Latest posts by Richard Ebeling (see all)
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Why is the free enterprise or capitalist economic system so widely disliked, hated and opposed? Given the success of the competitive market economy to “deliver the goods,” it presents something of a paradox. An economic system that has either radically reduced or even in some instances virtually eliminated poverty, that has created widely available opportunities for personal, social and material improvement, and has abolished traditional systems of political privilege, plunder and power-lusting, is still considered by many to be an evil and unjust social system.
One would think that the market economy would be hailed as the most important social institution that humanity had stumbled upon in all of human history. Let’s not forget that for most of that history the condition of man was to use British philosopher, Thomas Hobbes’s famous phrase, “poor, nasty, brutish, and short.”
The Transformation from Poverty to Freedom and Plenty
Humanity existed for thousands of years at a level of existence that was at or sometimes even below bare subsistence. The images still shown on our television screens of starving, diseased and seemingly hopeless children in what used to be called “third world” countries, with appeals for charitable giving to save those young lives, was, in fact, the general condition for the vast majority of human beings everywhere around the globe just a few centuries ago.
But such circumstances have been diminishing in degree and extent in a growing number of places in the world, first in Western Europe and North America starting in the nineteenth century, then in areas outside of “the West” in the twentieth century, and now in the twenty-first century in more and more parts of Asia and Africa and Latin America. It is not impossible to imagine that before the end of the twenty-first century abject poverty may very well be a thing of the past for practically all of humankind.
What has made this transformative process possible over the last two or three hundred years – a blink of the eye in terms of all the time that human beings have been on this planet – has been a political philosophy of individualism and an economic system based on market-based and -oriented relationships. The idea and spirit of individualism heralded a cultural shift that moved society away from a view that the individual human being was an object of control, manipulation and sacrifice for a wider collective group or tribe. And that an individual had a right to peacefully live for himself, pursuing what he considered to be in his best interest for himself and those he cared about. Slavery and servitude were replaced with the belief that human association should be based on mutual benefit through voluntary exchange.
The new science of political economy, symbolized by the publication and growing impact of Adam Smith’s The Wealth of Nations (1776), drew attention to the fact that freedom, peace, and prosperity could be combined by harnessing personal self-interest to the simultaneous betterment of others through the institutions of the free market economy. As if by an “invisible hand,” advancing one’s own circumstance also brought with it an improvement in the conditions of those with whom one interacted in an arena of competitive supply and demand.
In spite of the astonishing success of functioning market economies in enlarging freedom and prosperity for now billions of people on this blue ball revolving in space around the sun, capitalism stands criticized and condemned wherever it exists to one noticeable degree or another. Why?
Anti-Capitalism Arising from Ignorance of Economics
I would like to highlight at least three of the reasons for the persistence of anti-capitalist attitudes and arguments. They are ignorance, arrogance and envy.
The first and most common one among a large number of people in society is ignorance of the nature, logic and workings of a functioning and competitive market economy. Most people rarely reflect on the how and why of what brings about the material and cultural quality of everyday life, especially as experienced in North America and most of Europe. It is just taken for granted that all those goods and services appear everyday in the shops and stores regularly visited or that, now, are simply ordered online and which then appear in a very short period of time at our doorsteps.
Nor do many people understand what can easily become the negative effects from various government policies. Why not a minimum wage law? Shouldn’t everyone have a “living wage,” a “fair” wage for a decent life? It takes some effort of following through several chains of logic to fully appreciate that artificially setting the hourly wage above where a competitive market had or would establish it may result in the unemployment of those whose labor skills in the workplace may be viewed as being worth less to an existing or prospective employer than what the government dictates must be paid to them. Thus, a minimum wage may price out of the market some of the very people such legislation was designed to help. Their standard of living and life opportunities, therefore, may be worsening, whatever the “good intentions” of the minimum wage advocates. (See my article, “Freedom and the Minimum Wage”.)
Neither do people always understand that attempting to maintain domestic businesses and jobs through protectionist tariffs that raise the cost of importing various foreign-made goods may actually hurt the employment and profits of many more than supposedly are helped with these barriers to international trade. If foreign suppliers of goods earn fewer dollars from doing business in America, this reduces their financial ability to purchase American-made goods they might have wanted to buy, thus negatively impacting export sectors of the U.S. economy. Such import tariffs also mean that American consumers have fewer goods from which to choose and tend to pay higher prices for the same goods that they now end up purchasing from government-protected American producers and sellers. In the long run, everyone tends to be made worse off from government policies designed to give special benefits to some small segments of all those employed in the economy-wide social system of division of labor. (See my article, “Trump’s Protectionist Follies Threaten a Trade War”.)
Educating for Economic Literacy
While such ignorance makes it easy for far too many to fall prey to misguided and counter-productive economic policy ideas, in principle ignorance can be corrected with informed education about the workings of a free market system. People can be assisted to see both the direct and indirect effects resulting from different economic systems – capitalism, socialism, the interventionist-welfare state – and why and how it is that only open, competitive free market systems can supply both freedom and prosperity, especially when the market system is effectively bolstered by a philosophy of individual liberty and rights in an institutional setting of impartial rule of law that ensures freedom for all and special favors or privileges for none.
I know from personal experience in the college classroom that if presented in clear, relevant, interesting and persuasive ways, the ideas and importance of free market capitalism for assuring a “good society,” is teachable and learnable. It does not mean that every student coming out of an economics class leaves a free marketeer at the end of the semester. But the limits and absurdities of many, if not most, government interventions can be understood by most, and many can appreciate the benefits of the competitive economic system.
This is especially so, from my experience, when the case for capitalism is offered in an “Austrian” economic framework that emphasizes the limits of individual human knowledge, the role of the pricing system for coordinating the actions of multitudes for economic well being through economic calculation, and the inescapable impossibilities of government planners and regulators to ever know enough of all the complex, dispersed and decentralized knowledge of the world, upon which any modern society is dependent, to ever successfully do better than the free market economy.
Economic Education Begins with Self-Improvement
The other educational task is to share the philosophical and economic ideas of the free market society with others with whom we interact in our daily lives, when it seems appropriate. No one likes a pushy know-it-all, but over lunch or dinner, for instance, when political or economic policy ideas arise in conversation there are sometimes opportunities to offer one’s own “two cents” about freedom, the free market and the role of government in society.
But as Leonard E. Read (1898-1983), the founder and longtime first president of the Foundation for Economic Education (FEE) always emphasized, changing the world only happens one person and one mind at a time. And the person and mind over whom we can have the most influence to think rightly on such matters is ourselves. Therefore, making the case for freedom to others begins with the self-education and self-improvement of ourselves in knowing, understanding and learning to effectively articulate the principles of liberty and free market capitalism. (See my article, “How to Be a Light of Liberty in the New Year”.)
Anti-Capitalism from Intellectual and Ideological Arrogance
The second cause for much of the anti-capitalist sentiment in our society is human arrogance. We each are susceptible to hubris, the belief that we know better how others should live and act better than themselves. However, those who are most frequently guilty of such arrogance are the intellectuals of modern society. Many of the more classical liberal-oriented minds of the twentieth century have drawn attention to this, including Joseph A. Schumpeter and Friedrich A. Hayek.
The peculiarity of successful free market capitalism is that it has generated enough prosperity that it enables to be sustained an entire segment of the population who are able to devote themselves simply to the pursuit and propagating of ideas. They include schoolteachers, college and university professors, authors of “serious” and “popular” journals, magazines and newspapers, and books.
When a writer of a newspaper or magazine article or editorial piece, says at some point that “critics” or “experts” say, invariably among them are “the intellectuals” whose role in the division of labor is to interpret, analyze, and challenge the ways things are and how they might otherwise be for the better. Most such intellectuals, if one is frank and direct, have lived in “ivory towers” of academia and the general informational media a good part or even all of their lives. They know little or nothing about the actual day-by-day working of a business, meeting a bottom line to meet an enterprise’s employee payroll, or the need to focus on the consumer satisfactions of others to avoid a loss and maybe earn a profit.
Their knowledge of “capitalism” is usually derived, and sometimes exclusively, from reading the earlier and other contemporary critics of the market economy. Businessmen are “exploiters” of workers, “plunderers” of the planet, the greedy “cutthroats” who would sell their own mother for an extra margin of profit, and who reduce all of human life to a financial bottom line. They care nothing for “society,” and make their employment decisions based on racist and misogynist prejudices and biases.
This cultivates an arrogance and hubris in many such intellectuals, the “social critics” of the human condition, that if only they were in charge or if their advice was followed by those holding the reins of political power and decision-making, how much better could the world be made.
De Jouvenel on Three Reasons for Anti-Capitalism
The French social philosopher, Bertrand de Jouvenel (1903-1987), once discussed, “The Attitude of the Intellectuals to the Market Economy.” First, for them the market economy is “disorderly,” that is, they look at the outcomes of the market and assert how much better would be the patterns and relationships and results of society if only there was someone in charge – the government planner, regulator, redistributor – to generate the “socially just” and economically moral outcome that clearly the market does not and cannot provide when left to its own unfettered devices.
The second criticism is that the market economy exalts and satisfies the wrong values. Surely, we don’t need another brand of toothpaste or a new and improved pair of sneakers when the society’s resources (through government control and redistribution) could be better applied to “feeding the hungry,” or subsidizing planned parenthood, or paying for more college classes on why genders are imaginary categories imposed by white, male capitalists to abuse the weak and “marginalized.”
And, third, de Jouvenel, said, there is the implicit resentment by many intellectuals that the market economy places them at a disadvantage. What is that disadvantage? That the market rewards people for catering to the everyday, “lower” wants of the uninformed and manipulated consumers, rather than they, the intellectuals, who devote their lives to the “big ideas” – the beautiful, the just, the good, the better – but who have little or none of the recognition or income of the billionaire businessmen who has made his fortune by persuading easily manipulated homeowners that they really needed his “designer” bathroom sink faucet. How morally depraved that the man who could have been the world’s next great music composer has to lower himself to earn a living in the market economy writing catchy television commercial jingle songs.
School Privatization to Reduce the Arrogance of the Intellectuals
Institutionally, one of the most important long-run remedies to the continuing cultivation and inculcation of such anti-capitalist attitudes and ideas into young minds is the privatization of education, from kindergarten through the university PhD. As long as these types of intellectuals can live on other people’s tax money in sequestered academic islands of educational socialism, they will never be ousted from their protected realms of near monopoly control over the minds of one generation of students after another.
How many parents would want to directly pay for so many of the asinine college and university courses, especially in the social sciences and humanities, that have often become little more than ideological indoctrination camps in the ideas of “political correctness” and collectivist “social justice” fantasies? Market-based educational competition would soon test whether or not these are the ideas that parents and students want offered and experienced among the academic curriculum choices as stepping stones to after graduation careers. Or whether such groupthink notions that passes for “postmodern” deepness, would be the cultural literacy that those paying for their own and their children’s educations would really desire.
The first step toward introducing real intellectual diversity into K-12 education would be the ending of teacher licensing in all private and current choice-based schools. Teachers’ unions and education degree mills presently have a monopoly on who gets to teach those young and impressionable minds long before some of them may go on to college. Open market competition for teachers would offer different techniques for teaching and the content of what was taught.
The ultimate and essential step is the end of all mandatory government schooling. All primary and secondary schools should be privatized, either by handing the schools over to the existing teachers and employees and tell them they are now fully responsible for demonstrating to parents that their curriculum and teaching methods will, in fact, educate their children and prepare them for the future. Or the schools might be privatized through selling them off at public auction to single stand-alone companies wanting to buy them, or to private school chains wanting to offer a brand name of potential excellence and quality either regionally or nationally.
The full privatization of schooling and education would offer the best long-term avenue for the creation and the cultivation of an alternative community of intellectuals and teachers more aware of, more oriented to, and more sympathetic towards the nature and workings of a market system. This will never occur as long as government monopoly-licensed teachers in taxpayer-funded schools can have such huge control over the ideas offered to the youth of the country. (See my article, “Educational Socialism vs. Free Market Schooling”.)
Anti-Capitalism Arising from Socially Destructive Envy
Finally, the third cause for anti-capitalist attitudes and resentments is envy. The German sociologist, Helmut Schoeck (1922-1993), in his classic study on, Envy: A Theory of Social Behavior (1966), made a point of distinguishing between jealousy and envy. Jealousy refers to a desire or wish that the success or good fortune of another had been yours, instead. You may consider that the other person’s success or good fortune was rightly or justly earned or not, but your reasoned and emotional response is that he has achieved or acquired something that you would like to have or that in a fairer world could or would have been yours.
Envy is something different, Schoeck said. In this instance, the envious person begrudges the success or achievement of another. It is a desire or wish not so much that the envier had obtained that success or achievement, but rather “that the best kind of world be one in which neither he, the subject, nor the object of his envy have them . . . One begrudges others their personal or material assets, being as a rule almost more intent on their destruction than on their acquisition.” Indeed, and perversely sometimes, “The envious man is perfectly prepared to injure himself if by so doing he can injure or hurt the object of his envy.”
Ayn Rand (1905-1982) offered a similar idea of envy in her essay on, “The Age of Envy” (1971) in which she argued that the envious person is one who hates “the good for being the good.” Or as she said in Atlas Shrugged (1957), the enviers “do not want to own your fortune, they want you to lose it; they do not want to succeed, they want you to fail; they do not want to live, they want you to die; they desire nothing, they hate existence.”
Both Schoeck and Rand emphasized that the envious person senses or believes that he could never successfully do or achieve what the object of their envy has attained. He hates and resents the other precisely because the other’s success is a slap in the face pointing out or reminding the envier of his own more limited qualities or capabilities. If I cannot do it, then no one should have the ability to do it with the resulting rewards.
Ludwig von Mises also offered a version of the same idea in his short book, The Anti-Capitalistic Mentality (1956). In the free market system success or failure is more greatly determined by one’s own demonstrated ability. In the pre-capitalist systems of society, you were born into a social caste or class that was defined and enforced by law or rigid custom. Never rising to a higher station in life, or a higher income, could be said to not be your fault. You are a “victim of the system.” The serf was tied to the land and forced to follow in the footsteps and the same status that was imposed on his father before him.
Under capitalism, there is always, of course, chance, or the bad luck of poorly choosing whom one’s parents turn out to be, or often just the bad timing of being in the wrong place at the wrong time. But far more than under other social systems known in human history, the free market system offers the individual far more latitude and liberty to determine his own fate. You have greater freedom to pursue an education, select a profession or occupation or line of work, to decide on trying to become a successful enterprising entrepreneur, to save out of income to start a business or partnering with others in doing so, and competing with more established firms if you think you can better satisfy consumers.
But it also means, Mises observed, that it reminds a person that any disappointments in life or failures to go as far professionally and financially as one had hoped falls mainly on oneself. Some find it hard to accept and deal with this. It is easier to say if not for greedy capitalists, or if not for the harsh coldness of the profit system, or if not for dog-eat-dog competition, I would have been more successful.
From Resentment to Envy to Social Destruction
But the resentment and blame game that Mises considered part of the anti-capitalist mentality, only becomes the destructive emotion of envy when, as Schoeck and Rand said, some people so resent the nature and the outcomes of the free market system that they would rather see other’s poor than themselves possibly better off or rich; would rather undermine the opportunity for anyone to have a chance for success than live in a world in which they could try but clearly don’t believe they could succeed; and would rather see the enslavement of all than deal with the burdens of being free themselves.
Envy, as Helmut Schoeck also observed, is an ancient affliction that has always plagued the human psyche. During many periods of history, envy has been an emotion that social pressures have required the individual to repress or keep hidden away in his heart, being unbecoming of healthy human beings and destructive of society if let loose upon the world.
But in our age of collectivism in its various ideological manifestations, paternalistic arrogance and the dark sickness of envy have been able to raise their ugly heads in the latest campaign against capitalism. From Obama’s insistence addressed to successful businessmen that they did not really “make it,” to the demand that the “injustice” of inequality must be undone by pulling down the “one percent,” or to the battle cry that “white privilege” dictates the radical reconstruction of all forms of human association and interaction to a lowest common denominator of group status defined by race and gender, “social critics” and social engineering elites demand to remake society in their own delusional images. While the envious would rather destroy human society as it exists than accept a reality inconsistent with their dreams of frustrated tribal justice.
Only a renewed philosophy of individualism and free market economics can turn the world away from these three reasons behind the anti-capitalistic mentality of our time.
[Originally Published at the Future of Freedom Foundation]