Free-Market Liberalism vs. Corrupted “Capitalism” and La-La Land Socialism
One of the issues that confronts the friends of freedom is how best to make the case for liberty as a political idea and ideal and as a policy proposal.
One of the issues that confronts the friends of freedom is how best to make the case for liberty as a political idea and ideal and as a policy proposal. A central element in that is making sure that we know what it is that we are advocating and why, and what it is that we oppose and why. For instance, what is “capitalism” and what is “socialism”? And are those always unambiguous terms concerning the difference between the free and unfree society?
It is certainly true that collectivist ideas of various types have made so much headway both in the realm of ideas and in actual policies that there are few people in American society who advocate a “laissez-faire” political, social, and economic system under which government would be narrowly limited to little more or nothing else than protection of each individual’s right to his life, liberty, and honestly acquired property.
Public opinion about capitalism and socialism
In June 2019, the Pew Research Center released the results of one of its political-opinion surveys about people’s positive or negative conceptions of “capitalism” and “socialism.” While overall, 65 percent of Americans said they had a favorable view of capitalism, 42 percent said that they had a favorable one of socialism.
Among Republicans or Republican-leaning voters, a positive view of capitalism was held by 78 percent, while among Democrats and Democrat-leaning voters that number was only 55 percent. Among those Democrats, 44 percent held a negative view of capitalism, while that was the case among only 20 percent of Republicans.
On the other hand, 65 percent of Democrats and Democrat-leaning voters were positive about socialism, with 15 percent of Republicans and Republican-leaning voters having such a positive view. Only 33 percent of Democrats were negative about socialism, while 84 percent of Republicans were negative on socialism.
Among voters 30 years old or younger, 50 percent were positive on socialism. Also, 46 percent of women thought positively about socialism, while only 38 percent of men did. Among white Americans, positive views of socialism were held by 35 percent, while among African-Americans that rose to 65 percent, and among Hispanics it was 52 percent.
Among those less than 30 years old, 52 percent had a positive view of capitalism. Among men that number was 74 percent and among women it was 56 percent. Whites were 66 percent positive about capitalism, while 57 percent among African-Americans and 61 percent among Hispanics had such a view.
One thing that immediately stands out is the overlapping attitudes in which the total of positive and negative attitudes about capitalism and socialism comes to more than 100 percent in the same age, sex, or racial categories. In other words, many groups and individuals were positive and negative about socialism and capitalism at the same time.
One conclusion that can be drawn is that people do not really understand what capitalist and socialist systems represent, or they like and dislike various aspects of both, and wish they could just pick and choose, a la carte: items A and B from the capitalism column and items C and D from the socialism column. In other words, mixing free enterprise and various civil liberties with government-provided health care and minimum-wage laws, and various redistributions of income.
Turning socialism into pleasant “progressivism”
Socialism’s recent advocates, such as Bernie Sanders and Alexandria Ocasio-Cortez, have failed to detail how their socialism is different from the older twentieth-century experiences with socialism, other than to assure that theirs is “democratic,” John McWhorter, a professor of linguistics at Columbia University states, while the opponents of socialism only want to tar and feather it with the Soviet emblem of tyranny and terror.
What does McWhorter propose in its place? He argues that “progressive is a far better term for the people and ideas described as [socially] liberal or democratic socialist today…. Progressivism is ‘etymologically transparent’ in its clear signification of progress, of moving forward. And unlike socialism, the term doesn’t require supporters to clear ‘cobwebs’ of negative historical and tonal associations when they identify with it.”
McWhorter explains that “liberalism” originally had the “classical” connotation of meaning the absence of political coercion in social and economic affairs, and then was transformed into a “social liberalism” in the early decades of the twentieth century of government intervention and redistribution that became institutionalized in the 1930s during the New Deal days of the Franklin Roosevelt administration. But he offers no alternative word to describe the political philosophy of individual liberty and limited government (other than to mention in passing that some classical liberals nowadays call themselves libertarians).
Concerning McWhorter’s proposed rebranding of socialism, who can be against “progress,” and, therefore, “progressivism”? Perhaps that’s why he offers no alternative term for presumed out-of-date classical liberalism. What would be the point of having a term designating a political position against “progress”? But what is considered to be progress?
For the classical liberal, a better term in place of “socialism” might be political and social “regressivism,” since socialism is really a regressive system of steps backward to the politics of an older age when governments controlled and commanded most of what went on in society before nineteenth-century liberalism began to peal it away.
Free-market liberalism vs. “historical capitalism”
We are left in a situation where existing political labels seem confusing and misunderstood in the minds of many in society.
In the January 1993 issue of Future of Freedom (when it was called Freedom Daily), I wrote an essay entitled “Historical Capitalism versus the Free Market.” I pointed out that “capitalism” had emerged out of the previous feudal and monarchical systems of government, with the result that markets and individuals were gradually freed from the heavy hand of political controls and restrictions.
But its development had been handicapped by the fact that markets had never been permitted to be entirely free from government intervention and regulation. Even in the heyday of nineteenth-century liberalism, governments even in the most “enlightened” of limited-government regimes continued to interfere in the social and economic affairs of the citizenry. And before any further reforms could remove the remaining vestiges of government intervention, the new forces of modern-day nationalism and socialism arose to start moving Western societies in the direction of new versions of the regulatory-redistributive state.
At the same time, “socialism” has existed in various forms in theory and practice, from Soviet-style communism to post–World War II British “democratic” socialism under the Labor Party, to an amorphous, emotive post-scarcity la-la land in which everything is “free” for the masses, and where work and worry and “hateful” words disappear from the human condition, which seems to be its current incarnation for the likes of Sanders and Ocasio-Cortez.
Saving and preserving the noble word “liberalism”
For myself, I am not willing to give up the word “liberalism” as a reflection of the philosophy of freedom that I believe in and hold dear. It is strongly connected with the idea and reality of human liberty in modern history. Historically, liberalism was identified in the nineteenth century with the crusade to end slavery, first in Great Britain and then in the rest of the world, including the United States. Liberalism called for the end to restrictions on the civil liberties of freedom of religion, the press, and speech, and freedom of association, and for protection of the individual’s person, property, and privacy from unwarranted search and seizure.
Equally important, liberalism campaigned for the abolition of restrictions on economic freedom. This was captured in Adam Smith’s happy phrase of calling for a “system of natural liberty,” under which the individual person would be free to pursue any goals and purposes he set for himself, in peaceful association and competition with others in the marketplace and the institutions of civil society. That included the individual person’s right to enter into free exchange with anyone he chose, whether at home or abroad, on terms reached through voluntary agreement among the trading participants. In addition, the individual was to be secure in his private property and any uses he found for it that did not abridge the equal rights of others. And the individual was recognized as having a right to the honest earnings he had acquired in those market transactions with other people.
Socialism means command; liberalism means freedom.
Through all of its transformations, socialism has meant government control, planning, and redistribution. In the early decades of the nineteenth century, socialists argued over whether the collectivist and planned society of the future would be agrarian or industrial, local communes or nationally centralized, and, of course, whether it would be more or less “democratic.”
Indeed, the entire controversy between “democratic” socialists and Leninist communists through most of the twentieth century was not over the goal, which was the end to all or nearly all private ownership of the means of production, with government central planning replacing competitive private enterprise, but whether the collectivist society should or could come through the peaceful method of the ballot box or the violent means of revolution and dictatorship. The great debate was over the possible political means to the commonly shared ideological end: the end to “capitalism” and the imposing of government socialist central planning.
Liberalism is founded on the idea of the distinct and unique individual human being. The individual should be considered the slave and property of no other man; he owns and governs himself. He decides on his own ends and selects his own means to pursue his goals, and gives meaning, value, and purpose to his own life in all its aspects. He respects the equal rights of all others, and therefore accepts and tries to live by the moral principle of mutual respect and peaceful association in all dealings with his fellow man.
The free man, in spirit as well as in action, abjures envy of the achievements and successes of other people. He accepts the fact that while all people should be recognized as possessing equal rights to their respective life, liberty, and property before the law, humans are amazingly diverse in their natural talents and their chosen inclinations. Each chooses his own way, but he is not guaranteed success in all things or protection at others’ expense when he experiences disappointments and failures in life.
Since no man is an island, every reflective human being understands that he lives among others and shares a community of everyday life with them. But the liberal outlook is to see the ethical avenues and the most effective practical means to the common concerns and interests among men to be the voluntary associations of civil society. The voluntarist approach is ethical because it recognizes each human as a self-owning and self-directing person for his own chosen ends, who should not be compelled to accept or participate in any activity or group without his own consent.
Secondly, the liberal understands that human knowledge is imperfect and divided among all the multitudes of people in any society. The answers to common problems needing to be solved are far more likely to be found when people are at liberty to decide how best to apply what they know in conjunction with others than when all are forced to follow the designs and dictates of a few who arrogantly presume to know enough to solve the joint matters of human concern.
The liberal also believes that the freeing of all the minds of society will produce the creative innovations in the marketplace of supply and demand that will, over time, improve the quality and standard of living of all, on terms each considers most attractive, and far better than when confined within the restrictions of government regulations and controls over how men should apply their talents.
Liberal optimism, tempered by political suspicion
The liberal is both optimistic and cautious about the characteristics of his fellows. He has confidence that man has the ability to plan and direct his own life. He believes that men can understand and follow the longer-run rules of social order that permit each to have his liberty and that also facilitate cooperative collaboration in markets and voluntary associations.
Yet his reason and the sad experience of human history warn that his fellow creatures are too easily tempted to turn to the use of private or political force to obtain the things desired, when the costs of applied coercion seem to be less than the costs of mutual and peaceful agreement with others. The liberal, therefore, has a healthy skepticism and concern for any and all unrestrained political power, regardless of the authoritarian or democratic form it may take.
Thus, the liberal strongly proposes and, indeed, insists on clear and explicit constitutional limits on the delegated and enumerated functions assigned to any government, with its duties confined to the protection of the individual rights of the citizenry, with the fewest linguistic ambiguities through which power may be extended and expanded beyond the securing of people’s freedom.
Socialism presumes groups and demands planning.
Socialism, in all its proposed and experienced forms, invariably begins with the presumption of groups rather than individuals. It may be social classes (as was declared by Marxists), or nations (as was heralded by fascists), or races (as was insisted on by Nazis). But in each one the individual is submerged and disappears within the collective, which is made the defining characteristic of each and every person and from which escape is virtually impossible. Individuals are expected to think, value, and act in the context of their classified collective. To think, value, or act differently than how your group is required to think, value, and act demonstrates only one of three possibilities: you have been wrongly indoctrinated to not understand where your “true” interests lie; you are in the paid and traitorous service of an enemy social class, nation, or race; or you are a renegade individual who “selfishly” betrays his group for his own personal gains.
Furthermore, socialism insists, in all of its variations, that the individual must conform to the central plan designed and implemented by those in political power, who declare their superior knowledge about what the purposes of society should be, and who insist that all must be confined within “the plan,” with each person’s rightful share of the collective production being decided for him on the basis of some claimed notion of social justice.
Indoctrination for acceptance and obedience; compulsion to ensure fulfillment of the goals of the plan; and de-individualization of all relationships and attitudes in society so that everyone’s actions conform to the collective idea and ideology imposed on society — these are the presumptions of socialism.
Socialism can be one overarching and uniform central plan (as represented in the former Soviet Union), or it can have a set of interlocking plans based on the politicking of competing pressure groups within the collectivist society that decides the goals and divides up the group output. This latter is “democratic socialism,” when partly or fully implemented.
The confused reality of capitalism and socialism mixed together
The confusion in the real world is that there are existing side by side degrees of competitive enterprise guided by the existing forces of supply and demand; and elements of government intervention, regulation, restriction, and redistribution that, while not doing away fully with markets and market-based activities, do distort, misdirect, and imbalance what otherwise would have been the outcomes generated by a functioning free-market liberal system.
That mixture also blurs the distinction between just and unjust market outcomes and income distributions. Goodly portions of incomes earned are no doubt due to people’s responses to relatively market-driven opportunities. But overlaid on the patterns of production and relative income shares earned and influencing them are the impacts of government regulatory, redistributive, and planning policies meant to influence the outcomes of the market processes.
Thus, wealth earned and accumulated may be due to private enterprisers’ success in satisfying the market demands of their fellows. But part of what is earned and accumulated may be the result of the interventionist-welfare state, and therefore to that extent they may be unjust rewards arising from political pull and plundering, and not market-based profit making.
It’s such confusions that plague political and policy discourse in America and most other places around the world. What economic system are we living under, “capitalism” or “socialism”? Which political visions are implicitly guiding people’s attitudes, beliefs, and voting patterns? A desire for free (or freer) market liberalism, or a more “progressive” coercive socialism?
Are the outcomes that we see in society and the market the result of competitive capitalism, or of crony political interventionist favoritism? Or is it socialism in terms of its utopian rhetoric and depressing reality? Or is it some intertwined mixture of both, the specific contributing elements of each difficult to separate from one another; which are the ethical outcomes of voluntary exchange and which are the results of governmental intervention? In some cases, it may be relatively clear to say which is the outcome of one versus the other. But in too many instances, they blur together, and are far from easy to dissect and determine.
What is crucial for the friend of liberty, nonetheless, and, indeed, precisely because of this conflicting and confusing reality, is to explain the logic and morality of a truly free-market liberalism that is distinct from the corrupted “historical capitalism” under which we live, and the nature of socialism regardless of the promised version offered as an alternative to what currently exists in America. The future of freedom depends upon it.
[Originally Published at the Future of Freedom Foundation]