How can the capitalist system be anathema to so many Americans today, even among those elites who have benefited the most from its achievements?  They don’t fault capitalism as an engine of production, but they do blame it mainly for creating inequality, depleting earths limited resources, dramatically changing the climate, and creating greedy exploitive rent seekers. The anti-capitalist believe we will all be better off with a “government managed economy”, a new economy centrally planned that will equally distribute income, protect our natural resources, and make us all Mother Theresa’s.  Fat chance!  

Indeed, capitalism is not perfect, and needs attention to assure all get a fair chance to accumulate wealth.  However, we should first acknowledge that we had a lot less inequality when we were all poor, before the great industrial revolution dramatically raised the standard of living for most of mankind.   Inequality is an issue now because of our success at mass production and capital accumulation, but it is misunderstood and unfairly demonized because of false assumptions.  For example, most measures of income do not account for the income the middle class paid in federal, state and local taxes, therefore dramatically overstating the inequality.  There are also transfer payments many Americans will receive in Medicare, Medicaid, SSI, food stamps, and from other means tested programs that are ignored in these statistics.  There’s a lot more we need to understand about inequality, but stubborn poverty should be our first concern. 

Capitalist haters still think our economic problems stem from the less government movement of Ronald Reagan, Margaret Thatcher and their followers, who advocated for fewer regulations, more competition, expanded property rights, and free trade.  Nothing could be further from the truth.  Over the last few decades the government hand in the economy is reaching in more often to control monetary policy, protect monopolies, restrict free trade, and favor the entrenched elites who have mastered the skill of using the government to gain more control and power for themselves.  The real danger is too much power in too few hands.  It is political and legal manipulation that is infecting capitalism and impacting its health. 

When government policies can protect or destroy a business monopoly, you can bet crony capitalism will be in full force in the halls of government.  A recent tragic example of this was the financial crisis of 2007-8 when our well-intended government loosened lending requirements for home mortgage borrowing, lowered mortgage rates, and relaxed capital requirements of investment banks thereby inducing a global financial crisis.  Assuming these financial institutions were “too big to fail”, our government passed the $700 billion Troubled Asset Relief Program, saving several of these distressed businesses and their leaders from financial ruin, even though their own poor choices were to blame.   Companies, and their leaders, should not be bailed out by the government. No business should ever be too big to fail.  

An assessment of what went wrong should not simply be blamed on the failure of the capitalist system in general, but one should dig deeper to find the real cause, which I believe is the monstrous process of expropriation.  I’m not referring just to the governments taking of our land or other physical properties, but our intellectual ingenuity, our potentiality.  By this I mean we have fewer opportunities to be entrepreneurs and partake in ownership today then ten or twenty years ago.  Everywhere we look we see the consolidation of markets, less competition in most U.S. sectors, a decline in the number of U.S. publicly listed companies, and higher prices for services (i.e., cell phone, internet service) than in many other countries.  Why is this occurring? Because the more we use government to be the engine of our economy, the more connected power players counter with lobbying to protect their pet causes and businesses.  Today we are trying to figure out what to do about big tech companies like Amazon, Google, and Facebook dominating the advertising market and eating more businesses.  Our political and legal system was supposed to protect us from this bullying, but it will only do so when we the people take back control from the few entrenched elites who are doing a masterful job of keeping their own power, and growing their market share.   

There is a limited role for government in assuring capitalism remains moral.  It is to protect our individual freedoms by creating policies and laws that do mostly just that.  Government should not legislate morality. The legitimate complaints about capitalism, such as overt greed and exploitation by some individuals and corporations, are best ameliorated through voluntary religious/moral instruction that teaches the value of covenant relationships as found in the Judeo-Christian tradition for example. It is also appropriate for government to hold businesses and corporations accountable; pay restitution when it’s behavior causes harm to others, insist on more transparency in pricing, respect personal data ownership, and remove barriers and restrictions on market entry to name a few.  In the end the morality of capitalism is mostly dependent on a moral people.