Global capitalism contributes not only to the depletion of natural resources and environmental degradation but also to global warming.
– Dr. Hans Baer featured in Encyclopedia Britannica online
From the current economic crisis through third-world poverty to global warming, capitalism has been blamed for nearly every major problem of our day. Accused of fostering discrimination, exploitation, environmental destruction and a host of other ills, it looms as a popular villain in the contemporary western psyche.
But this viewpoint could hardly be more unfair, argues Robert Murphy in The Politically Incorrect Guide to Capitalism. In this much-needed work, Murphy takes on the most common anti-capitalist myths and exposes them for the lies that they are. In the process he shows that capitalism is not only innocent of the charges leveled against it, but it is actually one of the best things that has ever happened to man (and also to the environment).
This may come as a shock to those fed by the leftist propaganda of the education and media establishments. Take, for example, the often made claim that capitalism exploits the poor to serve the interests of the rich. “Historically, this is precisely backward,” notes Murphy. Before capitalism came along, the vast majority of people lived lives of endless drudgery, poverty and squalor. Those who believe that feudal serfs spent their time enjoying pristine nature, doing handicrafts and attending opera until capitalism spoilt their fun by imposing hard labor should think again. Luxury goods as well as life's basic comforts were the monopoly of the small elite aristocracy. Things, however, changed with the advent of capitalism when businessmen began gearing production toward the newly rising and empowered working classes. Murphy points out how in the course of time this brought about a stunning result: “The average blue-collar worker under capitalism was (and is) fantastically wealthy compared to the kings of the feudal period.”
Or take the charge that capitalism wastes natural resources and fosters environmental destruction. The exact opposite is the case; in reality, capitalism encourages conservation and good stewardship. It is not difficult to see why. Businesses that waste have higher production costs, which in turn makes them less competitive. The profit motive thus ensures that in capitalism natural resources are used with far greater care than in any other system. It is a well documented fact that centralized economies where state-owned businesses do not have to compete with each invariably suffer from prodigious waste of resources.
And as far as the overall environment is concerned, it is enough to visit non-capitalist countries to see where the real ruination occurs. Writes Murphy: “If you wanted to find real environmental catastrophes, you'd look not at the United States or Western Europe but at the former members of the Soviet Union and its Eastern Block.” To drive home the point, he quotes Ruben Manatsakanian of the Central European University in Budapest:
The mountains of solid wastes, and lakes of liquid ones, near most heavy industries in Poland, the Czech Republic, he former German Democratic Republic, Ukraine, Russia, Kazakhstan, Estonia, and other countries are probably the most visible environmental legacy of the former [Soviet] system.
Such environmental damage is rarely found in capitalist countries. Some people may object that our situation is the result of perspicacious government regulations, but they forget that many places of the Soviet Block had some of the most stringent environmental laws anywhere. It did not matter. Backward countries – and every non-capitalist country is backward – are simply unable to take care of their citizens or their environment. Capitalism, on the other hand, takes care of both. It bestows incomparable material affluence on those who live under it and also keeps their surroundings clean. It is a matter of observable fact, Murphy notes, that “in practice, the capitalist economies have enjoyed steady improvement in environmental quality, while the totalitarian governments have been the worst desecrators of the planet.”
He goes on to quote Dixy Lee Ray who points out that Henry Ford, a quintessential capitalist, improved public health and raised standard of living more than any administration or government. How did he accomplish this? By introducing the Model T and providing Americans with affordable cars. This not only increased comfort and ease of life, but also cleared the streets of horse manure, a breeding ground of bacteria and disease.
The story of Henry Ford illustrates that great quality of capitalism whereby people generate public good while pursuing their self-interest. This is how Murphy articulates this seemingly counterintuitive phenomenon: “A system based on private property and the incentive for profit [capitalism] leads people to do what's best not only for themselves, but also for society as well.” We are speaking here, of course, about what Adam Smith memorably dubbed the “invisible hand.” But the invisible hand also has its counterpart, which is “when government intervenes in the market, it not only tramples on freedom and individual rights, but it also often hurts the very people it presumes to help.”
There could be no better example of this than the concept of the minimum wage, rooted in the myth that unless they are forced, greedy capitalists will not pay decent living wages. But if this is so, why is it that they are willing to pay such high salaries to some athletes, lawyers, doctors or software engineers? The low pay of some workers is not generally due to their employers' greed, but to market forces which normally do not put a high premium on unskilled labor. The way out of this is to develop skills that are in higher demand and thus command higher rates of compensation. Raising the minimum wage only shuts many low-skilled workers out of the job market, which, in turn, deprives them of the opportunity to work their way up the employment ladder. Paradoxically, the very people whom the government seeks to help are harmed by its actions.
By systematically refuting the most frequent anti-capitalist myths, Robert Murphy shows that rather than a scourge of mankind, capitalism is by far the best societal arrangement that has ever come into existence. By giving people an unprecedented degree of freedom, boundless opportunity and material affluence on a mass scale, capitalism has brought about a quality of life undreamt of in history. Anyone who genuinely cares for the well being of the human race cannot but embrace and celebrate it. Perhaps no one has expressed this point better than Ayn Rand when she said, “If capitalism had never existed, any honest humanitarian should have been struggling to invent it.”
Given capitalism's historical record one would expect that politicians, intellectuals, educators and opinion makers would sing its praises. But this is not what happens. Instead, capitalism comes under relentless criticism from those who should know better. Murphy does not delve into the causes that underlie this psychological pathology, but we can be certain that those who exhibit it are not motivated by concern for their fellow men or by regard for truth. Ayn Rand sizes them them up with with her customary incisiveness:
“But when you see men struggling to evade its [capitalism's] existence, to misinterpret its nature, and to destroy its last remnants – you may be sure that whatever their motives, love for man is not one of them.”
Well argued and skillfully written, The Politically Incorrect Guide to Capitalism gives intellectual ammunition to all defenders of capitalism whom may not always be sure how to answer all the criticisms hurled against it. But this book is more than just a spirited defense of capitalism. It is also a demolition of the convoluted worldview that strives against it. Murphy shows not only that its purveyors have no case, but that their criticisms are one hundred and eighty degrees out of phase. Those who fight and stand up for the best system in history need not feel ashamed. It is their opponents who should be discomfited for deviousness and intellectual dishonesty.
The Politically Incorrect Guide to Capitalism is particularly pertinent today when capitalism – the socio-economic basis of American society – is under unprecedented assault by radicals who have gained positions of power and influence throughout our government and major institutions.