Big Head Press

L. Neil Smith's
Number 508, March 1, 2009

"The one hope we have is to aggressively reassert
the libertarian principles that propelled the American
Revolution and turned the world upside down."

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In Defense of Capitalism
by Sean Gangol
RGangol -+at+-

Special to The Libertarian Enterprise

Thanks to America's financial crisis, the economic system known as capitalism has found itself under fire by statists, leftists, socialists, and just about any other group that doesn't understand basic economics. Ever since the beginning of this financial crisis, the people who oppose capitalism have gloated about how free markets don't work. These people also go on to tell us how libertarianism is a discredited ideology. Sadly, most of these people don't even know what they are talking about.

To be fair, the ignorance of capitalist bashers is not entirely their fault. Thanks to the mainstream media and public brainwashing, excuse me, education, many people believe that capitalism and free markets are bad things. In public school textbooks kids are taught about how bad the Industrial Revolution was for the workers, until they were rescued by government regulations and labor unions. What these books fail to show is that as harsh as the conditions were for the workers of the early stages of the industrial revolution, they weren't nearly as harsh as the working conditions in agriculture. That was why many Americans left the farms to work in the factories. These textbooks also fail to mention that factory conditions improved with the advancement of technology. Child labor was dying out long before any federal law was passed.

These same books also refer to the most famous capitalists as the "Robber Barons." They only discuss the negative aspects of these so-called Robber Barons and rarely mention the contributions that these people made on society. Many textbooks call the business practices of John Rockefeller to be amoral and unethical and never mention how Rockefeller was able to reduce the price of kerosene from a dollar a gallon to ten cents after establishing Standard Oil. He also helped develop a vaccine for Yellow Fever and saved Belgium from famine during the First World War. Let us not forget Henry Ford, the man who made the automobile more affordable to the common man. People seem to forget that it was Ford who created the forty-hour work week and not the unions. They may have had their faults, but their contributions should outweigh any of their "amoral" business practices.

People also like to confuse capitalism with corporatism. Corporations such as, Halliburton and Pfizer are supported by the federal government. People also have the misconception that it was capitalism that caused the financial crisis that we are in now. In reality it was actually government interference that helped cause the crisis. In the 1970's the government passed the Community Reinvestment Act, which forced banks to loosen their restrictions on the loans they gave out. Unfortunately, this led to people obtaining loans that they couldn't afford to pay back. Then we have Freddie Mac and Sally Mae, who were given subsidiaries by the government to make financial decisions that were risky and reckless. These corporations exist as long as the government keeps supporting them.

It is also believed that regulations are needed to keep the corporations in check. What people don't realize is that regulations have little or no effect on larger companies. The larger businesses can afford to take on the burden of regulations, since they have more resources to find ways around them. Smaller businesses on the other hand don't have as many resources, so the regulations make it harder for them to prosper. When the smaller businesses are crushed under the weight of regulations, the larger businesses profit from it because they end up with less competition. In many states local organizations that represent the big businesses, will advocate for laws that will ensure less competition.

The media has also played into the misconception that capitalism is failing due to all the companies that need bailouts. If our government truly understood the concept of capitalism and free markets they wouldn't be bailing all these companies out. Whenever the government does something like this, it creates a form of corporate welfare, which is even more costly then any poverty based welfare. In a true free market, businesses would survive only on sound financial decisions.

One of the most unfortunate aspects of capitalism is that many people associate it with the exploitation of workers from third world countries. The clothing factories that operate in third world countries are known as "sweat shops" and are criticized for poor working conditions and low pay. Even though for some the working conditions are unjustly harsh and the wages may seem low, life without these shops would actually hurt the local people. Without these shops, the men would be forced to work for lower wages doing back breaking work in agriculture. Many of the women would have had to prostitute themselves just to keep their families fed. Another thing that people don't seem to take in account is that as low as the wages are in sweatshops, they are still higher then the average wages of others in those nations. Obviously the issue of sweatshops is hardly black and white.

Not to say that capitalism is without its faults. Far form it. The system isn't always fair, nor is it always just. I am reminded of what Winston Churchill once said about democracy. As bad as it is, it is still better then any other form of government. That is how I view capitalism. All the great technology that we have now comes from capitalism. We have the ability to change the temperatures in our own homes. It is now easier to communicate with someone that lives on the other side of the world, thanks to a little invention called the internet. We also have an abundance of choices and foods, which is also because of capitalism. Some of the poorest people in the United States live better then the monarchs did hundreds of years ago.

Unfortunately there are many people who are clueless about capitalism. It always amuses me to see a bunch of college students hanging around Starbucks, while bashing capitalism and complaining about how corporations are taking over the world. Yet, you will see these same people ordering five dollar lattes, while one guy surfs the net with his new Blackberry. Many of them will be listening to trendy music with their Ipods and there will be at least one guy among the group that will text message his girl friend with the newest and most expensive cell phone. Of course they are usually too dense to understand the irony.


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