Never forget the undeniable moral case for capitalism
Critics of capitalism describe it as immoral. In pointing to subjective (and sometimes objective) examples of unethical or harmful behaviour they conclude that capitalism is the enabling or even necessary force. Others, in so far as they stop to think about it, may conclude that the free-market system is amoral; that it is utterly indifferent to questions of right and wrong. Some of capitalism’s most robust supporters share this view and cite the market’s amorality as one of its greatest strengths.
There is doubtless some truth in this analysis, but for as long as I can remember I’ve subscribed to the view that free-market capitalism is an inherently moral force; that there is a crystal-clear moral case for free markets, property rights, the profit motive and voluntary exchange. To readers of CityAM this may be an uncontroversial view, but the argument is rarely heard these days.
As an undergraduate, more than 20 years ago, a lecturer in my business and politics module handed out a stack of FTSE 100 annual reports, directed us to the remuneration sections, and asked us to rank directors on “a fat cat scale.” The global financial crisis, into which I graduated, saw such attitudes become mainstream. Fat cats, high pay, extraction, exploitation, inequality, greed and injustice have become part of the contemporary critique of capitalism and, over recent years, have taken hold in academic, cultural and political debates.
Defenders of capitalism have had their work cut out
Against this backdrop, defenders of capitalism have had their work cut out; the UK economy has grown by an average of just 1.5 per cent each year since 2008, compared to an average annual rate of 3 per cent in the 15 years prior to 2008. Growth has become elusive, productivity has stalled and living standards have suffered.
While some would cite these conditions as proof of capitalism’s inadequacies they should instead be used as the launchpad for a renewed focus on the need to rediscover, articulate and celebrate the wealth-enhancing, life-improving, progress-powering benefits of classical liberalism and market forces that have been so undermined and distorted by regulation, subsidy, bad policy and over-taxation.
Fortunately, a new book aims to do exactly that. On Morality, Human Behaviour and Economics is a collection of essays published this week by the Institute of Economic Affairs. With contributions from academics, economists, philosophers and even the odd journalist the book is rich, robust, uplifting and stimulating.
It’s a modern fightback that draws on ancient wisdom, perfect for your summer holiday and vital for the battles to come.