My support for capitalism is primarily based on moral and ethical grounds. That capitalism also is economically efficient is an added bonus to me. Its instrumental role in creating more wealth than alternative systems is great but even if that were not so, I would still support it because it is the only system that is consistent with individual freedom and choice.
Capitalism is based on private property rights and voluntary exchanges in free markets. It’s essentially an impersonal process — no one is giving out commands for people to follow — out of which emerges an order that is beyond anyone’s ability to foresee or improve upon (unless there is a benevolent, omnipotent, omniscient dictator who controls every single entity, which in our case we have not got.) This process leads to outcomes that are, in the words of the Scottish Enlightenment philosopher Adam Ferguson “the result of human action, but not the execution of any human design” (1782).
Are distributions of income and wealth obtained by this process fair? Since the distribution obtained itself is not the intention of any person or persons, we can only ask if the process which leads to the distribution is fair or not. Therefore if we agree that the process is fair, we can accept that the resulting distribution is fair.
Is it morally superior to other systems? I believe that a system that does not involve coercion is superior to a system that requires coercion of some by some others. Capitalism does not involve coercion, while socialism and communism cannot be enforced without coercion. Therefore I judge capitalism to be morally superior to collectivist enterprises.
Author: Atanu Dey
Economist. View all posts by Atanu Dey
Atanu Dey : Life is a Random Draw 
Dear Atanu, Thanks for your post. I believe in your attempt to favor a position, that you argue “nominal case” view vs. “corner case view”. Others who argue against take the corner case view. Both suffer from “cherry picking” bias.
It is my belief, that any system of government will have merits and demerits just like any other system. None have a monopoly of virtue.
The question is therefore not of relative superiority based on an arbitrary set of values that are not universally defined or measured, rather of what is the right system for a populace, at any juncture in the arc of development of a society.
Social disruption can be brutal, generational poverty even more so. USA where I live is a young country from current social perspective compared to India or China that have had different arcs of evolution. What China has done via a sort of dictatorial capitalism is amazing in solving the problem of poverty at a fast turning, and yet at the cost of trampling on western style human rights and values, that their people are now starting to get used to…
China needs to shift now to a more market oriented approach since the previous framework is unsustainable and could engender wealth inequality in the longer term, as capitalism tends to do. Who knows how that form of government would look like. That’s one example.
In summary, my point is that, economic systems should be a solution to the problem a society is facing at any juncture in its arc of development. Extolling virtue or vice of any system is OK in that context, and not so much in absolute terms. Every system has downsides (eg. distribution of wealth for capitalism, distribution of poverty and misery for socialism) and upsides (freedom of action -capitalism, freedom of inaction – socialism) that are an interplay of the socio-economic state of the society and the -ism. As for India, I love the fact that our form of democracy and government, while having many flaws has higher societal engagement than more educated and richer societies in the planet. It’s messy, it sometimes stinks, it’s full of contradiction and yet, it continues to survive in the wild for thousands of years.
Thank You!
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I recommend you go back and read my post. I was talking about an economic system — capitalism. I was not talking about a system of governance. They are two different dimensions. Conflating the two leads to confusion.
Governance systems: democracy, republic, authoritarian, fascist, anarchic, etc.
Economic systems: capitalism, socialism, communism
You can pick and choose one from the first list and another from the second list. For example, you can have authoritarian capitalism, or republican socialism. They are (largely) independent choices.
I wrote about the virtues of capitalism. I did not imply anything in my post about the type of governance.
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This is a very simplistic view. But I take your point that socialism and communism need enforcement, and are more prone to coercion and abuse of power. Why I support elements of capitalism is that societies need to be productive, creative, innovative and the rest of it. If one does not have ‘valued good’ including agricultural produce (food) no one can live. The human-animal needs to be ‘productive’ in many ways; that is the bottom line. However, “capitalism” (mercantilism, and other connotations) is by itself, certainly not “morally” or “ethically” superior! If you interpret these two terms correctly, and in their common use, then you’ve made an incorrect interpretation. Just look at landowners and feudal systems, which existed, probably from time immemorial, but more recently, in the last Millenium. Only in rare instances have leaders (kings?) strived to distribute wealth and reduce disparities between the ‘haves’ and the ‘have-nots’. A good discourse to have, but I urge you to re-think your simplistic view.
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I don’t think you and I have a shared conception of capitalism. If you think mercantilism and feudalism is capitalism, then clearly I am talking of a car and you are talking about a whale. Two entirely different objects.
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Most of us have moved beyond ‘Capitalim-vs-Socialism’ debate. A more recent debate is “State Capitalim” and if it is superior/threat to the rest.
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Good for you, for having moved beyond the capitalism vs socialism debate. As it happens, many people are enthralled by the virtues of socialism. In the US, they are the followers of Bernie Sanders and Elizabeth Warren. In India, socialism is part of the constitution.
Socialism kills. Each generation has to learn that lesson. Also each generation needs to learn the evils of crony socialism (which is also known as crony capitalism.)
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