Common misconceptions about capitalism

Common misconceptions about capitalism

A friend's MySpace blog and the recent discussion I got into concerning it prompted me to add a bit to my thoughts and compile them into a post. The topic is capitalism—more specifically, the common misconceptions of capitalism that I’ve run across. Many college students I’ve encountered have the same general opinions: e.g., capitalism is a bad system, introducing some form of socialist doctrine into our economic system would be of great benefit, and governmental involvement in regulating the economy should increase. While the degree and severity of the proposed changes vary, they all strike this college student as flawed. I will attempt here to outline and refute several of the underlying assumptions of such opinions.

One of the conversations that sparked my interest was that of the responsibility of advertisers in creating societal norms, and the resulting push for government involvement in protecting the consumer from negative advertising pressures. (The case in point was the sexualization of advertising and the glorification of the supermodel body type.) Another was the intention of Adam Smith’s definition of capitalism in The Wealth of Nations. That point was brought up in a discussion concerning how Christian our nation really is. The final straw was a conversation that occurred out of the blue with one of my calculus III classmates today about the viability of capitalism and the possible addition of socialistic controls (such as a national income cap) to our current system. Through these dialogues, I have been able to distill what I think are the most detrimental misconceptions about capitalism that my generation seems to consistently promulgate.

1. The ability to sell something, whether a product or an idea, entails power over what the consumer will buy.

No one phrases this opinion as I have. It usually masquerades as well-meaning sentiment against the advertising and pressures of Hollywood that have helped our society become obsessed with a less-than-realistic and often less-than-moral ideal for human thought, appearance, or behavior. “It’s wrong for the media to sell an ideal that is harmful to people, this ideal promotes [insert bulimia, sleeping around, drinking, etc.]!” But this statement assumes too much: it assumes that advertisers have the capacity to cause people to do or believe something. It is true that the purpose of advertising is to encourage the purchase, but no advertiser can impede the choice of a consumer to buy or not. Every consumer has the same opportunity to find a logical fallacy and render the advertising invalid, or to examine the ad and still choose to purchase the product. Advertising, whether it is true or deceptive or ethical or not, cannot coerce.

2. Capitalism inherently allows unethical advertising.

“Why does the current system allow such deception or misrepresentation in the media, then?” is usually the next question. Indeed, capitalism does allow such actions. More generally, free society allows it. I have just as much right to deceive you as you do to see through my deception. On a corporate level, there are consequences to false or unethical advertising—lawsuits and the like. But something so abstract as lifestyle choices or supermodel bodies—you can't prosecute that. The lies in advertising with which we are faced are not the only ideals the media has ever sold, nor are they a creation of Hollywood and the media alone. Society helps. And society goes through cycles of what’s fashionable or acceptable.

3. Government intervention can solve capitalism’s faults.

Often, the suggestion is proposed that the government should not allow deceptive advertising. Very seldom do they see that this borders on censorship by suggesting that firms be disallowed from selling whatever they want. Caveat emptor, not venditor. Beyond the obvious exceptions (like drugs and black market weapons), if what firms are allowed to sell should be regulated governmentally, then the government carries the burden of being a moral guide for the consumer. That is neither its purpose nor its practical function. In fact, it can only mean one thing: bigger government and a Bigger Brother telling us what we can and can’t buy.

This idea often takes the form of, “But the government should do something about it!,” or the ever popular, “It’s not fair! The consumer is being sold false ideas.” As I said before, yes, capitalism means that the seller has just as much of a right to sell a product or an idea as the buyer does to buy it or not. But I don't see how this is unfair—the ultimate power is already in the hands of the buyer!

“But obviously most consumers don’t take advantage of this power and are gullibly led along by the media.” Now, an argument against the system of capitalism on the basis that not everyone takes advantage of the rights afforded them by the system simply won’t succeed. Capitalism works as a system whether the buyers take advantage of their power or not. They still have ultimate power over the advertisers. Ignorance of this power or willingness to be deceived does not nullify the power or indict the system—it indicts the character of our society’s buyers. “With great power comes great responsibility”—capitalism not only gives the power to buyers, it gives them the responsibility of discernment in what they will buy or buy into. The system is not to blame. The sellers are not to blame. The buyers are to blame, because they (we) have voted for the superficial and immoral ideals with our wallets. I grow weary of young, marginally-liberal in their angst pinning the blame on the enigmatic ideas of “the system” or “the sellers.” Why not admit that the power to stop this lies in the buying choice of the people who are being advertised to?

Getting away from the advertising end of things, we have…

4. Capitalism is a cutthroat system.

Guilty as charged. If you have no initiative and entrepreneurship, capitalism dooms you to failure. But isn’t that just life? Capitalism may be harsh, but so is 2 Thessalonians 3:10: “If anyone is not willing to work, let him not eat.” But, far from being solely cutthroat, the basis of capitalism, as Smith argued in Wealth of Nations, is that the self-interest promotes the social interest. In other words, when one person or firm betters itself by working, advertising, selling, etc., it benefits society as a whole. Capitalism works, and it doesn't work because everyone is out to make a buck. It works by promoting a society that is individually self-bettering, resulting in a society full of free individuals who are seeking a better quality of life. Even corporations find that they benefit from giving back to society.

5. Capitalism is selfish, and so opposed to the teachings of Christ.

From what I know of Smith's writings, he argued that capitalism survives on self-interest, which is distinguished from selfishness. Selfishness seeks self-gratification at the expense of others. Self-interest seeks to improve the individual by legal means. The fundamental hypothesis posited by Smith was that individuals’ and firms’ pursuit of self-interest actually serves the social interest. (What’s good for the individual in a free market translates to the benefit of the entire market.)

How can an economic theory be opposed to the moral teachings of Christ? It is true that Smith's economic philosophy makes for a poor worldview. But I don't think anyone’s tried to apply his economic theory to Christian living (or living in general).

Also, central to the command to consider others’ needs before our own is our sense of our own needs—self-interest, if you will. Take, for example, the Golden Rule: “whatever you wish that others would do to you, do also to them” (Matthew 7:12). Putting others first requires a knowledge of what you wish for yourself—self-interest again. Then Paul writes in Philippians 2:3-4, “Let each of you look not only to his own interests, but also to the interests of others.” This command is not to the exclusion of self-interest, but in fact builds on it, telling us to consider our self-interest and then consider others’ interests above even that. So, no—capitalistic self-interest is not in conflict with Christian values. I think it is an essential part of our existence (think fight-or-flight response and the like) and a jumping-off point for going the extra mile for others. I think that it's making too much of Smith's philosophy to say that it conflicts with the message of Christ. That’s bringing economic policy into an arena for which it was not intended.

Those are the five biggest misconceptions about capitalism that I've found among my peers. Unfortunately, many of their opinions seem to be formed as an echo of the generic liberal angst against the present system, whatever the system may be. I try to bring a healthy dose of realistic thought into my political discussions with them, and I hope that I've done that here.