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Four Cheers for Capitalism


Is capitalism morally wanting? A lot of people think so and not just the Clintons and left-wingers. Conservatives, of both the neo and paleo variety have never been comfortable with what they call “unbridled” capitalism. Just recently William Bennett, the former drug czar and education czar and now neoconservatism’s vicar of virtue, launched an attack on capitalism in announcing a new project. Neocon godfather Irving Kristol can manage only “two cheers for capitalism.” William F. Buckley supports compulsory national service. From the other wing of conservatism, Patrick Buchanan has denounced “vulture capitalists and their painted ladies.”

Conservative anticapitalism is reflected in conservative statism. Notice that Republicans don’t like being portrayed as “negative” when it comes to government. As David Brooks of The Weekly Standard wrote,

Congressional conservatives assumed the majority in 1995, consumed by anti-government fervor and boasting of agencies to cut, programs to eliminate. As they learned, that amounted to little more than a politics of negation; they were against a lot, but for little. Limiting government is a fine, but insufficient, agenda. So the party is now significantly less anti-state and more pro-community than two years ago. Conservatives have become re-reconciled to the idea of some government action.

Brooks saw an early indication of a Republican shift when Sen. Dan Coats and Rep. John Kasich wrote, “The fact that government programs have not worked is no excuse for those in government not to act.” Recently Coats said, “We think government needs to do more than feed the body. [!] The soul and mind need to be addressed.”

If government is needed to do those things, it must mean that capitalism is deficient.

What is the conservatives’ beef with capitalism? They say the marketplace is amoral. Capitalists offer whatever is demanded, without regard for its propriety. People unduly emphasize consumption. Hollywood caters to people’s base instincts. Under capitalism, Bennett says, “desires become needs.” (This gets awfully close to John Kenneth Galbraith’s indictment of capitalism for creating needs.)

There is a grain of truth here. In a free market, goods and services are tradable as the parties to transactions see fit. But the conservatives’ criticism is off the mark. Capitalism doesn’t do the things they complain of. People do. More specifically, free people do. Capitalism merely lets them do it. But I don’t hear the critics complain that “freedom is amoral.” Instead, they turn to history’s favorite whipping boy, capitalism.

Here is a universal truth: capitalism is what you get when the government leaves people alone. It is a legal environment that recognizes the rights to life, liberty, and property. It is a set of rules that reflects the natural right of self-ownership. Any alleged evils of capitalism are simply the result of people’s being free to choose. Blaming capitalism for what people supply and demand is a little like blaming the game of baseball because players spit.

If the conservatives want to rid capitalism of everything they see as vices (which Lysander Spooner so eloquently taught us are not crimes), they have to impose limits on freedom. Not limits like the law against murder, but limits on peaceful conduct that violates no one’s rights. This is the same group that rails against “liberal elites” for not trusting people to make wise and moral decisions about their lives. Yet they appoint themselves as a new elite, suggesting that in the marketplace people will not make wise and moral decisions.

If conservatives wish to offer advice to willing listeners on how to live virtuously, let them do so. But when they condemn capitalism, they imply that they think the people have too much liberty. When they favor laws against drugs and pornography, they are saying that people should not be permitted to trade in certain kinds of property. Their devotion to property rights is, to put it mildly, less than complete. When they favor laws against prostitution, they demonstrate that their commitment to self-ownership is weak. They would not join in my paraphrase of Voltaire: I may dislike what you trade, but I will defend to the death your right to trade it.

I, for one, would like to object to the claim that capitalism is amoral. In the market, people may engage in any peaceful conduct, even if it is “immoral.” But that does not mean that capitalism is amoral. The market has a strong moral base. To put it in Lockean terms, recognition of each person’s property in himself and his legitimately acquired possessions is a moral principle.

Under capitalism, you cannot own another human being. That’s a moral idea. Under capitalism, killing another person is illegitimate. That’s a moral idea. Under capitalism, using a person’s property on terms other than those he’s agreed to is prohibited. That’s a moral idea. To believe capitalism is amoral, you’d have to believe that liberty is outside of morality. But since free choice is a prerequisite for moral agency, that argument is plainly absurd.

Equally ridiculous is the branding of capitalism as a system that extols “atomistic individualism.” That’s just crazy on the face of it. It’s always been a straw man. No advocate of capitalism ever waxed ecstatic with a vision of individuals living self-sufficiently by themselves. I don’t know what you would call such as “social” arrangement, but it wouldn’t be capitalism. As the Austrian economists never tire of pointing out, capitalism is a monument to social cooperation. The free market is synonymous with the division of labor and an ever-expanding circle of exchange. How atomistic does that sound?

When conservatives criticize capitalism for being excessively individualistic, they start sounding like the left, which faults markets for being competitive rather than cooperative. How much confusion has been displayed over that issue! It doesn’t take much to see that competition and cooperation are two aspects of the same idea. Competition is what you get when people are free to choose with whom they will cooperate. Look at it this way: I need shoes. I am confident that I could not make a decent pair for myself, certainly not without devoting much time and effort that I would prefer to put to other purposes. So I cooperate with someone else to acquire shoes.

Cooperate with whom? Whoever can provide the best value. In a free market, anyone is free to offer to cooperate with me in this endeavor. And I am free to decide whose offer I will accept. That is the genesis of competition. Cooperation minus competition equals coercion. Forced cooperation is not nearly as attractive as it’s made out to be.

The upshot is that the marketplace is as far from atomistic as it could be. People are constantly cooperating with people in ever wider circles. The more advanced the market, the wider the circles. Every day, you and I cooperate with people at great distances people whose names we will never know people we will never meet. Yet we cooperate. It’s amazing when you think about it. (This, by the way, is why it is in our self-interest for the people of other nations to get rich. Protectionism and beggar-thy-neighbor policies are always self-defeating.)

Capitalism, indeed, is the system of individualism, in the sense that each person is politically free to decide for himself what he wants, how he will work to get it, and with whom he will cooperate.

But such individualism is not atomistic. It’s molecular.

“Molecular individualism” is not an elegant enough phrase to serve as a battle cry for the libertarian movement. It’s a bit long for a bumper sticker. But it expresses an important point we must make in our efforts to win adherents. Capitalism is the only truly “social” system, in that it respects the social spontaneity born of the free, peaceful activities of human beings. It permits, as Friedrich A. Hayek taught, the widest use of the explicit and tacit knowledge that is scattered throughout society, thus improving everyone’s chances for a better life. Since it makes a truly human life possible, capitalism is eminently moral.

The right-wing critique of capitalism is off base. It reflects a precapitalist mentality that doesn’t understand and, therefore distrusts, liberty. We should keep that in mind when we search the landscape for allies.

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    Sheldon Richman is former vice president and editor at The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.