When the Bilderberg conference met in Switzerland a month ago, many of their topics of discussion were predictable: Russia, China, and Brexit. (Organizers did not foresee the importance of including Iran on their list.) One of the more intriguing topics was “the future of capitalism.” In spite of the hostility that some American politicians (mostly Democrats) express toward capitalism, I see little reason to doubt that capitalism will remain for many generations.
According to Wikipedia, capitalism had its origins in the Italian Renaissance; the guild system of the Middle Ages and the emergence of modern banking during the same time period are also significant to the beginnings of capitalism. The age of exploration and the industrial revolution both strengthened the power of capitalism. While some countries, including Spain and Portugal, saw government investment in exploration and colonialization, Great Britain and the Netherlands experienced private investment in those areas. Joint stock companies funded the explorers and traders, accepting the risk of such ventures for the sake of the expected profits; the government did little more than tax the profits that were produced.
Karl Marx predicted that capitalism would be overthrown by angry workers in the most industrialized countries. Instead, the first Marxist revolution arose in Russia, and it was followed by Marxist movements in less industrialized countries. Government regulations, along with the growing power of labor unions, responded to complaints about capitalism, reducing its laissez-faire (“leave it alone”) tendencies, but preserving its existence. Regulations about workplace safety, pollution control, and labor laws are accepted by modern capitalists, although debate continues regarding the proper level of government regulation. So long as businesses are privately owned, even though they are regulated, capitalism will continue to exist in the world.
The primary opponent of capitalism is socialism. Many socialist countries are dominated by Marxist movements, generally identified with a Communist Party. During the last hundred years, people have fled such countries in great numbers. Since the Communist Party tended to be totalitarian, restricting the freedom of citizens, it is not easy to separate the political and economic factors involved. Strictly speaking, capitalism and socialism are economic systems that could exist under monarchies or republics, in democracies and in dictatorships. As a result, it may be unfair to judge socialism solely by the number of East Germans, Vietnamese, Cubans, and others who have fled totalitarian socialism, even at the risk of their lives.
But when the economies of East and West Germany are compared before their union in 1989, or when North Korea and South Korea are compared, the results are clear. In fact, the capitalist nations of east Asia after the end of World War II were so successful that, by the 1980s, the government of China decided to return to capitalism, even though the government is still run by a group that calls itself Communist. China’s economic failures under Marxist socialism and its success since it turned to capitalism are another case study for comparison of the two systems.
Advocates of socialism claim that it is more fair, that it divides wealth among all the people rather than allowing wealth to accumulate in the hands of a few successful capitalists. Government regulation again tempers capitalism, breaking apart monopolies and trusts and cartels, setting minimum wages for workers, and in extreme cases (such as during a major war) controlling prices as well as wages. Meanwhile, competition among capitalists for customers and for workers grants advantages to customers and workers that they would not gain in a fully socialist system. If the government owned and managed all the businesses in a country, waste and carelessness would increase, because workers and managers would have less incentive to be careful, efficient, and productive.
In same cases, government competition with private businesses benefits consumers. The United States Postal Service is required to deliver letters and packages everywhere in the country; UPS, FedEx, and DHL must follow the same policy to remain competitive. Competition between federal health insurance (Medicare and Medicaid) and private health insurers could also benefit consumers.
In many cases, people demand more government control out of a sense of what rights belong to citizens. At first, human rights were largely considered freedoms: freedom of speech, freedom of religion, freedom to assemble, and so forth. As the right to life was used to support government programs to feed the hungry and shelter the homeless, the concept of human rights expanded. Basic education was seen as a human right, so the government opened schools; now some politicians want to consider college education a right for all citizens. In the same way, treating health care as a human right, some politicians want the government not only to regulate doctors and hospitals but to control them, determining costs and fees and subsidizing health care for low income citizens through taxation of wealthier citizens. Such a move would be detrimental to capitalism.
Even though some loud voices deplore capitalism and want to replace it with socialism, it seems likely that capitalism will remain. Voters will, in the long run, reject politicians that favor socialism and will support politicians who see the greatness of the nation linked to capitalism and private enterprise. J.