Morality of capitalism - Is capitalism good?

Morality of capitalism - Is capitalism good?

“A basic principle of modern state capitalism is that costs and risks are socialized to the extent possible, while profit is privatized.” - Noam Chomsky.

Capitalism is an economic system characterized by - lack of government intervention, means of production owned by private firms, goods and services distributed according to price mechanism (and not government price controls), demand and supply dynamics, etc. It is generally seen in negative light and devoid of morality as we can see in the above quote. But does it really lack morality?

No it has no morality and is bad –

1. Capitalism encourages greed. Its only motive is profit. Mixed economies or socialistic economies are far much better in terms of inclusive development and taking care of all people rather than capitalism. Capitalism violates principles of social justice.

2. In capitalism, usually end justifies the means. The end which is profit justifies all sort of environmental and human exploitation.

3. Capitalism is a system of class rule based on the private ownership of means of livelihood. This gives a few rich the power to buy and sell jobs, which means they get power to build or destroy entire communities that depend on those jobs.

4. Capitalists favors freedom and individualism, but they destroy freedom and individualism for everyone but themselves. Capitalists undermine unions and other organizations that encourage workers to cooperate with each other and act collectively. Capitalism, as a system of organizing economic activity, has a contradictory relation to community as a way of organizing social cooperation.

5. Capitalism enables firms to gain monopoly power. With monopoly they can exploit people to charge higher prices.

6. Capitalism is environmentally destructive.

7. It ignores social good and social responsibility.

8. Capitalist society fails to provide equality of opportunity. Many are born into wealthy families or inherit wealth due to notion of private property.

9. Capitalist economies have a tendency to booms and busts with recessions and mass unemployment.

10. Capitalism has a systematic bias towards consumerism rather than need fulfillment.

11. Capitalist commodification threatens important values in society and culture. It corrodes community.

12. Capitalism limits democracy as with economic power comes legal power and influence.

13. The gap between rich and poor always increases because the rich have a better and greater chance to invest and thus gain profits than the poor.

14. It promotes multi-culturism which in turn becomes mono-culturalism; as the economically strongest culture always wins in such system.

Yes it has morality and is good –

1. Capitalism empowers people through the freedom to choose, to buy or produce.

2. Freedom to choose is a high moral principle. Democracy is based on the same principle.

3. Democracy is held high morally while capitalism is looked down on. Yet, democracy shares almost similar flaws as capitalism. E.g. businessmen make fancy claims and don't deliver; so do politicians.

4. The communist states had assured employment and security for the aged and handicapped. Yet, people fled to capitalist countries where neither jobs nor welfare was assured. What was assured was freedom to choose, and that mattered above all. Thus there is inherent morality in capitalism.

5. Adam Smith, father of capitalism said, once capitalists had to compete in a market system, they had to woo consumers with ever better goods and services, thus producing a social good that was never part of their original aim. Smith said capitalists were rascals, but capitalism was a good system.

6. Economic freedom helps political freedom. Government controlled means of production and prices, leads to a powerful state which may extend its influence into other areas of life.

7. Capitalist firms face incentives to be efficient, cut costs and avoid waste. State owned firms often tend to be more inefficient.

8. Economic growth - Individuals face incentives to be innovative and work hard which creates a climate of innovation and economic expansion. This helps in economic growth. This increased wealth, enables a higher standard of living, and everyone can benefit from this increased wealth.

9. Its trickledown effect helps the poor.

10. There are no better alternatives. As Winston Churchill, ‘“It has been said that democracy is the worst form of government except all the others that have been tried.’ A similar statement could apply to capitalism.

Conclusion

Martin Luther King Jr. said in 'Where do we go from here' that - Capitalism fails to realize that life is social. Communism fails to realize that life is personal. The good and just society is...a socially conscious democracy which reconciles the truths of individualism and collectivism. There is inherent morality in capitalism and capitalism as a system is good. It is just that greed and bad capitalists have tarnished the system just like greed and corrupt politicians destroy democracy. Most of the countries are moving towards mixed economies with capitalism at centre and enough control of the state to achieve a welfare state. Virtues of capitalism have proven to be effective in bringing in prosperity.