America is in fiscal trouble, and seems determined to making matters worse for itself.
That’s why it’s long past time for an honest discussion about the “C-word.”
Capitalism – an economic system that is based on the private ownership of property, as opposed to government ownership of property, and the creation of goods and services that are sold for a profit - can restore our country to fiscal sanity, and save the rest of the world. It has lifted roughly half of the world’s estimated 6 billion people out of poverty (much of this has happened over the course of my lifetime), and has produced unprecedented levels of wealth for common, ordinary citizens.
Yet today, an economic idea that was birthed in the year of our nation’s founding (Philosopher Adam Smith’s groundbreaking work “The Wealth of Nations” was published in London in 1776) is scarcely taught in the United States. The very word “capitalism” is vulgar in the minds of many, and America’s current governmental leadership, starting primarily with President Obama and his party in Congress, has done a great job demonizing capitalistic ideals.
So to begin resuscitating the American economy with more capitalism-friendly economic policies, we need to first address some of the key falsehoods surrounding the idea of capitalism. Once Americans begin to better understand economics, generally, and capitalism specifically, the road will be paved for making better choices for our leaders and policies.So let’s start with falsehood #1: Capitalism is an economic system “based on greed” - Nobody doubts that greed is real, but today many American governmental leaders speak as though profits and economic success are evidence of greed. Others argue that “greed is good” and that it should animate our capitalist economic system. Neither one of these assumptions is accurate, or true.
Adam Smith made a distinction between greed and “rational self interest,” and argued that while being greedy is destructive and bad, human individuals are naturally “self-interested” creatures, and as such, we all seek to ensure our self-interests with our economic choices. As an example of this, think about the computer used to view or print this article. When you purchased it, did you shop around and find the best possible computer available for the lowest possible price? It was within your rational self interest to do so. It was also rational for the retailer to sell you the computer at the price you paid, and it was rational for the manufacturer to sell it to the retailer. Maximizing the benefits of one’s economic resources is not in and of itself evidence of greed – it is evidence of human rationality.
Austin Hill is an Author, Consultant, and Host of "Austin Hill's Big World of Small Business," a syndicated talk show about small business ownership and entrepreneurship. He is Co-Author of the new release "The Virtues Of Capitalism: A Moral Case For Free Markets." , Author of "White House Confidential: The Little Book Of Weird Presidential History," and a frequent guest host for Washington, DC's 105.9 WMAL Talk Radio.