I chose this title on purpose because our times are going to engender a big re-think of our political and economic system and “Capitalism and Freedom”, Milton Friedman’s seminal book, arrived during a time of great cross currents as well, those of a generation ago.
Believers in a small, non-existent government may be right in theory but, given power, they never delivered a smaller government. Abdication of responsibility, naïve but self-serving beliefs in systems which we all know go to extremes, and despising fairness have led to the banking heart of the private sector begging bucks from Big Brother.
What is the essence of capitalism as generally understood?
- The private ownership of property rights protected by law
- The belief in private enterprise and ingenuity
- Utilizing the market mechanism to arrive at price and to leave economic participants free to use price to plan their production, consumption, and other activities
- A free information system encouraging communication and the expression of opinion
- Individual empowerment
- Trust busting and the distribution of wealth
The way modern western society holds to these beliefs can be seen if one compares our capitalism (alias “free market economy”, etc) with feudalism, communism and fascism. The contrasts readily become apparent.
Feudalism, communism and fascism have much in common and – shockingly – often differ from capitalism only in emphasis rather than substance.
There is first an ethical dimension, perhaps best summarized as “don’t do unto others what you don’t want others to do unto you.” (See my Two Lessons from the Last Century.) Ethics tend to be forgotten as we race gung ho for more and more.
Importantly, though, the feature which best distinguishes free market capitalism from all the others is that it managed to deliver John Stewart Mill’s “the greatest good for the greatest number”.
Our system is powered by a thriving middle class, the great generator of wealth. The erosion or the alienation of the middle class dooms the system and transforms it, ever so gently, and sometimes not so gently, into oblivion.
The middle class is the centerpiece of the masterpiece.