Sorry, Sandy, Capitalism Needs No Redemption
Addressing an audience at Austin’s South by Southwest conference, Rep. Alexandria Ocasio-Cortez called capitalism an “irredeemable system.”
“Capitalism is the ideology of capital,” she says. “The most important thing is the concentration of capital and to seek and maximize profit.”
One should easily be able to point out the practical failings in such rudimentary arguments for socialism. In fact, it would be incredibly easy to argue, as a recent Vox article does, that nearly every advancement in human well-being has taken place in the short blip of human history since the Industrial Revolution. That article miraculously neglects to mention free markets or capitalism once, but it should be obvious to any reasonable observer what the observed trend means.
The Industrial Revolution did, in fact, lead to the concentration of capital in the hands of some more successful and innovative individuals, which allowed some of them to create large businesses that flourished (and many more that failed), particularly in places like America. The country's framework of laws allowed free markets to exist relatively unimpeded. Without this “ideology of capital,” where the profit motive drove success for many individuals and companies, there would have been no mechanism to create the economies of scale necessary for producers to provide larger quantities of higher quality goods and services. That, in turn, led to the lower prices which made those goods and services more desirable and attainable among more consumers in a competitive marketplace.
The net effect of this economic system has been wealth creation such that the world has never seen, a more robust economic marketplace, and the exponential betterment of human well-being. To grasp this doesn’t require an economics degree, but only the most basic understanding of how the principles of supply and demand guide economic progress in a free market of voluntary, reciprocal exchanges of value.
The question is, why would such a system be in any need of redemption, as Ocasio-Cortez suggests it should be?
Because she and her modern-day socialist cohorts eschew the reality of circumstances which lead to such prosperity in order to present a fantastic vision of a reality that they imagine could exist.
The argument for socialism is a moral one, and predicated upon the fantasy that there could possibly exist an equality of economic outcomes for millions upon millions of people for whom there is, as Thomas Sowell argues in The Quest for Cosmic Justice, a “vast spectrum of other inequalities in intelligence, talent, physical appearance, charm, articulation, etc.”
Ocasio-Cortez argues that these millions upon millions of people interacting with one another via free exchanges of value leads to some individuals becoming more successful than others due to the individual’s desire for “concentration of capital” and a motive for individual “profit.” She’s clear in those terms, but as is required of socialists, particularly those seeking power in America, she’s less clear about the only mechanism which could possibly lead to the equality of economic outcomes that she proclaims is possible.
Economic equality, Sowell continues, “may be achievable only by political measures which require large concentrations of power in a relatively few hands in government.” [Emphasis added]
Millions of individuals’ effort to concentrate capital by engaging in free market exchanges is evil, socialists proclaim, however much wealth is created and however much human beings may broadly benefit in the process. Any effort by government to concentrate the power to control the means of production and to redistribute wealth, on the other hand, is somehow noble.
But what does the latter imply?
The greatest impulse of socialists tends to be the equitable “redistribution” of wealth. In America, there are constitutional constraints prohibiting the government seizure of an individual’s existing wealth, but socialists of the past have already secured the mechanism for attempts to establish an equitable distribution of individuals’ income. We call that mechanism a progressive tax code.
This is generally problematic, not only because an equality of incomes is impossible in a free market due to the “vast spectrum” of inequalities which would naturally determine varying levels of success, but because “income cannot be redistributed because it was not distributed in the first place,” Sowell writes. “It was paid for services rendered and how much is paid is determined jointly by those individuals rendering the service and those to whom it is rendered.”
In other words, to “redistribute” income such that there is an equality of economic outcomes requires the destruction of the system of voluntary free market exchanges required to generate wealth in the first place.
Centralizing the “power” to redistribute income, and thereby cauterizing the wealth creation that the individuals in a free market can achieve, creates disastrous outcomes. Sowell writes:
To allow any governmental authority to determine how much money individuals shall be permitted to receive from other individuals produces not only a distortion of the economic processes by undermining incentive for efficiency, it is more fundamentally a monumental concentration of political power which reduces everyone to the level of a client of politicians. Even aside from what this means for freedom and human dignity, it makes virtually inevitable a constant and bitter struggle among all segments of the society for the favor of those who wield this massive power to determine each person’s economic well-being. It is a formula for economic, political, and social disaster. Such power has, in a number of countries, led to a nomenklatura whose personal privileges have been a mockery of the very ideals of equality that led to such a concentration of power in pursuit of a mirage.
Given all of this, we should be inclined to ask -- which of these two competing systems of economic arrangement actually requires some sort of redemption?
On the one hand, the system of free market exchanges which could lead to the “concentration of capital” among individuals while they seek “profit” has led to the greatest advancement of human well-being in the history of mankind. On the other, the very opposite principle, i.e., the concentration of government power to coercively chase some utopian vision of equality in economic outcomes, has unquestionably led to over 100 million deaths in the twentieth century alone, and all at the hands of socialist dictatorships which used this same indictment of the evils of capitalism as their guiding principle.
Capitalism, and the reciprocal free market activity that the term represents, is in no need of redemption. Socialism, however, is a cancerous ideology which has proven both practically and morally destructive, time and time again.
How can it possibly be that Ocasio-Cortez and company are able to allege, uncontested by a fawning media, that the principles of capitalism, and not socialism, should be the principles that are on trial in America’s debate over its future?