It is widely acknowledged that capitalist countries are the most successful at creating wealth and raising their citizens’ overall standard of living. People who live in such countries enjoy access to bigger homes, better-trained doctors, more advanced technology, and higher paying jobs. By contrast, those living under collectivist systems like the European welfare states often endure long waits for poorer quality medical help and have far less choice in the things they buy and less money to buy them with. Studies like the Index of Economic Freedom consistently find that higher measures of economic liberty correlate strongly with better standards of living: the freer people are, the richer they become.
But in spite of all this, capitalism is criticized. Its detractors complain that it creates an unjust divide between rich and poor–or that employers don’t pay employees their rightful due–or that the poor are “denied access” to basic needs like education, medical care, and retirement income. Even though the poor in capitalist countries enjoy far greater resources and opportunities than their counterparts in collectivist nations, critics denounce capitalism for allowing some people to have more than others.
Before considering the merits of these charges, we must ask: what is capitalism? Most would say that capitalism is synonymous with a free market of profit-seeking companies. Although capitalism does institute free markets, the term fundamentally refers not to an economic system, but a political one. It is at root a system in which the government protects every citizen’s freedom to act in his own interest. In practice, this means full freedom of action, so long as one’s actions do not violate the rights of others. People are left free to pursue their chosen values, whether education, career, medicine, entertainment, hobbies, family, or none of the above–so long as they respect the right of others to do the same. In essence, capitalism is the system that existed in the free northern states in the nineteenth century. (America today is not a capitalist nation, but a system mixing together elements of freedom and government control.)
Capitalism, in other words, is the system where interacting voluntarily with your neighbors is the law. The use or threat of force is legally forbidden. In any role–doctor or patient, banker or customer, teacher or student, CEO or cashier–every individual enters relationships with others by choice, not by threatening them with his fists or his Senator’s power to pass restrictive laws.Let us return then to the question of those “left behind” under capitalism. Doesn’t everyone deserve an education, health care, and a basic income? Isn’t it unjust that some people get wealthy while others have little? Shouldn’t we aim for a system that empowers the government to remedy such disparities?
Capitalism answers: no. There is only one alternative to the capitalist model of voluntary interaction–force. Every government policy that grants entitlements to some citizens does so, and must do so, by violating the freedom of others. To entitle citizens to things like education, healthcare, or public transportation necessarily requires forcing someone to teach or treat or drive, or forcing someone else (the taxpayers) to pay. In other words, to establish the “right” to education or healthcare is to establish the “right” to the time, energy, and wealth of those who must supply such benefits. When America’s Founding Fathers spoke of the right to the pursuit of happiness, rather than the right to happiness itself, they recognized that one is rightfully entitled only to what he earns or gains by voluntary consent from others–success and happiness are to be sought and earned, not expropriated from others by force. In this sense, no one is “left behind” under capitalism: every individual has the same unrestricted freedom to pursue what he needs and wants.
Criticism of capitalism stems from the ethical ideal of altruism, the idea that morality consists of sacrificing for those in need. To selfishly pursue one’s own ends, on this view, is to shirk one’s moral duty to others. Capitalism rebuffs this notion by upholding and protecting each individual’s right to act in his own interests, in opposition to those who demand he sacrifice his time, effort, wealth and happiness for others. The altruist morality is inherently anti-capitalist because its implementation in politics requires the violation of freedom. Those who choose not to voluntarily sacrifice their interests for others must be forced to do so.
If you don’t have children or wish to send yours to private school, opponents of capitalism say too bad–you must sacrifice your earnings to pay for the public education of others. If you’d like to save for your own retirement according to your own judgment, too bad–you must sacrifice your income to pay for the retirement income of others. If you’d prefer to spend $40 a month on a gym membership rather than pay taxes to Medicaid, too bad–you must sacrifice that “selfish” pleasure so that others may have medical care. In these and a multitude of other cases, non-capitalist governments force you to submit to the sacrificial code of altruism, whether you agree and consent or not.
Capitalism is the only social system that abolishes forced sacrifice. It is based, not on the ethics of altruism, but on a morality of individualism, which holds that it is not only permissible, but morally proper for every individual to act in his own interest. Under capitalism every human being is left free to pursue and enjoy whatever type of life he can achieve to the extent of his ability and determination. He is free to offer his values in trade for those of others, voluntarily and to mutual benefit. He is free to keep everything he earns or give it all away, according to his own uncoerced judgment.
Under capitalism, the government’s role is singular and crucial: the protection of individual rights, i.e., of each man’s ability to act without being subject to physical force by others (or the threat thereof). Only such a system secures for everyone the freedom to direct their lives as they see fit–as such, it is the only moral social system.Yet capitalism is rarely defended on moral grounds. Even conservatives, its alleged supporters, do not defend its moral goodness. Though they often advocate the free market as the most practical choice for creating wealth, their allegiance to religious altruism leads them to apologize for capitalism’s implicit endorsement of self-interest.
Thankfully, there does exist a rational, moral defense of capitalism in the works of Ayn Rand. In her books and essays, particularly in Capitalism: The Unknown Ideal, you can find a detailed explanation of what capitalism is, the morality it is based upon, and which facts support and validate that morality. And you can judge Rand’s case for claiming, in her words, that “no politico-economic system in history has ever proved its value so eloquently or benefited mankind so greatly as capitalism”.
Noah Stahl is a graduate student in computer and electrical engineering at Iowa State University.