I believe that people should be left alone and allowed to succeed or fail. People need liberty and a system that guards their liberty.
I love capitalism. Capitalism is good but it has a bad name. It’s not primarily about capital and investing. It is about property. As the legal thinker William Blackstone wrote:
There is nothing which so generally strikes the imagination, and engages the affections of mankind, as the right of property; or that sole and despotic dominion which one man claims over the external things of the world, in total exclusion of the right of any other individual in the universe. [Note: By “despotic,” Blackstone means “absolute.”]
Well, bravo. I’m a huge fan of capitalism myself. It’s great to see well thought out arguments like yours.
There’s only one major issue that I’ve identified: This isn’t about capitalism—it’s about libertarianism. I’m not sure if you’ve read Nozick’s Anarchy, State, and Utopia but that’s the thing for you.
Robert Nozick talked a lot about the minimal state, a concept that celebrates economic and moral freedom of the individuals and gives only limited role to the state: creating a legal system that protects people’s property and guarantees the validity of contracts. This is very similar to your reasoning but it’s libertarian philosophy and not directly the theory of capitalism.
Capitalism and libertarianism seem infinitely intertwined. Even so, if you look up the definition of capitalism and study the main ideas of libertarianism, you will find yourself wondering if the two are separate at all. They actually are. The U.S. didn’t cease to have a capitalist system under Obama’s presidency, though he’s definitely not a libertarian.
In today’s world, after Keynes and his successors, we have a mixed economic system, that’s not laissez faire but it’s also clearly not communist economy. The state does this and the state says that, courts rule this and that way and many complain why we don’t have the original capitalist freedom. So why is this? Is this something good?
I could bring economic arguments but I’m sure I’d be making mistakes but more importantly the reason for having the current system can be found in political considerations:
#1: The market might always find balance eventually but, in the meantime, individual lives, which’ survival are dependent on economic safety, can be hurt. So the economy of the country may find balance after a year or two of necessary fluctuation but in those years a family may go bankrupt, people can become desperate and not all of them are good-enough economists to be able to avoid undergoing serious losses. You said that these are inevitable casualties but politicians found it otherwise. More on this later.
#2: In a competition the strong/smart prevails and the weak/feeble-minded stays behind. You understood this as the order of nature. But nature isn’t fair. We can say it’s random and random doesn’t equal fair but receiving in proper proportion in accordance with one’s desert is. Being born strong or weak clearly has no relation to our desert.
According to Weber, capitalism was an unavoidable consequence of the emergence of Protestantism: People experienced a new freedom and the sensation of equality and autonomy spread very fast. And of course capitalism was a much better system than feudalism that preceded it in Europe. But it seems today that capitalism is and has been evolving.
You found morality in rewarding the productive and by the promise of these rewards motivating new members of society to become productive. It is, in fact, very moral, however, this can mean in a way rewarding the capable and ignoring the incapable and that is immoral. Why? Because no one made themselves capable. You might think hard work is your own merit, though if you can work hard it means that you have sufficient concentration and the sufficient abilities. These depend on genes and other external variables, so they do not originate from your own doing, ergo it isn’t moral to reward you for something that you just happened to have.
I have introduced some political and moral arguments against laissez faire libertarianism but what are ideas for corrections—you may ask—nobody asks this, of course, but it’s good to think that I’m not writing to myself…
One of the most famous political philosophers of the 20th century, John Rawls, recognized how libertarianism is unfair and so he said that a system should be formulated from behind the veil of ignorance: We decide without knowing what will be the most profitable environment for us, only considering what will surely be beneficial for everyone, since we can be successful salespersons or Hispanic cleaning ladies. Of course the veil of ignorance is an abstract thing, not something real, but it is a fair concept. Or is it?
Even Rawls came to realize that even though capabilities are contingent, the able should not be withheld their reward because they used well what was given to them. So he created the difference principle: Inequalities may exist as long as they are profitable to the whole community.
Politicians seem to have adopted Rawls’ ideas, though in a very weakened way (for which I am grateful by the way). What we see today is capitalism but fixed with the tools of fairness. Politicians understood and admitted that capitalism is a clever system, working very well most of the time, but they also said that people should be protected and aided because not everyone can stand their ground in an economic competition. They decided to help the weak because politicians can’t settle with inevitable casualties of any standing economic system but they ought to bring welfare to the whole community. In the other hand, politicians can never ignore what is owed to the productive and able.
At the end of the day, though, I still root for capitalism because so far it’s been working nicely. What must be observed in this question is that this system has been based on morals and values, not on figures and balances. We should be critical and be critical with the eyes of the idealist and not the pragmatist.