Why Liberals Hate Capitalism

Capitalism is to each according to his accomplishments

America is engaged in a great culture war for the preservation of capitalism along with liberty – which is symbiotically linked to capitalism. As economist Joseph Schumpeter predicted a century ago, capitalism has sown the seeds of its own destruction.1 Schumpeter laid the blame at the feet of liberal professors who, freed from the need to work, would promote anti-capitalist dogma which eventually would result in people voting for a social welfare state, i.e. socialism.

College professors indoctrinating socialism

“Capitalism will not survive. Its demise will not be due to economic failure; instead its very success . . . creates conditions in which it cannot survive.” Schumpeter

Just how bad is the anti-capitalist mentality? In recent polls, a majority of Americans ages 18-29 believe socialism is the ideal economic system2 They embrace feel-good notions about some abstract socialist utopia3 that never has existed and never can exist. They simultaneously harbor a dark vision of capitalism as a dog-eat-dog system. Clearly, the vituperation of capitalism by professors has infected college students and wafted into the general population. It appears Schumpeter was prescient.

Why Liberals Favor Socialism Over Capitalism

There are many reasons progressives hate capitalism and embrace socialism.

Capitalism evolved organically. No intellectual wrote a capitalist manifesto. Adam Smith did not invent capitalism; he merely explained what people did naturally. Capitalism just happens; it doesn’t require academics to theorize.
No one is needed to control capitalism. Socialism however requires controllers, i.e. socialist intellectuals who deign to know what is best for everyone.
Capitalism is egalitarian. Some uneducated bloke can make a fortune stripping junked autos for parts because he provides a valuable service to consumers. In contrast, the intellectual feels unrecognized and unrewarded.
Professors are rewarded by bureaucrats, not markets. They succeed by pleasing statist employers, not by providing value to consumers.
Capitalism is to each according to his accomplishments, not his intentions.
Liberals believe their advanced degrees, pet theories and pristine intentions should be rewarded and override the free decisions of consumers, if necessary by using the police power of the state. Capitalists believe in laissez faire.
Collectivists prefer government regulation to the chaos of the marketplace.
Consumers are sovereign. Intellectuals enjoy no special status and the common man holds all the power via his decisions to buy or not to buy. The most powerful economic force on earth is a consumer armed with a free choice. Wealth can be achieved only by serving sovereign consumers – with every penny a vote.
Capitalism brooks no excuses for failure. Those who fail are found wanting by their fellow man. Both the carrot and stick are real. The economic landscape is littered with failed businesses and crushed dreams of wannabe entrepreneurs. Under socialism, there are no consequences for failure.
Socialists desire control over others because they know what is best for the poor ignorant rubes in flyover land. Capitalists just want to be left alone.
Intellectuals see themselves as heroic figures reining in greedy capitalists, saving helpless victims and basking in the approbation of mankind. Capitalists simply want to provide a product or service consumers value more than its cost.
Liberals focus on the perceived inequalities and social injustices of capitalism rather than on its astounding success in ending extreme poverty on our planet.
Progressives ignore the total failure of all collectivist systems ever imposed by man. They ignore Venezuela, Cuba, North Korea and the former USSR and believe they will get it right the next time. Capitalists know better.

Schumpeter’s Prediction: True or False?

Over 100 years ago Schumpeter predicted the success of capitalism would lead to its destruction. He feared the demise of capitalism, along with its corollaries of wealth and liberty, would usher in a new dark age resulting in a lengthy and unspeakable Orwellian torpor where men lead lives of quiet desperation. We are now in the end stage of a great cultural war to decide if our children and grandchildren inherit a world of free men and free markets or one of a never-ending socialist miasma.

I fear Americans have lost the critical connection between capitalism and the wealth and liberty it produces. By most objective metrics, it appears socialism is on the ascendancy. Even in America, that great bastion of capitalism and the richest country on earth, its youth favor socialism. Hopefully, this post will help explain why America’s liberal intelligentsia hate capitalism and love socialism.

Liberty is like a beautiful but fragile garden in the middle of the jungle; it requires constant vigilance to survive. It is not a natural state, but must be protected constantly against forces trying to destroy it. We Americans are not doing a good enough job tending the garden. Nowhere is it written that the garden will survive.

Please see my posts of March 4, 2018 and March, 11, 2018 for a comprehensive analysis of Schumpeter’s prediction. All my posts are available on my website: www.mllg.us.
See my post of May 26, 2024. It is available in the Substack archives and on my website.
Most college students who favor socialism trot out Sweden as an example of a socialist nirvana. They are blissfully ignorant that Sweden is a capitalist state with sky-high taxes on its middle class. If Sweden were a US state, it would be 30% poorer than the USA’s poorest state, Mississippi.

© 2024 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com

The Morality of Capitalism

Capitalism vs. Socialism: Results, Theory and Morality

George Noga
Oct 27, 2024

Socialists always compare an idealized version of socialism to the practice of capitalism. This is as convoluted as comparing ideal capitalism to real-world socialism. This post presents a comparison between socialism and capitalism: results to results, theory to theory and morality to morality.

Results of Socialism Compared to Results of Capitalism

This is no contest; no one seriously argues socialism produces better results. Socialism never has created sustained prosperity; it can only achieve a brief illusion of prosperity by plundering a nation’s wealth. See my post of May 26, 2024 for more details; it is available on my website www.mllg.us and in Substack archives.

Although socialism may achieve transient benefits, it always ends the same, i.e. starvation amidst plenty. Socialism’s failures are legion: the USSR, Venezuela, Cuba, North Korea, much of Latin and South America and Africa. There is not one example in history where socialism has worked. But they will get it right next time.

In sharp contrast, capitalism’s successes also are legion; they include, but are not limited to, the USA, Canada, Europe, Australia, New Zealand, Japan, Singapore and South Korea. In the past 30 years (per the World Bank) capitalism has cut extreme poverty by 90%. Each day 100,000 more people escape poverty thanks to capitalism, the greatest economic and humanitarian success since men lived in trees.

Theory of Socialism Compared to Theory of Capitalism

Under ideal socialism, the governing values are community and equality. Socialists view economic well-being as a common enterprise. People share work according to their abilities and no one demands extra benefits due to greater talent or work. All inequalities due to undeserved advantages or disadvantages are eliminated. In socialists’ utopia all people are economically equal, i.e. equality of outcome.

Ideal capitalism means self-interest and free markets. Some people are more talented, exert more effort or take greater risks; hence, some are wealthier than others. Just as in the socialist utopia however, people care about each other and value community. When someone is in need, neighbors help. All of the good parts of the socialist utopia are present in ideal capitalism, but so are additional benefits such as innovation, job creation and more and better goods and services.

Everyone is better off with capitalism and there is no envy because everyone is unselfish. If one assumes people under socialism are altruistic, then it is only fair to make the same assumption for capitalism. Moreover, markets are not dependent on altruism and function quite well even when comity is in short supply.

Morality of Socialism Compared to Morality of Capitalism

Capitalism is non-coercive cooperation in free markets. People succeed only by providing goods and services valued by their fellow man more than their cost. No transaction ever takes place unless both parties benefit. There is no more potent force on earth than a consumer armed with a free choice. The consumer is sovereign, and even the largest corporation cannot force anyone to buy its products. Capitalism is economic democracy and every penny is a vote.

Following are some of the moral underpinnings of capitalism – an economic system that respects individual rights, promotes liberty and lifts the world out of poverty.

Individual rights: Capitalism is predicated on the belief that it is a fundamental human right for everyone to be free to pursue their own economic interest. Under socialism, big brother decides everything.
Liberty: The freedom provided by capitalism is necessary for humans, both individually and as a society, to flourish. The political corollary of capitalism is liberty, while under socialism it is tyranny.
Meritocracy: Under capitalism, rewards are aligned with ability, work effort and risk. Capitalism is based on the correct understanding of human nature, while socialism is diametrically opposed to human nature.
Voluntary Exchange: All transactions in a capitalist system are based on mutual benefit. Socialism is based on central planning without regard to markets.
Innovation and Efficiency: The incentives of capitalism result in an economy that innovates, creates new jobs and responds to peoples’ needs and wants. This process benefits society as a whole. Compare the socialist (East Germany) Trabant to the capitalist (West Germany) Mercedes-Benz, BMW, VW or Audi.
Morality: Individuals under capitalism are responsible for their own success or failure; under socialism individuals are subordinate to the state.

Capitalism isn’t good because it works; it works because it’s good.

Capitalism is morally superior to socialism and is better in both theory and practice. Capitalism isn’t good because it works; it works because it is good. Socialism always fails because it is based on a deeply flawed understanding of human nature; hence, it never has succeeded and never will. The great mystery is why anyone in 2024 still believes in socialism. Maybe they will get it right the next time.

© 2024 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com