Capitalism

Capitalism is the only politico-economic system based on the doctrine of individual rights. Advocates of it say that in allowing each individual to act unhampered by government regulations, capitalism causes wealth to be created in the most efficient manner possible which ultimately raises the standard of living, increases economic opportunities, and makes available an ever growing supply of products for everyone. Thus, under capitalism, the individual's pursuit of his own economic self-interest simultaneously benefits the economic self-interests of all others. In other words, as the rich become richer, the poor become richer- at least in theory.

Proponents of this system understandably hold to the belief that capitalism is not a system which exploits a large portion of society for the sake of a small minority of wealthy capitalists (economic elitism). In fact, they maintain that capitalism is the complete embodiment of social justice. In a social or political context justice means that every person gets no more, and no less, than what he gains through voluntary association with other men. A capitalist society is a just society because all individuals are considered equal under the law. Capitalism recognizes that it is just for a man to keep what he has earned and that it is unjust for a man, or group of men, to have the right to what other people have earned. Since all people must live independently under capitalism, all of the material values that a person acquires must be earned. Thus, the expression of social justice under capitalism is that what a man earns is directly proportional to what he produces, with no antitrust laws or progressive income taxes stifling his achievement. All other forms of government, such as the welfare state, institutionalize injustice by legally expropriating the property of some men and giving it to others.

Many people have trouble accepting that capitalism is a just system because of the existence of economic inequality. For example, it is observed that famous celebrities and sports stars receive very large incomes for work that is perceived as trivial, and that many hard working people make incomes which pale in comparison from jobs that are perceived to be of greater benefit to society. A capitalist would reply that each of them deserves what they earn, and what they earn is the result of how much wealth each of them creates Since each man has the right to the product of his labor, it is completely just for the disparity in incomes to exist, and the only injustice to occur would be for the government to take money from the celebrity or athlete and give it to those who supposedly deserve it on the basis of their "need."

What are we to make of this? On the surface it seems reasonable. But is it just? Under capitalism, as it is currently practiced in America, selfishness on the part of the capitalist will always tend toward debt-oriented labor and economic practices making it morally wrong. The best way to understand this is to compare capitalism to communism. Communism failed, in part, because the state owned the means of production. What this really amounted to was that individuals highly placed in the Communist party actually controlled the means of production, and these individuals tended strongly toward corruption. Dissociated from his own self-interest, and dominated by the corrupt and bureaucratic apparatus of the Communist party, the average individual found himself politically powerless and poorly motivated economically, unable to enjoy the fruits of his own labor. In addition to being corrupt, the size and inertia of the state bureaucracy made for inefficiency of administration. And exacerbating all of this, a number of pathological personalities, such as Stalin and Khrushchev, rose to the top of the power structure and acted against the common good. Now let’s look at how our current version of capitalism and free enterprise mirrors this.

Ironically, capitalism has tendencies to many of the same problems as communism, though the failures are superficially different. The large corporation, which is perhaps the ultimate expression of successful capitalism, is the locus of many of the problems. Corresponding to the privileged elite of the Communist party is the privileged corporate elite. Just as the privileged elite of the Communist party rendered the political system useless for the average individual by promoting political corruption, the privileged elite of corporate capitalism has also rendered the political system useless for the average individual by promoting political corruption. Moreover, under corporate capitalism, the individual is wrongly motivated (through fear of loss of employment rather than the desire to build equity), and is unable to enjoy the fruits of his own labor, since most of the value of that labor is appropriated by the corporation in profits for a few while paying disproportionately much lower wages to its workers. Just looking at our current economic meltdown is proof enough of this. We certainly have pathological personalities at the top of the corporate power structure (along with their political cronies bought and paid for by “campaign donations”) exacerbating the situation. After extensive congressional investigations did anyone responsible go to jail? In the end who suffered the consequences for the corrupt practices of Wall Street – the CEO’s or the workers who lost their jobs and the taxpayers who footed the bill for the bailouts?

That the political and economic outcomes have been so similar under both communism and corporate capitalism should hardly be surprising, given that the underlying problem is the same in both cases: too great a concentration of ownership and control in too few hands. From the perspective of morality the problems of the two systems are also the same: neither system allows the average individual to enjoy most of the fruits of his own labor and both exploit the individual shamelessly.

Is there a better system? Stay tuned for future posts. Meantime, share your thoughts.