A Defense of Capitalism

In his November 6 column in The Tech, entitled “Who Does Capitalism Really Work For?,” Alexi Goranov argues that, given the current economic and social state of America, it is clear that there must be an overhaul of the system. Greedy corporations and those in the upper echelon of the economic ladder have stopped at nothing to profit at the expense of America’s working class. The system has rewarded the few while failing to provide for the majority of Americans. Therefore, it is our responsibility to initiate a new, democratic way of doing things, one that puts people before money.

This seems like a plausible argument. Yet what is its moral basis? Although not explicitly stated, the premise is that people have a right to certain things and it is society’s job to provide them. If I need something, it is the job of someone else to produce it for me. As Obama aptly put it in a recent speech on race, “Let us be our brother’s keeper.” The products of society are resources, to which all, at least to some extent, are entitled to. However, society is not an entity. It is made up of individuals, who themselves have inalienable rights. If it is society’s responsibility to provide for our needs, then the reality is that it is the job of some person to produce for the benefit of someone else. A socialist system is based upon this moral code.

Everyone has one fundamental right: a right to life. This doesn’t mean a right to healthcare or Social Security. Instead, it means that everyone has a right to live their own lives as they see fit, to follow a set of values which they have chosen. In essence, everyone has a right to freedom. In this sense, the moral code described above violates this right. It holds that people owe something back to the community, that property can be taken in the name of the collective.

Society cannot produce anything. It has no rights. Therefore, society cannot claim anything for itself. Men and women, on the other hand, produce everything and have rights. Democracy is no justification of the alternative. A majority does not have a free pass to violate the rights of a minority.

This is the moral justification of capitalism. It is a system that respects property rights and allows people to function as free individuals, just as the Founding Fathers envisioned. People interact with each other voluntarily in such a system, valuing and trading goods and services only when they see a benefit for themselves. Capitalism is not evil. It is not a necessary flaw to be tolerated. It is the system that has made the United States the wealthiest nation in the world. It is the reason why for hundreds of years immigrants have left their homes to follow their dreams in the land of opportunity. It allows all people to live at their highest potential, enjoying the fruits of their own productive work with the guarantee that it is theirs.

You have every right to disagree with and criticize this argument. Yet the debate must be relevant to the subject at hand. Capitalism is a social and economic system, not a political one.  As Michael Moore shows in Capitalism: A Love Story, fraud in the government has been rampant. There are some corporations that wield sizable influence in government policy, which they use to cheat the system and gain even more profits. Fraud is wrong, but the solution is not to reevaluate our social and economic system. Rather, we should question the effectiveness and functioning of the government. Moore says that the $700 billion dollar financial bailout was in many ways a result of the greed of  bankers who happened to have connections in the Treasury Department. It was immoral, even from a capitalist point of view. Corporations, just like individuals, do not have a right to be saved at the expense of others.

Another argument that is often made against capitalism as seen in America is the growing gap between the rich and the poor. Depending on your value system, you may or may not be troubled by such statistics. From a capitalist point of view, this is not so bad. In a society that rewards productive achievement, some people are going to be richer, possibly by a lot, than others. In an ideal capitalist system, a person gets wealthy when other people value the products of his or her work. As a nation gets wealthier, it is generally true that the rich will get richer at a greater rate than the poor will get better off.

Yet this is because the richest members of society are, in an ideal system, producing the most. This is not to say that America is a perfect model of such a social and economic order, but it does employ many of its basic principles. Everyone benefits from the work of productive individuals, including the poor. America is so wealthy because Americans produce things that are of value to people all over the world.

By redistributing wealth, or increasing equity, it is a basic economic principle that efficiency will decrease as a result. The morality of such an exchange is implicit in the philosophy of capitalism. People will not and by no means should be expected to do their best work when they are not in control of what they produce.

Capitalism works because it respects property rights. Individuals interact with each other only on a voluntary basis, when they see a benefit. The extent to which our nation has practiced these principles has made us one of the wealthiest and most productive countries on the planet, whose citizens enjoy a standard of living well above that of the vast majority of the global population. Our country definitely has many problems that need to be addressed. Yet I think the answer is not to overhaul or even restrict capitalism. Rather, a more effective solution might be to make our political system more compatible with our economic one. To ensure that the government performs its most crucial responsibility, to protect the most fundamental rights to life, liberty, and the pursuit of happiness, above else.

This discussion has not been intended to be an exhaustive argument in favor of capitalism. Rather, it has been intended to add another dimension to the debate and address some of the important points which I felt had been missing so far. America is at a turning point. In light of the financial collapse, issues with healthcare and the waning competitiveness of our education system, just to name a few, it is clear that things need to be done differently. What exactly needs to be done differently is the subject of a very important dialogue, one for which I have sought to initiate a framework. I encourage you to contact me at kafisher@mit.edu if you have found any of this compelling and would like to contribute to this debate.

Kevin Fisher is a member of the Class of 2012.