Capitalism, Freedom, and Fairness, Essay Example

Is capitalism the answer? To one very powerful current of opinion, the answer to this question is so obvious as to seem self-evident: Look to the excesses and oppressions of global capitalism, its detractors chorus. Look to the disenfranchised, huddled masses, look to the wretched of the earth, whose labor has been exploited and whose savings have been purloined for the gain of greedy plutocratic enterprise. However, there is another current of opinion, perhaps less popular at the present time, but powerful for its force of argumentation all the same. Look to the elevated conditions of material prosperity in capitalist societies, say the defenders of capitalism. Look to the prodigious achievements of the enterprising nations of the West, and the enterprising nations of the East, such as Japan, and more recently China, who are joining them. Look, above all, to the economic and social freedom that capitalism offers, the only economic system to offer such. To borrow a line from the title of Milton Friedman’s great book, this, then, is the story of capitalism and freedom. 

In order to truly take the measure of the case for capitalism, it is only meet to examine the furor of its detractors. The hue and cry against capitalism has been taken up most recently and most loudly by the protestors of the Occupy Wall Street movement, though in truth this gives the appearance of being little more than a particularly vocal conglomeration of the forces that have long resisted capitalism in American culture, notably left-wing college students. An example of such is provided by Matthaei, whose offering in Political Economy and Contemporary Capitalism is a screed entitled, “Beyond Racist Capitalist Patriarchal Economics: Growing a Liberated Economy” (48). In truth, Matthaei invokes stock left-wing academic buzzwords and jingoism against capitalism, charging it with “endemic… sexism, racism, and heterosexism” (48). The capitalist economy, we learn, is intrinsically culpable for a range of such serious moral and social failings as racism, sexism, and homophobia (49-50). Matthaei even seems to believe that these are necessary features of capitalism (50).

How to salvage any case for capitalism from such damning indictments? In fact, Ludwig Von Mises provided both a ready answer for such anti-capitalist pundits as Matthaei, not to mention a discerning and insightful diagnosis of their psychological condition. In his Liberalism, Von Mises ably diagnoses the shrillest anti-capitalist polemicists: some are simply resentful and envious of those who have succeeded in life better than they, case in point the rich, and wish to punish them (13-14). Others are neurotics, incapable of dealing with the realities of life, which they find to be unfair (14). Unfortunately, this neurosis lies at the very root of much of the anti-capitalist spirit. It is this same neurotic mindset that undergirds the two biggest assumptions of Marxism, both baseless: first, that the resources necessary for production “need not be economized”, and second, that the success of a socialist revolution will turn work from burden to pleasure (15).

Von Mises then explains that in fact, the lessons of history stand against Matthaei and her ilk. Far from oppression, capitalism has brought unprecedented prosperity and a precipitous increase in the material conditions of living standards (“Liberalism” 1-2). And while it is undeniable that capitalism has consistently produced a select class of persons whose wealth and material standards of living exceeded those of the masses, Von Mises is quick to observe that the benefits of capitalism were far-reaching: in Western countries that adopted the program of social, economic and political liberalism in the 19^th century, particularly the United States, certain nations of industrialized Europe, and key British colonies, the common worker enjoyed a standard of living that far exceeded that enjoyed by nobility in a time not too far removed (2). This is the promise of capitalism, if it is allowed to flourish in classically liberal social and political circumstances: social advancement by the dint of one’s own efforts and abilities (2).

Milton Friedman addresses this specific anti-capitalist claim as well, noting a persistent correlation between the development of capitalism and the reduction of persecution, bigotry, and discrimination of all kinds against vulnerable minority groups (108). He observes that even in so extremely racist a social milieu as the post-bellum U.S. South in the infamous era of Jim Crow, African-Americans were not prohibited from owning private property (108). Despite the many contemptible measures taken against this oppressed stratum of Southern society by the very whites who had only just been forced to relinquish ownership of them, the African-American community was able to begin to derive tremendous benefit from what economic freedoms they were allowed (108). This, Friedman explains, is an essential factor in explaining the progress of oppressed minority communities in situations where even a little bit of the capitalistic spirit is allowed to flourish. Bred with liberalism, capitalism’s proper conclusion becomes an equitable state of affairs, wherein no individual is disadvantaged for their demographic characteristics or their political opinions (108-109). This approach is due to capitalism’s particular emphasis on the consumer.

For capitalism, the consumer is sovereign (Von Mises “Anti-Capitalistic Mentality” 1). Where Marxism advocates romantic and dangerous delusions about the mutability of human nature in a socialist society, capitalism takes persons as it finds them: consumers, whose purchasing decisions should be used to inform what is produced, how much, and to what standards of quality (“Anti-Capitalistic Mentality” 1, “Liberalism” 15). The detractors of capitalism charge it with plutocracy and oppression; if they are historically literate, they may correctly observe that the system of plantation slavery which prevailed in the antebellum U.S. South and the planter colonies of the Caribbean, South America etc. was capitalistic. However, what they fail to give due recognition to is the potently emancipatory combination of capitalism and a liberal program, one in which the rights of all are recognized, irrespective of race, gender, sexual orientation, class, etc. It is this outstanding feature of the liberal, capitalist program that explains the astounding rise of the industrial West in the 19^th and 20^th centuries: rather than peasants trapped in penury, the common folk were free to become wage earners and thus, consumers (“Anti Capitalistic Mentality” 2). This system promotes freedom, because it allows the individual to live according to their own abilities and merits on the one hand, and their own tastes and desires on the other. This is a far cry indeed from a socialist system of central planning, wherein an individual is subject to the dicta of a governmental machine that regulates essentially every aspect of the economy (3).

As the great Milton Friedman explains in his book Capitalism and Freedom, the economic freedoms of liberal capitalism are essential for the realization of a truly free society (7). Capitalism, and only capitalism, offers individuals the economic freedom to earn a wage according to their merits, and to spend it as they see fit. This is, therefore, ineluctably a matter of social freedom as well. Forcing an individual to spend 10% of their income on social security is depriving them of both an economic freedom and a social freedom, Friedman explains (8). Restrictions on trade, in the form of tariffs and duties, are similarly deprivations of economic, and therefore social, freedom (9).

Nor is this merely a matter of social security and so-called fair trade: in fact, economic freedom is the staff of life for democracy (Friedman 9). Friedman observes that no society in history has ever “been marked by a large measure of political freedom, and… has not also used something comparable to a free market to organize the bulk of economic activity” (9). However, Friedman does add that although the economic freedom of capitalism is necessary for democracy to flourish, in and of itself it is not sufficient—as witnessed with the examples of Fascist Italy and Spain, Germany during certain periods of its history, even Czarist Russia prior to World War I (9). Still, economic freedom is important for promoting political freedom, because it creates a base of power that is not dependent upon the overarching structure of the state: in other words, with economic freedom, even a country that is run by a dictatorship may gain a class of capitalists who are not particularly beholden to the dictator (9-10). By these means, the fertile seedbed of capitalism and liberal ideas may in time produce a harvest of liberal democracy.

The hue and cry against capitalism has remained, in many ways, essentially unchanged down the 20^th and 19^thcenturies. Capitalism, its detractors complain, is unfair: it allows the few to accumulate great wealth at the expense of the many; intrinsically oppressive, it perpetuates oppression along the three great axes of the left-wing academic’s holy trinity of race, class, and gender (Norberg 33-34). As Melzer explains, down the 20^th century it was socialism that consistently raised the banner of opposition to capitalism, on precisely these kinds of issues (loc. 426). The result was a whole raft of experiments with socialism, some democratic (as in the case of the United Kingdom), many more authoritarian, even totalitarian, as with the Soviet Union, the People’s Republic of China, the Khmer Rouge, Cuba, and North Korea. Many of the latter category, as any student of history can attest, became overtly tyrannical, committing numerous and appalling human rights abuses (loc. 426). Compared with this dismal track record, the advance of liberal capitalism has been an unprecedented historical godsend. The advance of liberal capitalism has brought economic prosperity and greater levels of civilization to the West, and is now transforming the East and the developing world. By any measure, capitalism is the answer to the creation of a prosperous and free society.

Works Cited

Friedman, Milton. Capitalism and Freedom. 40^th anniversary ed. Chicago, IL: University of Chicago Press, 2002. Print.

Matthaei, Julie. “Beyond Racist Capitalist Patriarchal Economics: Growing a Liberated Economy.” Political Economy and Contemporary Capitalism: Radical Perspectives on Economic Theory and Policy. Ed. Ron Baiman, Heather Boushey, and Dawn Saunders. Armonk, NY: M. E. Sharpe, Inc. 48-56. Print.

Melzer, Allan H. Why Capitalism? New York: Oxford University Press, 2012. Kindle.

Norberg, Johan. In Defence of Global Capitalism. Trans. Cato Institute. New Delhi, India: Liberty Institute, 2005. Print.

Von Mises, Ludwig. The Anti-Capitalistic Mentality. Toronto, Canada: D. Van Nostrand Company, Inc., 1956. Print.

Liberalism: In the Classical Tradition. 3^rd ed. San Francisco, CA: Cobden Press, 1985. Print.