As I was recently reading the opinion section of the local paper I have noticed that a lot of people are displaying their dislike of Capitalism. I cant say I am surprised given the educational systems teaching the tenets of Marx more then the tenets of Smith, but it still upsets me. I would like to present a defense of Capitalism because I believe that it is the only Economic system that can work.
The first thing we need to do is ask: What was the condition of people in pre-capitalist societies? Well for thousands of years people were barely able to survive as subsistence farmers. They lived hard lives filled with fear of famines and war and then died at a young age. This persisted all the way to the middle ages where people were serfs tied to the land and who had to work and fight for the landlord. This system didn’t allow for any upward movement in society. If you were born rich you would die rich, born poor you would die poor. Would anyone today want to go back to this era? This slowly developed into the mercantilist system which was a system in which governments controlled the flow of money with the goal of keeping it in their nation. This led to controls on imports and exports, where you could live and work, how and when you could ship goods and what industries were allowed to function. Does this sound good to anyone? It didn’t sound good to Adam Smith and it was against Mercantilism that he wrote his Classic The Wealth of Nations. However this began to change as the process of division of labor and the development of sophisticated financial systems allowed for the substitution of labor with capital. This allowed more people free to think and invent new ways of doing things, leading to the industrial revolution. At this time people were working over 70 hours a week and living until the age of 35. This Revolution increased productivity and therefore wealth.
What is the condition of people in the most capitalist country in the world? Well the average American works 39 hours a week and lives to the age of 77. The process of competition and productivity allows all people to buy goods that used to be luxuries or nonexistent. According to Robert Rector at the Heritage Foundation there are 37 million Americans who are considered poor by Government standards. Out of these 43% own their own homes, typically with more living space than the average person in Europe. 80% percent have Air conditioning while only 36% had it in 1970. 31% own more than one car, 78% have a DVD or VCR. Oh the horrors of Capitalism! So called “Big” companies and “Robber Barons are successful because they cut prices, not exploiting people. They have no control over you like landlords in feudal days or Mercantilist governments, if you don’t like them you spend your money elsewhere. If anyone wants to trade all that Capitalism has made possible for what planned economies like Cuba or the former Soviet Union go right ahead but leave Capitalism for the rest of us.