All over campus and in fact throughout America and the world, I continue to hear a great deal about the evils of capitalism and what this philosophy has done to our country.
I saw this argument summed up in a 2007 interview with Boston University professor Howard Zinn, who stated, “We need a system where corporate profit is not the motivating force for economic activity, where the goal is not profit but human need. It will start with severe regulation of capitalism.” What is this evil force which Zinn and his New Left, socialist, and often “moderate” compatriots so despise?
True free market capitalism is very simple: it is the separation of the economy from the State, the abolition of the public sector, and it is, in fact, merely one part of a whole libertarian philosophy which advocates the separation of just about everything from the State.
Capitalism is a philosophy that states that private businesses can provide any and all services better, cheaper and more efficiently than the government, and relies on voluntary, individual action and mutual exchanges rather than coercive force expended on behalf of some mythical “society” or “greater good” defined by whoever happens to be in a position of power.
When one views capitalism for what it truly is, not some kind of incomprehensible business strategy but in fact the economic aspect of the larger Philosophy of Liberty, two things become quickly apparent: We do not live in a nation that practices or has ever practiced free market capitalism, and the businessmen on whom many are placing the blame for our current woes, and who certainly do deserve their share of the blame, are anything but capitalists.
Capitalism is the opposite of monopoly in that it encourages competition on a massive scale between any and all economic players. Government finds itself in diametric opposition to capitalism as the largest and most complete monopoly to have ever existed. Government is a self-proclaimed moral monopoly on force, using this power to bestow privileges to varying groups throughout the economy, and thus drastically throwing off the workings of the free market and creating the false free market in which we live.
The most striking example is the Federal Reserve, a private bank which is given a monopoly on currency by the federal government. Even trying to compete with the Federal Reserve is punishable by time in prison. One also should consider the area of farming subsidies, via which the government endows corporate farmers with special privileges and makes it even more difficult for small farmers to compete (in fact, the government simultaneously pays farmers both to grow and not grow).
Another example of the nonexistence of true capitalism in the United States is the Military Industrial Complex, which costs over $1 trillion each year, all taken from the taxpayers either directly or indirectly, and redirected to whichever corporation can produce the cheapest and most efficient killing machines, the need for which has usually been skillfully demonstrated by lobbyists working for these very corporations.
The argument behind all of these operations is that they provide services that the free market could not. If the government did not provide the economy with currency, farmers with enough money to be profitable and the people with protection, who would? A basic examination of economics shows the ludicrous nature of this argument. The free market is in the interest of providing those items for which people demonstrate the greatest demand. People subjectively assign value to varying items and services and dispense their money and capital on this basis.
Sometimes future goods are valued higher than current goods, so people save their money, or if the present goods conform well enough to consumer demand, people will spend their money in the present. Regardless, in a capitalist economy, it is demand which dictates what goods will be sold and traded in a market economy. Businesses under this system cannot use coercion to force consumers to buy their products; they simply attempt to predict and meet demands better than their competitors.
With this understanding in mind, it should be obvious that a massive demand exists for things like roads, education, power, water and a multitude of other items that the government claims only it can provide.
We also must stray from the idea that businessmen are capitalists.
Businessmen are people who, all other things equal, want to make money, and they certainly do not care if it is the free market or government intervention that gives them their profits. I do not hear anyone at Duke Power or AT&T complaining about the monopoly privileges bestowed upon them, big bankers stating that the Federal Reserve needs to be stripped of its monopoly on currency and credit, or Wal-Mart begging to have its special government-endowed privileges repealed.
However, if the American system is not one of free market capitalism, then what is to blame for our current economic problems? The fact is that while government apologists cry out that the free market system has failed us, it is in fact government intervention in the economy which has failed.
When the government takes an interventionist action like, for example, artificially expanding credit and the money supply via tightly controlled monopolies in these areas, this sends false signals throughout the marketplace, in this case the false signal that people are saving more money and building up more credit. It should be no surprise that such actions result in massive economic failures like we are currently experiencing. Businessmen who believe they are reacting to market forces, as they should, are in fact reacting to false market forces, or the government attempting to mimic economic growth without actually contributing any new capital to the economy.
If such systems have been continually tried and failed, why do governments continue to use and even defend them?