David Strom

Why is "Capitalism" a dirty word for some people?

It makes no sense at all. Since the decline of feudalism and mercantilism, the rise of capitalism has given us the most remarkable expansion of wealth, health, and general well-being that the world has ever seen.

In the last few centuries, our life spans have doubled, our wealth has expanded immeasurably, our educational attainments are unparalleled in human history, and our productivity growth has allowed us to enjoy leisure and entertainment inconceivable only a century ago.

All these facts are certainly attributable mainly to the development and expansion of capitalism and the division of labor that springs from it; yet with few exceptions intellectuals and many others consider capitalism with suspicion and even hostility.

Why?

It seems to me that the term itself puts people off. After all, if you think of the three major economic ideologies, Capitalism, Socialism, and Communism, one has as its descriptive root “capital” which usually means money, while the others both refer to human relations themselves. In short, it looks like capitalism focuses on money, while socialism and communism focus on people.

Who would prefer an economic and political system that focuses on the good of money or capital versus one where the good of people comes first?

But of course, history and experience show that a liberal society with a capitalist economic system is infinitely superior to the command-and-control communist model, and a far better wealth and well-being generator than the increasingly creaky democratic socialist states seen in much of Europe. (The average European Union citizen is only 70% as wealthy as the average American, and falling further behind).

Adam Smith, the iconic economist and philosopher of Capitalism had a much different way of describing our system than we use today. Smith did not call what he was describing and advocating for “capitalism;” instead the term he used was in many ways superior, if not as succinct: “the system of natural liberty.”

Smith’s formulation is superior to the term capitalism, if for no other reason than it defines one of the great moral differences between free market economics (capitalism) and its more statist rivals: capitalist economies are free economies with free people, while socialist, communist, and fascistic economies are characterized by central planning and control, which requires some level of coercion.


David Strom

David Strom is the President of the Minnesota Free Market Institute. He hosts a weekly radio show on AM-1280 "The Patriot" in Minneapolis-St. Paul, available on podcast at Townhall.com.

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