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Criticisms of Capitalism

Posted by Chance on February 1, 2006

The existence and state of capitalism is something that Christians and non-Christians alike argue about. Most Christians are what people would consider “right-wing” and typically support the ideals of capitalism. Non-Christians, those who are typically libertarians, support capitalism as well. On the other side are the more liberal Christians and non-Christians who dislike the American ideal of capitalism, and want to move more towards a type of system where people are guaranteed by the government to get what they need.

What is capitalism? It is essentially a system of mutual exchanges. People exchange money for goods or services. Some negotiation is typically involved, some direct, some indirect. I can negotiate directly with someone selling their house so that we can both agree on a price for which I can buy that house. Other negotiations are more indirect. If Arby’s sells sandwiches that are too expensive (which they do), I can decide to go somewhere else to eat. If more people decide to do the same thing, Arby’s will increase the quality of their food, or sell at lower prices.

Now, that doesn’t sound so bad, does it? But people have some criticisms of our way of doing business, some of them legitimate, some of them not. One legitimate concern is that of the person’s safety, and this is where regulation comes in. Should workers at Arby’s have to get a food-handling license, so that there is a guarantee that the food is healthy and clean? Should the sanitation department do inspections of Arby’s to make sure that it is safe? Now, I am a supporter of the free market, but this area of capitalism is gray. To what extent should our places of business be legilated? Personally, I believe the only legitimate reason for legislating businesses (in addition to fraud) is when the safety of people are involved. However, even this is a slippery slope. No one should be able to sue McDonald’s for coffee that was supposed to be hot in the first place. Some argue that the free market and the lawsuit system ensure that businesses sell reasonably safe products. That is, motivations to have a successful business are enough to ensure that a business stays in line, and if, in the event they do not, they get sued. The lawsuit would be punitive, and the free market economics would be preventative enough. Does the free market do a sufficient job in this area though? One question I have unanswered for now…

Now, again, the idea of mutual exchanges sounds pretty simple. There are issues of personal safety and fraud. But this idea gets really tricky when people factor need into the equation. Many people think that a system like socialism should be in place, because it (supposedly) provides for people’s basic needs. They assert that a more socialist form of government allows people to get the food and healthcare they need. In a capitalist society, people are at the mercy of others’ profit motive. Nothing is guaranteed.

Many Christians join along with this argument along with the claim that capitalism is
simply immoral. It encourages greed and profit at other people’s expense.

Now, this post is not addressing those who believe in minor tweaks to the system, or believe in things such as welfare for those who cannot help themselves, I am mainly addressing arguments from those who see capitalism itself as deeply flawed and immoral and prefer a radically altered form of capitalism or a socialistic government. It is one thing to support some programs for the poor, but it is another to want massive wealth-redistribution schemes.

Concerning the issue of material needs, this is an understandable argument. However, policy institutes such as The Cato Institute and The Foundation for Economic Education (FEE) spend their efforts debunking the notion that socialist governments can provide for the common man better than a capitalist society. Their arguments are philosophical, as well as empirical. Countless articles explain how capitalism can deliver the goods to society. Now, I am sure there are countless left-wing institutions as well that provide another side to the story. But Cato and Fee’s arguments make intuitive sense as well, and they have history behind them. For instance, they use the oil crisis of the 70s to show why government should not issue price controls on gasoline, or other products for that matter. They show how rent control has devastated communities. Such institutes also explain that incentives drive a capitalist society, and use some common sense scenarios to show how excessive government intervention in the economy can be destructive and hurt the poor along with the rich.

I can go at length arguing the material needs aspect, and I am sure I will do so in later posts.

The “Christian” arguments against capitalism are a little bit harder to defend against, and I will address this in my next post.

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2 Responses to “Criticisms of Capitalism”

  1. The Prophet said

    Very Interesting.

  2. The Prophet said

    Great Post, Chance… I can’t wait for your next one.

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