Ideal Capitalism Beats Ideal Socialism, Georgetown Business Professor says

Socialism has seen a reemergence on the American Left in recent years, especially since politicians such as Bernie Sanders and Alexandria Ocasio-Cortez have become popular among many young adults. Advocates of socialism generally argue that capitalism is ‘exploitative’ and ‘immoral,’and that socialism is the proper economic model to help American workers. They say that forms of socialism practiced by the Soviet Union under Stalin and China under Mao were not ‘real socialism,’and that socialism would be great if everyone acted morally. Jason Brennan, Professor of Strategy, Economics, Ethics, and Public Policy at the McDonough School of Business at Georgetown University, made the case that capitalism is still morally superior to socialism even if we compare ‘ideal’ versions of both systems.

Brennan pointed out that “Capitalism has been a tremendous achievement over the past century. When you look at what’s happened to world poverty, it’s down now under 10%. Throughout almost all of human history, as Deirdre McCloskey says, ‘Once upon a time everyone everywhere was poor and then capitalism happened and now we’re rich.’”

Also, “…if you take something like the Fraser Index of Economic Freedom or Heritage’s index and you look at the income of the people at the bottom 10^th percentile of income in those countries (capitalist countries), before they receive any welfare payments, before they receive any government transfers, you find that they’re making around $10,500 a year or $11,500 a year, which isn’t a lot, but even adjusting for the cost of living and purchasing price parity, puts them in the top 15% of income earners in the world.”

Socialists are not able to effectively argue based on facts and statistics, so instead claim the moral high ground. They say that capitalism works due to peoples’ inclinations to be evil and pursue their own self-interests.

Capitalism is here because human beings are flawed, but if all human beings were morally good, socialism would be the better system, one school of thought goes. G.A. Cohen was one of the leading advocates of this idea. He devised a thought experiment in which he asked people to choose between two camping trips. The first trip would be the ‘socialist’ camping trip, in which everyone is kind and shares resources with each other. The second would be the ‘capitalist’ camping trip, in which participants only provide resources to each other if they are paid. Also, one contestant’s father had previously accumulated food for his son, and the son mocks the other campers for having less food than he does. Since everybody would prefer to take the socialist camping trip, Cohen argues that socialism is the inherently better system.

Brennan believes that Cohen’s argument does not work, and does a thought experiment of his own to demonstrate where the argument fails. Brennan uses the Mickey Mouse Clubhouse television show as an analogy to an ideal capitalistic society. On the show, “They often give stuff to one another, but they also engage in lots of market transactions-they buy and sell things for profit…Nevertheless, nothing really bad ever happens on the show. They’re committed to all sorts of interesting moral principles. They’re committed to a principle of social justice by which they ensure that the background economic conditions are such that everyone leads a good life, and if anyone starts to slip through the cracks through no fault of their own, they all voluntarily come together to help that person, and no one would ever free ride on their generosity. So they do this without any kind of state enforcement…” If the show imitated socialism, Mickey would become a dictator who starves farmers for not agreeing with his economic plans and murders the intellectuals. The economic plans do not succeed and leave many people with a low standard of living. Everybody would obviously prefer the capitalistic Mickey Mouse Clubhouse.

Cohen’s argument fails because his ideal socialist society is only good because everyone acts virtuous, not because of the socialist system itself. Even if you concede that a socialist system in which everyone acts virtuous is better than a realistic capitalist system, how does the former system compare to an ideal capitalist system? Brennan argues that capitalism is superior to socialism in both a realistic and idealistic sense. To make his case for the idealistic capitalist society, Brennan says: “I think even in a utopia, people are going to want sustained access to private goods because human beings tend to be project pursuers — they tend to get meaning in their lives by having things that they’re working on for a long period of time…” and “…we all have a need to have some spaces where we get to unilaterally shape them to our own desires…”Socialists usually agree with these arguments, but they oppose the means of production being private. The problem is that humans derive value from producing things, so “…it seems like the arguments socialists are giving for private property in personal items also apply to private property in productive things.”

Socialists desire a perfect philosopher queen who devises an economic plan to make everyone wealthy. Unfortunately, no person will ever become that smart. The free market is a good substitute for this person, because “The forces of supply and demand and the information that is communicated through prices serve the function of this philosopher queen. That’s true in the real world, where people are flawed and imperfect in processing information, and it’s even more true in utopia”.

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