Capitalism Superiority
The superiority of capitalism is based on its wealth generation and poverty eradication abilities. First, we need to understand the origins of this economic system. In 1681, the French finance minister Jean-Baptiste Colbert asked a group of business owners led by a man named Thomas Le Gendre how the government should help them. Le Gendre told him: “Laissez nous faire,” meaning “let us do it.” This coined the concept of laissez-faire economics, arguing that market forces alone should drive the economy and the governments should avoid direct intervention.
Almost 100 years later, The Wealth of Nations, written by Adam Smith in 1776, produced a comprehensive philosophical examination of the way nations should manage their economies. He called his system a “commercial society” and later his supporters promoted this idea known as “capitalism.” First, Capitalism has been the most effective system for lifting people out of poverty, you can see that between the years 0 and 1800, 80% of the population was below the poverty line and stayed there until the Industrialization, motivated and enabled by Capitalism, started creating wealth as citizens started getting better products for better prices: https://ourworldindata.org/grapher/share-of-population-living-in-extreme-poverty?country=~OWID_WRL Note that the data after 1981 relates to household income or consumption surveys collated by the world bank, and before 1981 it is based on historical reconstructions of GDP per capita and inequality data, that’s why the dots appear each 10 years.
Second, Capitalism contributed to unprecedented economic growth rates; to see this, a good example is to look at our economic growth rate. Before looking at the charts, these historical estimates are adjusted for inflation: https://ourworldindata.org/grapher/global-gdp-over-the-long-run From the year 0 to the year 1500, the global GDP was about 500 million us dollars, in 1820 the global GDP was of $1.4 trillion approximately, it grew 1% to 2% annually. From the year 1850 to the 1950, the GDP grew almost 10 times, while experiencing mature industrial capitalism, the growth rates were around 2 to 3% annually in industrialized nations. After the WW2, from 1950 to the 2000, it got multiplied 5 times, rising to $68 trillion. And averaged 4% to 5% growth rate annually.
What is the logic behind this? What is supporting this growth? It’s the freedom capitalism supports. Countries rated “free,” “mostly free,” or “moderately free” in the 2024 Index generate incomes that are more than double the average levels in other countries and more than three times higher than the incomes of people living in economically “repressed” countries. Also, there is a significant correlation between economic freedom and overall well-being, which includes factors such as health, education, the environment, innovation, societal progress, and democratic governance.
To conclude, capitalism is the most effective system for promoting economic growth, reducing poverty, and improving quality of life, beyond its economic benefits, capitalism is morally superior because it respects individual freedom and fosters innovation and progress. Well-managed capitalism, adapted to current societies, can still be a driving force for prosperity and human development. As John Stuart Mill once said: a society that is more concerned about equality than freedom is not going to get anything from both.
