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The Morality of Capitalism

George Noga Capitalism vs. Socialism

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.
Food Lines in Socialist Venezuela

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