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Davis, California

Thursday, September 16, 2021

Capitalism and the poor

For those of you who did not read my column last quarter, I will be writing about capitalism and defending it against various criticisms. Rather than a technical philosophical defense of capitalism, though, I will be focusing on concrete issues. I should also note that the system we have today in this country does not qualify as capitalism, but instead is a mixed economy with improper government controls and cronyism. I refer you to my first column last quarter for a fuller discussion of what I mean by capitalism.

Often, when I tell people that I support laissez-faire capitalism — the system in which the government does nothing but protect the life, liberty and property of its citizens, and all property is privately owned — it is asked: “What about the poor?”

I could just as easily respond, of course, by asking, “What about them?” The hidden assumption behind the original question is the view that no one has a right to exist entirely for her own sake — to produce and enjoy her own wealth free from the coercive interference of government. No, some people must be forced to sacrifice their values for the sake of the poor, or less fortunate. This is the premise that has to be challenged if we are to live in a moral and free society.

First, it is a misconception that the poor are worse off in a laissez-faire capitalist system — because everyone can benefit the most from productive geniuses in such a system. By this I do not mean some sort of “trickle-down economics” (a term best avoided because of how politically charged it is) but rather that if productive individuals are left to their own devices, their value creation creates more opportunities for wealth and improvement in the standard of living: you do not have to be rich to benefit from what producers such as Bill Gates or Sam Walton have accomplished.

Moreover, entitlement schemes and wealth redistribution aimed at reducing poverty can cripple the self-esteem of their recipients. The precondition of true, lasting self-esteem is independence, productiveness and self-reliance. Applied to economic situations, this means working to provide others with values as a way of acquiring wealth. Coercive redistribution negates this by transforming economic relationships into those between victims and parasites. Worse, such policies can incentivize idleness or other kinds of self-destructive behavior, resulting in even more poverty.

Second, although I am optimistic that in a laissez-faire capitalist society private charities could alleviate the worst aspects of poverty, we should reject the notion that poverty is necessarily a social problem, i.e. a problem that society as a whole has a responsibility to solve. In a free society, wealth is distributed according to voluntary choice: People agree to work for a certain wage, pay a certain price, accept the terms of a contract and so on. Thus, it is not the fault of wealthier individuals (or anyone else) that others are poor (in a semi-free society, this may not be the case, but then that is just an argument for true capitalism).

Poverty can arise from many circumstances, such as a lack of education or simply misfortune — I do not hold the view that people in a free society are necessarily poor because they deserve to be. This does not change the fact that morally each individual is responsible for her own life. Only you can make your life meaningful and successful by choosing goals and achieving them — you cannot properly shift this burden to others.

Ultimately, although it may be moral if one can afford it to support charitable causes, poverty is not an important issue in a technologically advanced and productive laissez-faire society. What matters most is pursuing your values and trading with others to achieve your rational goals: developing a career, cultivating romantic relationships, enjoying art and so on. To act on your values, you need to be free; laissez-faire capitalism is the system that reflects this fact.

TRISTAN DE LIEGE can be reached at tflenaerts@ucdavis.edu.

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