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Tuesday, April 25, 2017

Capitalism Is the Moral High Road

In free markets, we must attempt to persuade each other without compulsion.

Higher education in the United States is engulfed in an ideological campaign against the American political and economic traditions of individual liberty, free competitive markets, and constitutionally limited government. In its place is the “progressive” agenda of collectivist identity politics, the interventionist economy, and political plunder.

Surveys of political orientation and bias in American academia have strongly suggested that the large majority of college and university professors are “left-of-center.” Conservatives and classical liberals are relatively few and far between at most institutions of higher learning.

But the worst thing about this phenomenon is not simply the marginalizing of those labeled as being on the political “right,” but the growing intolerance of any views other than the left-of-center majoritarian ones. As we’ve seen in the media, this intolerance has taken the form of both verbal and even physical attacks in some instances.

War on Individualism and Capitalism

There is a near totalitarian “progressive” dogmatism on some campuses that, like its Marxian ancestor, views everyone to their political “right” as agents or apologists for exploitation and oppression. These new ideologues believe that individualism, capitalism, and an impartial rule of law based on equal rights (not privileges) are a smoke screen to delude the masses into accepting abuse by businessmen and the privileged.

There are two ways human beings can interact with each other: through the threat or use of force or by mutual agreement and voluntary consent.

They feel called upon to resist and silence these “enemies of the people” everywhere and especially in the halls of academia. For them, colleges and universities are a “hot house” for the cultivation of a new collectivism and the nurturing of generational indoctrination in the young. Any alternative seeds of individualism and free market capitalism must be eradicated from the educational nursery that is fertilizing the “raised consciousness” of social, racial, and gender collectivism.

In this setting, the task of the classical liberal-oriented economist is to oppose this dangerous direction and trend. Not through matching dogma and closed-mindedness, but through reason, argument, and persuasion. It is essential for the economist friend of freedom to show how and why the free market economy is the basis for human liberty, cultural betterment, and material prosperity.

The starting point, in my view, is to emphasize that there are basically two ways human beings can interact and associate with each other: through the threat or use of force or by mutual agreement and voluntary consent.

Everyone Wants to Be Free

I sometimes start out a class at the beginning of the semester by asking the students, which one of them woke up this morning just wishing that, some time during the day, someone would kill them? And at the end of the day was disappointed it had not happened?

They consider it good and just that each of them be left to manage and direct their own lives, unmolested by others in society.

No hands are ever raised.

I ask, which one of them started the day really hoping that someone would rob or defraud them during some social or market interaction? And, again, if it had not happened, they ended the day disappointed and frustrated that no one had stolen from them or cheated them?

Again, no hands are raised.

I also ask, which one of them started the day really, really hoping that someone would put a gun to their head and tell them that from now on they were going to be that person’s slave, who would order them around, telling them what to do, how to do, and when to whatever the slave-master commanded, under penalty of threatened physical harm if they disobeyed? And, once more, they were very sad that this had not happened by day’s end?

And, once more, no hands are raised.

Finally, I ask, if someone in this class were to be murdered, robbed, defrauded or enslaved, would they consider this right, good, or just? No one says, yes.

I suggest that all of them would prefer to have life, liberty, and property respected by others, free from the use of force or its threat. They imply that they consider it good and just that each of them be left to manage and direct their own lives, in their own way, peacefully, unmolested by others in society.

Capitalism’s Premise: Individual Rights and Liberty

I then explain that the economic system that most closely offers an implied right and security for each person to be that free individual is the free market economy, capitalism.

I ask, when have any of them ever walked into a shoe store, looked around, maybe tried on a pair of shoes, and, when you decided to leave without buying anything, an intimidating character with a club or a gun said, “The boss says you ain’t leaving without buying something”? Likely none of us, I point out, has ever had such a direct experience.

Why? Because the moral premise underlying transactions in the marketplace is that each participant has the right to say, “Yes” or “No” to an exchange.

Virtually every other philosophical and political system throughout human history has been based on some version of the opposite. That is, that you do not own yourself; your life and property are at the disposal of the primitive tribe or the medieval king or the community.

If violence is abolished from all human relationships the only way we can get others to do what we want is through reason and persuasion.

This is the premise of all forms of political and economic collectivism: You work for the group, you obey the group, and you live and die for the group. Political authority presumes to have the right to compel your acquiescence for the needs and desires of the collective group.

Only liberal, free market capitalism, as it developed in parts of the Western world, and especially in the United States, broke free of the collectivist conception of the relationship between individuals and society. The modern ideas of individual liberty and free enterprise have transformed lives and the ethical premises underlying human association.

A new morality emerged under which human relationships became based on mutual consent and voluntary agreement. Men could attempt to persuade each other to associate and trade, but they could not be compelled and plundered so one person could get what he wanted from another without their consent.

For Americans, it is heralded as the fundamental principle under which our country was based: It is held to be a self-evident truth that all men are created equal and endowed with certain unalienable rights among which are their individual rights to life, liberty, and the pursuit of happiness.

Fostering Honesty and Manners

As a consequence of this principle of liberty, in the marketplace of the free society individuals learn and practice the etiquette and manners of respect, politeness, honesty, and tolerance. This naturally follows from the fact that, if violence is abolished from all human relationships, or at least minimized, the only way any of us can get others to do things we would like them to do for us is through reason, argument, and persuasion.

The reason the salesman is motivated to act with courtesy and deference towards his customers is because he cannot force them to buy a pair of the shoes he wants to sell. They can simply walk away and buy shoes from another seller that is interested in winning their business, or they can abstain from buying anything at all.

Respectful behavior may start out as an attempt to secure profits, but over time “good behavior” becomes a part of routine interactions.

The clichés of “service with a smile,” or “the customer is always right,” are manifestations of the voluntarist principle that is the basis of all market transactions. No businessman is likely to keep his market share or even stay in business in the long run if he earns a reputation for rudeness and dishonesty.

The famous Scottish economist of the eighteenth century, Adam Smith, long ago explained that the motivation for polite, deferential behavior on the part of any businessman is his own self-interest. Every enterpriser who has learned the importance of branding and reputation knows this.

Respectful behavior may start out as an attempt to secure profits, but over time “good behavior” becomes a part of routine interactions, until, they are finally transformed into customs which we expect in all human encounters, inside and outside of the marketplace. In this way, capitalist conduct contributes to a more cultured and humane civilization.

Creating a Spirit of Humility

Free market capitalism also inculcates a spirit and attitude of humility. In the open and competitive marketplace, in principle, anyone who has an idea or a dream is free to try to bring it into reality. No private person or political power has the right to prevent him from entering the field of enterprise to discover if his idea can be brought to fruition.

Not only would it be morally wrong, but it would limit what mankind can accomplish to only what the central planner can imagine.

The capitalist “rule of the game” is that anyone is at liberty to enter the arena of enterprise if he has the will, determination, and drive. Not one of us has the ability to know beforehand which ideas and efforts will turn out to be a success or a failure.

The Austrian economist and Nobel Prize-winner, F. A. Hayek, once referred to competition as a “discovery procedure.” The humility of the marketplace is that no one – not even the most well-informed government bureaucrat – has sufficient knowledge and forethought to successfully “pick winners” and “avoid losers” for the good of society as a whole.

This can only be found out through the competitive rivalry of private enterprisers, with each trying to gain the business of customers who decide which producers best fulfill their wants and needs.

Taking the High Road

The watchwords of capitalist free market morality, therefore, are liberty, honesty, and humility: The freedom of each individual to live and choose for himself; the ethics of fair dealings; and the modesty to admit that none of us is wise enough to plan society.

Not only would it be morally wrong to reduce people to the status of commanded followers, but it would limit what mankind can accomplish to only what the central planner can imagine. It is better for both the individual and for society if everyone is at liberty to act according to their own interests. All of society can benefit from what one human mind can conceive of that another may not.

Free market capitalism is the ethical high road to human dignity and mutual prosperity.

We live at a time in which capitalism is stymied in almost every direction by the heavy hand of government control. In the real world, we have politically managed and manipulated capitalism that is very far from the truly free market capitalism that I outline to my students in terms of its moral premises and social virtues.

A truly free market is certainly not the twisted conception of “capitalism” that is presented in the media and in the classrooms of too many college and university professors. Real free market capitalism recognizes and respects the rights of the individual and is that economic system that offers humanity the most moral system of human association imaginable by and for man.

Free market capitalism is the ethical high road to human dignity and mutual prosperity. If its moral and related foundations can be successfully articulated to students in a persuasive manner, the totalitarian progressives can be opposed through the power of reason and a basic understanding of the connections between economic liberty, social peace, mutual well-being, and a better future for all of mankind.

(Based on a presentation delivered at the annual meeting of the Association of Private Enterprise Education in Maui, Hawaii, April 11, 2017, for a session devoted to “Teaching the Economics, Philosophy, and Morality of Free-Market Capitalism.”)

  • Richard M. Ebeling is BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel in Charleston, South Carolina. He was president of the Foundation for Economic Education (FEE) from 2003 to 2008.