An Excerpt from the first draft of the Introduction to Andrew Bernstein’s forthcoming book The Capitalist Manifesto.
As we move into a new millennium, it is time to take a look at the political/economic system currently dominant in the United States. Just as an individual may use the turn of a new year to assess the state of his life with an eye toward making improvements, so American society should do the same regarding its political/economic life. The country was founded on the explicit principles of individual rights and limited Constitutional government in the 18th century, but drifted gradually toward welfare state socialism in the 20th. Do we today desire greater freedom or stronger government controls? More fundamentally, do we believe an individual has the inalienable right to his own life or that he has unchosen obligations to sacrifice himself to society? Or do we hold some middle-of-the-road compromise between these antipodes?
The events of the 20th century prove dramatically two things: that the capitalist system creates enormous prosperity and that all forms of statism lead to poverty and, ultimately, collapse. The wealth of the capitalist nations — of the United States, Hong Kong, Japan, the countries of Western Europe — is manifest. For example, it is the United States and Hong Kong that have the highest per capita incomes in the world — $27, 000 and $26,000 respectively. The collapse of Communism in Russia and in Eastern Europe is well-documented.
But there are other examples, as well. Given the economic chaos in Cuba, nobody knows the exact standard of living, but the best estimates range from $900.00 to the National Bank of Cuba’s claim of $1200.00. All agree that it is significantly lower than the $1,978.00 it was in pre-Communist days. According to figures from the World Bank, the standard of living in Vietnam is even lower than that — while Communism in North Korea has led to one of the worst famines in history, with the most conservative figures estimating the death toll in the tens of thousands. The “great laboratory” of capitalist West Berlin side-by-side with Communist East Berlin provided dramatic results — West Berlin a modern, prosperous commercial center, East Berlin so destitute and squalid that, by 1989, the rubble remained from World War Two battles four decades earlier. Communist China has introduced elements of free enterprise and, as a result, experiences increasing prosperity. Such non-Communist dictatorships as Iraq, Libya, Iran, Zaire, Rwanda and Haiti suffer an economic growth rate in negative numbers, i.e., their economies are shrinking. Even the semi-socialist nations of Scandinavia are poorer than their capitalist neighbors. Freedom causes prosperity.
Despite abundant evidence that freedom leads to wealth and government controls to poverty, we are steadily losing our freedoms in America. The Environmental Protection Agency often prevents landowners from developing their own properties. A productive company like Microsoft is subjected to the persecution of anti-trust action. Regulatory agencies like OSHA, the FTC and the EEOC routinely place irrational obstacles in the path of productive activities. All honest working individuals are forced to finance a multitude of social welfare programs. In cities in New York and California, restaurateurs are no longer permitted to decide if smoking will be allowed in their establishments. Hundreds of thousands of Americans suffering from treatable diseases often die because the FDA prohibits them from obtaining medications that are used effectively in other countries. The freedom of American citizens is steadily being taken away by the government.
The capitalist system is generally thought of as the system of wealth. This is true, but is not fundamental. First and foremost, capitalism is the system of freedom. It is only by ensuring the rights of the individual that it liberates the most productive persons to create wealth. A related point is that capitalism is generally thought of as an economic system — one which protects private ownership of property and the right to seek profit. This is accurate in so far as it goes, but does not go far enough. Capitalism is a political-economic system. Its essence is to protect the rights of the individual, including his right to own property. The novelist/philosopher Ayn Rand gives an accurate definition: ‘Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.’ The key to explaining capitalism’s unparalleled economic success is dual: to show that it alone is the system that guarantees individual liberties, and to demonstrate that political liberty is an indispensable requirement of man’s life on earth.
Individual rights is a principle that applies equally to personal morality as to economics. American citizens are gradually losing their rights in this area, as well. There are many examples. Millions of Americans, despite being rational adults, are not allowed to decide for themselves if they will use drugs. Similarly, in a famous case, a Georgia man and his wife were imprisoned for performing oral sex in their own home — a conviction upheld by the United States Supreme Court. Increasing numbers of outstanding high school students are forced by state requirements into performing acts of community service under threat of not receiving a diploma — this often despite a superb academic record. Further, at the very time that curable American patients are denied life-saving medications by the FDA, terminally-ill Americans are prohibited from receiving medically-assisted suicide — and Dr. Jack Kevorkian is convicted of murder and imprisoned for providing it. This means that some Americans who choose to live are forced by the government to die, and some Americans who choose to die are forced by the government to live. Capitalism is the political/economic system that stands for the principle of individual rights — in both the economic and the moral realms. Such violations of the inalienable rights of individuals represent an abrogation of capitalism.
Many intellectuals, journalists and politicians are unable to recognize the virtues of capitalism because of the influence of the German philosopher, Karl Marx (1818-1883.) Marx is obviously mistaken in his belief that socialist countries will out-produce capitalist ones and achieve greater prosperity — and few people believe this anymore. But Marx’s case for socialism and against capitalism is primarily on moral, not on economic grounds. He believes that prosperous individuals are rich because they have victimized the poor, and that the government must redress the injustice by forcibly re-distributing income. Most of our current welfare policies and regulation of business proceed from Marx’s enduring influence. In economic terms, the case for capitalism in opposition to all forms of socialism is overwhelming and unanswerable. Empirical fact and the writings of the great free-market economists combine to show this. Unfortunately, not many people are aware of the economic arguments supporting capitalism, and fewer of the moral and philosophical ones.