by Brian Balfour
Senior Vice President of Research, John Locke Foundation
Advocates of free-market capitalism handicap themselves when they prioritize capitalism’s superior productivity rather than the moral superiority of capitalism. Indeed, in the battle of emotions vs. rational justification in the human brain, emotions are king. You cannot penetrate emotional objections with more charts and spreadsheets.
The most compelling case for capitalism’s economic freedom is not its efficiency but its consistency with fundamental moral principles, like voluntary exchange, mutual benefit, and enhanced individual choice.
To free-market supporters, the case is clear. But why do so many still insist that socialism is a morally superior system?
A September Pew Research Center survey found that “36% of U.S. adults say they view socialism somewhat (30%) or very (6%) positively.” While still appreciably lower than the share of adults viewing capitalism favorably (54%), the number remains frighteningly high. Still more troubling, among those aged 18-29, 44% view socialism favorably, compared to just 40% with a favorable view of capitalism.
The most compelling case for economic freedom is not its economic efficiency but its consistency with fundamental moral principles, like voluntary exchange, mutual benefit, and enhanced individual choice.
Those with a favorable view of socialism cite fairness, a more “generous” society, and meeting people’s basic needs as reasons.
Selflessness. Fairness. Meeting people’s needs. These are the characteristics that socialists use to describe their desired system. Nothing about productivity or wealth creation. Theirs is a purely emotional appeal to moral sensibilities.
Meanwhile, supporters of capitalism cite opportunities for “financial growth” as a primary reason for support. Such appeals to material gain will fall flat in the face of emotionally satisfying justifications.
But what if free-market capitalism was superior at satisfying the socialist’s moral codes better than socialism?
A walk through some of capitalism’s main features demonstrates this to be the case.
When it comes to meeting society’s basic needs, nothing can approach capitalism. For starters, in a free-market system, individuals acquire wealth through producing and exchanging goods and services that others want. To receive, one must first give. To truly be successful, entrepreneurs must first take into consideration what others need and desire, then provide for those needs at a price consumers are willing to pay.
In a market economy, prices, conveyed by the free exchange of private property, communicate the needs of those we don’t know. Consumers bid up the prices of those goods most in demand, which signals to entrepreneurs, enabling them intentionally to provide goods valued by others.
Socialism, conversely, has no pricing mechanism for the factors of production, creating shortages of society’s most urgent needs.
As Milton Friedman stated irrefutably, “So that the record of history is absolutely crystal clear. That there is no alternative way, so far discovered, of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.”
Secondly, a free-market system based on private property offers the fairest means to allocate scarce resources. For starters, property rights are human rights. The starting point for the undeniability of property rights is self-ownership. John Locke famously weighed in on the topic of property rights in his classic 1823 book, “Two Treatises of Government.”
“(E)very man has a ‘property’ in his own ‘person.’ This nobody has any right to but himself,” Locke wrote. “The ‘labour’ of his body and the ‘work’ of his hands, we may say, are properly his.”
Furthermore, other methods of resource allocation fail the fairness test. The idea of first come, first served rewards proximity to those doing the allocating; games of chance like a lottery system are based on mere luck; and a centralized decision-making system rewards bribes and corruption of those in positions to decide.
Under a system of private property exchange, in order to compete for desired goods, one must offer something of value in exchange. Voluntary exchange of justly acquired property is the fairest means of scarce resource allocation.
Finally is the issue of selflessness.
A society organized under a system of selflessness has its limits. Zero-sum self-sacrifice (i.e., giving without getting anything in return) cannot expand to too many others without spelling one’s own demise. If you keep giving while getting nothing in return, eventually you will starve.
What happens, then, when voluntary egalitarianism fails to provide sufficient sustenance?
Force would need to enter the picture, compelling people to part with resources against their will, fostering resentment and division between the makers and the takers. How is that just?
Conversely, under capitalism, one must serve others in society if he wants to acquire riches, even those he may not like. The incentives of a capitalist system motivate, for example, cattle ranchers in Wyoming to work all day to provide steaks that will end up on the plate of Manhattan elites that the ranchers might otherwise never choose to feed.
The results may not be motivated by pure charity, but such patterns of production and exchange would certainly strongly resemble a more selfless society.
In order to win in the arena of ideas, it is critical to understand what motivates our opponents.
Even granting the goals of fairness, meeting people’s needs, and selflessness cherished by socialists, we can make the case that a competitive, free-market economy is far superior at meeting those goals in modern civilization than a top-down, centrally controlled socialist system.