Two Cheers for Capitalism
The misguided leftist hatred of the free market.
Bruce Thornton is a Shillman Journalism Fellow at the David Horowitz Freedom Center.
If you want a monument to the failure of American schools, just look around a Bernie Sanders rally. It will be full of millennials, the 83 million people born between the early 1980s and 2000s. Most of them have been educated in schools that abandoned basic skills and knowledge, and put in their place curricula designed to “improve” human nature in order to conform to progressive utopian ideals. So instead of informed citizens, we have today’s “tolerant,” “sensitive,” and “diverse” narcissists whose heads are uniformly filled with intolerant leftwing dogma and unexamined political orthodoxy.
Exhibit one is the enthusiasm for socialism on the part of many millennials. This affection for a failed ideology in turn explains their attraction to an antique hippie and self-proclaimed socialist whose only jobs his whole life have been on the public payroll in a state with fewer people than Fresno County. So no surprise that in New Hampshire 83% of the under-30 vote went for Sanders, in Iowa 84%, and in Nevada 82%. That electoral approval, of course, is predicated on massive ignorance of socialism’s historical reality. In a 2010 New York Times/CBS poll, only 16% of millennials knew that socialism means some degree of government ownership of the economy. But it’s not just millennials: 43% of Democrats––and 56% of Democratic primary voters–– also view socialism favorably. That’s why Hillary Clinton is furiously tacking left in the primaries.
Nor do millennials know that Bernie’s advice to “look to countries like Denmark, like Sweden and Norway and learn from what they have accomplished for their working people,” ignores the fact that those countries have long been reforming their welfare states and liberalizing their economies, backing away from the failed dirigiste policies that excite the Berniacs. Denmark does have a generous welfare state, but high taxes on the middle class and a regressive Value Added Tax fund these benefits. This inconvenient truth contradicts Bernie’s claim that all his promised goodies can be paid for by punitively taxing “billionaires,” whose combined total wealth couldn’t pay for one year of the federal budget, let alone the trillions of dollars in unfunded social welfare liabilities.
But the flip side of this love of socialism is a strange hatred of capitalism, another consequence of the degeneration of our schools, which teach very little about the history and true nature of capitalism. So all that students know are what popular culture, movie actors, and progressives teach them with caricatures of capitalism as silly as Scrooge McDuck diving into piles of currency or pin-striped Mr. Moneybags lounging at Park Place.
Meanwhile these millennial scourges of corporations and the rich can’t figure out that their comfortable, nutritious, gadget-filled lives are subsidized by the surplus wealth created by the capitalist economy. Similarly the like-minded professors and public employee unions cheering along with them have no clue that their Cadillac pensions are funded by investments in those same corporations that they love to hear Bernie and Hillary demonize.
Worst of all, these sleek Savonarolas don’t know that the top 400 wealthiest Americans created or controlled 10 million jobs, that 2.4% of taxpayers pay half of all income taxes, that the top 10% pay half of all federal taxes, or that in the last 25 years, a billion people across the globe have been lifted from poverty not by socialism, but by predominantly free-market economic policies that have reduced the global poverty rate from 37% to 10%. As economic historian Deidre McCloskey has written of capitalism’s historical success,
In relative terms, the poorest people in the developed economies and billions in the poor countries have been the biggest beneficiaries. The rich became richer, true. But the poor have gas heating, cars, smallpox vaccinations, indoor plumbing, cheap travel, rights for women, low child mortality, adequate nutrition, taller bodies, doubled life expectancy, schooling for their kids, newspapers, a vote, a shot at university and respect.
It is scandalous that privileged Americans take all these historically unprecedented goods for granted, and then attack the economic system that has benefited not just them but billions of other people.
But not just ignorance explains this swooning for socialism. Something older and more ancient is at work––envy and resentment. From ancient Athens to the Constitutional Convention, the propensity of people with less to envy those with more has been acknowledged as the source of political discord and factional strife. As New Yorker Gouverneur Morris said during the Convention debates,
The Rich will strive to establish their dominion and enslave the rest. They always did. They always will. The proper security against them is to form them into a separate interest. The two forces [rich and the rest] will then control each other. By thus combining and setting apart the aristocratic interest, the popular interest will be combined against it. There will be a mutual check and mutual security.
Accepting the permanent flaws of human nature, the Founders sought to prevent one faction from dominating the other and thus threatening political freedom. As long as all citizens were politically and economically free to rise as far as their talents and virtues could take them, the disparity in wealth would not lead to revolution and tyranny.
The progressive movement, however, is not satisfied with this political and economic equality of opportunity. It promises an equality of result, one thwarted by the evil plutocrats who unfairly take a larger piece of the wealth-pie than they deserve. Thus as we hear in the rhetoric of the Democratic primary, “Wall Street” and “CEOs” and “hedge fund managers” are excoriated, and promises are made to appropriate and redistribute wealth in order to achieve an equality of result. But history shows that every effort to reach this utopian goal ends in a brutal autocracy of some elite or other, with the rest mired in the grim equality of want and oppression.
The genius of capitalism is that contrary to class warfare rhetoric, it recognizes that wealth is not fixed and limited, but can be created by human ingenuity at coming up with new products and services that people desire. Moreover, the benefits and improvements are circulated throughout society by the self-regulation of the market, raising living standards for everybody. Consider the astonishing transformation of American life after 1870, as documented by Robert J. Gordon’s recent book. Electrification, the internal-combustion engine, sewage systems, running water on demand, central heating, and affordable housing transformed American life and raised standards of living for everyone. Thank the free market and an open society that allowed inventors and entrepreneurs to profit from their ideas.
Of course, given the natural inequality of people’s talents, drive, and virtues, there will be economic winners and losers, some more so than others. But a dynamic “creative destruction” means that everyone over time has a shot at improving his or his children’s or his grandchildren’s lives. Moreover, the surplus wealth capitalism creates can be used to bestow even upon the “losers” a quality of life unimagined by our ancestors outside the fantasies of myth and legend.
But why give capitalism only two cheers? As the Roman emperor Vespasian said, “Money doesn’t stink.” The market depends on virtues it doesn’t create. Secularization has eroded the religious faith that once functioned as a corrective counter-force to the excesses that are latent in the pursuit of wealth and the calculus of profit and loss, and that can lead to a debasing hedonism and materialism. And despite its wide distribution, this bounty has intensified the ancient sin of envy and strife that, as the Greek poet Hesiod said, makes you want to burn down your neighbor’s full barn rather than work harder to fill your own. Creating the richest common people in history has not kept many of them from the dissatisfaction with their lot that progressives stoke and exploit.
But in the end, those are flaws of human nature and human character, not of capitalism. Those attacking capitalism because it gives scope to greed and inequality should remember that throughout history––the same history no longer taught in our failed schools and universities–– revolutions aiming to create virtue and equality through autocratic power over people and economies have left behind gulags and corpses, misery and scarcity. So to paraphrase Churchill, capitalism is the worst form of economic system––except for all those other forms that have been tried from time to time.