The Morality of Capitalism

By Audrey Pietrucha

For some time now capitalism has served as the world’s favorite piñata. The blame is misplaced since most of our economic troubles are not the result of laissez-faire economics but the antithesis: market intervention and manipulation. In reality, capitalism and free markets are responsible for and supportive of much of what we value in our lives, our relationships and our society. For those who love freedom, capitalism is the highest moral ground on which they can stand. 

The most obvious evidence of capitalism’s constructive influence is the cooperation free markets produce among participants. When people engage in commerce there is an inclination to get along. Both parties want something from the other and both believe that exchange will somehow improve their lives. When I visit the Crazy Russian Girls bakery and buy a scone, I give them a couple of dollars because that scone is more valuable to me than the money. They accept my money because it is more valuable to them than the scone. We have both freely given to each other and the interaction has added value to our lives.

That peaceful exchange, like millions that are engaged in by people throughout the world every day, was prescribed by Thomas Jefferson as a good on the international level as well. "An exchange of surpluses and wants between neighbor nations is both a right and a duty under the moral law,” he said. He often linked peace and free commerce between nations, recognizing trading partners seldom declare war on one another.

Free markets also promote competition, which is nothing more or less than the pursuit of excellence. Competition encourages individuals and businesses alike to improve, grow and flourish. In the market this striving for excellence transpires in the service of others. Businesses are more successful when they please their customers so they compete with each other to provide the best goods and services. Pioneering businesses and cutting-edge entrepreneurs use competition to push themselves and their products forward. Consumers are the biggest winners in these contests.

Emulation is another positive component of free markets. Remember when you were a kid and your best friend went out and bought the same baseball cap you had but then dressed it up with some stickers? You complained to your mom, who told you when someone copies you they are paying you a compliment. Free market innovators copy each other all the time and they keep adding stickers to the original baseball cap until it is almost unrecognizable. They use free information garnered by both those who have come before and contemporaries to see what succeeds and what fails, and then act accordingly. This is how the goods and services we use evolve and improve. The key board I’m typing on was not invented by the same person who invented my laptop. It isn’t even the same one that first appeared on a typewriter decades ago. My laptop was not invented by one person but by many people building on ideas and inventions that came before them – and so on and so on.

This idea of emulation reveals the miracle of the free market. Many years ago it was expounded in a wonderful essay called“I, Pencil.” Written by Leonard E. Read, founder of the Foundation for Economic Education, “I, Pencil” is the autobiography of a pencil. What appears to us to be a simple object is actually the culmination of hours of labor and centuries of innovation and discovery. As Read succinctly concluded:

I, Pencil, am a complex combination of miracles: a tree, zinc, copper, graphite, and so on. But to these miracles which manifest themselves in Nature an even more extraordinary miracle has been added: the configuration of creative human energies—millions of tiny know-hows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human masterminding! Since only God can make a tree, I insist that only God could make me. Man can no more direct these millions of know-hows to bring me into being than he can put molecules together to create a tree.

No, no one man or even a committee of men could create a pencil. This is why planned economies always fail. No group of people, no matter how smart they or we think they are, is smart enough to anticipate what Austrian economist Murray Rothbard described as the “highly complex, interacting latticework of exchanges” necessary to produce and distribute the goods and service human beings demand.

 

Capitalism is not without flaws, but then no system is because it is engaged in by people and people are imperfect. Still, a system that encourages voluntary cooperation and peaceful exchange must be considered morally superior to one in which force and coercion are necessary components, as is the case with any system that relies on confiscation and redistribution of wealth. Just as Winston Churchill said of democracy, capitalism is the worst economic system - except for all the rest.

Audrey Pietrucha hosts The Catamount Room on public access television. She can be reached at vermontliberty@gmail.com.