CAPITALISM: THUMBS THUMBS UP DOWN?
Should anyone care whether capitalism lives or dies? Anyone, that is, apart from the rich and powerful?
A few things come to mind. No other system has worked so well for so long to create wealth and prosperity; no other way of organizing economic activity has enabled so many millions of people to lead rewarding lives of their own choosing; no other has done more to stimulate human creativity and innovation.
Surprisingly enough, however, there are many rich and successful people who express indifference or hostility to free-market capitalism — even if their own good fortune would have been impossible without it. In this group you find deans and presidents of colleges and universities; more than a few of their students, professors, and administrators; and a number of media pundits, along with several business leaders and philanthropists.
Inside the anti-capitalist mentality
If capitalism is the horn of plenty, why are there people who loathe capitalism?
Ludwig von Mises, an Austrian economist and historian, posed that question in a slender book (just 113 pages) called The Anti-Capitalist Mentality, which was published in 1954 — a time when socialism was making rapid inroads in both the developed and undeveloped words. He gave a threefold answer to his own question.
The first factor is “simple ignorance.” Few people credited capitalism for the fact that they “enjoy amenities that were denied to the most prosperous people of earlier generations.” That included not just telephones, steelmaking, and cars, but “thousands of other advancements” that owe their existence to “the driving force of the profit motive and the deployment of better tools and machines in the creation of new products.” “Take away capitalism,” Mises says, “and you wipe out most or all of the extraordinary progress in raising living standards and reducing poverty since the dawn of the industrial age.”
The second factor is “envy, the green-eyed monster ... Capitalism grants to each the opportunity to gain the most desirable position, which, of course, can only be obtained by the few.” However much someone may have gained, there are always others before his eyes who have done better. According to Mises, that is “the attitude of the tramp against the man with the regular job, the factory hand against his foreman, the executive against the vice president ... and so on.”
The third and final factor is “the unceasing vilification of capitalism by those who seek to constrain or destroy it.” The anti-capitalists go on “telling and retelling the same story: saying ‘Capitalism is a system to make the masses suffer terribly and that the more capitalism progresses, the more the immense majority becomes impoverished.'”
Under a capitalist system worthy of its name (meaning to Mises, a competitive market economy free of the crippling effects of state planning and controls), powerful industrialists and rich investors have comparatively little influence. In the absence of government intervention to favor certain groups or enterprises, it is ordinary people in their capacity as consumers who really call the shots under free-market capitalism. Through their “buying or not buying,” consumers provide “a daily referendum on what is to be produced and who is to produce it.” They have the whip hand — the power to make “poor suppliers rich and rich suppliers poor.”
Mises's greatest fear was that a democratic people — at a terrible cost to their future — would decide to “renounce freedom and voluntarily surrender to the suzerainty of omnipotent government.” Mises spoke of the danger of a “growing absence of capitalism” and railed against progressive policies that restricted individual freedom of choice and concentrated much greater planning and decision-making power in the hands of government.
Whither capitalism today
Are ordinary people in their capacity as consumers still calling the shots today? Not as much as we would like. In the past few years, we have seen a huge increase in government intervention to restrict individual choice and favor different groups and enterprises — everything from Silicon Valley chipmakers to large subsidies to facilitate the production of electric vehicles (EVs).
It's worth noting that the term capitalist is now commonly used in contradictory ways. First is as a term of opprobrium, when accusing offending parties of “corporate greed” or “obscene profits.” Second is as term of selfexoneration — as in “Regardless of anything else I do or say, I want you to know I'm still a capitalist.”
We believe that free-market capitalism is far from finished in this country. We don't think that people will sit back and make their futures worse — or let government do it for them.
In a free country, policies once made can always be unmade. In this economy, the lowhanging fruit seems to us to be in the unmaking of imprudent and foolish policies.
Rex Sinquefield is president of the board and a co-founder of the Show-Me Institute; Andrew Wilson the Institute’s senior writer and senior fellow.