Does Free Enterprise Encourage Excess and Exploitation?
Aside from the purely economic benefits of capitalism and the broad acknowledgement that freedom itself is a good thing, is it possible that the negative effects of capitalism outweigh the positives? Does capitalism destroy a society from the inside out by encouraging gluttony and incentivizing exploitation?
An appraisal of American culture appears to confirm this. In an age of Big Gulps, Big Macs and the "The 'Merica;" when capitalism seems to have turned human beings into overweight, impatient and technology-crazed consumer zombies; and when people seem more interested in getting ahead than getting along, it is worth considering whether the benefits are worth the costs.
There are a few questions to unpack before we can answer this.
Does capitalism make people greedy?
Given that greed is a strong force in all types of societies throughout all of human history, we can conclusively say no, capitalism does not make people greedy. In fact, a system of free enterprise directs our inherent greed toward more productive ends. In a capitalist economy, wealth is the reward for finding ways to meet the needs and demands of others. In a command economy, where reward mechanisms are distorted, individuals more frequently pursue wealth by climbing the ladder of crime and corruption.
Does capitalism produce a society where the weak are ruled over or destroyed by the strong?
This would seem logical—after all, free enterprise is based largely on competition. But winners are not so easy to predict. In a vastly diverse world where people have different resources, intellect, determination and creativity, mere "strength" has little to say about who comes out on top. This is a fact first acknowledged by Socrates, who challenged the idea that justice is the "advantage of the stronger."
Who would have guessed in the early 2000s that Apple would soon dominate the computer industry, or the music world, or the cell phone market? Who would have thought Blockbuster video would be nearly put out of business by Redbox, Netflix and network TV dramas? And where else can a person born into poverty become a millionaire businessman, but in a free society where opportunity and competition are limitless?
If capitalism does not make us more greedy, and it allows for fair competition, then we have to refine our original question. Rather than asking what capitalism does to people, it is more appropriate to ask what it allows people to do to themselves. Freedom means choice, and prosperity expands the breadth and depth of possible choices.
We may therefore ask whether our sinful nature, which tempts us to indulge and exploit, is given more opportunities to do so in a free and prosperous society. This is a legitimate charge against capitalism, of which I confess it is guilty. But if the power to choose and to act is necessarily a potential for evil, then it is also a potential for good. We tend to focus on the worst aspects of free choice, but the same freedom that gives us corndogs and liquor stores also gives us veggie burgers and farmers markets.
Thus, it is not the economic system in which human action takes place that lies at the heart of this inquiry; the virtue of a society suffers not by its systems and institutions, but by its character, culture and confession. If we seek a more ethical or Christ-centered society we must begin by changing hearts and minds, not passing legislation or altering economic policy.
Looking to the iron fist of government for moral correction frequently leads to even greater problems. The "Law of Unintended Consequences" is just one factor that must be considered before state action is taken. An even more ominous threat was recognized by James Madison in Federalist 51:
If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.
The alternative to a free society is one ruled by men, and we must not be fooled into thinking that statesmen are more wise, virtuous or even more accountable than businessmen. The capitalist believes that a little excess and exploitation in the private sphere, where it can be snuffed out in a free marketplace, is a small price to pay to reduce excess and exploitation in the public sphere, where it becomes the law of the land. This video from LearnLiberty illustrates—literally—why the government is not the solution to cronyism.
One more point is worth noting on this subject. Capitalism is routinely blamed for many cases of supposed excess or exploitation where there is none. American companies can hire Chinese workers to make products at a fraction of the cost of hiring a local worker. Is that exploitation, or is it opportunity? A group of friends can entertain one another with jokes and junk food. Does it count against them as gluttony? The subjective nature of these issues leaves substantial room for interpretation, and there is no shortage of critics willing to make the worst of anything.
Capitalism is particularly easy to misunderstand, to great consequence. By increasing freedom and prosperity, capitalism provides greater opportunities for both good and evil, but using the government to tip the balance more favorably tends to backfire. The task of developing a virtuous people is far beyond legislative jurisprudence. To miss this point is to invite a much greater set of problems.
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