The Moral Case for Capitalism

Dr. Wanjiru Njoya's recent article, published by the Mises Institute, offers a concise yet powerful defense of capitalism while decisively condemning socialism. If you believe that capitalism's success is inevitable and socialism's failure is a given, it's worth taking a closer look. You can read the full article at this link:

Presenting the Moral Case for Capitalism-capitalism

Here are some of my favorite excerpts from the article:

There is a widespread perception that capitalism is a system designed to encourage greed, envy, selfishness, and other moral failings to flourish...No economic system, no matter how efficient and productive, can flourish if it is widely regarded as the root of all evil.

The assumption of many capitalists is that the demonstrable benefits of capitalism ought to speak for themselves – people will enjoy the material comforts that only capitalism can produce, and that will suffice to make the case for capitalism. Add to that the fact that socialism is invariably accompanied by tyranny, deprivation, and ultimately death, and it is reasonable to suppose that there is no need for debates about morality – the facts will speak for themselves.

While the facts to a large extent speak for themselves, socialists who cling to their ideological interpretations with a cult-like devotion have now achieved dominance in most schools and institutions of higher learning. They offer an interpretation of history that seems superficially attractive – the rich are rich because the poor are poor, wealth comes from theft and exploitation, those who oppose wealth redistribution are motivated by hate, socialism only fails because the wrong people are put in charge, and the like.

These arguments are central to the “decolonize the curriculum” movement that has swept universities in the last few years. Underpinning this ideology is a commitment to egalitarianism, and the belief that inequality of income, wealth, or circumstance is wrong. The notion that inequality is presumptively evil, and that capitalism is therefore immoral because it produces inequality, persists.

We therefore defend the morality of capitalism by highlighting the importance of capitalism for liberty, and in turn emphasizing the importance of liberty for justice and peace. We argue that whether people have the same amount of wealth or different amounts of wealth is neither moral nor immoral. The moral debate concerns neither equality nor inequality, but people’s natural right to live in peace and liberty. Liberty is the foundation of morality and justice.

We defend capitalism not because we think systems of free exchange are inherently moral, but because we understand free exchange as an attribute of self-ownership and property rights. In a wider context different foundations for morality and justice may be held by different people, based on moral philosophy or religion, for example, but such foundations would not be objective or universal. Self-ownership and property rights are the only moral foundation of justice in an objective and universal sense.

A moral defense of capitalism is therefore premised on our inherent and inalienable right to life, liberty, and property.

Dr. Njoya's remarks bring to mind one of Milton Friedman's well-known quotes:

A major source of objection to a free economy is precisely that it gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.

Monopoly

In the following 4 minute video Milton Friedman answers a question from the audience after a speech in 1978 at the Mayo Clinic in Minnesota:

https://youtu.be/tdLBzfFGFQU

Ron Paul published an essay on 10/31/16 with the title "Blame Government, Not Markets for Monopoly".

http://ronpaulinstitute.org/archives/featured-articles/2016/october/31/blame-government-not-markets-for-monopoly/

The conclusion to this article is as follows:

Any businesses that charge high prices or offer substandard products will soon face competition from businesses offering consumers lower prices and/or higher quality. Monopolies only exist when government tilts the playing field in favor of well-connected crony capitalists. Therefore those concerned about excessive corporate power should join supporters of the free market in repudiating the regulations, taxes, and subsides that benefit politically-powerful businesses.

Living Within Our Means

The following 30 minute video depicts Milton Friedman at his best.  This interview allows Milton to discuss several of his most important topics.  One of his famous quotations is near the beginning of this video “One of the great mistakes is to judge policies and programs by their intentions rather than their results”.  His ability to present uncomplicated answers to complex questions is superb.  This video is now listed in the permanent links on this blog to the right of this text under “View these videos”.

This video is from the PBS show "The Open Mind", Moderator/Host Richard D. Heffner, Guest: Milton Friedman, economist, Sunday, December 7, 1975:

PBS Open Minds

You should invest 30 minutes of your time to watch this video in its entirety, if for no other reason to see how fluidly Milton is able to think through these questions and give such easily understood answers.

If you do not have the time now here are some of the highlights:

One of the great mistakes is to judge policies and programs by their intentions rather than their results. We all know a famous road that is paved with good intentions. The people who go around talking about their soft heart, I admire them for the softness of their heart, but unfortunately, it very often extends to their head as well, because the fact is that the programs that are labeled as being for the poor, for the needy, almost always have effects exactly the opposite of those which their well-intentioned sponsors intend them to have.

Let me give you a very simple example. Take the minimum wage law. Its well-meaning sponsors — there are always in these cases two groups of sponsors. There are the well-meaning sponsors and there are the special interests who are using the well-meaning sponsors as front men. You almost always when you have bad programs have an unholy coalition of the do-gooders on the one hand and the special interests on the other. The minimum wage law is as clear a case as you could want. The special interests are, of course, the trade unions, the monopolistic craft trade unions in particular.

You see, I think there’s been one underlying basic fallacy in this whole set of Social Security and Welfare measures. And that is the fallacy — this is at the bottom of it — the fallacy that it is feasible and possible to do good with other people’s money. Now, you see that fallacy — that view — has two flaws. If I want to do good with other people’s money I’d first have to take it away from them. That means that the welfare state philosophy of doing good with other people’s money, at its very bottom, is a philosophy of violence and coercion. It’s against freedom, because I have to use force to get the money. In the second place, very few people spend other people’s money as carefully as they spend their own.

But if you take the road that we have been on, we are heading towards a destruction of our free society and towards a totalitarian society.... we still have time to avoid it. But we will not avoid it unless the people of this country recognize the danger and take very difficult and important steps to set a limit on the extent to which they are going to permit government to interfere with their lives.

Well, I say thank God for government waste. If government is doing bad things, it’s only the waste that prevents the harm from being greater. And the waste of government has two very important elements. Number one, if government were now spending.…efficiently, we’d be slaves now. And in the second place, the waste is so obvious that it arouses a counter­movement on the population at large, people are disillusioned with government and it increases the chance that they will recognize where this road is taking them and get off that train before it goes all the way.

Other People's Money

These 2 short videos explain the fundamental inefficiency of government spending:

The first video is an excerpt from a TV interview on PBS "The Open Mind" (December 7, 1975).  In this interview Nobel Laureate economist Milton Friedman examines the dynamics of "doing good" with other people's money:

http://youtu.be/2IECY6LgqE0

The second video is from the organization ProLiberty:

http://youtu.be/leYMlFWWrmw

Milton Friedman's century

July 31, 2012 is the 100th anniversary of Milton Friedman's birth.  On this occasion we should celebrate the legacy that he has bestowed upon us.  Milton was a champion of limited government and free markets.  His ability to clearly explain the economic principles advocating personal freedom was unrivaled.

His audience was expanded dramatically when he was asked to host a television series “Free to Choose”.  This 10 part series reached millions of viewers and exposed them to the fundamental concepts of a free society.  Rose Friedman (Milton’s wife) described the decision to air the TV series in their memoirs (Two Lucky People, U. of Chicago Press, 1998), "Milton and I have spent much of our life trying to persuade our fellow men and women of the dangers of an intrusive government and the key role that a free competitive economy plays in making a free society possible. Bringing these ideas to the large audience that a TV documentary could attract excited us."

Thankfully Milton’s ideas were not isolated to the USA.  Czech President Vaclav Klaus has this to say: “For us, who lived in the communist world, Milton Friedman was the greatest champion of freedom, of limited and unobtrusive government and of free markets. Because of him I became a true believer in the unrestricted market economy.”  Milton’s books and essays along with the “Free to Choose” documentary were smuggled into totalitarian countries around the world and became a source of inspiration for a generation of freedom fighters.

I consider myself very fortunate to have met Milton and Rose in 2005.  It gave me a great feeling of satisfaction to personally thank both of them for all that they have done to advance our personal freedom.  I hope that you will take some time to visit the websites linked in this post.  Read his words, watch his videos, and most importantly spread his message that we must all be free to choose.

Milton Friedman collection

Milton Friedman

These four quotes from Milton Friedman may be more relevant today than ever.

1. A major source of objection to a free economy is precisely that it ... gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.

2. If you pay people not to work and tax them when they do, don't be surprised if you get unemployment.

3. Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. ... A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society.

4. Only a crisis, real or perceived, produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.

It is our responsibility to keep the ideas of personal freedom and economic liberty alive.