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Reconsidering How We Argue for Capitalism

(Lisa Krantz/AP)

“To improve the reputation of capitalism, libertarians must remind naysayers that it is a moral system based on freedom and voluntary participation.”

Free market capitalism is the best system for promoting human flourishing and prosperity. Thus, in advocating for the virtues of a market economy, libertarians often exalt the dynamism of capitalism. However, in doing so, they have unknowingly ceded the moral position to socialists. Demonstrating the impracticality of socialism is an ineffective strategy to galvanize goodwill for capitalism because objections to capitalism are usually predicated on moral grounds. Unfortunately, even sober critics may reject capitalism on the premise that it is inhumane and functions as a vehicle to enrich elites. Therefore, libertarian appeals to the superiority of free-market capitalism can be wrongly misinterpreted as a justification for elite rule. To improve the reputation of capitalism, libertarians must remind naysayers that it is a moral system based on freedom and voluntary participation. Notwithstanding the protests of its critics, the essence of capitalism is choice—not profits or even free markets. Markets are just a channel through which the gains of capitalism are realized.

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 prioritise 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 depicted 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 frequently put forward utilitarian arguments in favor of capitalism, most detractors assume that advocates of capitalism are fixated on accumulating wealth. In advancing the case for market capitalism, libertarians tend to forget that, at bottom, it must be about freedom.

For instance, some argue that a higher minimum wage limits job opportunities for young people. Others contend that, though there is no universal agreement that the minimum wage negatively affects employment, strong evidence suggests that its effects are more likely to produce adverse consequences over time. Yet, libertarians ought to despise minimum wage laws not due to their propensity to destroy jobs but, rather, because they violate voluntary interactions. Minimum wage laws represent the intrusion of contractual partnerships by the state. As moral agents, we possess the capacity to choose. As such, laws along these lines deprive us of our ability to exercise choice. If a young person in desperate need of a job and a struggling small business agreed to a certain hourly rate, is it not improper for the state to abrogate individual rights by making this contract impermissible?

Capitalism is more efficient than socialism, but to build a compelling argument for free market capitalism, defenders of liberty must articulate that it is a superior moral system.

Similarly, arguing that high tax rates deter capital formation and economic growth is an inelegant argument for capitalism. Onerous tax rates must be denounced, even when they pose no harm to innovation. Citizens already tolerate the excesses of the state by paying income tax. Therefore, for the government to imply that the affluent should pay higher taxes under the guise of promoting the common good is beyond brazen. Such a proposition implies that the state is entitled to the wealth of citizens; however, nothing could be further from the truth. Imposing high tax rates on the wealthy is an additional use of force by the state. Our right to property suggests that the government is restricted from interfering with our assets. As such, if politicians want to fund welfare or the military, they ought to think of creative ways to acquire funding other than taxing its citizens. In sum, high tax rates are illegitimate because they necessitate the use of force by the state to cajole citizens into revoking their rights. Moreover, though the United States Constitution protects property rights, we must never abandon the notion that—as an innately antisocial creature—the state will nullify our rights to achieve political ends. Promoting free-market capitalism is truly a mammoth task for the state.

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Similarly, trade restrictions are the bête noire of free market economists. So, unsurprisingly, they have provided a surplus of studies lauding the beneficial effects of free trade. For example, 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, investments 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. However, 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. Protectionism’s true perniciousness stems from how it robs consumers of their 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 also defend protectionism on the altar of the national good. Both acts palpably reflect an egregious assault on the right to choose. Clearly, those interested in preserving freedom must choose capitalism. 

Capitalism is more efficient than socialism, but to build a compelling argument for free market capitalism, defenders of liberty must articulate that it is a superior moral system. Reminding critics that capitalism has unleashed a wave of prosperity will not persuade its critics away from their belief that the system is fundamentally immoral. To win the battle of ideas, libertarians must make a cogent case for capitalism backed up by moral ideals. Relying on the economic legacy of capitalism to sway opinion is indeed a losing strategy. We, as libertarians, cannot cede moral arguments to the Left and expect to garner massive support.

Lipton Matthews is a Jamaican writer. He has recently also contributed to Mises Wire and The Federalist. He can be reached by email at 

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