There is a widespread perception that capitalism is a system designed to encourage greed, envy, selfishness, and other moral failings to flourish. Popular writing on capitalism, notably Ayn Rand’s “The Fountainhead” and “Atlas Shrugged,” recognizes the importance of addressing the moral case for capitalism. No economic system, no matter how efficient and productive, can flourish if it is widely regarded as the root of all evil. Given that the science of economics is value free and does not address questions of morality, this misconception about capitalism often festers and propagates with little demur.
The assumption of many capitalists is that the demonstrable benefits of capitalism ought to speak for themselves – people will enjoy the material comforts that only capitalism can produce, and that will suffice to make the case for capitalism. Add to that the fact that socialism is invariably accompanied by tyranny, deprivation, and ultimately death, and it is reasonable to suppose that there is no need for debates about morality – the facts will speak for themselves.
While the facts to a large extent speak for themselves, socialists who cling to their ideological interpretations with a cult-like devotion have now achieved dominance in most schools and institutions of higher learning. They offer an interpretation of history that seems superficially attractive – the rich are rich because the poor are poor, wealth comes from theft and exploitation, those who oppose wealth redistribution are motivated by hate, socialism only fails because the wrong people are put in charge, and the like.
These arguments are central to the “decolonize the curriculum” movement that has swept universities in the last few years. Underpinning this ideology is a commitment to egalitarianism, and the belief that inequality of income, wealth, or circumstance is wrong. The notion that inequality is presumptively evil, and that capitalism is therefore immoral because it produces inequality, persists. As Michael Tanner argues in his critique of Thomas Piketty’s “Capitalism”:
“Piketty takes the evilness of inequality as a given, ignoring the broader question of whether the same conditions that lead to growing wealth at the top of the pyramid also improve material well-being for those at the bottom.”
One of the challenges in making the moral case for capitalism is that the inequality debates have spawned their own use of terminology, in which liberal means egalitarian and capitalism means exploitation. Thus, the first step in defending capitalism is definitional. For example, in South Africa the term “capitalism” was historically seen as indelibly linked to imperialism, conquest, and racial segregation. Walter Williams’ book “South Africa’s War Against Capitalism” addresses this issue, aiming to clarify the importance of freedom of association and contractual freedom to capitalism. Williams was concerned that apartheid was seen as “a tool of capitalist enrichment”:
“The dominant black opinion in South Africa is that apartheid is an outgrowth of capitalism. Businesspeople are often seen as evil forces seeking racially discriminatory laws as a means to higher profits through the economic exploitation of non-Europeans. Therefore, in the eyes of many black Africans and their benefactors in Europe, the United States and elsewhere, a large part of the solution is seen as being – inter alia – in the promotion of socialist goals, such as state ownership and income redistribution, as a means to bring about a more just society.”
This explains why many Africans consider communism an attractive ideology – they regard communism as “antiracist” and are enthusiastically encouraged in this belief by Western communists.
The need to address these misconceptions by offering a moral defense of capitalism shows the importance of Murray Rothbard’s “The Ethics of Liberty.” Understanding the ethics of liberty is important in defending liberty and private property, and beyond that it is also important as the foundation of a moral defense of capitalism.
In our book, “Redressing Historical Injustice,” David Gordon and I ground our moral defense of capitalism on the ethical standards set out by Rothbard. We argue that capitalism, in itself, is neither moral nor immoral. It is a system of free market exchange based on private property, and in our view “it is no more reasonable to seek a moral standard within the processes of free market exchange than it would be to seek a moral standard in hills or forests or other natural features.” We argue that “instead, the tenets of capitalism ought to be evaluated according to an independent moral standard, namely the ethics of liberty.”
We therefore defend the morality of capitalism by highlighting the importance of capitalism for liberty, and in turn emphasizing the importance of liberty for justice and peace. We argue that whether people have the same amount of wealth or different amounts of wealth is neither moral nor immoral. The moral debate concerns neither equality nor inequality, but people’s natural right to live in peace and liberty. Liberty is the foundation of morality and justice.
We defend capitalism not because we think systems of free exchange are inherently moral, but because we understand free exchange as an attribute of self-ownership and property rights. In a wider context different foundations for morality and justice may be held by different people, based on moral philosophy or religion, for example, but such foundations would not be objective or universal. Self-ownership and property rights are the only moral foundation of justice in an objective and universal sense.
Those who see capitalism as immoral essentially depict free exchange, freedom of association and contractual freedom as “evil” because liberty cannot guarantee wealth equality – liberty is indeed bound to produce unequal wealth distribution. However, as Amartya Sen points out, it is odd to see free exchange or economic liberty as “immoral”: “To be generically against markets would be almost as odd as being generically against conversations between people.” It is clear that a moral defense of freedom of expression and freedom of association, or “conversations between people,” does not depend on whether the experience or outcomes of such interactions is equal. A moral defense of capitalism is therefore premised on our inherent and inalienable right to life, liberty, and property.
