The Capitalist Conundrum

How some love the benefits but hate the system that provides them.

In the next few articles, we will explore how anti-capitalist sentiment can paradoxically persist in societies that thrive on free markets. There is near-universal agreement that capitalism has produced previously unimagined results, lifting billions out of poverty, enabling huge leaps in innovation, and enabling individual economic and political freedoms far beyond those of any previous system. Yet questions remain: if capitalism has fostered so much good, why do so many people still view it with disdain, antipathy, and even outright hatred? Its detractors often blame it for wealth, income, and social inequalities, as well as environmental exploitation. To better understand this dynamic, let's first distinguish between the primary types of arguments against capitalism.

Economic Evidence versus Emotional Entropy

To understand anti-capitalist sentiment, we will have to examine both the economic realities and the psychological forces behind it.

The Economic Arguments

The confusion of inequality and injustice.

Capitalism, unlike any other system, rewards those in the system in proportion to the value they create for others. This necessarily produces inequality but cannot be considered unjust. See my article, 'The Morality of Capitalism' for a fuller explanation. But disparities in wealth and success do not reflect systemic failure; they are products of differences in effort expended, skills acquired, risks taken, and, to some extent, natural talent. These factors are present in every human endeavor. In sports, music, art, chess, poker, dance, architecture, science, or any other area you want to pick, some folks do it better than others, not because those areas have systemic faults, but because people do things differently. Why would anyone expect the economic system to magically produce equal outcomes?

The uncomfortable unpredictability of markets.

Many folks feel uncomfortable with the unpredictability of markets. They believe that a group of experts could plan a more organized system. But what these folks misunderstand is that what gives capitalism its greatest advantages is the freedom of the consumers in the system to make free choices. We live in a world economy of nine billion people, creating, marketing, buying, and selling. Of course, this creates uncertainty, since no one can predict what all these nine billion people will do next, but that does not justify denying them the ability to make free choices.

Consumer demand drives supply.

Since capitalism is a decentralized system that allocates resources based on consumer demand. It is often referred to as supply and demand, but demand and supply would be a better way to phrase it. In general, the demand, the desire for something within consumers, precedes the creation of a supply to respond to that demand. Entrepreneurs innovate and create services and products they hope will attract consumers by filling the demand the perceive in the market, and then seek venture capitalists to invest the funds needed to bring the product to market. Most attempts will fail to attract enough consumers to make the venture profitable. Those that succeed do so because consumers ‘vote’ in favor of it by spending their money on it.

The ‘benefits’ of alternative economies.

Academia has devolved into the media tradition of: "if it bleeds, it leads; if it’s sex, it’s next." The publish-or-perish culture driving academic research is analogous to the media's drive to attract customers. Thus, the more sensational the research, the more likely it is to be published, keeping the author gainfully employed. Extolling the virtues of capitalism is mundane and therefore not a fit subject for the next ‘hot’ publication. Slanted research, designed to ‘prove’ the superiority of alternative systems, by its contrarian nature, is far more likely to gain attention and be published. A paper detailing how North Koreans are far better off than Americans because their lives are not cluttered with possessions has a great chance of being published, while an article showing how the average American earns eighty-five times more than the average North Korean would be ignored as ‘not news’. This academic bias provides much of the fuel for those whose basic arguments are emotional rather than economic.

The Emotional Arguments

Letting consumers make the decisions is too random and unfair.

Too many fear the market’s perceived unpredictability. Capitalism’s critics see markets as chaotic, driven by corporate greed and consumers' foolish desires. They believe that a centrally planned economy would lead to stability and order. They imagine a system in which resources and manufacturing are managed by experts in an equitable and rational manner. Not only does this vision grossly misunderstand how economies function, but it is, on its face, anti-democratic. It takes away people’s voices and replaces them with the dictates of bureaucrats. Those who hold this point of view fail to see that, without economic freedom, no freedom is possible.

Economic Envy

Of the most powerful emotions driving anti-capitalist feelings, envy and resentment top the list. Ironically, this is especially true where opportunity is widely available, but outcomes vary significantly. That is, the very aspects of the system that provide everyone with an opportunity are blamed for people failing to take advantage of that opportunity. Seeing others succeed inspires the less successful to resent those who have succeeded. The media often exacerbates the situation by advertising the trappings of wealth that the successful have acquired. For many folks, this translates into a feeling of failure because they don’t have those rewards. This leads these folks to resent the system itself. They feel cheated, even though those who succeeded did not do so at the expense of the less successful.

Emotional Envy

Capitalism’s most vocal critics include academics, artists, writers, and media talking heads who often feel undervalued. They feel as though their contributions to society are more important than those of entrepreneurs and business leaders, and are envious of the status and wealth accorded to those whom they see as less worthy. They believe that the system provides financial and societal success that is not proportional to contributions to society. Therefore, these individuals direct their envy toward the criticism of capitalism for what they see as inherently misplaced values.

Grievance Culture

Anti-capitalist sentiment has become a fundamental element of grievance culture. The narratives propagated by ‘progressives’ portray capitalism as the source of a multitude of evils. While many of the problems are real, the blame is misplaced. One of capitalism's many virtues is that it makes social issues more apparent. But capitalism has no mechanism for solving the problems; that is the proper role of government. Blaming capitalism is tantamount to shooting the messenger. However, the grievance culture is blatantly hypocritical: those complaining about the evils of capitalism continue to enjoy its rewards. In the past fifty years alone, capitalism has provided the internet, cell phones, personal computers, microwave ovens, LED lighting, electric vehicles, smart home technology, gene-editing technology, medical imaging, e-commerce, digital payment systems, and on-demand services, GPS systems, digital cameras, and so much more. Before one takes the complainers seriously, they should demonstrate their sincerity by relinquishing all these benefits. When they paint capitalism as exploitive while at the same time exploiting it by using what it provides, they prove their lack of integrity. Promoting a culture of grievance is a self-serving attempt to achieve some sort of relevance that they aren’t willing to ‘pay their dues’ to earn. See my article, 'Imagine No Capitalism' to see what might happen if they got their way.

More to Come

This article has explored the economic and emotional reasons for the rise of anti-capitalist sentiment. In future articles, we will explore each of the areas highlighted above in greater detail, devoting an entire article to each. Look for them coming soon.