Capitalism has taken a beating the past few years. From the mortgage crisis to Bernie Madoff’s ponzi scheme, from a falling stock market to rising unemployment, capitalism does not seems like the best economic system at present. In fact, Michael Moore even made a movie satirically titled Capitalism: A Love Story.
Yet now is not the time to abandon capitalism. It offers the best hope to jump start the economy and–more importantly–generate long term progress. The Economist offers 3 reasons why capitalism must be praised:
- Creates cooperation between sometimes antagonistic parties. “…companies in fact depend on persuading large numbers of people—workers and bosses, shareholders and suppliers—to work together to a common end. This involves getting lots of strangers to trust each other.”
- Increases innovation. “Business people do not just invent clever products that solve nagging problems, …[t]hey also create organisations that manufacture these products and then distribute them about the world.”
- Maintains political pluralism. “Only 202 of the 500 biggest companies in America in 1980 were still in existence 20 years later.”
Most importantly, however, is that capitalism is provides a more open society. Anyone can earn a living, even if you don’t come from money or are a recent immigrant. Although of course, privileged individuals do better in any society, capitalism doesn’t preclude individuals from occupations if they are from certain backgrounds or castes. Further, capitalistic governments tend to meddle less in individuals affairs and uphold individual freedoms. Least we forget, the Nazi’s were from the National Socialist party. [Although to be fair, socialist governments can uphold individual freedoms and capitalist countries can also oppress minorities as well.]
A paper by the Indepenent Instiute claims that businessmen are more honest than preachers, politicians, and professors. Although businessmen can make untrue claims just like these other professions, because customers can “test drive” the products sold, the truth regarding the product will come out eventually. This gives the businessmen an incentive to be honest up front in order to maintain long term relationships with customers and suppliers.
In the words of Winston Churchill, “The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of Socialism is the equal sharing of miseries.”