Donna Edmunds: In Praise of Capitalism

Donna Edmunds is Director of Research at Progressive Vision. 

Much has been written over the last week on the government response to last week’s riots, some of it on this blog. But whilst there has been some welcome rhetoric from the Prime Minister on returning the country to a state in which hard work is fairly rewarded (although not in so many words, admittedly), there has been much more from both the PM and his ministers that has been kneejerk, illiberal and unfounded.

What is rapidly becoming clear is that this Conservative-led administration is determined to continue with the sorts of policies that have been employed by politicians in this country for decades. But it is the failure of those policies that we are seeing in tragic episodes such as the rioting, the shootings in Norway, and the financial turmoil that Europe currently finds itself in. This government has not recognised that it could be the first for many decades to stand for an alternative approach. James Delingpole has written:

“This is an opportunity for astute politicians to reject decades of ingrained, state-enforced political correctness and actual give the people what they want. What people want is very simple: a government which secures its citizens lives, livelihoods and property rights but otherwise leaves them well alone. Furthermore, a government which does not see it as part of its function to take money from the productive sector of the economy and squander it on the feckless and workshy.”

I agree with James that the government he describes would answer the concerns most commonly voiced by the British people, but I am less convinced that the people are clamouring – at the moment – for the rapid rollback of the state that would be required in order to get there. Why? Because after 56 years of the Welfare State, and with government spending now at over 50% of GDP for a third year running with barely a mention made of this fact, let alone any mainstream questioning of the morality of the situation, the British public have grown accustomed to the idea of state intervention to the point where they cannot conceive of any other way in which to run a country.

Any element of privatisation within the NHS is bad — even in the face of evidence that shows that health-care outcomes in the UK are not as good as those in comparable countries, the average Briton will shake his head and say “but privatisation is just not fair”. He can’t explain why, he just feels it to be so.

Any element of competition between or within schools is bad — neatly summarised by Prescott’s delightful little phrase: “the problem with good schools is that everyone wants to go there.” Grammar schools in particular are very bad despite being both free and good, because not everyone gets to attend them.

All rich people are bad — whether they’re self made, in which case they must have exploited workers – or have inherited wealth, in which case they are part of an oppressive regime. Furthermore, to pay for their crime of being rich, it is only just and fair that their money is handed over to the state to be shared amongst the people. The term ‘rich’ is applied to anyone with a little more money than the person voicing the opinion, and therefore includes most, if not all of the middle classes.

Mainstream political thinking – by which I mean the opinion of the man on the street – has become hopelessly muddled. He yearns for freedom from the state, particularly when shivering outside a pub in winter attempting to smoke, yet is the first to ask government for more money to be spent on whatever ill he perceives is the greatest in society, or more regulation to prevent a tragic event from ever recurring. And all of this done without a trace of irony. He simply cannot conceive that the two are mutually exclusive.

The myth spun to the people of Britain over the last half a century is this: that the government is able to take care of us from cradle to grave without imposing itself in our lives, without impoverishing the country by spending our hard-earned money, and without taking away our freedom to personal choice. It is not true, but has been believed as no credible alternative has been presented to the public. Yet with western economies collapsing under the strain of government debt and with civil society beginning to show signs of strain under a politically correct ideology that elevates the moral status of the criminal over the victim; the welfare recipient over the working man, that credible alternative must now be championed.
That credible alternative is, of course, capitalism.

The moral case for capitalism, so rarely heard at all in earnest in Britain, was succinctly laid out by Tom Palmer in a Cato Institute podcast recently. So many of the criticisms of capitalism that he identified are heard regularly in Britain; not only in our news, but also, thanks to years of repetition, uttered by her citizens. ‘Capitalism breeds inequality’, ‘it’s selfish’ and so on. But as Palmer points out, none of the criticisms apply only to capitalism, and indeed the adverse effects associated with them are often more keenly felt under socialist or authoritarian systems. Let us look some of these charges:

• ‘Capitalism is unrestrained self interest’. This implies that self interest exists only under Capitalism. It seems to be the concern most often voiced by the public when privatisation of any service is mooted: “It just wouldn’t be fair”. In other words, people would want to take what they could get with no concern for others in society. But this is a feature of human nature, not of capitalism. Self interest exists under every form of governance, be it socialism, interventionism, fascism or tribalism. Yet under any of those systems, those who are more able to achieve their selfish aims are those who are corrupt or criminal, only under capitalism is the desire to act in one’s self interest framed by a system of equality of law for everyone. Only under capitalism are the rich in society likely to have justly and morally earned their wealth through satisfying the needs and desires of others. Ayn Rand discussed the ‘Virtue of Selfishness’, whereas Gordon Gekko merely stated that ‘greed is good’, but the so called ‘base’ urge towards self interest that humans possess is only made virtuous when free individuals are enabled by law to trade freely to mutual advantage. The only mechanism for doing so is the free-market economy.
• ‘Capitalism means competition, and competition produces losers as well as winners’. Again, competition is seen in all forms of governance as people vie to better their lot under any system they happen to find themselves. However, once again the lawful framework that capitalism sets competition into ensures that, relatively speaking, capitalism produces those who do well and those who do less well. Contrast with communism in which the losers were shipped to gulags or summarily shot. As we have seen from the war of words raging over education reforms, the British system has consistently shied away from any form of competition over the last decades, particularly in education. Yet this is unrealistic. Humans are not carbon copies of each other, and a percentage of the population will always have some sort of advantage over others in any given situation. It is only under capitalism that each individual is free to find the sphere in which they excel, driving up the overall health, wealth and happiness of each person in society.
• ‘Capitalism leads to inequality’. It is a regular lament, even amongst those who are not particularly political, that the world would be a better place if everyone was on an equal material footing. That may be so, but it is a situation that has not yet been seen in human society, and is unlikely to be. If a person or an organisation has the power to take from those who have more and give to those who have less, in other words to construct an equal society and to enforce it so that it remains equal in perpetuity, they also have the power to take a little more for themselves because of course “all men are equal, but some are more equal than others”. Communist Russia and authoritarian Iran have their rich and poor classes. So once again we see that inequality is also a feature of all systems. On the other hand, capitalism tends to result in wealth being more evenly distributed throughout a society as the middle classes grow and the lower classes see their standards rise. Despite the expansion of the state in Britian this has clearly been the case here, and we have witnessed the working classes move out of the slums and into solidly built, centrally heated, plumbed homes filled with goods and gadgets undreamed of a century ago.

These, and the more nuanced arguments on specific policy are all arguments that must be made in the coming weeks and months, unashamedly, vociferously and repeatedly if we are to see a real shift towards a freer, wealthier society in the coming years. Not only by our politicians, but by all in society who value the vast benefits in terms of self-fulfilment that capitalism has brought us, and who would like to see those benefits extended even to those children who last week turned to criminality for a taste of life outside our welfare state, but this week are once again trapped within it.