The Moral Case for Capitalism

May 10, 2012

Capitalism has become the scapegoat for many social woes.  When critics are pressed to assert their opinion, a couple of distinct charges are leveled at the economic system: it generates inequality and it threatens social solidarity by allowing individuals some priority over their communities, says James R. Otteson, chair of the Philosophy Department at Yeshiva University in New York.

However, not only are many of the claims against capitalism misleading and overly caustic, but also they fail to account for the enormous positive influence that capitalism has in the world, specifically by curtailing the growth of poverty.

Because capitalism truly came into its own as an economic model approximately 200 years ago, a comparison of modern economic indicators with those from 1800 is enlightening.

  • Since 1800, the world's population has increased six fold, yet despite this enormous increase, real income per person has increased approximately 16-fold.
  • In America, the increase is even more dramatic: in 1800, the country's total population was 5.3 million, life expectancy was 39 years, and the real gross domestic product (GDP) per capita was $1,343 (in 2010 dollars).
  • By 2011, the population had grown to 308 million, life expectancy doubled to 78 years, and GDP per capita increased 36-fold to $48,800.

All of this is to say that regardless of its additional impacts on society and people, capitalism has done more than anything else in the last 10,000 years of human history to alleviate the great social evil of poverty.

Given this benefit, the fact that capitalism encourages inequality should be considered relatively minor.  If the two social evils of poverty and income inequality were compared, few would suggest that the latter were of greater significance.  Rather, most would acknowledge that ending poverty (a goal that capitalism serves strongly) should be a nation's top priority.

Perhaps the most important implication of capitalism, however, is the innate respect that it entails.  Rather than other economic systems in which a powerful entity discerns the individual's wants and needs and assists him/her in obtaining them, capitalism recognizes that people are competent enough to take care of themselves.

Source: James R. Otteson, "An Audacious Promise: The Moral Case for Capitalism," Manhattan Institute, May 2012.

For text:

http://www.manhattan-institute.org/pdf/ir_12.pdf

 

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