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Wednesday, May 30, 2012

The Morality of Capitalism: What Your Professors Won’t Tell You

During the numerous “Occupy” protests in 2011, many of the signs on display declared that capitalism was to blame for the nation’s ills. Obviously, the protesters had not read this book.

The Morality of Capitalism is aimed especially at young people who have gotten a negative impression of capitalism—as the subtitle accurately suggests, college students are likely to hear little that’s good or accurate about it in their courses—but even veterans of the battle for liberty will find a lot of fresh, intriguing material here.

As Tom Palmer emphasizes in his introduction, capitalism (by which he means the pure free market) “is a system of cultural, spiritual, and ethical values,” and the essays that follow show that those values can and do operate to improve the lives of people around the globe. The global aspect of the book is one of its most effective features. Readers learn from writers of extraordinarily diverse backgrounds that capitalism is what their countries lack and that its absence is the reason that their people remain poor and oppressed. Someone skeptical about arguments for capitalism presented by white American men might sit up and pay attention when, for example, they are made by an African woman.

June Arunga, a citizen of Kenya, argues in her essay, “Global Capitalism and Justice,” that free trade, far from harming the poor of Africa, has made them much better off. They enjoy higher incomes, better products, and easier lives because capitalism (to the extent that it is allowed) enables them to earn more and trade for better goods. She further observes that the coercive and corrupt governments in most African countries inhibit the expansion of capitalism. “Our own governments,” she writes, “are hurting us; they steal from us, they stop us from trading, and they keep the poor down. Local investors are not allowed to compete because of the lack of the rule of law.” Too bad that June Arunga was not around to explain to those wealthy American protesters that laissez-faire capitalism is crucial to human flourishing.

In his essay Peruvian novelist (and Nobel Prize winner) Mario Vargas Llosa rebuts the idea, common among those who demonize capitalism, that it undermines indigenous cultures. He writes, “The allegations against globalization and in favor of cultural identity reveal a static conception of culture that has no historical basis. What cultures have ever remained static over time?” The fears expressed about capitalism leading to the Americanization of the planet are nothing more than “ideological paranoia.” Vargas Llosa shows that people are enriched in their standard of living and through the cultural exchanges capitalism makes possible.

Probably the most common complaint lodged against capitalism is that it is inconsistent with “social justice.” In his essay, David Kelley confronts that idea, arguing that both the “welfarist” and the “egalitarian” cases for overturning capitalism are ethical failures.

He contends that Ayn Rand’s “trader principle” of peaceful exchange is the proper moral foundation for any society. That principle, of course, is only compatible with capitalism.

Most critics believe that capitalism is based on greed, but John Mackey, founder and CEO of Whole Foods Market, shows the charge is false. The wealth that his successful company has created, starting from nothing more than an idea and achieving a current market capitalization in excess of $10 billion, does not just mean profits for stockholders. It also makes possible Mackey’s donations to the Whole Planet Foundation, which extends microloans to poor people around the world so that they can make capitalist investments of their own. The wealth created by capitalists is not confined just to themselves, but spreads in countless ways. Mackey also stresses that capitalism is “a healthier outlet for energy than militarism, political conflict, and wealth destruction.” Just think of the lives lost, property destroyed, and misery caused by the anticapitalist regimes of the twentieth century.

The big, inescapable lesson of the book is that advocates of capitalism have the moral high ground. Unfortunately, they often cede it to their opponents, forcing advocates of capitalism to make defensive, “yes, but . . .” arguments. That is a terrible mistake. After reading this book, you will be well prepared to do battle with those who, as Ludwig von Mises put it, are imbued with “the anti-capitalist mentality.”

Palmer’s book is a project of the Atlas Economic Research Foundation. He and Atlas deserve three cheers (at least) for it and their continuing efforts at making the case for capitalism and liberty around the world.

  • George Leef is the former book review editor of The Freeman. He is director of research at the John W. Pope Center for Higher Education Policy.

  • Dr. Palmer is executive vice president for international programs at the Atlas Network and a senior fellow at the Cato Institute and director of the Institute's educational program, Cato University.