Socialism vs. Capitalism: Which is the Moral System

Throughout history there have been two basic forms of social organization: collectivism and individualism. In the twentieth-century collectivism has taken many forms: socialism, fascism, nazism, welfare-statism and communism are its more notable variations. The only social system commensurate with individualism is laissez-faire capitalism.

The extraordinary level of material prosperity achieved by the capitalist system over the course of the last two-hundred years is a matter of historical record. But very few people are willing to defend capitalism as morally uplifting.

It is fashionable among college professors, journalists, and politicians these days to sneer at the free-enterprise system. They tell us that capitalism is base, callous, exploitative, dehumanizing, alienating, and ultimately enslaving.

The intellectuals’ mantra runs something like this: In theory socialism is the morally superior social system despite its dismal record of failure in the real world. Capitalism, by contrast, is a morally bankrupt system despite the extraordinary prosperity it has created. In other words, capitalism at best, can only be defended on pragmatic grounds. We tolerate it because it works.

Under socialism a ruling class of intellectuals, bureaucrats and social planners decide what people want or what is good for society and then use the coercive power of the State to regulate, tax, and redistribute the wealth of those who work for a living. In other words, socialism is a form of legalized theft.

The morality of socialism can be summed-up in two words: envy and self-sacrifice. Envy is the desire to not only possess another’s wealth but also the desire to see another’s wealth lowered to the level of one’s own. Socialism’s teaching on self-sacrifice was nicely summarized by two of its greatest defenders, Hermann Goering and Bennito Mussolini. The highest principle of Nazism (National Socialism), said Goering, is: “Common good comes before private good.” Fascism, said Mussolini, is ” a life in which the individual, through the sacrifice of his own private interests…realizes that completely spiritual existence in which his value as a man lies.”

Socialism is the social system which institutionalizes envy and self-sacrifice: It is the social system which uses compulsion and the organized violence of the State to expropriate wealth from the producer class for its redistribution to the parasitical class.

Despite the intellectuals’ psychotic hatred of capitalism, it is the only moral and just social system.

Capitalism is the only moral system because it requires human beings to deal with one another as traders–that is, as free moral agents trading and selling goods and services on the basis of mutual consent.

Capitalism is the only just system because the sole criterion that determines the value of thing exchanged is the free, voluntary, universal judgement of the consumer. Coercion and fraud are anathema to the free-market system.

It is both moral and just because the degree to which man rises or falls in society is determined by the degree to which he uses his mind. Capitalism is the only social system that rewards merit, ability and achievement, regardless of one’s birth or station in life.

Yes, there are winners and losers in capitalism. The winners are those who are honest, industrious, thoughtful, prudent, frugal, responsible, disciplined, and efficient. The losers are those who are shiftless, lazy, imprudent, extravagant, negligent, impractical, and inefficient.

Capitalism is the only social system that rewards virtue and punishes vice. This applies to both the business executive and the carpenter, the lawyer and the factory worker.

But how does the entrepreneurial mind work? Have you ever wondered about the mental processes of the men and women who invented penicillin, the internal combustion engine, the airplane, the radio, the electric light, canned food, air conditioning, washing machines, dishwashers, computers, etc.?

What are the characteristics of the entrepreneur? The entrepreneur is that man or woman with unlimited drive, initiative, insight, energy, daring creativity, optimism and ingenuity. The entrepreneur is the man who sees in every field a potential garden, in every seed an apple. Wealth starts with ideas in people’s heads.

The entrepreneur is therefore above all else a man of the mind. The entrepreneur is the man who is constantly thinking of new ways to improve the material or spiritual lives of the greatest number of people.

And what are the social and political conditions which encourage or inhibit the entrepreneurial mind? The free-enterprise system is not possible without the sanctity of private property, the freedom of contract, free trade and the rule of law.

But the one thing that the entrepreneur values over all others is freedom–the freedom to experiment, invent and produce. The one thing that the entrepreneur dreads is government intervention. Government taxation and regulation are the means by which social planners punish and restrict the man or woman of ideas.

Welfare, regulations, taxes, tariffs, minimum-wage laws are all immoral because they use the coercive power of the state to organize human choice and action; they’re immoral because they inhibit or deny the freedom to choose how we live our lives; they’re immoral because they deny our right to live as autonomous moral agents; and they’re immoral because they deny our essential humanity. If you think this is hyperbole, stop paying your taxes for a year or two and see what happens.

The requirements for success in a free society demand that ordinary citizens order their lives in accordance with certain virtues–namely, rationality, independence, industriousness, prudence, frugality, etc. In a free capitalist society individuals must choose for themselves how they will order their lives and the values they will pursue. Under socialism, most of life’s decisions are made for you.

Both socialism and capitalism have incentive programs. Under socialism there are built-in incentives to shirk responsibility. There is no reason to work harder than anyone else becuase the rewards are shared and therefore minimal to the hard-working individual; indeed, the incentive is to work less than others because the immediate loss is shared and therefore minimal to the slacker.

Under capitalism, the incentive is to work harder because each producer will receive the total value of his production–the rewards are not shared. Simply put: socialism rewards sloth and penalizes hard work while capitalism rewards hard work and penalizes sloth.

According to socialist doctrine, there is a limited amount of wealth in the world that must be divided equally between all citizens. One person’s gain under such a system is another’s loss.

According to the capitalist teaching, wealth has an unlimited growth potential and the fruits of one’s labor should be retained in whole by the producer. But unlike socialism, one person’s gain is everybody’s gain in the capitalist system. Wealth is distributed unequally but the ship of wealth rises for everyone.

Sadly, America is no longer a capitalist nation. We live under what is more properly called a mixed economy–that is, an economic system that permits private property, but only at the discretion of government planners. A little bit of capitalism and a little bit of socialism.

When government redistributes wealth through taxation, when it attempts to control and regulate business production and trade, who are the winners and losers? Under this kind of economy the winners and losers are reversed: the winners are those who scream the loudest for a handout and the losers are those quiet citizens who work hard and pay their taxes.

As a consequence of our sixty-year experiment with a mixed economy and the welfare state, America has created two new classes of citizens. The first is a debased class of dependents whose means of survival is contingent upon the forced expropriation of wealth from working citizens by a professional class of government social planners. The forgotten man and woman in all of this is the quiet, hardworking, lawabiding, taxpaying citizen who minds his or her own business but is forced to work for the government and their serfs.

The return of capitalism will not happen until there is a moral revolution in this country. We must rediscover and then teach our young the virtues associated with being free and independent citizens. Then and only then, will there be social justice in America.

C. Bradley Thompson is Assistant Professor of Political Science at Ashland University and Coordinator of Publications and Special Programs at the John M. Ashbrook Center for Public Affairs.