The Glorious, Untapped Potential of Capitalism

by | Oct 24, 2015

If only capitalism were given a chance, just imagine how much more it could do.

As we propose building border walls and nationalizing what remains of the private economy, banning guns and raising taxes, the one thing that could save America, and the world, is completely bypassed and ignored: authentic capitalism.

A reader of my articles from LinkedIn writes:

Michael, Just read your article in opposition to democratic socialism. If not redistribution, I’m curious as to what your solution is to change the dog-eat-dog, every man for himself, winner-take-all casino capitalism which has decimated the middle class and working classes, and where all the wealth is going to the top? What’s the answer to rebalance the game of Capitalism?

Here is my reply:

The problem with this question is that it’s rigged.

“Dog-eat-dog” is an emotional expression and a value judgment. It clearly implies something bad, but it does not say what “bad” is, or why.

While there’s nothing wrong with value judgments, you first have to prove the basis for them.

I cannot accept the unproven premise of your question — “Capitalism is by nature dog-eat-dog” — and then attempt to defend capitalism against charges you have not proven, with the term “dog-eat-dog” never concretely defined.

I know this is how debates between Democrats and Republicans typically go, but I will have no part of those debates. They’re rigged from the get-go.

First, let’s define capitalism. Capitalism is the social system where all property, including the entire means of production, is privately owned. Private means private. No cronies, no subsidies, no regulations imposed on some and relaxed for others. It’s the system where economy and state are completely separate, precisely as church and state are (or should be) separate.

Capitalism is the only social system which can or will uphold individual rights. Individual rights refer to freedom from the initiation of force or fraud.

At root, individual rights are a protection of the right to be left alone. Nobody — not a criminal, not the government — may initiate force (or threaten its use) against anyone. Period. All actions should be freely chosen and consensual; a government exists to protect you from anyone who seeks to initiate force or fraud against anyone else.

That’s all government may do, and that’s everything.

By that definition, what we have today is not capitalism; not even close. What we have today is a hybrid mixture of capitalism and socialism.

Socialism is the system where all property is owned “publicly,” i.e. by the government, and where the means of production are controlled and managed entirely by the government.

The system you’re referring to in your question is the hybrid mixture, not capitalism.

If you don’t like capitalism, don’t offer today’s system as proof of its dysfunction. Not only is today’s system a mixture, it’s moving decisively towards socialism.

Medicine is now almost completely under the control of the government. Under Obama, regulation of and control over the private economy has significantly increased. This has been the trend for a very long time, but Obama has intensified it.

If things are not getting better, than why has the progressive movement towards socialism not pleased you? How much socialism will it take to please you? Will we have to look like Communist Cuba or Communist North Korea before you’re happy? Or how about Soviet Russia or Maoist China?

If your standard of “better” or “success” is wealth redistribution, then why not North Korea or Soviet Russia? Would you prefer living in those societies, since their system of government is more fair and just, by your definition? If not, why not? How do you resolve this contradiction?

In America today, and for more than a century now (and to some extent always), there has been a hybrid mixture of the two systems. Everything that goes wrong economically gets blamed on capitalism; everything that goes right is attributed to government, or socialism.

Every time there is a problem, such as a depression, recession or bust, it’s blamed on the free market, even though the market is not free; and instead of repealing controls on private enterprise after an economic downturn, we add new ones.

Example: Government policies of currency manipulation (after creation of the Federal Reserve) and trade restriction (from the Hoover administration) in the 1920s contributed to the Great Depression. However, the market got the blame, resulting in the socialistic New Deal.

Example: The socialistic New Deal was followed by decades of boom-and-bust cycles, culminating in the government inflationary cycle of the 1970s. However, the market got all the blame. People came to believe that “boom-and-bust” is the norm for a free market, even though the United States did not have this problem in the 19th century, an era of mostly capitalism. During that period, economic growth was awe-inspiring, inventions were everywhere, and the only economic downturns were occasional and short-term “panics” or recessions, not the prolonged  and repeated mega-busts we know and fear today.

The government policies of manipulating the housing market so “everyone can own a house” in the 1990s and early 2000s led to the real estate bubble of 2007-08. However, the “free” market got the blame, and government control and spending/borrowing have increased still more since then. Everybody claimed that lack of “regulation” caused that bubble, while never identifying the lack of which regulations, and why; and without identifying which new regulations have been imposed to guarantee it never happens again. The faith in the vaguely defined “regulation” is almost mystical, although we mistakenly call it scientific.

What next? It’s anybody’s guess. What we know for sure is the market — barely a free market at all, anymore — will get 100 percent of the blame for whatever happens next.

In an authentically capitalist society where all activity is consensual, there is no “dog-eat-dog” in the sense of violent or fraudulent people unleashing their will upon their victims. While this would be true in a state of anarchy or no government, it’s not true in a social system where all activity is consensual.

In a free society, some will achieve and perform better than others. This is not “dog-eat-dog.” It’s simply a reflection of the fact that for a variety of reasons, people — who are unequal in talent, virtue, brainpower or work ethic — do not always perform the same way. As a result, some businesses will prosper; some will stagnate or decline; and others will perish.

The businesses that perish have no right to initiate coercive action against those who do better; likewise, those who do better do not attain greater profits because they’re forcing people to do anything.

A free market is a place of free trade where individuals — customers and owners alike — are free to communicate with one another through transactions, currency exchange, contractual arrangements, pricing mechanisms (supply and demand), and in any other way they wish, so long as there’s no force or fraud. If force or fraud is discovered or suspected, then courts, police, investigative bodies and armies are properly in place to protect individual rights, within a framework of due process of law.

“Rebalancing”? What in the world is rebalancing? Capitalism, properly defined, requires no “rebalancing.”

The idea of rebalancing comes from a false conclusion that it’s unfair and unjust when some people perform better than others, and consequently some do better than others.

If you feel that life is only about luck and has nothing to do with achievement, virtue or effort, then you ought to take this up with a psychotherapist. But you have no right to impose this psychological issue on the entire population by pushing for more destructive socialistic controls to “equalize” things to your liking.

Inequality of virtue, choices and abilities is a fact of human nature which cannot be changed. In fact, nobody rational would want to change the wide diversity inherent in human nature.

It may be true that an excellent producer will make a billion dollars while a mediocre or average one will make much less. Even so, that mediocre or average producer is far better off living in a society where the brilliant producer is left free to produce and profit. Why? Because everyone benefits from the innovations and improvements in the standard of living which arise from economic freedom. Even people who live entirely off charity do way better in a free society with unequal incomes than they would in a socialized, flattened society where everyone is poor or can barely get by.

Economic freedom ultimately arises from the freedom of the mind. The more everyone’s mind is free, the more the best minds may do their thing and in the process (regardless of motives) make the world a better place. Like your smart phone? Like the fact oil was made so useful you can travel almost anywhere, any time? Like the fact you have a chance of living until 90 or 100 rather than 40 or 50 tops? Thank capitalism. Without private ownership and property rights, including the right to keep one’s profits, these things would never have happened.

Contrast the livability of a society where capitalism is only partially permitted with a society where socialism is the absolute rule. For example, contrast the United States with Soviet Russia. Contrast North Korea with South Korea. Contrast China under the absolute socialism of Mao with even the semi-socialism/pseudo-capitalism of today’s China.

There’s no comparison.

Socialism weakens and ultimately destroys, wherever it’s the rule and the extent to which it’s the rule. Capitalism is just the opposite.

Examine a satellite photo of North Korea and South Korea. The Communist North is in darkness. The South is filled with light, energy and human productivity. No, South Korea is not a fully capitalist country (no society has yet been one); but the advantages of even hampered capitalism over all out socialism do not compare.

Nobody wants to live in a socialist country — least of all, the rich socialists of a more or less economically free society who complain about wealth inequality in the society. The hypocrisy exhibited by our richest Hollywood and other millionaires and billionaires in defense of socialism is absurd. If they really meant what they say, they’d give away all their wealth or, better yet, move to a country like North Korea or Cuba where socialism is complete. Why don’t they? It tells you a lot right there.

Capitalism is not only the most prosperous social system; it’s the most moral. Why? Because it outlaws the imposition of force. It forbids slavery of every degree and kind, and requires that all activity in a society be consensual.

Freedom from coercion is a good thing. Liberty is right, and just. “Liberal” leftists promote socialism to the point that many now support the candidacy of a consistent, explicit socialist like Bernie Sanders. Yet these same leftists want individual rights in the realm of the uterus (i.e. abortion rights) and consensual sex (e.g. gay marriage rights).

By what stretch do you defend individual rights to be free from coercion in the personal realm, while demanding socialistic enslavement and coercion in the economic? Why are we to be free in the bedroom and chained in the boardroom, or at the bank, or at the supermarket?

Remember that economic controls do not only punish “the rich;” they punish everyone, because the more you harm business, the less business can accommodate its paying, willing customers.

And yes it’s true, as many leftists point out, that the rich often get away with things the middle class or poor cannot, because they can afford expensive attorneys and accountants. But doesn’t that prove the point: that government controls are the problem here, not the rich or the existence of wealth and improved standards of living created by capitalism?

The presence of rich people does not indicate a sick society; it indicates a healthy one. A society with no rich people would be a society with no economic foundation and no economic growth. This is unhealthy.

While a hybrid socialist-capitalist society, such as ours, will produce a combination of rich people and other people who are hopelessly stuck in poverty or mediocre stagnation, particularly those trapped on government handouts, this is not the fault of capitalism. It’s the fault of the hybrid, and the fault of welfare state. Repeal socialistic controls (phasing out welfare and entitlements) and permit full capitalism, and then everyone will have a fair chance. Charity will still be legal, but it won’t be the clunky, red-tape and inhumane handout system we have today. There’s no other way.

The government, instead of being the greatest violator of this principle of non-coercion (as it has been throughout history) becomes instead its greatest enforcer. Idealisitc? Maybe. But it’s achievable, and the United States, for a time, nearly got there. The problem was that eventually the United States started moving towards the socialism that has impeded, swallowed up and ultimately destroyed all who attempted it.

America, or any other country, should move as quickly and fully as possible towards complete capitalism, by the definition I provided. We should abolish or phase out the socialistic controls we have. Some, like the Department of Education and the alphabet soup regulatory agencies (like the EPA, presently out of control) could be abolished overnight. Others, like Social Security and Medicare, will have to be phased out over time. Remember, if you’re in your 20s or 30s, those programs will be gone for sure, on their current unsustainable path. Unless, perhaps, we impose a 100 percent tax rate on everyone, at which point there will no longer be an economy, and we will look just like Maoist China or Soviet Russia at the end of their ruinous reigns.

You and I do not share the same goal. It sounds like your goal is “balance” and fairness by some false standard, where the law will force everyone to be equal in outcome rather than equal under the law.

Don’t get me wrong. Equality under the law is absolutely the ideal. Everyone’s individual rights should be enforced equally, regardless of race, creed, gender, or any other irrelevant factor. But equal individual rights do not imply a guarantee to the same outcome. Only a dictatorship could accomplish that by enslaving and impoverishing everyone — equally.

Differences in outcome — the lack of “balance” to which I believe you’re referring — is not something to merely tolerate; it’s something to celebrate. The fact is: we are not all equal in our abilities or even willingness to achieve, attain and accomplish all that our potentials will permit. We are all best served by a society where the best and brightest may flourish to the greatest extent they’re capable.

A rising tide does, in fact, lift all boats.

Socialism leads to stagnation, suffering and despair; equal misery for all, but you will get misery. Americans grasp and appreciate this fact less than most because America was the first and only society in history to embrace capitalism to any large extent. But we’re abolishing capitalism step by step, and in the process committing the social-economic equivalent of suicide … not unlike a drug or alcohol addict on the road to self-annihilation, unless there’s a complete and total course reversal.

Capitalism is not utopia, of course, because nothing is. Utopia is a fantasy. But it’s nevertheless the most just, rational and enlightened social system humankind ever has, or ever will, devise. It’s the only system worthy and capable of holding human potential to the standard of which it’s capable.

Look at what a brief flash of capitalism in human history gave humankind for the last couple of centuries. If only capitalism were given a chance, just imagine how much more it could do.

Dr. Michael Hurd is a psychotherapist, columnist and author of "Bad Therapy, Good Therapy (And How to Tell the Difference)" and "Grow Up America!" Visit his website at:

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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