You are invited to read this commentary from the Free Enterprise Foundation. It will make you think!

Capitalism, Misunderstood Engine of Benevolence

“Doing well is the result of doing good! That's what capitalism is all about.”
Ralph Waldo Emerson

The inherent vice of Capitalism is the unequal sharing of blessings; the inherent virtue of Socialism is the equal sharing of miseries.”
Winston Churchill

Rasmussen Reports notes that historically when asked whether they prefer a free market economy to a socialist, 70 percent of Americans choose free enterprise. In a more recent Rasmussen national telephone poll, substituting the word capitalism for free enterprise receives startling different results. Only 53 percent of American adults think capitalism is better than socialism.

Of particular challenge to restoring the vigor of our economy, among adults under 30, only thirty seven percent prefer capitalism, while 33 percent prefer socialism with 30 percent undecided. As in the earlier larger poll, substituting “free enterprise” for “capitalism” raises the split for the “good guys” to 49 to 26. As you might expect, there is a partisan split in the responses as well, with Republicans preferring Capitalism by an eleven to one margin, while Democrats only favor capitalism 39 percent to 30.

However you slice the results, it is clear that we have failed to educate our emerging ruling majority regarding the merits of free enterprise or even that it is capitalism. Of more importance, as parents we have allowed, on our watch, the nation to drift from a strong Judeo-Christian morality to self centered whatever feels good hedonism. Washington, Franklin and Jefferson all warned us against losing our Creator ordained morality. John Adams in the clearest terms warned that our Constitution was not the equal of an immoral citizenry consumed with self centered passion that would go through our Constitution “like a whale through a net.”

What is capitalism? And if it is not the cause of our current economic and social distress, what is the road we must travel to restore our great land to its full power and stability? Capitalism is founded in the noble effort of man to earn a living for himself and his family. The former chairman of Coca Cola noted recently that it is the only economic engine that will lift people out of poverty. By diligence, intelligence and hard work, the budding capitalist is able to create surplus and to exchange a portion of his surplus for what he needs to live and reinvest in the growth of his craft or profession.

A capitalist supports not only himself but those he employs who in turn support others who produce items desired for an ever increasing general welfare. In a properly balanced capitalist economy, there is not equality in outcome, but the level of welfare for those at the bottom should be increasing as the economy expands. Ultimately it is more about the level of well being for the bottom than the ratio of earnings by the top over the bottom.

While in the eighteenth century the system I describe was kept in track by competition, in the twenty-first, technology has permitted the accumulation of capital in sums not imaginable historically. One mouse click can obligate in a string of interconnected financial decisions some million households and others connected to them. Under these circumstances, bankruptcy without assistance to those who are faced with financial destruction is not a solution our society is willing to accept. The cleansing action of bankruptcy is thought to be too disruptive of the innocent in such cases. Along the road to this sad state of affairs, if we had enforced the rules already on the books, this would not have happened.

The financial collapse could have been avoided if we had used existing regulatory devices to prevent the problem from occurring in the first place. Instead, in a tragic perfect storm of “non-,” “mis-” and “mal-” action by government, rogue traders influenced, by the benevolent attitude toward risky financial activity, undertook actions that were the last straw. Their activity broke the faith of the country that what they were doing could ever have a happy ending, and our financial infrastructure came tumbling down.

Capitalists get the blame for what had plenty of helping hands in government, but capitalism is not to blame. Every system has rogues who pursue their own goals to the detriment of society. More often that not, in capitalism, welfare is actually enhanced by these activities because competition keeps it under control. Experience supports Churchill’s conclusion that in socialism rather than debating unequal distribution of surplus, we would be reduced to sharing misery.

Economists focus on man’s economic choices, but in analyzing capitalism, they miss man’s better nature. Capitalism is founded in service by man to man. Its measure should consider what capitalists do with their surplus, a surplus that societies not based in capitalism simply do not produce.

While my envy bone gets a slight twinge when I read of someone earning an 8 or 9 figure sum by means that are never described, I remind myself that in earning that significant surplus beyond the needs of any lifetime, he or she has earned an opportunity to exhibit their better nature by its disposition. Do they enlarge opportunity for others and lift those who have not achieved a minimal portion of the American dream….or if not that, have they shared their bounty with a charity that reaches out to the world’s poor to lift up those whom economic weakness make among the world’s most miserable and at risk?

While others around the globe exhibit a sense of charity, American capitalists and just ordinary citizens are unmatched in disposition of significant amounts of surplus to good deeds and the needs of others. The figure for 2008 is not yet available, but in 2007, Americans gave almost 308 Billion dollars in measured charity. That is the kind of giving that gets reflected on tax returns, and it misses the thousands of volunteer hours that occur daily.

Non government organizations, business and the American rich are far more effective than our politicized government in responding immediately to emergencies and to underwriting the long term welfare of mankind in their educational, research and direct support for those less fortunate.

I cringe when I think of what would happen if we counted on government to replace this giving by its red tape-wrapped efforts. American capitalists do a better job here and world wide in bringing clean water, a cure for polio, and countless other acts of charity annually than are imaginable from governments’ ham fisted efforts.

Capitalistic process must be encouraged for the freedom it provides man to utilize his whole nature founded in the values taught since childhood to make the world a better place by his passage through life. Its alleged failures are based in our failures in education, encouragement of faith and self discipline to enforce those rules already on the books to prevent our society from getting off the tracks in the future. Flirting with alternatives is flirting with misery and disaster for us all. _._

Copyright © 2009 by Robert E. Freer, Jr. All rights reserved

About the author: Robert E. Freer, Jr., is president of the Free Enterprise Foundation. He is also a professor at The Citadel and was selected in 2005 to be their first John S. Grinalds Leader in Residence and in 2009 to be their first BB&T Visiting Professor in Ethics and Free Enterprise Leadership. A regular contributor to the Mercury, Prof. Freer may be reached at Robert.freer@citadel.edu. If you would like him to appear before your group or organization to speak on any of the subjects about which he writes, please contact him at The Citadel. Copies of his earlier columns may be found at The Free Enterprise Foundation