In Defense of Capitalism

I made the mistake of commenting on an article I saw on Facebook the other day. For the most part, I've more or less learned to refrain from getting into arguments with strangers over Facebook or through the comment sections of articles I read. You have about as good a chance of convincing these people of the righteousness of your argument as you do in convincing Liberace that sequins and gold don't have to be wardrobe staples.

Alas, I have a fatal flaw, though, in that if I see stupid in the world, I feel the need to try and correct it. Hence this blog. Hence my futile efforts at trying to convince some avowed socialists that capitalism, far from being the cause of world poverty and hunger, has actually done more than any other system known to man to lift people and countries out of poverty.

The title of the article was Capitalism and Global Poverty: Two Billion Poor, One Billion Hungry and the little preview snippet of the article read, "The report describes the conditions produced by capitalism—mass poverty, deprivation, social injustice, inequality, oppression—but makes no reference to capitalism. There is simply no mention of the economic system under which the world’s population lives, and thus no discussion of any alternative." Oy vey.

Enter Haley, stage left: "Sorry, wrong. Capitalism has brought more people out of poverty than any other system. Bread lines don't happen under capitalism. Food shortages don't happen under capitalism. Millions and millions of people starved and died under the communist and socialist regimes of China and Russia. Venezuela is lacking basic necessities under their socialist regime. Sorry, you can't blame capitalism for hunger and poverty unless you bastardize the definition of capitalism."

Then the stupid comes: "I believe that polls show that majorities in 'liberated' Warsaw Pact countries miss communism. They thought it was bad - until they experienced predatory capitalism..." I'd like to see these polls and talk to some of those Chinese and Russians who lived under Mao and Stalin and see if they really did enjoy living under those regimes more than current ones. 

This guy here really lets me have it: "Why is that always ignorant people defend capitalism with a counter argument of communism? have you personally ever lived in a real communist country? I gusse not, I am sure you have not even been across the state line." Yeah, sure, as I write this from the Bahamas. And fortunately, no, I haven't ever lived in a real communist country as there are hardly any left in existence anymore because people have figured out that it doesn't work!

Not only does it not work, if only it were as simple as "Oops, this didn't work. Let's try something else." No, when socialism and communism fail, they take millions and millions of people down with it. In fact, apart from WWI and WWII, deaths due to communism and socialism were the greatest cause of death than any other cause in the 20th century. It's estimated that 85-100 million people died under these regimes. How are we even debating this? How are people still even thinking that socialism might be more ideal than capitalism? When capitalism fails (and of course these failures are due to government intervention) mass deaths do not happen. Worst case scenario: greedy companies run shady businesses that bilk people out of their life savings. Irrefutably immoral and reprehensible, but millions of people do not die as a consequence. Moderate case scenario: You can't afford an iPhone 5 and instead have to get the Sprint smart phone instead. Oh the horrors of capitalism.

People aren't literally starving to death in countries where they have a relatively free market. People aren't risking their lives on makeshift rafts trying to get away from their oppressive capitalist country for the shores of their communist neighbor. No! People are seeking out freedom, which is what capitalism, in its pure form at least, represents. Even in its bastardized, corporatist form that we experience today, the results are still better than they ever were under socialism. 

I know there are tomes of economic texts out there and you can find any multitude of economists to support your chosen economic system, but let's put this as simply as possible. Capitalism is referred to as the free market, with "free" being the operative word here. You have a boat. I wish to buy a boat. We trade your boat for my money and bingo! That's the free market. There's no force or coercion involved to complete the transaction. We are both better off because of the transaction or else the transaction never would have occurred. I would have kept my money and spent it on something else and you would have sold your boat to someone else if one of us were unhappy with the terms of the sale. Multiply millions of transactions like this everyday and you have the flourishing of a system where people mutually benefit by acting on behalf of their own self interests. This is how our fledgling country developed from nothing to a world superpower in just over a century.

The problems arise when government starts trying to interfere with these freely entered into arrangements. Take the current example of Uber, for instance. Uber is a popular ride sharing enterprise that is starting to displace taxicabs because of its convenience and affordability. Here you have a person or enterprise trying to bring a service to the market, to fulfill a need or a void in the marketplace that they thought the taxicabs weren't filling. On the other hand, you have tens of thousands of willing customers who have found their business model to be much more appealing than the traditional taxicab and have chosen to spend their money freely with Uber. Everyone wins, right? Wrong. Despite this freely entered into business transaction, the government in some states and cities has felt the need to try and ban Uber or severely limit their business. This is a lose-lose. The entrepreneur loses out on potential income and the consumer loses out on a cheaper, more efficient mode of transportation. The only winner in this equation is the taxi cab cabal who has successfully lobbied the government to drive out their competition. Innovation and ingenuity has been stifled. The government flashed the gun hidden underneath its cloak using the implied threat of violence in order to quash this business venture and bestow favor upon another business or industry. 

Therein lies the problem with systems that rely on an excessive amount of government control. The government's only tool is its monopoly on violence and its implied threats thereof. That's why the communist and socialist regimes of the 20th century had such catastrophic results. Not only because these governments presumed to be above the laws of economics, as if they could avoid those laws anymore than they could avoid the laws of gravity, which had disastrous effects on supply and demand causing shortages of daily necessities resulting in mass famine amongst other things, but because their massive overreach into their economies and the free market required violence to subvert the free will of its citizens. 

It was because of these -what should be obvious- facts that I felt the need to go drop some truth bombs on these severely misguided people. As expected, I'm quite certain I failed to persuade anyone to step into the light. That won't keep me from trying, however. As Ron Paul has famously said, "Speak up, speak often and don't worry about those that at this point cannot understand as they can never un-hear what we tell them." 

As for those who are open to learning more about the free market, capitalism, economics, and history, I have a few recommendations all brought to you by the indispensable Tom Woods who, apart from Ron Paul, is by far my favorite figure in the liberty movement. 

For an introductory tidbit that requires minimal time commitment, I offer a brilliant speech that Tom Woods gave in defense of capitalism called "Why Economic Freedom? Here's Why": https://www.youtube.com/watch?v=TnS2OtzSTq0

If you want to delve a little deeper, any of Tom Woods's books are worth reading but in particular regarding this topic I would recommend Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse.  

And lastly, for an invaluable resource at a phenomenal price, there is the Tom Woods's Liberty Classroom: The History and Economics They Didn't Teach You. This gives you a high school or beginning college level introduction to many topics taught by actual university professors. Some of the classes include: The American Revolution, History of Political Thought, Austrian Economics Step-By-Step, U.S. History, and Introduction to Logic. Additionally, each course has a corresponding forum where you can ask the professors questions and get clarification on some of the lectures being taught. They also do a monthly webinar with the professors where you can ask your questions and have them answered live on the spot. How much would you pay to get similar courses and access in college? $5000/year? Would you believe that Liberty Classroom will only cost you 1% of that amount? For the mathematically challenged like me, that's 50 bucks. Fifty dollars gets you an awesome introductory education on topics that are more relevant than ever so you can go into a Facebook debate armed with information, for whatever good it will do you ;) A superb value if I ever saw one.