What’s so great about capitalism?

Recently I’ve been reading some articles from the libertarian/classical liberal perspective on economic policy and the overall benefits of a capitalist world economy. With Ron Paul supporters flooding the internet in the last few months, one can’t help but pay at least a bit of attention to what that entire intellectual tradition has been arguing. Two recent things I have read are Peter Saunders’ article on why capitalism is good for the soul and a few pieces by a certain Dr. Kelley Ross, a scholar on the little-known philosopher Jakob Fries. Ross apparently was a libertarian candidate for California a few times, and his stuff on political economy can be found here.

Saunders claims that the reason activist oriented politics like socialism and environmentalism attract a following today is because they base themselves on an emotional appeal to the human soul that rational and calculating capitalism can’t emulate. The statistical evidence he brings forth about the improvement of living standards since the 19th century is convincing but, like most free-market fundamentalists, he is also prone to broad generalizations. For example, I doubt that socialists have shown any more of an “unshakeable belief in their own infallibility” than those who praise the invisible hand of the market. When Saunders claims that in 1820 85% of the world population lived on today’s equivalent of less than $1, this is misleading because it implies that back then one dollar’s worth of goods would be equal or close to todays, which I doubt. At another point, he writes that “because capitalism constantly encourages innovation, it is inevitable that many of the items brought to market will be trivial or even trashy, but some will make a genuine contribution to human well-being.” In theory this is true enough. But for a real life example of where innovation almost never leads to success is the modern music industry, where the most original and boundary-pushing artists are consistently found in the underground scenes rather than in the media spotlight.

These are just a few of the objections that can be brought up to Saunders’s argument. However, one of the most interesting parts in it is the mention of Robert Nozick’s claim that the reason intellectuals are so often opposed to the free market comes from a realization that their labor is not worth as much as they initially thought. This insight seems to hit right on the head the unfortunate fact that intelligence and education are not valued as much now as in the past.

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