Why Liberals should learn to love capitalism
Markets don’t get enough credit from the center-left..
The Center-left has a shaky relationship with free markets. In 2016 Bernie Sanders ran a strong, yet unsuccessful primary campaign on his brand of “Democratic Socialism” In his campaign he called for Single Payer healthcare, Free Tuition, a $15 minimum wage, Universal Child Care, an end to Citizens United and higher taxes on the wealthy and corporations. That platform gave inspiration to a cohort of young who due to the recent great recession are increasingly skeptical of capitalism. There is just one problem, none of the policies just listed are socialism, and many people have a skewed idea of what capitalism actually is.
The policies aligned with Bernie Sanders campaign that are gaining traction in Democratic politics, such as Single-Payer aren’t socialism. So is Free college and parental leave. Those set of policies are just an expansion of public goods and the social safety net. There are actually pro-capitalist arguments for single payer, such as it will free up business from covering healthcare for their employees or will allow entrepreneurs to take more risks.
What is misunderstood is what socialism actually is, Socialism is defined as the collective ownership of the means of production. Basically workers own every business and make decisions on how that business is run collectively. The political right often tries to frame socialism as activist government, or redistribution, or the welfare state. That framing has been so commonplace in American politics such to the point that the left often buys into it as well.
The Right-leaning think tank, Heritage Foundation, has a ranking system of what they call Economic Freedom. In this ranking system they rank countries on its definition of economic freedom by their tax laws, regulatory framework, property rights, and openness to trade. In this index, Denmark is ranked as having more economic freedom than the U.S. with it being ranked 12th and the U.S. at number 18.
Denmark is hailed by American leftists as a socialist paradise for their universal health care, generous pension and unemployment benefits, childcare provisions, and overall high quality of life. In reality, Denmark is a very capitalist country with a generous welfare state. In Denmark, property rights are strongly protected, labour laws and regulations are loose, free trade reigns, there is no legislated minimum wage, and until very recently had a lower corporate tax rate than the U.S. Denmark does however have high personal income taxes and a VAT (which is like a national sales tax) to fund their generous programs. They essentially let the market create wealth and then taxes some of that wealth to fund universal social programs, Denmark is by every means a capitalist country.
What many people, especially those on the left, get wrong about capitalism is how it actually is defined. It is defined as an economic system based on private ownership and the free exchange of goods and services. Many people think of it as greed, or business behaving badly, or inequality, or cronyism. While those things maybe symptoms of bad practices associated with capitalism, it is not the essence of it. Capitalism allows for a specialization trade and gives consumers options.
Capitalism reduces poverty. Free trade and globalization in the last thirty years has caused a dramatic reduction in extreme poverty. It was largely due to China liberalizing its economy after the policies of Deng Xiaoping. Free Trade benefits everyone, it raises the standard of living in the developing world, and provides cheap goods to developed nations. Although there are a few communities that may have been hurt by trade, they must be given the necessary trade adjustment assistance to retool their economy for a changed world.
With all of these positives, liberals and progressives should not view capitalism as the problem. Corporate greed and consolidation is the problem, Inequality is the problem, an inadequate social safety net is the problem. All of those can mitigated with the right policies. Supporting a more generous welfare state does not make one an anti capitalist. Actually, one can argue that the welfare state was designed to accommodate capitalism to protect vulnerable citizens from market failure.
Capitalism makes the all of the luxuries of modern life capable. That Iphone that you spend way too much time on? Brought to you by Capitalism. That Uber you and your friends took out to the bars? Capitalism is responsible. Binging a new series on Netflix? Capitalism. That Macbook that you use to get on facebook and rant about how horrible capitalism is? Also brought to you by capitalism. A person of middling means today has a higher quality of life than medieval kings due to capitalism. Progressives should learn to appreciate the good that they are often blind to. This does not mean changing their values or beliefs but changing the semantics used to describe our economic system in order to have better informed discussions and decisions on policy.
