Capitalism, above any other ideology, is one that promotes unlimited growth. It is also the most morally sound economic system in use today with its emphasis on freedom and its absence of force – even in its current mixed economy embodiment.
Dr Yaron Brook, Chairman of the Board at the Ayn Rand Institute, presents many of the arguments for why this is the case which generally come directly from Rand’s own writing. The majority of his work rightly defends the rights of businessmen to act in the interests of both themselves and their enterprise. In this way, wealth is created through the provision of a product or service which many people want and are willing to pay for. Additionally, competition is a key component of a fully functioning capitalist system which provides the best products and services it can and is a key area which must be discussed – competition is not a destructive tool of business as those entrenched in the anti-capitalistic mindset may have you believe. There is a strong moral case for capitalism which must be uncovered and voiced more often than it is today.
Capitalism is the most productive and effective system for economic development – even the left can agree that this is the case. The fundamental reason for this is incentivisation. A reward, be it monetary or another such as a promotion, is key to encouraging those of talent to create more wealth. Not only does this apply to the individual employee but also to those in executive positions who are incentivised to improve their business’ proposition to gain market share and thus receive larger rewards. Brook states this astutely: “the more people’s lives you make better, the richer you’ll become.” Competition, then, is the life blood of capitalism as this is the means of incentivisation between businesses. As businesses compete for a greater share of customers, they are encouraged to improve their products and services to best suit the needs of their potential customers. Dr Brooks explains that this self-interest, in pursuit of greater wealth, creates both greater value for customers and in a lot of cases, namely Apple, completely new technology and innovations.
Today’s society however continues to see self-interest as evil and immoral. What Ayn Rand suggests in The Virtue of Selfishness needs to change is our system of ethics. The results of capitalism and free market are, however, unequivocal – the freer the market, the greater the wealth and the better the standard of living. Taking South America as a case study, Venezuela used to be the richest nation in Latin America but has declined to become the poorest since adopting socialism, whilst Chile has grown to be the richest since adopting capitalism and implementing markets with less restrictions. I previously wrote a piece discussing such a difference on the Korean peninsula but these examples are not anomalies. Further examples include Singapore, Hong Kong, United Arab Emirates, Taiwan – all countries that have implemented freedom but are surrounded by nations using state control ideologies, such as communism in China. It appears that these empirical facts have been ignored in favour of a moral code where only those who have suffered can be held in high esteem. Is it really bad to think about yourself first, why is another person’s wellbeing more important than your own? Rand flips ethics upside down and, returning to Aristotle, believed that flourishing in your own life is the key to morality. Humans are separated from other animals by our ability to think and be rationally and Aristotle, Rand and Brook believe this to be the key defining faculty of the human being. Morality then for Rand is the use of our rational mind to decide what is best for our selves.
It must be made clear that self-interest does not mean no care for others, in many ways other people are incredibly important and useful to ourselves. Doing what is best for oneself is likely to involve the inclusion of other individuals and by treating these people right you serve yourself. As Brook states, if you were to lie to your friends for a week you might not have any friends after that time, if you’re a CEO and you decide to lie to your shareholders you will be fired. By being self-interested and wanting relationships with other individuals you improve their lives through friendly actions such as generosity.
If you live by this ethical model, which has logical, rational justification, then the ideological system you would prefer to live in is one where government is not regulating your every move but one in which they respect your ability to think rationally. Socialism or communism are based on a moral system of suffering and a belief in that which you have earned is not yours to keep. This provides no incentivisation to work to increase your wealth, to innovate and provide improvements to others and to their lives, especially if you know that gradually your wealth will be slowly taxed out of your hands. Communism kills business, and as business drives life improvements, communism kills development.
Those who argue against capitalism continuously return to the same idea, that capitalism creates inequality. Once again empirical facts have been ignored. If we were to look at Britain during the industrial revolution, to begin with people were in abject poverty and standards of living were low. However, as the system developed and people began working for a wage and moving up, businesses began to compete and innovate at an incredible rate, never seen before, lives were improved exponentially. Abject poverty as was seen prior to this revolution has not been seen since. Socialists believe we should give handouts to those who need it most around the world. As Brook states, if you demand that the poor be raised to a middle-class level, you are condemning them to be poor forever. As discussed, a key theme in capitalism is incentivisation. Earning and creating is an incentive to act sensibly with money but if you are handed unearned money there is no incentive to value it as highly as if you had earned it. For people to rise out of poverty they must go through that method of slowly ratcheting up from earning minimum wage to being invaluable to the company. Capitalism is the only system in human history to allow this and to solve the problem of poverty.
It is then clear that capitalism, unlike communism and other such statist systems, is moral and the fact that it is not typically viewed in this way shows us that it is not our ideology which needs to change, but rather our system of ethics. Capitalism, through self interest, creates wealth, destroys poverty and improves well-being. It is clear then that self interest is not a vice, but in fact one of the most valuable virtues of mankind.