Why Do People Love Capitalism and the Free Market?
Why is it that so many people seem to scoff when you offer a critique of capitalism? When you mention that government oversight can actually produce good results, like limiting pollution or curbing corruption. Sure, the idea of a “free market” where businesses provide what consumers want sounds nice at a base level, but the flaws come out once implemented and impacted by real-world factors. It’s not simply a matter of law that supply will perfectly equal demand and everyone will be happy from the owner, to the employee, and the consumer.
There are fundamental flaws concerning the basic tenets of capitalism in its purest form. And, I’ll also focus on modern-day American capitalism which has put rules in place to prevent some of the worst outcomes.
At its core, capitalism calls for the pursuit of profit. As a result, it means profit is the primary goal, which leads to greed. This really shouldn’t be debated when it’s in the definition. What we can debate, and should, is whether we’re ok with placing money above people.
Yes, there are examples of morally sound companies that turn a profit while still “doing the right thing.” But, this can mean sacrificing profits, at least during the short term. Examples include increasing employee wages above what is required by law. Offering health insurance even though you could still have a full staff without it.
System of Merit and Earning What You Get
So back to the basic question, why do people love capitalism? I think a lot comes from the reasoning that whatever is accomplished in a capitalistic society, has been “earned” by the person or company. It’s a system of merit. This thinking seems to discount the obvious reality that very, very few people have found success by themselves.
Whether it’s getting financing from a bank or investor, hiring employees, and even asking for favors, it takes a collective effort for someone to succeed. Pure capitalism, and a free market, allows the person with the most power to benefit the most. Even though their success would have been impossible without the help of others.
The “earning it” idea that seems to be the backbone of the pro-capitalism argument completely falls apart when you advance one generation. A capitalist society emphasizes power in the form of money. When you then have an individual who can pass down their money, the next generation “earns” even less of what they accomplish. We are no longer taking merit into account when someone inherits an already successful business.
It’s not surprising that those who oppose estate taxes are the same ones who defend capitalism, while shouting that they earned everything they have and it’s their right to pass it down a generation. That next generation then uses the same argument.
Anyone Can Get Rich
This leads to the myth around working hard and getting what you deserve, that anyone can get rich. There are many jobs that need to be performed by someone, where no matter how hard you work there’s only so much you can earn. Capitalism is not a true merit system where working hard inherently leads to more money. Yes, working hard *can* lead to earning more, but more often, working hard keeps people in their current situation.
Capitalism makes it easier for those in power to gain more, and harder for those without it to gain any. It’s really the opposite of what a “free market” advocate believes in, because once you have money, you don’t have to work as hard as the person who has none.
It’s really a con that anyone can become wealthy in a capitalist or free market society. It works by those in power continuing to say they earned it and they worked hard, and that America is the land of opportunity. This gets buy-in from the people who don’t have money or power, but want to believe that if only they work harder, one day they will.
In my eyes, these are the two categories of capitalist defenders. Those who it has benefited, and those who think someday they will themselves benefit from it.
We need to also talk about the negative consequences of the pursuit of money and profit above all else. Things like materialism, declining mental health, pollution, inequality, massive economic depressions and recessions, and more.
I find it incredible that when we talk about those negative aspects on an individual basis, separate from their relationship with capitalism, people agree that rampant materialism is not a good thing. They agree that conflict among people is not a good thing, even though history shows us that massive inequality eventually leads to conflict. More money does not lead to happiness (even though people always seem to think they’re the exception to this rule).
Then, once we draw the line between capitalism and these things, people seem to change their mind. They go back to, well if people just worked harder or got a different job there wouldn’t be inequality, while completely ignoring that somebody has to do that job for the person at the top to benefit. Or, it’s my right to have as much money as I want. My freedom to hoard money is more important than those things.
Capitalism Equals Freedom
Freedom and choice. This is the one argument I think has some credence to it. Not that every one of us should have the freedom to exploit people for the sake of profit, but that capitalism as a system does in fact allow greater freedoms to businesses.
Now, we can’t say that’s a 100% positive outcome, because those freedoms include the mistreatment of workers. It includes taking shortcuts on product safety as long as the profits outweigh the future legal fees.
This again comes down to the morals of capitalism. I do not think it is acceptable to endanger or abuse humans in the name of profit. But, for those who do, it is undeniable that a capitalist system does indeed offer greater freedom and choice to businesses.
But it’s not just about the morals. Because even with the current laws against monopolies in the United States, we are seeing to this day monopolistic outcomes from the likes of Amazon, Facebook, and Google. These monopolistic outcomes include limiting choice, exploiting workers, and price gouging. Things that the free market defenders claims to be against.
Monopolies are inevitable under the current system, even with laws in place to prevent them. Monopolies inherently drive down competition, yet another supposed benefit of capitalism. If allowed to continue unimpeded for too long, capitalism will eat itself.
When you operate in a system that values money above all else, suffering is inevitable, inequality is inevitable, and conflict is inevitable. How can a system, i.e. country, thrive when it allows for the majority of people to be exploited?