photo credit: pfala

One of the most frequent and rarely contested criticisms against capitalism is the assertion that it is inherently selfish and inequitable. Greedy men hoard their wealth, critics cry, thus reinforcing and perpetuating the imbalance the capitalist system naturally creates.

Proffered solutions vary, but all share in common one fundamental element: the notion that the government must be empowered to solve the problem. Thus, the implemented ideal takes on any number of masks: socialism, democracy, communism, etc. Not only that, but the principles involved are able to infuse whatever other form of government does exist, thus slowly warping it into a markedly different system. So it is that within a republican framework legislation can be passed (illegally, though it wears some semblance of legality) that uses government to fix the problem.

Such solutions, however, fail to realize the true nature of the problem, and more importantly, what the correct solution unquestionably is. Proponents of government intervention into wealth distribution argue (whether explicitly or implicitly) that mankind is too selfish to take care of the poor and needy on their own, and therefore they must be required to do so. Further, they assert that when one’s elected representatives vote to implement some socialist policy or program, that it is perfectly fine and legal since it was done by an authorized government agent.

These and similar accusations, all of them errant and wholly misguided, stem from a mistrust of capitalism and a lack of faith in man’s innate desire to help others.

It must be noted here that when opponents claim that capitalism is by definition a selfish economic model, they have missed the mark. To conflate selfishness (as it is conventionally understood) with self-interest shows an economic ignorance that must be remedied before proceeding. Self-interest, the philosophic basis of capitalism, is rooted in the idea that by working to further one’s own interests and secure individual success, those with whom the person interacts (and on a larger scale, then, society as a whole) profit as well. For example, by working towards an education I pay tuition by which my professors profit; I buy textbooks which increase the sales of the bookstore and the book’s author; I help others in their education by working in a study group; and I help my classmates learn by offering my insights and knowledge. While small and specific, this example illustrates how in any economic pursuit, those with whom I interact profit along the way.

Similarly, as a web designer, I sometimes hire subcontractors to help me with my work, and thus help them pay their bills by creating employment for them. I also have to buy various supplies from which the stores I patronize profit. Whatever my mission, it can be easily seen that as I work to further my own self-interest (and thus secure to me a profitable future), I am helping others to do the same.

Selfishness, on the other hand, would entail a person hoarding their wealth and refusing to aid others in any way. What’s ridiculous about this conflation is that a capitalist would never create any wealth by hoarding his money. Only by using it as the resource it is would he be able to create additional wealth and increase his profit. He does so by employing others, purchasing items, and, as they say, “spending money to make money”.

Additionally, the self-interest inherent in capitalism is rooted in the law of the harvest, which states that one is to harvest what one sows. The capitalist who hires twenty workers is allowing them the opportunity, if they so choose, to work for an agreed upon amount. This, rather than the dole, is the proper way for a person in need to create wealth and work their way up the prosperity ladder.

To argue, as socialists of all flavors do, that the poor and needy are somehow entitled to one’s money or resources, is to ignore completely the law of the harvest and assert that some individual or organization (government or otherwise) has the moral authority to act as re-distributor and guarantor of economic equality. Of such an ideal, Ayn Rand wrote:

The social system based on and consonant with the altruist morality—with the code of self-sacrifice—is socialism, in all or any of its variants: fascism, Nazism, communism. All of them treat man as a sacrificial animal to be immolated for the benefit of the group, the tribe, the society, the state. Soviet Russia is the ultimate result, the final product, the full, consistent embodiment of the altruist morality in practice; it represents the only way that that morality can ever be practiced. (Ayn Rand, via Quoty)

Where Rand failed in this description is the differentiation between two types of sacrifice. The type to which she referred is the one used as a reason to justify mandatory charity. Governments legalize theft and force individuals to surrender some of their wealth—to be distributed as the government sees fit and thinks best—and then tell their constituents that theirs is a noble sacrifice and opportunity to help those in need. Individuals who comply then may feel that they are already charitable enough, for they cannot afford more than the government takes. They outsource their charity (financial and otherwise) to mostly unelected bureaucrats who are notorious for corruption, waste, and mismanagement.

While that form of sacrifice is nothing but a farce made up to pacify those who have been robbed, the form of sacrifice which Rand failed to explain is one which is closely linked to self-interest. Stephen Covey explains:

[Sacrifice is] the subordinating of one’s self or one’s ego to a higher purpose, cause or principle. Again, sacrifice really means giving up something good for something better. But in the mind of the person sacrificing, there really is no sacrifice—only to the observer is it a sacrifice. (Stephen R. Covey, via Quoty)

Brigham Young echoed this thought, illustrating that true sacrifice is nothing more than momentary self-deprivation for a more ideal reward:

Now, you Elders who understand the principles of the kingdom of God, what would you not give, do, or sacrifice, to assist in building up His kingdom upon the earth? Says one, ‘I would do anything in my power, anything that the Lord would help me to do, to build up His kingdom.’ Says another, ‘I would sacrifice all my property.’ Wonderful indeed! Do you not know that the possession of your property is like a shadow, or the dew of the morning before the noon-day sun, that you cannot have any assurance of its control for a single moment! It is the unseen hand of Providence that controls it. In short, what would you sacrifice? The Saints sacrifice everything; but, strictly speaking, there is no sacrifice about it. If you give a penny for a million of gold! A handful of earth for a planet! A temporary worn out tenement for one glorified, that will exist, abide, and continue to increase throughout a never ending eternity, what a sacrifice to be sure! (Brigham Young, via Quoty)

Thus we can see that the things we might label sacrifice (giving to a humanitarian aid organization on a monthly basis, giving a tithe to a church, giving up some time to help a friend in need, etc.) are based in self-interest. We do them because of a belief that we will receive a greater reward. Call it karma, call it blessings, or call it whatever you want: the fact that we “sacrifice” is that we aspire for something better. One does not truly sacrifice if compelled; Jesus said that such charity doesn’t really count. Instead, true sacrifice must be voluntary, individual, and free from any force or intervention.

Capitalism, then, is the only economic model under which true charity may be performed. Any other method of government that compels its citizens to give up a portion of their money is practicing a false altruism that, as Rand explained, puts us on a slippery slope to absolute communism. Force should be shunned at all times, but especially when used as a method of supposedly helping those in need.

Lastly, it must be emphasized that the fundamental argument behind such government-enforced charity is the belief that 1) There is severe economic imbalance in the world, and 2) were they not compelled, individuals would do nothing about it. As always, Frederic Bastiat aptly articulated the fallacy behind such a stance:

Liberty! Today, apparently, we are no longer interested. In this land of ours, this France, where fashion reigns as queen, liberty seems to have gone out of style. Yet, for myself, I say: Whoever rejects liberty has no faith in mankind. Recently, it is alleged, the distressing discovery has been made that liberty leads inevitably to monopoly.**3 No, this monstrous linking, this unnatural joining together of freedom and monopoly is nonexistent; it is a figment of the imagination that the clear light of political economy quickly dissipates. Liberty begets monopoly! Oppression is born of freedom! But, make no mistake about it, to affirm this is to affirm that man’s tendencies are inherently evil, evil in their nature, evil in their essence; it is to affirm that his natural bent is toward his deterioration and that his mind is attracted irresistibly toward error. What good, then, are our schools, our study, our research, our discussions, except to add momentum to our descent down the fatal slope; since, for man, to learn to choose is to learn to commit suicide? And if man’s tendencies are perverse, where will the social planners seek to place their fulcrum? According to their premises, it will have to be outside of humanity. Will they seek it within themselves, in their own intelligence, in their own hearts? But they are not yet gods: they too are men and hence, along with all humanity, careening down toward the fatal abyss. Will they call upon the state to intervene? But the state is composed of men; and we should have to prove that the men who form the state constitute a class apart, to whom the general laws of society are not applicable, since they are called upon to make the laws. Unless this be proved, the facing of the dilemma is not even postponed. (Frederic Bastiat, Economic Harmonies)

Those who lack such a faith in mankind fail to ignore some striking examples of voluntary charity:

• In 2005, Americans gave $260.28 billion to scores of religious, environmental, and health organizations—$15 billion more than in 2004.
• In 2006, Americans gave nearly $300 billion to charitable causes, setting a record and besting the 2005 total that had been boosted by a surge in aid to victims of hurricanes Katrina, Rita and Wilma and the Asian tsunami.
• Warren Buffet pledged to donate $37 billion to charity.
• About 65 percent of households with incomes lower than $100,000 give to charity.
• The U.S. government gave about $20 billion in foreign aid in 2004, while Americans privately gave $24.2 billion.
• Americans per capita individually give about three and a half times more money per year, than the French per capita. They also give seven times more than the Germans and 14 times more than the Italians.

Examples abound, all indicating that individuals are generous. To be sure, were government-mandated “charity” abolished, there would be more needs than there currently are. Some might rise to the occasion, others may look the other way with indifference. Such are the consequences of freedom. Perceived problems, however, cannot be used as a legitimate excuse for force and compulsory giving, for in doing so, you create a victim out of one person and a thief out of another. That is hardly the right way to go about doing good.

One need only look at comparisons between the United States—where vestiges of capitalism still exist—and other countries far more socialist to note the severe discrepancy in voluntary charity. Whenever capitalism has been instituted and preserved, individuals prosper in their freedoms and in their self-interest help others around them prosper as well. Whether through charitable gift-giving, employment, or trade, such individuals become far more willing and eager to share their bounty with others who have not seen such economic success.

True charity has only ever existed in capitalist enterprise. Though socialist government may rob a man of his wages, he is yet free to give even further of his own accord. In doing so, he—not the thieves in his government—is practicing true charity, and act for which he will one day be rewarded.