Capitalism Is Alive and Well

If you listen to the talking heads of the mainstream media, influential politicians like Senator Bernie Sanders, and left-wing publications and blogs, you'll be led to believe that capitalism is nothing more than a greedy, immoral, inefficient system that uses citizens to fatten corporations and government leaders.  But when you step back, take a deep breath, and study the facts, it's quite clear that capitalism will always be the answer.

Four Reasons Why Capitalism Works

It doesn't matter the date or time – you'll find outrageous claims of the decline of capitalism all throughout history.  During the recent recession, the Huffington Post published a piece titled "Capitalism Is Dead. Now What Do We Do?"  Just last year, the Independent Online ran a piece in which it claims that capitalism has made itself obsolete.  During the recent presidential election, otherwise respectable politicians tried to push the idea of socialism on Americans with straight faces.

While there's always room in America for debate and the marketplace of ideas, it's astonishing that people continue to question the effectiveness of capitalism when it has become the gold standard for successful government over the past few centuries.

In case you've become so inundated with the calls for socialism over the past decade that you've started to question your sanity, let's have a bit of a refresher on why capitalism works and how it benefits the government, the marketplace, businesses, families, and individuals.

Here are specific reasons why capitalism is still alive and well.

1. Capitalism Creates Freedom

At its very core, capitalism ensures freedom.  How so?  Well, put simply, it promotes choice.  It gives every citizen the ability to choose what he buys, how much he pays, where he wants to work, what he wants to sell, etc.

With capitalism, you can decide to rent out your house as a stream of income and buy another one to live in.  It's your right.

With capitalism, you can get three different quotes from three different contractors when you want to install a new HVAC system in your home.  It's your right.

With capitalism, you can run a business and set your prices higher than the competition simply because you offer better service and more value.  It's your right.

With statism, the opposite is true.  Choices are limited, and you must adhere to strict rules and regulations.

As business owner Matt Michel succinctly says, "The removal of simple choices reduces freedom.  The removal of all choices is slavery.  The direction of statism is towards slavery.  The direction of capitalism is towards freedom.  Capitalism is morally superior."

2. Capitalism Encourages Productivity

One of the beautiful things about capitalism is that it draws a clear line in the sand.  If you want to be successful and financially independent, you have to work hard.  If you have no interest in working hard and creating a future for yourself, you don't have to work.  In this sense, capitalism encourages productivity on an individual basis.

Whereas a statist or socialist society gives people little reason to exert energy and make sacrifices, capitalism provides people with motivation to add value to society.  If you want to see your wages grow, you work hard and impress your employer.  If you don't want to have an employer, you launch your own business and pave your own way.  If you want to become a lawyer, you go to law school, get the degree, and prove your worth in the job marketplace.

Do some individuals face more barriers than others based on things like skin color, gender, and economic background?  Certainly – but that doesn't mean that the entire system is flawed.

3. Capitalism Leads to Happiness

All said and done, every person in the world wants one thing: happiness.  And while it's possible to find happiness in just about any situation, data show that people in countries where capitalism is alive and well tend to be happier than those in socialist or statist societies.

A few years ago, the University of Leicester produced what it called the first ever "world map of happiness."  As the report stated, "There is a belief that capitalism leads to unhappy people.  However, when people are asked if they are happy with their lives, people in countries with good healthcare, a higher GDP per capita, and access to education were much more likely to report being happy."

If you don't believe the University of Leicester's world map of happiness, just think about it in terms of common sense.  When people have the freedom to make choices – rather than being told what they can do, where they can shop, where they can work, how much they can earn, and how much they can spend on products and services – they tend to be much more satisfied with their day-to-day lives and future outlook.  The result is happiness.

4. Capitalism Promotes Environmentalism 

If you want to make a socialist's head spin, tell him that capitalism actually does a better job of protecting the environment and promoting sustainability.  For an example, just look at "The Tragedy of the Commons" by Garrett Hardin.

In his piece, Hardin looks at a 1974 satellite photo of Earth in which a shot of northern Africa showed an irregular dark patch, roughly 390 square miles in area.  When researchers looked at this area from the ground, they realized that it was a vibrant piece of property with lush grass.  Outside the land, which was fenced in, the ground had been despoiled, and there was very little evidence of any plant life.

What was the explanation for this?  The fenced in area was private land that was subdivided into five different portions.  Because the owners of the land had incentive to take care of it, the property thrived.  Outside the fenced in area was public land in which nomads could herd their cattle.  Because there was no incentive to care for the pasture, the land quickly deteriorated.

This is just one example, but it's a powerful one.  When people own land, they take care of it.  When everyone owns land, nobody is incentivized to steward it.

Let the System Work for You

If you're lazy, unmotivated, and jealous of others' success, capitalism probably won't work for you.  But the fact that it doesn't work for you doesn't mean that the system, as a whole, is broken.  The fact of the matter is that ambitious people who are willing to work hard and create value will continue to thrive in a capitalistic society.  No level of noise from attention-seeking politicians, reporters, and high school economics teachers will change this fact.