It is true that free market capitalism is the best system for promoting human flourishing and prosperity.
Not surprisingly, then, many advocates for free markets exalt the dynamism of capitalism. However, in making this utilitarian defense of capitalism, defenders might also be ceding the moral position to socialists.
The Importance of the Moral Argument
Demonstrating the impracticality of socialism is necessary, but is also an ineffective strategy to galvanize goodwill for capitalism, because objections to capitalism are usually predicated on moral grounds. Unfortunately, even sober critics of socialism may reject capitalism on the premise that it is inhumane and functions as a vehicle to enrich the elite. Therefore, libertarian paeans to the superiority of free market capitalism can be wrongly misinterpreted as a justification for elite rule. To improve the reputation of capitalism, defenders of markets must remind naysayers that it is a moral system based on freedom and voluntary participation. Notwithstanding the remonstrations of critics, the essence of capitalism is choice, not profits.
A Quest for Profit?
Mark O’Connell in a review critical of capitalism poignantly elucidates the thesis that capitalism is primarily a quest for profit: “The priority under capitalism is always profit, and so we must in one way or another prioritize doing what is profitable, even if it’s at the expense of other necessities, such as living a meaningful or spiritually fulfilling life.”
The caricature of capitalism sketched by O’Connell is widely accepted across the political spectrum, though it has no real basis. Profits inspire entrepreneurs to maintain the operation of their businesses, but capitalism properly understood is not about money.
Since libertarians and other defenders of free markets frequently promulgate utilitarian arguments in favor of capitalism, most detractors assume that advocates of capitalism are fixated on accumulating wealth.
For instance, some defenders of laissez-faire (correctly) argue that a higher minimum wage limits job opportunities for young people. But it is important to revile minimum wage laws not just due to their propensity to destroy jobs, but because legal mandates on wages violate the basic human rights of human beings entering into private agreements for mutual benefit. Minimum wage laws represent the intrusion of contractual partnerships by the state. As moral agents, we possess the capacity to choose, hence the establishment of such laws deprives us of our ability to exercise choice.
If a young person in desperate need of a job and a struggling small business owner agreed to accept a certain hourly rate, it is improper for the state to abrogate individual rights by making this contract impermissible. If research indicates that minimum wage mandates have no impact on employment, supporting them would still remain objectionable on moral grounds. Consequently, it remains important to oppose minimum wage laws on moral grounds. Unless minimum wage requirements are voluntarily implemented by either trade groups or by individual workers, they are simply unjust.
Likewise pontificating that high tax rates deter capital formation and economic growth is an inelegant argument for capitalism. Tax hikes must be denounced, even when researchers can demonstrate no harm to innovation or economic growth. After all, citizens already tolerate numerous excesses of the state imposed simply through the levy and collection of income taxes at any rate.
For the government to imply that the affluent should pay even higher taxes under the guise of promoting the common good is beyond brazen. Such a proposition intuits that the state is entitled to the wealth of citizens; however, nothing could be further from the truth.
Similarly, trade restrictions are the bête noire of free market economists. So unsurprisingly they have provided a bevy of studies lauding the beneficial effects of free trade. For example, leading economists Donald J. Boudreaux and Nita Ghei in a report published by the Mercatus Center perceptively point out the advantages of free trade:
- Free trade improves efficiency and innovation. Over time, free trade works with other market processes to shift workers and resources to more productive uses, allowing more efficient industries to thrive. The results are higher wages, investment in such things as infrastructure, and a more dynamic economy that continues to create new jobs and opportunities.
- Free trade drives competitiveness. Free trade does require American businesses and workers to adapt to the shifting demands of the worldwide marketplace. But these adjustments are critical to remaining competitive, and competition is what fuels long-term growth.
These claims are quite powerful; however, an affirmation of capitalism must rest on moral assumptions. The pernicious nature of protectionism is revealed in its ability to rob consumers of the right to choose. It is a gross injustice for politicians to determine the goods and services that are consumed by citizens. By aiding protectionism, the state is curtailing the diversity of products offered to consumers, thus indirectly stripping them of their right to exercise choice. Essentially, hypocrisy is glaringly evident when socialists castigate authoritarian regimes for banning Facebook in the name of national unity, but defend protectionism on the altar of the national good. Both acts constitute an egregious assault on the right to choose. Clearly, those interested in preserving freedom must choose capitalism.