Over the past dozen and a half columns, I have explained how the system we have today is not capitalism, and that, despite the blame that capitalism receives for many of our current problems, it is the return to laissez-faire that we need to live in a free and flourishing society.
But is this not too idealistic? I do not think so, and this is for two reasons.
First, economics is on our side. Free markets work. As we can see in a myriad of examples, government intervention and regulation has historically been highly destructive, because of its arbitrary nature and the lack of relevant information that bureaucrats have access to.
Take for instance the life-saving drugs that may have to wait extra months or years to pass FDA approval before they can enter the market. Or consider the inefficiency caused by requiring that ethanol be present in gasoline — which, besides being harmful to engines, results in fewer miles per gallon.
And free-market capitalism, to the extent it has existed, is responsible for the greatest increase in standard of living that the world has ever seen. It has made people’s work more efficient and sensible through an ever greater division of labor, all the while shortening the work day and increasing wages. Since producers and innovators in a free market are able to rely fully on their own judgment and effort, they can find the most profitable ways to devise products and services that consumers want.
The real heroes of capitalism, such as as Andrew Carnegie and Cornelius Vanderbilt, were geniuses who made products cheaper to consumers and improved quality. The businessmen that instead act to deceive others through fraud, such as Bernie Madoff, or attempt to fix prices, will inevitably meet their demise in a capitalistic system.
Second, capitalism is the system most closely associated with the American sense of life and the individualism that has long been an important aspect of our culture. We value self-reliance, independence, hard work and the freedom to pursue our dreams. Consider that Atlas Shrugged still sells hundreds of thousands of copies per year.
But this does not change the fact that for capitalism to emerge victorious from the political discourse, in which it is being viciously attacked or misrepresented by both conservatives and liberals, we need to reconfigure our understanding of morality and of the real purpose of government.
Capitalism is the system that promotes self-interest. But this sense of self-interest does not mean evils such as lying, cheating and stealing that we often associate with that concept. Capitalism promotes long-term self-interest: the choice and pursuit of rational values, productive work and integrity. And everyone benefits from those who pursue their self-interest in this way.
Capitalism is not a system where mindless greed or “consumerism” can flourish — in that system, each individual is responsible for her own life and cannot get away with irrationality, wastefulness or laziness.
And yet, we cannot fully rely or act on our own judgment lest we are free from government coercion, or the arbitrary interference of others. It is only physical force that can violate your autonomy, by rendering your thought irrelevant and by severing the connection between your values and your actions and rightful property. This is why we need a constitutionally limited government to protect our rights to life, liberty and property, and nothing else.
We do not need a government that tells us what food to buy, how to teach our children, what imperialistic wars we ought to endorse or how we ought to hire and pay workers. But today this is exactly what our government does, and rarely is it questioned by our politicians.
It is only through understanding this that we can fully prevent the misery and poverty that is inevitably attached to a tyrannical regime — and as long as the case for capitalism is not grasped, this is what we are heading toward.
TRISTAN DE LIEGE believes history is on his side. He can be reached at email@example.com.