Capitalism is an Unparalleled Economic and Political System
How it works
Capitalism is a system known for promoting prosperity, wealth, freedom, and more. It goes without saying that any country that has ever existed will have inevitable setbacks. Ideally, the supposed lack of investment of S&P 500 companies in themselves, and homelessness in Seattle, did not come into fruition because of Capitalism. Nevertheless, critics suggest that an alternative to Capitalism is required to fix these issues. But these alternative systems, that they insist on implementing, have consistently failed to meet the needs of their constituents time and time again when tested in the real world.
For this reason, Capitalism is an unparalleled economic and political system that should be implemented around the world due to its consistent track record in promoting peace, prosperity, and wealth.
Capitalism is the best economic system in promoting peace throughout the world. As the Ayn Rand Institute observed, Capitalism created the civilized world’s longest period of peace – from the end of the Napoleonic Wars in 1815 to the beginning of World War I in 1914 (Andrew Bernstein). For this reason, it’s wrong when opponents of Capitalism misalign it with greed and conflict. From major conflicts such as World War I and World War II, to lesser conflicts such as the Persian Gulf War and the Taliban in Afghanistan, all have one prominent characteristic in common. All these conflicts have erupted under the command of dictatorial governments rather than Capitalistic ones. In stark contrast to various statist countries, Capitalism does not reward conflicts and the wasting of money. These dictatorial regimes need bloodshed and strife to gain power and to advance their goals, not Capitalism. While it’s certainly true that the Capitalist country of America has been involved in many conflicts in the past and present, it’s not Capitalism that incited these conflicts.
In addition, Capitalism should be a country’s preferred economic system due to its prosperous success in the Communications industry, and the obvious lack of better alternatives to Capitalism. Michael O’Reilly, the Commissioner of the FCC nominated by President Barack Obama, suggests that there are five reasons as to why the implementation has aided in the prosperity of the Communications industry. He suggests that Capitalism connects buyers and sellers in the marketplace, minimizes government interference, protects consumers efficiently, facilitates economic growth, and lastly fosters entrepreneurialism (Defending Capitalism). These five qualities of the Communications industry generated by Capitalism are advantageous because they assist in the generation of natural competition. Through natural competition, companies compete with one another to generate the most cost-effective and highest-quality product with the incentive to gain additional sales by convincing customers to buy their product over others. Time and time again, it’s proven that other economic systems like Communism couldn’t create true competition like Capitalism because of its failure to create innovation and incentives.
Rather than replacing capitalism with another system like socialism, John Ikerd, a Professor Emeritus at the University of Missouri and John Isbister, the author of Capitalism and Justice: Envisioning Social and Economic Fairness, both suggest that the current implementation of Capitalism should be improved upon rather than replaced. Ikerd believes no other economic system can rival the efficiency of Capitalism because it doesn’t get violently rejected by its own people. The inhabitants of a Capitalist country don’t fully reject Capitalism because it doesn’t deprive anyone of their basic social rights or violate any moral imperatives such as seizing the means of production and redistributing wealth like socialism and communism. He also mentions that it’s undeniable that Capitalism has its flaws. But the reasoning implies that Capitalism shouldn’t be replaced but improved upon. Even if one were to find justifiable fault in a capitalist system, there are simply no just or reasonable alternatives to Capitalism that exist. It’s clear that Capitalism can lack justice from time to time, but the reasoning of critics advocating for the replacement of capitalism due to its failure to guarantee freedom or equal treatment is foolish. There are two separate reasons as to why there’s no point in seeking alternatives to Capitalism. The first reason is that alternatives to Capitalism have been proven to be less just and moral, as seen by the bloody conflicts of the twentieth century. The second reason is that Capitalism is all that’s left; it has destroyed feudal, tribal, communal, and imperial systems. Put quite simply, all alternatives to capitalism have been eliminated by it and the remaining alternatives are simply insufficient at meeting the needs of its people.
Critics like Andy Freeman are correct in stating that Seattle is not doing so well even with the city’s decision to invest $5.3 million dollars into its homelessness crisis. He suggests that municipal zoning laws and state laws are preventing the construction of low-cost and transitional housing to help these homeless individuals. Freeman then uses these laws and this investment failure as proof that these laws are in place to serve the interests of the rich and that these capitalist-bureaucratic obstacles cannot solve the homelessness situation of Seattle even if desired. As a solution, Freeman calls for more government intervention and further taxing the rich. Detracting from this Seattle dilemma, Theodore Kinni, a contributor to the Stanford School of Business, discusses various fault lines in Capitalism. A study from economist William Lazonick shows that Companies from 2003 to 2012 spent 54% of their earnings buying back their stock and 37% of earnings on dividends, leaving 9% to invest in their business and people. It is then suggested that this is due to the sputtering engines of Capitalism.
These setbacks and losses are not because of capitalism. The critics fail to address that, since capitalism is the most prosperous and free system today, this gives companies and institutions the freedom to make poor governing decisions, financial laws, and other resolutions. In other words, it’s the fault of these individual institutions and not the entire economic and political system. Addressing Freeman’s piece regarding the dilemma of homelessness in Seattle, Freeman is misaligning the responsibility of capitalism. No economic system, including capitalism, can guarantee freedom or equality, let alone perfection. Even if it is undeniable that capitalism is the cause of the problem, socialist-like solutions such as taxing the rich, distributing wealth, and increased government intervention is indisputably not the solution. Freeman’s solutions will cripple incentive and competition to naturally solve the problem through commerce.
Regarding Kinni’s take on the lack of company investment in themselves, this is again not the fault of capitalism. In fact, it’s not even a problem. The study referred to here states that the total earnings of S&P 500 companies equate to $2.4 trillion, which means 9% of that is $206 billion. Evidence proves that these S&P 500 companies hire the absolute best of the best from top schools. This means that spending their earnings on training and investment in employees isn’t as necessary, and the consensual agreement between employers and employees on a salary is not an issue. This suggests that employers and employees are happy with their pay, eliminating a portion of the need for the company to invest more of its earnings in itself.
Moreover, capitalism rewards businesses with honest and civil practices. This is because entrepreneurs who engage in greedy and deceitful practices, such as Bernie Madoff and the CEO of Enron during its scandal, Kenneth Lay, fail in capitalist systems. They fail because true competition and creating the greatest and most efficient product for the consumer is rewarded in the long run, while deceitful practices only trick people temporarily in the short term (Mueller 44).
In summary, the arguments proposed by the opposition are invalidated because capitalism rewards ethical business practices, propagates prosperity and freedom, and brings success to those who partake in capitalism properly.
In conclusion, capitalism is the greatest social and economic system due to its promotion of ethical business practices, the peace it brings to civilized countries that partake in it, and the way it can foster competition and incentives, as seen in the communications industry. These reasons indicate that advocating for capitalism can help make the world a better place.
- Bernstein, Andrew. “Capitalism Does Not Lead to War.” War, edited by Louise I. Gerdes, Greenhaven Press, 2005. Opposing Viewpoints. Opposing Viewpoints in Context, http://link.galegroup.com.lscsproxy2.lonestar.edu/apps/doc/EJ3010237241/OVIC?u=nhmccd_main&sid=OVIC&xid=90e8558c. Accessed 4 Nov. 2018.
- “Defending Capitalism in Communications.” Federal Communications Commission, 17 Feb. 2016, www.fcc.gov/news-events/blog/2016/02/12/defending-capitalism-communications.
- Freeman, Andy. “Capitalism Unable to Ease Homelessness in Seattle Even If It Wants…” Liberation News, 24 July 2018, www.liberationnews.org/capitalism-unable-ease-homelessness-seattle-even-wants/.
- “Is Capitalism Killing America?” Stanford Graduate School of Business, 18 Sept. 2017, www.gsb.stanford.edu/insights/capitalism-killing-america.
- Isbister, John. “There Are No Just Alternatives to Capitalism.” Social Justice, edited by William Dudley, Greenhaven Press, 2005. Opposing Viewpoints. Opposing Viewpoints in Context, http://link.galegroup.com.lscsproxy2.lonestar.edu/apps/doc/EJ3010397229/OVIC?u=nhmccd_main&sid=OVIC&xid=c2622ae3. Accessed 4 Nov. 2018. Originally published in Capitalism and Justice: Envisioning Social and Economic Fairness, Kumarian Press, 2001.
- John, Ikerd. “Sustainable Capitalism: Our Best Hope for the Future.” Sustainable Capitalism: Our Best Hope for the Future,http://web.missouri.edu/ikerdj/papers/WI%20Baraboo%20–%20Sustainable%20Capitalism.htm
- Kinni, Theodore. “Is Capitalism Killing America?” Stanford Graduate School of Business, 18 Sept. 2017, www.gsb.stanford.edu/insights/capitalism-killing-america.
- Mueller, John. “Capitalism Is Beneficial.” American Values, edited by Mary E. Williams, Greenhaven Press, 2005. Opposing Viewpoints. Opposing Viewpoints in Context, http://link.galegroup.com.lscsproxy.lonestar.edu/apps/doc/EJ3010110234/OVIC?u=nhmccd_main&sid=OVIC&xid=68c69ce5. Accessed 2 Nov. 2018. Originally published as “Democracy vs. Capitalism,” The American Enterprise, vol. 13, Mar. 2002, p. 44.