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Morality and Capitalism

By Paul A. Cleveland

        Critics of capitalism often argue that free enterprise promotes the worst kind of human behavior and, therefore, must be rejected if moral human action is to prevail. They argue that free enterprise promotes jealousy, envy, and greed. In their opinion, life on this planet would be better served if we substituted government control over the production and distribution of economic goods. The assumption is that such a collectivization of life would promote the highest level of virtuous living amongst one another. But, is this assessment correct?

        I would argue that such thinking is at best naïve. At worst it is simply motivated by the very greed that its promoters supposedly deplore. First, it must be noted that jealousy, envy, and greed are all evidence of the inherent sinful passions present in every human heart. They are not spawned by economic activity. Moreover, to assume that they are the outgrowth of economic action displays an almost thorough ignorance of what capitalism actually is. A free market is nothing more than an institutional arrangement of private property and voluntary trade. The only way to succeed in such an economic environment is by continually serving your customers with goods and services that they value more than what they must give up to get them. One of the first principles of economic exchange is the realization that there are mutual gains from trade. Otherwise, no trade would ever develop in the first place.

        Consider for a moment a world where you had to produce all the goods and services you consumed solely by your own efforts without the benefit of the efforts of any other person. A casual consideration of such a world ought to convince you that you are the great beneficiary of economic exchange and voluntary trade. Things as simple as preparing a ham sandwich for lunch would be impossible if it all depended on you. Think for a moment about the tasks that you would have to perform. You would have to find a pig, kill the pig, prep the pig, cure the ham, and slice the ham. To accomplish these tasks would require a wide variety of tools and ingredients which you would likewise have to produce for yourself. You would need a knife to kill and carve the pig along with all the ingredients needed to cure the ham. This would entail the knowledge of mining metal and forging it into the proper form. The amount of labor needed to complete every task would run into years. But for a fraction of an hour of your labor, someone is willing to make a sandwich for you as is evidenced by the fact that Subway advertises foot long sandwiches for $5.00 regularly. Not only that, but everyone who had a hand in the labor needed to produce all the ingredients for your sandwich along with the necessary tools needed to secure their production did their work voluntarily. No one had to force them to do what they did.

        When we begin to think about it in these terms, what would be immoral and reprehensible would be a situation where some people forced other people to do certain things for them or else be punished in some way. Regrettably, this is what the critics of capitalism advocate whether wittingly or unwittingly. They tell us that people have a right to education, housing, health care and a wide variety of other goods and services. But is this true? In fact, what they are arguing is that some people have a right to force others to provide such goods and services for them or else be thrown in jail for failure to do so. They are actually arguing that governments should use their force to punish productive people for the benefit of those who are not. They are essentially enslaving some people to other people and that is immoral.

Despite this fact, some worry about private monopolies of certain goods. However, a private monopoly associated with market power is a far cry from the dictatorial power exercised by government which uses the force of a gun to accomplish its ends. A single provider in the market must still serve his customers at prices that the customers are willing to pay if he is to achieve his own ends. He cannot hold a gun to the heads of his customers. As Yuri Maltsev observed, “The sad legacy of Marxism is the mind set of certain people, both in the East and West, who believe that the state can cure all economic ills and bring about social justice.” (1993, 29) The truth is that markets are dynamic and not static. A business can only be successful as long as it provides satisfactory goods to its consumers at prices that the consumers are willing to pay. It cannot infringe upon any other offer that some other firm might offer to its customers. As a result, it must continually improve upon its product offer if it hopes to keep serving its customers since great success always invites competition. The only way to maintain a monopoly position without truly serving the highest interests of one’s customers at any point in time is to seek and gain political privilege which is again to use the force of government to enslave people to yourself.

References

Maltsev, Yuri, Requiem for Marx, (Auburn, AL: Ludwig von Mises Institute, 1993).

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