in an environment dominated by governmental regulation of economic matters. While today there are many who mistakenly believe that government management of the economy and regulation of business is a new and modern idea, this is not true. Actually, the concept of a government of extensive powers managing the economy and regulating business is ancient, and was particularly in vogue for more than a century before the American Revolution.(12) This government regulation of economic affairs was a basic part of the then predominant economic system which was called mercantilism.(13)
The Physiocrats
In the Eighteenth Century, there arose a school of thought opposing government regulation of the economy. Many of those who promoted this new point of view called themselves physiocrats, and declared that:
A statesman's true business was not to make laws for industry and trade in the hope of increasing wealth; but merely to ascertain and protect from encroachment the simple and immutable laws of nature, under which the production of wealth would regulate itself in the best possible way if governments would abstain from meddling.(14)
This natural law point of view led the physiocrats to the following concept of the proper role of government:
The functions of government should be limited to the protection of life, liberty and property, and the individual should be permitted to pursue his own interests and make the most of his labor.(15) [p. 115]
The similarity of this statement of the natural law concept of the Physiocrats and two other statements should be noted. The first is an extract from Section 134 of the Doctrine and Covenants which sets forth a Declaration of Belief regarding Governments and Laws. Verse two of that Section reads as follows:
We believe that no government can exist in peace, except such laws are framed and held inviolate as will secure to each individual the free exercise of conscience, the right and control of property, and the protection of life.
The second of the two other statements that should be noted for its similarity to the physiocrat concept is taken directly from the Declaration of Independence:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness.
It has been pointed out that while the words "pursuit of happiness" refer to property rights, they are more than a mere euphemism. Instead, they represent an attempt to intimate a larger concept somewhat similar to that implied in the above quoted words of George Sutherland and President David O. McKay. This larger concept involves more than just the possibly dormant protection of property rights. The words "pursuit of happiness" imply, instead, something akin to a dynamic concept of free enterprise economic opportunity—the right to venture and to labor in the enterprise of one's choice and to be secure in the fruit of one's success.(16) [p. 116]
Adam Smith
Interestingly, it was in 1776, the very year of the signing of the Declaration of Independence, that Adam Smith published his Wealth of Nations, which is regarded by many as one of the most important books ever written on political philosophy and economic theory. In his Wealth of Nations Adam Smith incorporated ideas of Locke, Montesquieu, and Hume as well as ideas of the physiocrats.(17) Basic to Adam Smith's thinking was the concept that:
There is a natural and beneficent order which pervades the universe and of necessity extends to the domain of social, economic and political phenomena — an order which man cannot and therefore should not attempt to alter.(18)
As an extension of this basic concept Adam Smith proposed the following fundamental thesis:
Human happiness and the "wealth of nations" can be most rapidly and effectively increased by bringing about complete industrial and commercial liberty, and it was at this point that his political philosophy merged with his economic theory and made possible a unified and coherent body of doctrine.(19)
The political aspects of the system proposed by Adam Smith envisioned a government limited to the following:
1. Protection against foreign invasion.
2. Administration of law and justice.
3. Establishment and maintenance of public works and the provision of education.
However, he contemplated that the government would intervene in the last two types of functions only when voluntary action by the citizens failed to function effectively.(20) [p. 117]
With respect to government regulation of business, Adam Smith
vigorously urged the immediate abolition of all restrictive state regulation of industry and commerce and the immediate initiation of that regime of unhindered competition which would allow economic affairs to harmonize with the beneficent order of nature and bring the full measure of happiness and prosperity to the human race.(21)
The great principle of prosperity was expressed by Adam Smith in these words:
The natural effort of every individual to better his own condition, when suffered to exert itself with freedom and security, is so powerful a principle, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often encumbers its operations; though the effect of these obstructions is always more or less either to encroach upon its freedom, or to diminish its security.(22)
It was in 1787, eleven years after the publication of Wealth of Nations, that the Framers met in Philadelphia and drafted the American Constitution. It should be noted that the American Constitution sets up not merely a governmental organization structure, but a complete political, economic, and social system of freedom. Furthermore, the freedom system the Framers adopted is readily identifiable as basically similar to the political, economic, and social system synthesized by Adam Smith. Of course, concepts incorporated into the Constitution came from other sources also just as Adam Smith incorporated others' ideas into his own system. However, the influence of the physiocrats and Adam Smith are particularly emphasized here in connection with preparing the way for the adoption of the Constitution because, in this section emphasis is placed on the economic aspects of the constitutional system. [p. 118]
It seems strange that even though the evidence appears to indicate quite clearly that the amazing prosperity of this country is due largely to its adoption of the capitalistic system, many Americans feel apologetic about capitalism and believe that it should be eliminated, or at least limited. In fact, when Adam Smith's ideas are taught at all in schools today, it is generally from the point of view that they are not applicable in our modern enlightened society.(23)
Framers Favored Property Requirement For Voting
The belief of the Framers that property rights are an essential part of freedom is confirmed and clarified by a brief examination of their attitude toward voting rights. It will be recalled that in designing the constitutional system the Framers used particular care to see that those responsible for each aspect of it had a personal interest in administering their function in such a way as to preserve the freedom system. For example, this concept was expressed in connection with the principles of separation of powers and checks and balances in these words:
But the great security against a gradual concentration of . . . powers . . . consists in giving to those who administer each department the necessary constitutional means and personal motives to resist encroachments. . . . The interest of the man must be connected with the constitutional rights of the place.(24)
In keeping with this concept that the people responsible for each aspect of the constitutional system should have a personal interest in its preservation, it appears to have been the consensus of the Framers that only those with property should have the right to vote. The reason for this belief that ownership of property should be a prerequisite [p. 119] to the right to vote was the attitude that only those who had property to protect would have a personal interest in the preservation of property rights, which the Framers equated with liberty. On the other hand, they felt that those without property should not have the right to vote because the Framers believed that property rights and therefore liberty would not be secure in the hands of those with no property of their own to protect.(25)
It is of interest to read Madison's comment anticipating the time when the majority of the citizens would be without property and expressing concern for the safety of "the rights of property and the public liberty" if the property-less majority have the right to vote.
Viewing the subject on its merits alone, the freeholders of the Country would be the safest depositories of Republican liberty. In future times a great majority of the people will not only be without land, but any other sort of property. These will either combine under the influence of their common situation; in which case, the rights of property & the public liberty, will not be secure in their hands: or which is more probable, they will become the tools of opulence & ambition, in which case there will be equal danger on another side.(26)
Karl Marx Opposed Property Requirement for Voting
Sometimes a clearer understanding of a matter is obtained by looking at its opposite. Instead of the freedom system of the Constitution, Karl Marx proposed the compulsion system of communism. He clearly realized that to eliminate the free enterprise system it would be necessary to undermine property rights since these represented freedom of choice in one's economic activities. In this connection, he made the following comment acknowledging the correctness of the Framers' point of view that a property qualification for voting is essential to the preservation of property rights. [p. 120]
Man proclaims politically that private property is abolished as soon as he abolishes the property qualification for the vote. . . . Is not private property as an idea abolished when the nonowner becomes legislator for the owner? The property qualification for the vote is the ultimate political form for the recognition of private property.(27)
Although it appears definitely to have been the feeling of the Framers that there should be a property requirement for voting, it seems that there were two principal reasons why such a requirement was not incorporated into the Constitution. The first was concern that such a requirement might make ratification more difficult because of the wide diversity of property requirements already in force in the several states. The second was an expectation that such a requirement would automatically be applied anyhow, because most Americans were already freeholders and because the states themselves applied property requirements for voting.(28) For example, in the Encyclopedia Americana the following, comment is made concerning suffrage requirements in the states at the time:
When the Union was formed, in 1787, in each State . . . the qualification was usually a freehold of 40s. to £3, or an estate worth £20 to £60, or ownership of a certain number of acres.(29)
The above comments concerning the attitude of the Framers toward a property requirement for voting are made in the context of showing that the Framers considered property rights essential to liberty. But there were also other advantages the Framers felt would accrue from a property limitation on voting rights. They felt that ultimately [p. 121] the preservation of freedom depended on the right to vote being exercised by those who had both good judgment and character, and that property ownership was an indication of the possession of those necessary qualities.(30)
Capitalistic America the Land of Opportunity
A frequently mentioned objection to capitalism is the argument that free enterprise, without government intervention, does not adequately provide for the poor and underprivileged. But it should be remembered that the free enterprise system is the one system that provides the framework under which the poor can become rich, and that under it America has been the land of opportunity the poor of other lands have struggled to enter. Instead of having to build a wall to keep people in, the United States has the problem of multitudes anxious to sacrifice greatly to enter and establish their posterity in this land of freedom and opportunity.
Those who favor changing America's constitutional system argue that this is no longer the land of opportunity under the free enterprise system and that the government must now intervene to provide opportunities for the disadvantaged. This idea has been repeated so often that there are many who believe it without having analyzed it. However, there is much evidence that this idea is not sound and that any lessening of opportunity results not from the free enterprise system, but from tampering with it. This counter idea is well expressed in The Mainspring of Human Progress:
Most of the major ills of the world have been caused by well meaning people who ignored the principle of individual freedom . . . and . . . were obsessed with fanatical zeal to improve the lot of mankind-in-the-mass through some pet formula of their own . . . the harm done by ordinary criminals, murderers, gangsters, and thieves is negligible in comparison with the agony inflicted upon human beings by the [p. 122] professional "do-gooders," who attempt to set themselves up as gods on earth and who would ruthlessly force their views on all others.(31)
Constitution Intended To Protect People From Do-Gooders
Mr. Weaver's comment about do-gooders attempting to set themselves up as gods is significant. It will be recalled that God does not take away people's free agency even though they often do make wrong choices with dreadful consequences. But it was Lucifer, the brilliant Son of the Morning, who sought to set himself up as God and to prevent people from making wrong choices by taking away their freedom of choice. Lucifer is by all odds the most influential do-gooder in the history of the world, and has been since before the earth was created. Contrary to the Lord's plan under which many would fail, Lucifer's plan guaranteed success to everybody. As a necessary part of insuring the success of everyone, Lucifer's plan essentially involved depriving people of their freedom for their own good.(32)
Actually, more than one hundred years ago the relationship between the Constitution and the do-gooders who seek to use the compulsory power of the government to help the poor and disadvantaged was well expressed by Daniel Webster in these words:
It is hardly too strong to say that the Constitution was made to guard the people against the dangers of good intentions. There are men in all ages who mean to govern well, but they mean to govern. They promise to be good masters, but they mean to be masters.(33)
One should respect the sincerity of purpose of most of those who wish to use the compulsory power of the [p. 123] government to do good. On the other hand, most parents who spoil their children are also sincere in their desires to rear their children well. In this connection there is a particularly worthwhile comment made by Grover Cleveland, one of the leaders of the Democratic Party and twice President of the United States. His statement that "though the people support the Government the Government should not support the people" has often been repeated. But less well known are his comments indicating why, in addition to being unconstitutional, he considered the proposed appropriation undesirable. He said:
The friendliness and charity of our countrymen can always be relied upon to relieve their fellow-citizens in misfortune. . . . Federal aid in such cases encourages the expectation of paternal care on the part of the Government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of that kindly sentiment and conduct which strengthens the bonds of a common brotherhood.(34)
As indicated in President Cleveland's comment just quoted, the free enterprise perspective of the Constitution has as one of its objectives the building of men and women of character through effort and struggle. On the other hand if a paternalistic government protects people from the struggle, they are prevented from developing the self reliant character needed to maintain freedom.(35)
Constitution Similar To Government of God
This fundamental character-developing aspect of the Constitution indicates how solidly the Constitution is founded on gospel principles, and especially the free agency gospel perspective with its emphasis on individual growth through effort and struggle. This similarity between the constitutional system and the principles of the gospel is [p. 124] of course expected since it is a doctrine of the LDS Church that the American constitutional system is very similar to the government of God.(36)
This doctrine of similarity between the Constitution and the government of God should serve another worthwhile function. That function is that it should constitute a valuable test of whether the above free agency analysis of the Constitution is correct. If the conclusion that the Constitution establishes a free enterprise political, social, and economic system is correct, and the constitutional system and the government of God are similar, then the economic order of the government of God should also be based on similar private property capitalistic principles.
Law of Consecration Like Capitalism, Not Socialism
The economic order of the government of God is known as the Law of Consecration. In contrast to a few superficial resemblances to socialism, the Law of Consecration has solid and basic resemblances to capitalism. Not only is the Law of Consecration more like capitalism than socialism because it is based on voluntary participation rather than use of the compulsion of government to enforce participation and compliance, but the Law of Consecration is actually a private property system.
For example, when a person elects to participate, he conveys all his property to the Church and receives back his stewardship, which may be the identical property he conveyed or more or less than that property. In any event, the property he receives back as a stewardship is deeded to him in such a manner that his right to it is legally secure under the laws of the land. In fact, if his participation in the Law of Consecration terminates, he has the right to keep his stewardship property. These private property [p. 125] characteristics of the Law of Consecration are evidenced by the following:
And let my servant Edward Partridge, when he shall appoint a man his portion, give unto him a writing that shall secure unto him his portion. . . .
And if he shall transgress and is not accounted worthy to belong to the church, he shall not have power to claim that portion which he has consecrated unto the bishop . . . but shall only have claim on that portion that is deeded unto him.
And thus all things shall be made sure, according to the laws of the land.(37)
Not only does a participant in the Law of Consecration have a binding legal right to his stewardship property, but he is expected to manage it wisely and to build as prosperous an enterprise as he is able. The surplus he earns above that needed for his family and business he is expected voluntarily to deliver to the Lord's storehouse for the Lord's purposes, such as to help the poor and to provide capital for other stewardships.(38)
The similarity between this principle of voluntarily contributing of one's means to help others and Grover Cleveland's above quoted comment concerning the undesirability as well as the unconstitutionality of federal aid to help the needy should be noted.
In the early history of Utah in some places and on a temporary basis, there were various types of communal life in force, but these were variations adapted to particular times and circumstances, and were not the Law of Consecration.
The Law of Consecration is actually a sort of religiously oriented capitalism. Just as the gospel is fundamentally individualistic in that each person works out his own salvation with fear and trembling, so the Law of Consecration is also basically individualistic. While it is true [p. 126] that a part of living the gospel and also the Law of Consecration is to be one's brother's keeper and to help the poor and less fortunate, there is no place in either for the socialistic or communistic point of view of merging the individual into the group and thereby leveling down the more capable individual. Even when a person helps others under the gospel and the Law of Consecration, he does it as a free individual, voluntarily choosing to do so out of love of God and his fellow man.(39)
The individualism of the gospel applies also to the recipients of help. In the gospel sense a person has no unconditional right to be helped by the group. If he is able to work but elects not to do so, he reaps the consequences of his idleness and has no claim for help from the Church. Church doctrine stresses that it is only the worthy poor who are entitled to help from the Lord's storehouse. An expression of this worthiness for help concept is as follows:
Thou shalt not be idle; for he that is idle shall not eat the bread nor wear the garments of the laborer.(40)
Another significant similarity between the constitutional system and the Law of Consecration is that both can function only in a religious society.(41)
Meaning of Bible Statement That Early Christians Had All Things Common
There are apparently some people who recognize that the Law of Consecration is a religiously oriented capitalistic system but who wonder how the free enterprise aspects of the Law of Consecration can be harmonized with the widely held idea that the early Christians practiced a sort of communism. It is true that there are statements in the scriptures mentioning that the early Christians had "all [p. 127] things common."(42) But what does this expression mean? Some light is shed on it by the following passage:
And the multitude of them that believed were of one heart and of one soul: neither said any of them that aught of the things which he possessed was his own; but they had all things common.(43)
Doesn't this passage indicate that "all things common" refers not to group legal ownership; but rather to an attitude, arising out of his spiritual feeling toward the other in the group, an individual takes toward his own property. In other words the individual members of the group actually owned their own property, but they chose not to speak of it as their own because of the love and unity they felt for each other.
The correctness of the above interpretation is confirmed by an incident recorded in the next chapter of the Acts of the Apostles. Ananias and his wife Sapphira sold some property and pretended to deliver to the apostles the entire purchase price they had received for the property, but they actually held back a part. In condemning them for having lied to God, Peter made the following significant statement concerning their individual legal ownership of the property, indicating that both the property itself and the money received in exchange for it were their private property which they were not obligated to share with the church:
Whiles it remained, was it not thine own? and after it was sold, was it not in thine own power?(44)
A more extensive discussion and refutation of the argument that the early Christians practiced a form of communism is found in The Naked Communist, by W. Cleon Skousen.(45) [p. 128]
Constitutional Freedom System Consistent With Gospel and Approved By Lord
Awareness of some of these background concepts antedating the Constitutional Convention of 1787, and familiarity with the similarity of the constitutional system to the Law of Consecration are helpful in understanding the Constitution for what it really is—not just a design for a government organizational structure, but an entire political, economic and social system under which freedom and prosperity could flourish. While many have criticized abuses of the free enterprise concepts built into the constitutional system, those abuses do not indicate that capitalism is wrong any more than they indicate that free agency is wrong.
Although Adam Smith's theories are rejected by modern advocates of government management of the economy, the following facts should not be forgotten by Latter-day Saints:
1. The predominant economic system prior to the American Revolution was that of governments with extensive powers managing the economy and regulating business in their respective countries.
2. That previously popular economic system was consciously rejected by the Framers who instead chose a system fundamentally similar to that proposed by Adam Smith involving synthesis of the concepts of a small limited government and a free enterprise or capitalistic economic system.
3. Not only has the Lord declared that the system set up by the Framers was designed by Him, but He has admonished Latter-day Saints to support it, and has indicated that "more or less" than that system "cometh of evil."(46) [p. 129]
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