Few topics can engender debate to the same magnitude as the debates between where Capitalism and Socialism are the superior economic system. It seems as if the debate between the two economic systems can only be one of morality rather than what is most efficient. By-in-large capitalism has exhibited over the centuries its prowess as being far more efficient for the distribution of resources than that of planned economies. This fact is so conspicuous even proponents of socialism are relinquishing claims of better efficiency  (pages 1-2) [1]. Only further punctuated by the glaring example of the collapse of the Soviet Union, clearly demonstrating its failings from a utilitarian standpoint. If from charitable disposition Socialism is less efficient (never mind compatible with human thriving) why would people continue to defend it? That question, unfortunately, becomes riddled with outlandish conspiratorial postulations. It only tarnishes the arguments for Capitalism rather than shed light on the true nature of socialism. As much as I revile political correctness, the Cultural Marxism postulations only make proponents of free markets and individual liberty look like cranks. It is a distraction from substantive and reasonable arguments and reasoning.


So with the variable of efficacy removed the only tenable dimension upon which we can still have disagreement upon would be morality. Ironically, Adam Smith championed the moral supremacy of Capitalism approximately a century prior to the implementation of the contemporary incarnations of socialism. Except in his 1776 treatise The Wealth of Nations, Smith was grappling with an interventionist economic philosophy that predated socialism. Mercantilism. While the erroneous principles of Mercantilism have been a reoccurring fad throughout history, the Mercantilism of Smith’s day was enforced by a hereditary monarchy. The emphasis on economic nationalism makes a potential precursor to fascism (a right-wing form of socialism) from an etymological standpoint [2]. Regardless, Smith conveyed compelling arguments in favor of unfettered trade nearly 300 years ago, however, controversy still looms. Despite his repudiation of the notion of an unregulated market leading to exploitation and avarice, this still commonly propelled argument by the critics of capitalism.  I think even the most hardliner proponents of capitalism can understand the temptation to view human nature with such incredulity.

Even if we find the motives of human nature to be questionable, should we approach still from a precautionary standpoint hold such an attempt against free enterprise?  It is presumptuous for us to claim we are privy to the motives of an individual based on broad assumptions. Even if the nature of man has the inherent proclivity for exploitation does this mean that we should also punish fair and charitable entrepreneurs?  Even if Thomas Hobbes is correct about the nature of people and their motives and actions [3].

Even if in theory the overall nature of man is flawed, and we are wired to be insouciant on the abject penury of our fellow man, does this mean that we are not obliged to provide the individual with the choice to help? There are two fundamental flaws in the observations of Thomas Hobbes.  For one, it is unjust to penalize an individual for the actions of others, when sanctions should be directed to the transgressor. Hobbes’s second folly is the assumption that there is some underlying subjective to the interpretation of the morality of thoughts and actions. However, the morality of itself does have an underlying fixed and universal nature.  Anytime we utilize the state to legislate morality we are subscribing to the Political Philosophy of Hobbes versus the Lockean principles that the United States was established upon. As well as transgresses the ethos of Capitalism.


It is the cynicism of human nature that makes capitalism a prime target for criticism of its perceived moralistic ills.  To some extent, it could be considered flawed reasoning to consistently look for the moral ineptitude of Capitalism to the extent that is a conspicuously evident bias. On a superficial level, it is not morally base or malevolent to provide a service or good at a fair price more expediently than that of a competitor. Especially if it an in-demand commodity or service. However, due to class envy and the lack of acknowledgment of the entrepreneur acting as a job creator, the businessman is demonized.  As of reparation justice, the entrepreneur is taxed excessively (page 21 &23) [4]. Merely for acting in the interest of his or her consumers and for providing a source of employment for the community. The government takes away money that could be reinvested in their enterprise and contribute to job growth in the local economy. Much of this sentiment of punishing those who succeed at business is derived from the notion of excessive profits. Which is fundamentally flawed since there isn’t a formal criterion set to determine what is considered excessive (page 36) [5] It could be surmised due to the perception of the injustice of those who languish in poverty and those who indulge in the comforts of luxury society has an inherent bias towards those who are monetarily successful. Due to this implied bias, we in a sense punish them for doing their job well out of a misplaced sense of moral justice. Which is analogous to getting fired or demoted for excelling at your job. However, in a sense job creation can act as a means of voluntary charity in the sense that it provides people which an opportunity to support themselves fiscally. It should be noted that this mechanism of economic growth may not be pure altruism, many entrepreneurs do privately donate to charities. But undeniable job creation is mutually beneficial.


From the standpoint of the visceral assessment of the injustice of economic inequality, it does seem reasonable to criticize capitalism. There are many implicit benefits of capitalism in pure (unregulated forum). Trade-in of itself requires social cooperation, however, it also fosters social cooperation as well. Adam Smith’s first treatise  The Theory of Moral Sentiments addresses how people do possess what would now be considered empathy.  Due to our ability to put ourselves in “someone else’s shoes” proverbially the average person tends to skew towards pro-social behavior in regards to face to face social interaction (page 18)  [6]. It has been well documented in the field of Psychology how people have strong cognitive biases against those who transgress again out established social norms. For instance, a recent study has found that the majority of individuals that found lost wallets actually took proper recourse to return the wallet to the rightful owner [7]. While there is always the potential to encounter the one anti-social transgressor, most people tend to act within accordance with social norms. That applies even to economic exchange. Much how empathy acts as a bulwark for the golden rule, most entrepreneurs possess the social intelligence to know that if you continuously slight your customers’ word will get out. In-turn as a natural consequence of dishonesty you will not remain in business for very long.

Beyond the confines of social convention and the consequential byproduct of violating social norms, but extents to the mutual benefit of the merchant and the customer. While both parties need to be honest regarding the parameters of the exchange (providing this contingency is fulfilled) it will be a constructive interaction. Honest exchange will not harm any party involved. Both the buyer and seller will benefit mutually. The buyer will obtain a product or service they desire and the seller will gain monetarily [8] [9]. Paraphrasing and applying Mises’s subjective theory of value, the buyer values the good or service more than the money they are giving up for such a product. Vice Versa for the seller.  In the instance of an employee and employer dynamic the employee sells their time to the employer for compensation for completing the expected task of the employer. This example is a mere extrapolation of the example above, the same principle. Commerce mirrors the collaborative of teamwork than the treachery of starved jackals. In order for the exchange to work on a voluntary basis, norms need to be adhered to and there needs to be mutual cooperation and understanding. These requirements are fulfilled in the majority of cases of economic exchange. What the critics of capitalism are so blind too is the fact that exchange mitigated by the state often requires cohesion.  Often is more apt to gender conflict than reinforce relations between individuals. But few that are incredulous of the nature of capitalism question these morally adverse aspects of planned economies.

The discussion about the morality of capitalism is always dichotomic, hardly are there any intermediate or moderate perspectives. My question becomes is it possible for capitalism to be morally neutral?  Rather than the inquiry addressing capitalism from a broad perspective, could it be possible to evaluate the morality based on application? There must be some sort of grey area regarding the morality of capitalism, which would make it necessary to assess it on a situational basis.

It is tantalizing attempting to analyze capitalism in such a manner and superficially seems rational. However, it is erroneous to do so.  Phenomena such as “Crony Capitalism” is really not a byproduct of pure capitalism, but rather a cardinal sin of “mixed-economies”. The vast majority of nations around the world practice “mixed-economies” rather than unadulterated socialism or capitalism [10]. What has been adopted is a variant of capitalism that suffers from government intervention in contrast to unfettered capitalism guided by the invisible hand. This composite of government planning and capitalism has become a breeding ground for corporate entities to attempt to gear legislation and other incentives in their favor, instead of allowing the cadence of the market to select the winners and losers. Merely utter the name ENRON and no further explanation is required. The genuine point I am attempted to establish is that most of the impropriety associated with capitalism is not an inherent attribute of it, but a result of government intervention skewing the natural order.

In reality, capitalism cannot be morally neutral. Most of the immorality or amorality is associated with a tainted brand of capitalism. In a sense, proponents of capitalism can echo the mantra firmly touted by the socialists ” real (insert economic system here)  has never been practiced.  To certain capacity this true on both fronts.



One thought on “The Morality of Capitalism

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