Why Capitalism Is Worth Defending

As Obama demonizes the wealthy and pitches a dozen plans to restructure the economy, opponents of this program need a reminder of what exactly we’re fighting for. We are resisting bureaucracy, central planning, and encroachments on our freedom and communities. Yet this does not get to the heart of the matter. We are not only an opposition movement, countering the president and his partisans’ agenda. More fundamentally, we stand in defense of the greatest engine of material prosperity in human history, the fount of civilization, peace, and modernity: Capitalism.

Many regard it a dirty word and it is tarnished most of all by its supposed guardians. Wall Street giants fancy themselves capitalists even as they live off the taxpayer and thrive on the state’s gifts of privilege, inflation, and barriers to entry. In the military-industrial complex they champion it by name as they produce devices of murder for the state. In the Republican Party and every conservative institution they talk it up while making such vast exceptions to the principle as to swallow it whole. When many think of capitalism, they think of the corporatist status quo, leading even some who favor economic freedom to abandon the term.

But we should not abandon it. For one thing, most opponents of capitalism do not merely oppose Goldman Sachs or Halliburton or even McDonalds. Rather, they oppose free enterprise as a matter of principle. They object to employers’ liberty to hire and fire whom they want, at whatever wage is mutually arranged. They protest the right of entrepreneurs to enter the market without restriction. They disapprove businesses designing infrastructure; providing energy, food, water and other necessary commodities; and running transportation without government meddling. They lament the rich getting richer, even through purely peaceful means. They oppose the freedom to engage in short selling, insider trading, hostile takeovers, and corporate mergers without the central state’s blessing. They begrudge the worker who dissents from the labor establishment. It is exactly the anarchy of the free market they despise, not the consolidated state-big business nexus they most want to smash. For every liberal who hates monopoly capitalism for anything approaching the right reasons, there are ten who deplore the capitalism part of it more than the monopoly.

It is simply a fact that capitalism, even hampered by the state, has dragged most of the world out of the pitiful poverty that characterized all of human existence for millennia. It was industrialization that saved the common worker from the constant tedium of primitive agriculture. It was the commodification of labor that doomed slavery, serfdom, and feudalism. Capitalism is the liberator of women, the benefactor of all children who enjoy time for study and play rather than endure uninterrupted toil on the farm. Capitalism is the great mediator between tribes and nations, which first put aside their weapons and hatreds in the prospect of benefiting from mutual exchange.

A century ago the Marxists acknowledged the productivity of capitalism and its preference to the feudalism it replaced, but predicted that the market would impoverish workers and lead to greater material scarcity. The opposite has happened and now the leftists attack capitalism mostly for other reasons: it produces too much and is wasteful, hurts the environment, exacerbates social divisions, isolates people from a spiritual awareness of their community, nation, or planet, and so on.

Yet all the higher, more noble, less materialistic aspirations of humankind rest on material security. Even those who hate the market, whether they work in it or not, thrive on the wealth it generates. If Marx’s buddy Engels hadn’t been a factory manager, he would have lacked the leisure time needed to help concoct their destructive philosophy. Every social sciences grad student, every Hollywood limousine liberal, every Christian-left do-gooder, and everyone for whom socialism itself is the one religion; every anti-market artist, scholar, philosopher, teacher and theologian screams atop a soapbox produced by the very capitalist system he disparages. Everything we do in our lives – materialistic or of a nobler nature – we do in the comfort provided by the market. Meanwhile, the very poorest in a modern capitalist system, even one as corrupted by statism as the United States, have it much better than all but the wealthiest people a century ago. These blessings are owed to capitalism, and unleashing it further would finally erase poverty as we know it.

There is a myth that capitalism is the dominating doctrine. It seems almost everyone believes this, most finding it at least somewhat unfortunate, which itself should tell you there’s a problem with assuming capitalism’s unchallenged popularity. In fact, capitalism has few authentic defenders. Conservatives pretend to support it, but make exceptions for education, energy, agriculture, labor, central banking, borders, intellectual property, and drugs, to say nothing of national defense and criminal justice. Even worse, many conservatives of the anti-corporatist, localist variety are more protectionist and economically nationalistic than the establishment right. They will sacrifice property rights for their cultural preferences on guns, religion, so-called family values, and certainly patriotism. With friends like these, capitalism needs truer allies.

Progressives and socialists are downright hostile. They claim to have made their peace with the market but have a new scheme every day to restrain it, punish it, manipulate it, and beat it into submission. Liberals insist they don’t want to rid of it, only refine it, only save it from itself. But if capitalism needs saving, it is not from itself, but only from liberals and conservatives.

Libertarians will speak up for capitalism, but often with some reticence. It has gotten such a bad name, and it is so despised by the liberal culture, that many do not wish to defend it outright. It is indeed crucial to be clear and precise in explaining what we mean by capitalism. But this great force for progress deserves our bold support, not our qualified testimony. It has given us everything we have. The least we can do is not pretend we’re embarrassed of it.

For the last century, capitalism’s most ardent defenders – the school of Mises, Hayek and Rothbard, and even the less radical followers of Rand and Friedman – have been clear that they mean the individual’s freedom in property rights and exchange, and almost everyone understands this. The enemies have mostly meant the same thing, when they weren’t disingenuously conflating free enterprise with state-sanctioned privilege.

Mises said “a society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society.” Hayek believed “the preservation of what is known as the capitalist system, of the system of free markets and the private ownership of the means of production, as an essential condition of the very survival of mankind.” While always careful to critique state capitalism for its interventionism and violence, Rothbard espoused “free-market capitalism [as] a network of free and voluntary exchanges in which producers work, produce, and exchange their products for the products of others through prices voluntarily arrived at.” Capitalism and freedom go hand in hand, and it is no wonder that the enemies of the market target libertarians as the most extreme proponents of what they loathe, rather than mostly focus on the corporatists and social democrats that dominate the modern left and right.

Some libertarians worry that “capitalism” puts too much focus on capital, but this is in truth no problem. Only through deferred consumption can we build civilization, by the amassing of higher order goods and the lowering of our orientation toward the present. This is the essence of the capitalist emphasis. Maybe it takes longer to explain ourselves when we adopt the battle cry of capitalism – it also takes longer to be a capitalist than only a consumer. In the long run, however, it is worth it. Libertarianism is a long-term struggle, and so why not take the long-term view of capitalism, both as a term worth embracing and a label for the economy we envision? Anarchism, too, is a hard pill to swallow, a tradition with a mixed history where a plausible case can be made that its conventional meaning does not always encompass the values we hold dear, but rather a lack of social order. Yet libertarian anarchists embrace the term, as we should the term capitalism.

Rothbard was particularly sensitive to the fact that the term was coined by its enemies, and many today believe that defenders of free markets should not allow the opposition to define the debate. Yet this point leads me to a very different conclusion. First, even insofar as the word has negative connotations in popular culture, we might still want to adopt it. The anti-Federalists were initially opposed to the label affixed to them by the Hamiltonian statists. But now I would uphold that descriptor with pride. This is an area where we can take a cue from the gay rights activists who were smeared as “queer,” only to proudly appropriate the term for their own uses.

Second and more important, if Marx and his ilk – whose ideas, to the extent they have been implemented, have yielded unparalleled human misery, starvation, and slavery – position themselves as the adversaries of capitalism, we should be so lucky to have these be the terms of the debate. The socialists of all stripes argue that real socialism has never been tried, and some say we market radicals are stuck with no better a response than to say that real capitalism has never been tried, either. However, unlike “real socialism,” which Mises demonstrated was impossible on a large scale, capitalism simply exists wherever it is left unmolested. It is the part of the market that is free. But regardless of how we define it, in terms of feeding the masses and sustaining society, I will take flawed capitalism over flawed socialism any day. I will take state capitalism, crony capitalism, or corporate capitalism over state socialism, democratic socialism, or national socialism.

Yet we need not make that choice, since opposing state capitalism is part of the capitalist cause, as should opposing state religion be the calling of every religious anti-statist, opposing state schools be the goal of every libertarian who loves education, and opposing state law and order be the creed of those who endorse the natural law and peaceful social order.

The capitalist portion of state capitalism is the part that works. The fruits of capitalism can be used for evil, and they are surely used this way by the state. For instance, the military-industrial complex’s evil is due to the socialist state military feeding off the production of semi-capitalist businesses. The one downside to capitalism is that the state becomes richer in absolute terms than with any other system. If the military were fully socialist it would be less effective – this is true. But this is merely a practical and moral indictment of the state, not the concept of capitalism.

If this is the only real confusion that confounds capitalism’s detractors we should simply ask them: Are you for a complete separation of capitalism and state, then? Of course they are almost to a person violently opposed to such a prospect. For them the problem is not the state having weapons and law enforcers and soldiers and national boundaries. Instead, the problem is unfettered entrepreneurism and the inequality of profit. Anti-capitalism is best defined, to paraphrase Mencken, by the fear that someone, somewhere, is getting rich. Looking at the warfare state, the anti-capitalists object to someone making money off the militarism, and indeed they should be embarrassed that the state institutions they favor can only successfully mount a military machine by exploiting the profit system. Yet, tellingly, their primary objection is often not with the profiteers’ war; it is with the war’s profiteers.

Some words are harsh and the concepts they embody seem harsher. Some notions seem too idealistic for many cynics. Peace, love, and freedom are all words that get a bad rap as head-in-the-cloud concepts that don’t describe reality as it actually exists. But we do know that in a world where not all is peaceful, love is sometimes hard to find, and freedom is always in peril, all of these ideals, insofar as they are allowed to flourish, point the way to a future of harmony and plenty. The same is true of capitalism. Don’t let its enemies spoil a good word for the greatest economic system in the history of the human race.


Anthony Gregory

The Daily Reckoning