“What can prevent the coming of totalitarian socialism is only a thorough change in ideologies. What we need is an open positive endorsement of that system to which we owe all the wealth that distinguishes our age from the conditions of ages gone by.”
Ludwig von Mises
You hear a lot of nonsense about capitalism. Lately I’ve been reading about the need for a more socially just system of capitalism. Frankly, I think corporations should be worrying less about social justice and more about serving the consumer and making a profit. Critics of capitalism are generally found on the left. However, many who consider themselves pro-business, or supporters of the market system, buy into the idea that capitalism needs maximum restraint from government. They believe that globalism, free markets, the profit motive and capitalism somehow contribute to poverty and injustice.
Religious figures, politicians of all stripes, economists and the media spout the most nonsense about capitalism. They fail to realize that the market system has raised the living standards in the capitalist countries to the point that the common man lives better than the royalty of bygone eras. Even those mired in poverty live more comfortably than the wealthy elites of prior centuries. The critics of capitalism want to replace it with unworkable socialist schemes. Unfortunately, government social programs and liberal social sympathy are a one-way ticket to poverty and economic failure. To the extent that these social schemes impede the operation of free-market capitalism, that is the degree our living standards are diminished.
We frequently hear about social injustice for poor laborers in countries where corporations pay low wages. While it is true that corporations often shift manufacturing facilities to impoverished countries where wages are low, consider the alternatives. These workers would be far worse off without employment. Many would starve and die, or live off a government dole. They would have no chance to work, save, improve their lives and that of their children. What’s happening in China is exactly what happened in the U.S. a century or more ago. Low wages attract capital and living standards improve. You can’t blame business for taking advantage of low wages and reducing the cost of their products to compete more effectively. When the costs of wages and labor are subject to the market, unemployment disappears. When people have jobs, poverty vanishes. When people work, save and invest, wages rise and as the dynamics of Asian capitalism verify, living standards improve.
Not only that, capitalism enables big business to mass produce for the benefit of the masses. It standardizes the people’s way of consumption and enjoyment. It enables every citizen in a capitalist country to share in these material blessings. Furthermore, it gives everyone the opportunity to become an entrepreneur, or attain a profession or position that pays off with a financial reward. But, no one goes without in a market economy because someone made a lot of money. The process that makes people rich also meets people’s wants and needs. The most millionaires are found in the countries with the highest living standards. Furthermore, the generosity of wealthy capitalists has been instrumental in serving the public good. Many have donated a share of their fortunes to charitable endeavors, and some have given most of their money away.
Capitalism and greed are often linked together by those who fail to understand how the market system works. While it’s true that entrepreneurs operate in their own self interest, they must first serve the consumers to benefit. The buying choices of the consumers determine which businesses fail or succeed. Those entrepreneurs who provide the best products and service win out over their competitors. Those who do the best job profit the most. If there is any greed involved, it must be subordinated to serving others before any profits are accrued.
As for the so-called dishonesty of capitalism and business, it’s true that the corporate leader or entrepreneur may choose a path of wrongdoing. The market does not prevent this, but it places an enormous penalty on such conduct. For example, the disclosure of fraud means the value of a company and its stock will plummet. In any sized business, acts of dishonesty towards customers represent the exact opposite of good service and quality. The foremost cause of bankruptcy among new businesses is the failure to apply absolute integrity to every transaction. Consumers won’t stand for lying and cheating. The market system penalizes poor service, rudeness, faulty products, antiquated methods, dishonesty, greed and too much self-serving behavior.
We have a huge problem in America. Virtually everyone believes untruths about capitalism. We are far too critical of the fabulous system of plenty that has brought us the highest living standards on earth. The Socialists have done a good job of undermining faith in the market system. The media constantly bombards us with the supposed failings of capitalism, and promotes the heavy hand of government intervention. Hostility towards corporate America from liberals is monumental. Leftists fail to comprehend that, without a market economy, freedom cannot survive and prosperity will vanish. Socialism and social programs guarantee economic failure. These liberals, who audaciously claim intellectual superiority, threaten the existence of the most beneficial system ever devised because of their complete and profound ignorance.
Too bad the left cannot understand the pioneering thought of the great free-market economist, Ludwig von Mises. “The truth is that capitalism has not only multiplied population figures but at the same time improved the people’s standard of living in an unprecedented way. Neither economic thinking nor historical experience suggest that any other social system could be as beneficial to the masses as capitalism. The results speak for themselves. The market economy needs no apologists and propagandists. It can apply to itself the words of Sir Christopher Wren’s epitaph in St. Paul’s: Si monumentum requiris, circumspice. (If you seek his monument, look around.)“