As the owner of a contracting business, do you feel you are under attack? You should. You are. Capitalism and the free enterprise system are under the most relentless assault seen in the post war era. As a contractor you operate within the capitalist system, but may not feel comfortable defending it. Here are ten reasons why capitalism is morally superior to socialism, or statism (i.e., power and decisions are vested in the state or government).
Talk about capitalism’s moral superiority the next time you hear someone parroting the politicians, entertainers, academics, clerics, and professional rabble rousers who are all bemoaning the failures of capitalism. Their only answers are to dust off the same old prescriptions that have been tried, tested, and found wanting again and again.
- Capitalism Promotes Freedom
The most basic freedom is the freedom to make choices. Capitalism promotes choice. It promotes the ability of people to decide what they want to buy, how much they want to buy, where they want to live, where they want to work, and so on. With statism, choices are limited. The government decides, for example, what kind of light bulb is available, how much water a toilet can use, the minimum factory efficiency of an air conditioning system, and more.
The removal of simple choices reduces freedom. The removal of all choices is slavery. The direction of statism is towards slavery. The direction of capitalism is towards freedom. Capitalism is morally superior.
- Capitalism Promotes Cooperation
If I want a new air conditioning system installed in my home, I call a contractor. We have to agree on a price where I consider it better to own the new comfort system than to keep the money it costs. Likewise, the contractor considers it better to take the money paid than to keep the equipment in inventory (or pick it up from the supply house) and perform the installation. We have to voluntarily cooperate and agree on the price.
Next, the contractor must elicit the labor of his employees to perform the installation, in return for compensation. Then, he must cooperate with the supply house or distributor regarding the purchase of the material and equipment. The distributor must buy it in turn from a manufacturer who builds the equipment as the outcome of thousands of acts of cooperation upstream.
An excellent video describing the cooperation that results from free markets and capitalism is I Pencil: The Movie, based on the essay by Leonard E. Read. Take a few minutes to watch it.
Statism denies cooperation. Central planners make decisions that are forced on people. Statists eschew cooperation because left on their own, people make decisions the statists disagree with. An example is the imposition of any type of wage and price controls like the minimum wage.
If you want to hire a high school student for a few hours after school to clean your shop and help stock your trucks at the end of the day, you and the high school student should be able to agree amongst yourselves on the right compensation. Because the high school student hasn’t learned good work habits, has no experience, and will require close supervision, you may decide that the student is not worth the required minimum. Because the state forces you to pay more than you can justify, you must find another way to get the work done and the student is denied both pocket money and the more valuable work experience that will lead to greater pay in the future.
Cooperation is more moral than force. Capitalism is again, the more moral economic system.
- Capitalism is More Optimistic
Capitalists live in a world of opportunity. They constantly survey the landscape looking for possibilities to gain, to build, to expand, to create. Statists, on the other hand, focus on scarcity. They see a world of limited resources, which gives them reason to ration and allocate.
What the statists overlook is the unlimited power of human ingenuity. Time and time again, statists have predicted the world would be unable to feed itself. Yet, agricultural innovations result in more food production on the same or less land. Statists scared the public with peak oil and limited fossil fuels, yet thinks to the combination of horizontal drilling and fracking, the U.S. alone sits on a 200 year supply of oil.
There is a moral aspect in play. Focusing on limits and living within them becomes a self-fulfilling prophesy. The statist suppresses man’s hopes and prospects. Capitalism again, is more moral.
- Capitalism Believes in People
The capitalist believes that people can make their own best decisions. This is the basis of the free market with millions of people making individual choices. Statists believe the common man is incapable of making good choices, so an elite must intervene and make choices for people.
Integral to capitalism is a belief in the goodness and intelligence of the common man, despite inherent frailties and shortcomings of individuals. Statists look down on and denigrate the public. Again, capitalism is more moral.
- Capitalism Promotes Equality
Income inequality is the cry of the statist. Equality of opportunity is the anthem of capitalism. People will never be wholly equal. Because of my four inch vertical leap, I will never be able to dunk a basketball. In a basketball game against Michael Jordan, I will lose ten times out of ten. Even if I practice hard and improve my game significantly, I will probably never be able to overcome Jordan’s inherent athletic gifts.
The capitalist would point out that my attempt to compete resulted in improvements in my basketball skills and ability. Jordan may still pound me into dust, but the overall game between us improved. I am better off as a result of my effort.
The statist takes a different view. Jordan’s basketball superiority is unfair. Therefore, he must be handicapped in some way. He must be forced to give me credit for some of the baskets he scores. This does nothing to improve the game or improve my performance. In fact, I have less reason to improve my game. I might have to work for my points instead of taking Jordan’s.
The cry about income inequality is one of the biggest loads of crap being foisted on the public today. The statist sees a static world where a low income earner today is a low income earner tomorrow, when the truth is just the opposite. People can change their income through their own efforts. I may never earn as much as Bill Gates, but I can earn more than I do today. When I strive to earn more, I help expand the economy. Taking money from Gates and giving it to me may benefit me personally, but it will do nothing to help the economy.
Winston Churchill said, “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.” By focusing on opportunity and not outcome, capitalism is the more moral economic system.
- Capitalism Promotes Emulation
The income inequality talk stirs up envy. Statists want us to envy and resent the wealthy and high income earners. Capitalists want us to emulate them. Do not resent those more successful than you. Emulate them.
Envy is dangerous. We see it in the HVAC industry every day. The contractors who are the most successful are often slammed and slandered by their less successful peers who envy them without attempting to learn from them. Envy generates excuses. Without envy, we must face the fact that we can change our own reality. If others can do it, so can we.
Emulation is more moral than envy. Capitalism is more moral than statism.
- Winners Under Capitalism Deliver Value
Your income and wealth are a direct reflection of the value you generate for others. Deliver more value under capitalism and you will ultimately receive commensurate rewards. Statists, on the other hand, reward connections and political power. The wealthy in a statist system exploit position and connections to prosper.
In the United States, we have a mixed system where we can see examples of both. We see entrepreneurs who become wealthy by building great companies. We also see crony capitalists who leverage government connections to gain advantage. Finally, we see representatives of the people who are elected to congress with pennies in their pockets and emerge in a few years with millions in their bank accounts.
Wealth from value delivered is morally superior to wealth from connections exploited. Capitalism is morally superior.
- Capitalism Results in Better Outcomes
The smartest guy in the room is not smarter than the collected intelligence of everyone else in the room. Markets are always smarter than government planners. In the free market, millions of individual decisions are made, which result in a more optimum outcome than the smartest guy in the country planning for everyone. This is why socialist countries tend to be economic basket cases. The more the state controls decisions through top down autocracy, the worse the outcomes.
A better outcome may or may not be considered morally superior, but it is superior. Capitalism is the better system.
- Capitalism is Consistent With the Human Condition
Incentives matter. If a full commission salesperson is put on salary, what happens to his performance? It declines, of course. Tell anyone he will make the same amount of money no matter how hard he works and most will not work very hard. This is human nature.
Capitalism is built on the notion of incentives. Everyone has an incentive to build, create, and serve others. Statists suppress incentives. They shill about income inequality and redistribute money earned by the most productive to give to those not producing at all.
It is human nature to strive to improve and achieve. If we were content with the status quo and just acted on urge and instinct, we would be little more than animals. The statist attempts to turn us into cattle or sheep. Capitalism reflects our true nature and the human condition. It is morally superior.
- Capitalism Protects the Planet
Statists love to moan about the environment. However, environmental conditions are best where wealth is greatest. Wealth correlates closely with capitalism.
Moreover, capitalists believe in private property and property rights, which is better for the environment. The Tragedy of the Commons explains how public ownership is worse than privatization. Individuals have an incentive to look after their property. No one has an incentive to take care of “the commons.” Yet, statists believe the state should own and control as much property as possible.
Combine the reduced wealth of a socialist economy with public ownership and you see the economic devastation that characterized many Soviet bloc countries following the fall of communism. Again, capitalism is morally superior.
What About the Poor?
Statists talk often of the need to take care of those less fortunate. Not even the most libertarian capitalist will argue with the need to help others. They do object to the government taking an individual’s money by force as certain as any armed robber and redistributing it in ways the individual does not like. This does not mean we abandon the poor. It just means we must recognize that redistribution of income is immoral, not moral.
It is worth noting that before the government created the welfare state, the poor were taken care of through Mutual Aid Societies. These were collections of people who supported each other in times of need. In short, they acted as private welfare organizations. Because they were relatively small, there was less potential to game the system and become permanent welfare recipients. The administrators of the Mutual Aid Societies personally knew who was able to work and who was trying, which is an impossibility with the modern welfare state.
Contractors are Capitalists – Defend It!
As a contractor, you put your capital at tremendous risk and keep it there until you exit with no guarantee of a return. On a daily basis you face increasing regulatory hurdles, intense competition, downward price pressure from Internet based sales and referral systems, and burdensome corporate taxation. Despite all of the risk, pressure, and anxiety, you have chosen to compete in the marketplace and would probably make the same choice again because it gives you the best opportunity to prosper. It is a pity that our capitalist economic system is under assault by so many of late. While it is as imperfect as the people who inhabit it, it remains morally superior to the others.
To paraphrase Churchill, capitalism is the worse economic system ever invented, except all of the others. As a contractor who operates within the capitalist system, you should defend it whenever possible. It beats the alternatives.
This is solely the opinion of Matt Michel (and right thinking people everywhere). Matt Michel encourages those who disagree with them to offer their explanations of how he is wrong. Since his children have moved out of the house, he isn’t wrong nearly as often and misses it. Email him at [email protected]