Each day we participate in the most just and free market system in the world. The iPhone we bought to talk to friends, the Pepsi we drank to keep us awake to study, the paycheck from work, are an integrative part of the free market. Dinesh D’Souza, former President of The King’s College noted free market “capitalism satisfied the Christian demand for an institution that channels selfish human desire toward the betterment of society.”
Author Michael Novak documents the origin of free enterprise to the Catholic’s creation of Canon Law, which led to a common market and law system by establishing “jurisdictions of empire, nation, chartered city, guild [for] merchants, and entrepreneurs. It also provided local and regional arbitrators, jurists, negotiators, and judges. Now gears for windmills, harnesses for beasts of burden, ocean-going ship rudders, eyeglasses, and ironwork” were invented with the free flow of trade and ideas. Later the “Protestant Work Ethic” would bring ferocity for free markets documented in Max Weber’s 1905 book, The Protestant Ethics and the Spirit of Capitalism. Book critic Tom Butler-Bowdon states Weber makes a compelling argument that Protestants made free markets worthy and morally just because “of the spirit of progress; the love of hard work for its own sake; the orderliness, punctuality and honesty; and the belief in a higher calling.”
As history tells us, the free enterprise system has been the catalyst for the greatest strides in innovation, social mobility, and the standard of living. In a free enterprise system, allocation of goods through trade is not an exploitation of buyers by sellers, rather a mutual agreement of value between two consenting parties. However, many of today’s liberal-progressives argue free enterprise is unethical resulting in a mal-distribution of wealth. They claim markets cause the rich to get richer and the poor to get poorer. However, history has shown societies prospered from free market expansion which created a better standard of living for all income classes. When President Kennedy cut taxes for the upper class the economy blossomed. Kennedy remarked, “A rising tide lifts all boats.” According to economist Arthur Laffer, the US’s “purchasing power of the median income family rose to $54,061 in 2004, an $8,228 real increase since 1980. The middle class is not disappearing…it is getting richer.” The poor have also benefited from these booms. A Treasury study on income mobility in the US from 1996 to 2004 found the bottom 20% of wage earners experienced a 109% (inflation adjusted) increase in income.
Critics of free enterprise often cite Sweden as a model of how socialism can work. Having a mother from Sweden and having visited many times, I know Sweden is a lovely country, but if Sweden is socialism’s best argument, then the cases against socialism are many. It is true Sweden has relatively no poverty. On the other hand, economist Milton Friedman noted, “That is interesting because in America, among Scandinavians, we have no poverty either.” Likewise less than 7% of Swedes and Swedish Americans live in poverty. However, the similarities end there considering how wealthy American Swedes are compared to their Swedish counterparts. A Swede’s average income per year is $36,600 while an American Swede’s average income per year is $56,900 according to author Kevin Williamson. A typical Swedish family would live in an 800 square foot apartment and own one car, while a typical Swedish-American family would own a 3000 square foot home and own two cars.
In addition, according to Socialism by Williamson, Sweden’s GDP per capita was 20% higher than that of the US in 1980, but in 2001 not only was the US’s GDP per capita higher, it was higher by an overwhelming 56%. Sweden also has more social rigidity than the US. Ironically, America is more egalitarian than Sweden. While income may be more equally distributed in Sweden, the US has distributed wealth more equally. Income and wealth are correlated in the US by high paying careers or entrepreneurship. In Sweden you are more likely wealthy because you inherited it.
The free enterprise system has benefited all economic classes and mankind’s leap in innovation, social mobility, and our standard of living. On the other hand, collectivist societies have stifled innovation, while creating a rigid social mobility, driving down a lower standard of living. President Ronald Reagan once said, “Socialists ignore the side of man that is the spirit. They can provide you shelter, fill your belly with bacon and beans, treat you when you’re ill, all the things guaranteed to a prisoner or a slave. They don’t understand that we also dream.” Similarly, Timothy 1:7 states, “For God hath not given us the spirit of fear; but of power, and of love, and of a sound mind.” The choice is clear. We must continue to dream.
7 replies on “Two Views: Is free-market capitalism good and just?”
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I felt that you did a great job tying in historic examples with real life experience. I felt that you made many valid points regarding the topic and overall wrote a very good paper.
I get it, we are a bunch of spoil brats, that squander the opportunities that were put in front of us, but in all fairness, government, need to butt out, a free market for all in not in place right now, I wanted to open a little business, i had enough money to do it, the dream was just coming to reality, but turns out that, government wanted almost all of the money i had just to open, that will leave me, with no money to operate the business, if all the corporations take their business to other countries, to increase their profits, by paying pennis to workers in China, India, Africa, that is fine, we already have done that, that is how they became wealthy by exploding the worker, the problem I see, is we need not to change our constitution, we do not want shariah law, we do not want a socialism, dictator, to put people in camps, to feed them bacon and beans. we will have a war, we like freedom, this country had been dumb down, the government did this for capitalism interest, so much ignorance, lock of education, making people fat and stupid, braking the family value, introducing drugs and trends to hypnotize, almost like zombies, generations are change, and yes, the few corporations that remain, will have to change to fined stability, and grow as a nation, if not we will pretty soon be a third world country. So, were are the good politicians that want to have this country back into business, with free markets and prosperity. I do not know? do you……
I find that you bring many important aspects within your paper and perfectly integrate them together. I applaud you in showing the stark differences in two countries and how they handle capitalism and socialism. The statistics are also quite remarkable, it’s a very interesting perspective I have never delved into before.
This is not the only perspective possible. What if the the free enterprise is not a static machine-like “thing” but a dynamic ecological process? instead of getting into fruitless either/or debates – either capitalism or socialism – we would understand how enterprises are conceived in passion, born in communities of trust, grow through the application of reason and mature in power. Here they tend to become stuck as their means run away with their ends and they forget why they exist and for who. This sets the stage for crisis and destruction, but with the possibility of renewal…
From this perspective Anglo-Saxon capitalism was conceived and born in the Nonconformist sects of 17th Century England ( a group that included the Puritans and the Quakers). It grew steadily and was only named as “capitalism” in the mid-19th Century. It seems that today capitalism may be stuck in the power phase and in urgent need of renewal by revisiting its original purpose and looking again at our ends rather than just our means. Capitalism makes a good servant but a poor master…
There’s a reason capitalism is the predominant economic system in the world…it’s the most efficient. As long as there is substantial competition, prices are always going to be reasonable. Capitalism provides incentives, and it’s a known fact that people respond to incentives.
Also, this system encourages efficiency in production. If one company is more efficient than another, they are most likely going to make a higher profit. This encourages the competition that drives prices down.