The Problem With Capitalism

Capitalism is built on the very simple premise that left alone, individuals will engage in mutually beneficial exchange. For instance, when a man buys a box of golf balls at a store for fifteen dollars, he values the box more than the fifteen dollars. Because the store was willing to part with one of its boxes for fifteen dollars, the owner of that store values the fifteen dollars more than the box. As such, their preferences are arranged so that both parties are willing to make the exchange. Capitalism is, therefore, built on the satisfaction of individual preferences. Entrepreneurs predict consumer demand for certain goods, produce those goods, and consumers trade their money in exchange for those goods. Capitalism has proven to be marvelously effective at satisfying the needs and desires of people. The areas of the world in which individual economic action are less encumbered by government regulations and taxes are the areas in which people enjoy the most luxurious standard of living. If you doubt it, check out the Heritage Foundation's Index of Economic Freedom at http://www.heritage.org/Index/.

Human beings, however, have shown themselves over the course of history to be a particularly wicked lot. Perhaps a system in which the preferences of individuals are satisfied is not as glorious a success as some conservatives claim that it is. Truly free market Capitalism would open the door for goods and services which many people desire such as narcotics and prostitution. These things are rightly illegal in (most parts of) the U.S., because left to their own devices, people would contract to obtain these goods. However, even the level of freedom which we enjoy in this country has resulted in what some cultural observers have called the "me generation". The "me generation" (now having been replicated in future generations) is understandably narcissistic, having grown up in an economic system which tells them that their desires are vastly important, and that many businesses and institutions exist to satisfy their every desire. As a consumer, they are literally the center of the economic universe.

A wise man once said that "The problem with Capitalism is capitalists, the problem with Socialism is Socialism." I could not agree more. Capitalism is an economic system best suited for angels, but it is frankly the best thing we have. Having the freedom to make good or poor choices strikes me as far superior to starvation. Proponents of Capitalism need to be aware, however, of the shortcomings of the capitalists that make up a Capitalist system. Any good system of government will rightly protect the freedom of individuals to engage in business and consumption as they choose. Yet remember that a virtuous people is necessary for a free market to be a truly excellent system.