A Brief History of Capitalistic Free Enterprise

by Glenn Rogers

  6. Capitalism is better than socialism because capitalism encourages people to achieve their full potential as a human being. What is your full potential as a human being? No one actually knows what a human being can accomplish, how far we can go, and what we can become. When we get there, we’ll know. But what we can say is that as a human being, you need to become the best you can be. You need to go as far as you can. A capitalistic society will help you do so. A socialistic society will not. How does a capitalistic society help you achieve your potential? A socialistic society celebrates the collective. The individual is simply part of the whole, doing his or her part to benefit the group. But a capitalistic society celebrates the individual. You are first and foremost a unique individual, and as such, you are encouraged and expected to accomplish whatever you want and whatever you can. Because you are free to excel, you are expected to go as high, as far, as fast as you can. And the fact that you are free to be and do who and what you want provides the incentive to do so. There is an idea being propagated by a number of people who fancy themselves forward-looking thinkers. They argue that if society gives you all the things you need to live—food, clothing, housing, education, transportation, communication, whatever—you are left free to pursue your interests and can become all you can be, contributing to society in meaningful ways. It is another form of the fantastical, unattainable utopia Marx postulated. The problem with his theory is that the 20th century experiments with socialism attempted to create a society where everyone’s needs were met. The state was in control and provided everything needed in the perfect society—at least that’s what they claimed they were doing. Except none of them were “perfect” societies, and none of them did much of anything amazing or life altering. What have any of them contributed to making the world a better place? All of the amazing and life-altering accomplishments came from people in capitalistic societies where people enjoyed incentives to excel and to become. And they did. Futurists can make whatever fantastical claims they can dream up about the ideal society, but history is fact, and it teaches us that societies that supposedly provide everyone with everything they “need” do not generate people who achieve their full potential as human beings. We know this because few people from those societies ever did much of anything very important.

  7. Capitalism is better than socialism because capitalism encourages more research and development in science and industry. It would be incorrect to suggest that no one in a socialist society has ever been involved in any kind of scientific, medical, or technological research and development. But look at the research and development in science, medicine, and technology that has changed the world since the beginning of the modern age (1450 or so). Where has most of it been done? In capitalistic societies—in societies where people were free and where incentives to excel existed. Where they developed a sense a individuality and personal responsibility, and in the process of achieving their full potential made discoveries, invented machines or devices, and developed procedures, methods, and processes that created Western culture and changed the world.

  8. Capitalism is better than socialism because capitalism allows for an earning capacity that encourages saving and investing which creates additional personal wealth allowing one to continue to excel and achieve. Socialism doesn’t. Some will argue that there are lots of people in America who do not earn enough to save and invest. That is true. But why do they not earn enough? Usually it is because of decisions they have made regarding education and career. That is not capitalism’s fault. It’s their fault. And while many people who do earn enough to save and invest do not do so because they choose to spend rather than to save, they at least have the option. People in socialist societies do not. The price they pay for living in a society where the government (in the name of equality) wants everyone to have nearly the same is that what everyone has is not nearly enough. Capitalism allows for the possibility of earning more than you need, so you can save and invest and have additional money to work with, so you can continue to excel and achieve.

  9. Capitalism is better than socialism because capitalism does for a society what it does for the individual. That is to say, capitalism allows a society to excel and achieve its potential as a dynamic collective of individuals who are busy exceling and achieving. What is true for most of the individuals of a society is true for the society itself. If most of the people of a given society are doing well, the society itself is doing well. If the society is doing well, most of the people of the society will be doing well.

  10. Capitalism is better than socialism because capitalism allows people to generate enough extra income so they can help other people. Socialism does not. Socialists criticize capitalism, characterizing it as a system rooted in greed and selfish thoughtlessness. This is patently untrue. Socialists are either unaware of the facts, or they intentionally misrepresent them. What are the facts? Americans (capitalists) are the most caring, giving people on the planet. In 2016, Americans gave over $390 billion to various charities. In 2017, the amount was just over $410 billion (givingusa.org). In 2018, the amount will go up even more. It always does. And this is personal giving, over and above what the government gives to other countries in foreign aid. Americans (capitalists) are not greedy, selfish, thoughtless, uncaring people. We do more for the poor and suffering in our country and around the world than any other people on earth. Socialist governments do not provide foreign aid that even comes close to what America provides, and the people of those socialist nations do not give as generously as Americans—if they give at all.

  According to the Wealth-X and Arton Capital Philanthropy Report, the average American household donates $3,000 annually to charities of one kind or another. That kind of capital can only be generated in a capitalistic society. Evidently, if one is really interested in helping people, one will use capitalism to generate the wealth that will allow one to be generous and helpful to others. The poor, which all socialists are, cannot help the poor. Only the wealthy can help the poor. And the only way to generate wealth so one can help the poor is through capitalism.

  Capitalism is better than socialism.

  Speaking of greed versus generosity, it is interesting that capitalists prefer to earn, to keep what they earned, and to make charitable donations to help the poor. Facts and data prove that this is the case. Socialists, however, prefer that the money earned by others be taken from those people and given to them, even though they did not earn it. Which of those two positions is rooted in greed?

  The New Socialism

  Although all one has to do to see what the word socialism means is to look it up, few seem to be willing to do that. Today, the word socialism is used to refer to providing universal social programs such as free health care, a free college education, and even a guaranteed minimum income (a monthly paycheck from the government) for everyone. And a socialist is one who advocates such social programs. The words are used this way so often that I fear the actual meaning of the word will be completely lost. If the meaning is going to be changed, as it apparently has, then we need to consider what is being proposed with the use of these new meanings.

  Socialists, like Bernie Sanders and Alexandria Ocasio-Cortez are advocating using the existing capitalistic structure in America to fund the social programs they advocate. Their belief is that the wealthy should be taxed at a much higher rate than is currently in place so that enough additional revenue would be raised to fund their programs. Is this kind of “socialism” viable?

  Problems with the New Socialism

  There are several problems with this new brand of socialism.

  1. The new socialism is based on the idea that everyone in society should live at nearly the same level, that there should be no or very little economic inequality. But upon what belief or assumption is that idea based? The idea that income inequality is bad (unjust) is often asserted, but reasons are never given to support the assertion. Why is income inequality a bad thing? The answer that is often given is that we’re all supposed
to be equal. This suggests a considerable misunderstanding of how the term equal is used. As noted already in an earlier chapter, we are intrinsically equal, yes. But we are not situationally equal, nor can we be. That we are all supposed to be equal, and therefore there ought not to be income inequality is simply not a sound argument. That is not what being created equal means.

  Another argument against income inequality is that it isn’t fair or just. To evaluate this argument we must ask about the definitions of fair and just. Going all the way back to ancient Greece, the definition of justice has always been each person getting what he or she deserves. Why should someone be given that which he or she has not earned? Why do they deserve that which they have not earned? How is a person getting what he has not earned fair or just? We must also ask, how is it fair and just to take money from those who have earned it to provide social programs to those who did not earn the money to pay for them?

  Part of what’s wrong with the new socialism is that it is not based on sound reasoning.

  2. The new socialists seem to think that hardworking, successful people will simply sit by and agree to the government taking as much as 80% of the income they have earned to pay for social programs. In 2019, the government will tax the income of the wealthy at a rate of 37%. During his 2016 bid for the presidency, Bernie Sanders said if he was elected he would raise taxes on the wealthy to 80%. Bernie is running again. If he gets elected, even if he couldn’t get the 80% through congress, if he could only get 70 or 60 or 50%, what makes socialists think the wealthy will just go quietly into the night of financial exploitation and oppression so social programs can be funded with their hard earned money? Why should the wealthy continue to work hard to be successful if the government is going to take most of it and redistribute it to people who didn’t earn it? Do the new socialists really think the hardworking people of America are just going to sit by and let that happen? In fact, they do think that. They do not really believe that the government serves the people. They believe that the government rules the people. And they intend to take what they want and do with it what they want. But consider what happened in Paris in December of 2018. The “socialist” leaders of that country raised taxes yet again in the form of a gasoline tax. For the French people, it was simply the last straw. They rebelled and rioted for days, and many sections of the beautiful city of Paris were burned and nearly destroyed. You cannot simply keep taking and taking and taking from hardworking people. Sooner or later they will say ENOUGH! And when they do, the results are often devastating for the government that abused them.

  3. The new socialism is based on the assumption that giving people free stuff is a good idea. Most parents, not all evidently but most, understand that if you do not teach children the value of hard work and earning, so they can acquire the things they want, they will never appreciate the things they have. Giving people free stuff does not help them develop the self-esteem and pride of accomplishment they need to spur them on to even greater accomplishments. When people are not required to earn and acquire, when they are allowed to simply sit back and receive, all they will do is sit back and receive. There are parents all across the country who have grown children (adult children) living at home doing that very thing. The new socialism is problematic because it does not require people to be responsible for their own needs. It does not require them to be self-sufficient.

  4. The new socialism, if it comes about, will create a society of people dependent on the government for the important things they need. Is it good for people to be dependent on the government? What if they are, and the government then begins to behave badly, oppressing the people, restricting their freedoms and rights? How can people who are dependent of the government stand up to the government and put a stop to the mistreatment? They cannot. He who pays the piper calls the tune. What does that mean? It means the one paying the bill is in charge. If the government is giving citizens the things they need, the government wields enormous power over those people. How do you oppose a government who can take important things from you? Of course, maybe that’s the idea. The best way to gain control over people is to make them dependent on you. How then can they rebel when they need to? Why would anyone need to rebel? Learn the lesson of history. When a government gains too much power over the people, it will soon begin to abuse its power. It has happened too many times in history to think it won’t and can’t happen again. Just because this is America doesn’t mean that if the government gets too big and too powerful bad things won’t ensue. They will. The new socialism will make us dependent on the government, which will give the government way too much power over us.

  We could probably come up with additional reasons why the new socialism is a bad idea, but these are sufficient to make the point—the new socialism is not good for people individually and not good for society collectively. It is not fair and just for the successful people of our society who will have to pay for it. It is not good because we will become a nation of weak, dependent people who look to the government to take care of us. And if we let that happen, we deserve what we get.

  Summary

  I have presented ten reasons why capitalism is better than socialism. You may agree with all of them; you may agree with none of them. Of course if you agree with none of what I said, you are standing in opposition with plain historical fact or economic data. That is your choice.

  If I had to select only one of the ten to make the point that capitalism is superior to socialism, I would choose number 10: Capitalism is better than socialism because capitalism allows people to generate enough extra income so they can help other people. Every year hard working capitalists give hundreds of billions of dollars to help people around the world. It is hard to argue with numbers like those.

  Additionally, there are a number of reasons why the new socialism would not be good for America. It is unfair and unjust for the wealthy who have to pay for it, unhealthy for the individuals who take what the government gives them, and dangerous for us as a society if we become dependent on the government for what we need.

  Conclusion

  While some people like to play fast and loose with the definitions of capitalism and socialism, especially academics influenced by Karl Marx, the definitions are really quite simple. Capitalism is an economic system where the means of production are privately owned, and decisions regarding production and distribution of goods (or services) are made by the owner. Capitalism can be very complex, as it often is today, but it can also be simple, as it was in ancient times. Let’s say there was a man living in ancient Sumer named Ahmad. Ahmad owned some goats and after milking them always ended up with more goat milk than his family could consume. Ahmad’s wife discovered how to make goat cheese from the goat milk and suggested to Ahmad that she could make cheese and then sell it in the local market. Ahmad thought that was a good idea and told her to go do it. Mrs. Ahmad made the cheese, sold it in the market, and made enough money not only to buy the grain she needed to make bread, but enough extra to buy another goat to make even more cheese. The economic system Ahmad and his wife were engaging in thousands of years ago was capitalistic free enterprise. No one had a name for it then, but what they were doing was what we now call capitalism. They owned the means of production and sold their goods with the intention of making a profit. Capitalism is as old as human society.

  The definition of socialism is an economic system where the government owns and controls the means of production and distribution. Socialism did not exist in the ancient world.

  When people change these definitions to suit their own needs, to make an argument they would otherwise not be able to make, they are engaging in intellectual dishonesty. That’s a polite way of saying they are lying.

  The claim is often made that capitalism is relatively new, that it began in simple form not long before the Industrial Revolution and is the cause of all sorts of injustice and human suffering. Nothing could be further from the truth. Even though the capitalism that sometimes characterizes t
he economics of the 21st century is quite complex, it is still just capitalism. And although the capitalism of ancient times was quite simple compared to some forms of modern capitalism, it was still capitalism. A 2018 Ford Taurus is much more complex than a 1908 Model T Ford. But both vehicles, the Model T and the Ford Taurus, are automobiles—cars. The fact that one is more complex than the other doesn’t mean that it is not still, fundamentally, a car.

  Capitalism today is sometimes (though not always) more complex than the capitalism of the ancient world. But if the means of production are privately owned and controlled by the owner, then capitalism, economically speaking, is what was and is going on. Suppose Bill uses some of his savings to start a garage door business. He installs and repairs garage doors and installs garage door openers. He already has a pickup truck and the tools he needs. He buys some garage doors and garage door openers and stores them in his garage. He sets up a website and buys some business cards. He looks up general contractors in his area and goes and talks to them about doing the garage door work they need done when they are working on houses. In a few weeks he begins to get some jobs, and in a few months he has a profitable business going. What economic system is he engaging in? Capitalism.