The debate around capitalism is certainly banal. However, I want to defend the market economy and clear its name of the capitalists who falsely praise it and the socialists who sincerely hate it. Both parties often misunderstand it.
A persistent false dichotomy from the Cold War era suggests that a market economy is one with capitalism, and that the only alternative to capitalism is Marxism, socialism, or communism. The misconception bundles these complicated ideas into a jumble of meaningless “isms.”
To define capitalism is not easy, but it can best be understood in three consecutive parts: the private ownership of production, the accumulation of profit and capital, and then the creation of a powerful ruling class.
It should be noted that modern socialism and its many offshoots are designed to be the antitheses of capitalism. Modern socialism is a system in which a central power plans most if not all economic activity. The other form of “libertarian” socialismsometimes called democratic socialism, involves worker-owned enterprise that belongs in a free market economy.
The problem is that a small group of bureaucrats running the economy could not improve conditions any more than a small group of industrialists could. People’s wants and needs are too big a business for any one group to handle properly, so the system works best when it’s democratized.
Capitalism and socialism are dogmatic ideologies that serve no purpose in the real economy. Like Rev. Martin Luther King said: “Communism forgets that life is individual. Capitalism forgets that life is social.
market economy or classic liberal economy, is a dynamic ecosystem of trade and commerce. By its nature, it strives for a balance between supply and demand, investor and investor, producer and consumer, and employer and employee in a concept known as “economic balance.”
This can only be achieved on the condition that everyone has equal chances and plays by the same set of rules. These concepts are often mentioned but rarely implemented. Capitalism stands in the way of a successful market economy.
Capitalism, is much younger than the concept of a Free market. Capitalism has hijacked the free market economy from a fluid system of exchange and regular wealth transfer to a rigid top-down power structure, perverting individualism and jeopardizing legality.
The cycle of wealth concentration and power consolidation in capitalism is entirely designed for the short-term gain of a few at the expense of long-term stability for everyone else.
Although capitalists claim to be against government intervention in the economy, capitalists have historically made huge profits from influence the governmentsuch as lobbying to create public policy favoring the interests of industry under the guise of supporting “economic growth” or “stimulus.”
Capitalism inevitably generates massive wealth inequality in any nation because it is one-sided. With a total bias in favor of owners of capital, all people who do not own capital, such as the working and middle classes, are excluded from the equation.
There is no such bias in the free market economy. However, it works best when wealth and money flow like water and circulate throughout society. A natural redistribution of wealth occurs without the government having to force it.
According to Atlantic, Adam Smith, known as the father of economics, who is often mistakenly considered the founder of capitalism, believed that the measure of a nation’s wealth and prosperity was the performance of the poorest. Smith challenged the colonial economy of mercantilisma system sharing more in common with capitalism than Smith’s classical economics ever did.
Smith is one of our best allies in proving the illegitimacy of capitalism. It reminds us that everything depends on power. Capitalism, like mercantilism and feudalism before it, ensures that power is concentrated in the hands of a privileged few, but the free market system was a radical new invention that brought democracy to the economy.
Capitalism is a money-centric system, whereas the free market was made for, by, and by human beings. The free market is a system like language, culture and science in that it is essential to the development of human society.
Capitalism on the other? We are better off without it.
Eric Reingardt (he/him) is a first year pre-law student. He is a freelance writer with a profile on Substack.