Capitalism: the Uncool Uncle
According to a 2019 Gallup poll, nearly half of millennials/Gen Zers hold a favorable view of socialism. That reality makes me cringe. For anybody born before the 1990s (outside of Bernie Sanders), you might have thought that the fall of the Berlin wall marked the end of Americans’ fascination with socialism. That should makes sense. Well, you’d be wrong. The end of the Cold War did not lead to the full defeat of communism and socialism. In fact, many American universities have ties to socialism and communism. For example, my university has a chapter of Young Democratic Socialists of America. Well, this post will show how much of a miracle capitalism has been to the planet.
For starters, here are just some of the many countries that have tried various forms of socialism and communism—Russia, East Germany, Cuba, Cambodia, North Korea, Venezuela, much of Eastern Europe, and much of Latin America. You might notice that tyranny and suffering characterized those places during the 20th century. Yet, we still see a seething disgust of capitalism among young Americans. We many find it hilarious when people tweet from their iPhone about how evil capitalism is—while simultaneously drinking a coffee from Starbucks. Jokes aside, we the American people need to share just how beneficial capitalism has been to mankind.
Capitalism: A Machine of Prosperity
Without question, capitalism is most beneficial force in all of human history. For nearly of all human history, people have lived in absolute poverty and tyranny. Freedom and opportunity have been the exception in the human experience, not the rule. Yet, something changed about two centuries ago. The rise of the industrial revolution and the embrace of free-markets led to a dramatic rise in the standard of living for human beings around the world. Global income and consumption has exponentially increased the last two centuries—especially for the global poor. Before two centuries ago, economic freedom throughout the world was severely limited. Forces such as monarchies, war, slavery, and feudalism limited humanity’s economic freedom for much of history—and still does in many parts of the world today.
Free trade and capitalism have made the lives of the global poor significantly better in the last two centuries. In the last century alone, starvation-level poverty has decreased by 80% (National Bureau of Economic Research). Hundreds of millions of people have been lifted out of poverty in places like China, Indonesia, and Brazil. Again, so many people have been lifted out of poverty by the economic system that Americans enjoy constantly complaining about.
In the documentary series Free to Choose, economist Milton Friedman provides a clear example of what embracing free markets does to a nation. In the mid-20th century, Hong Kong decided to embrace free markets and free trade. Even though this country lacked natural resources, it became one of the wealthiest regions in all of the world. Low government spending, relaxed regulations, and economic freedom have all led this small region of 400 square miles to become a land of opportunity. Hong Kong is one of the most desirable places to live in the Asian world. In such a short period of time, Hong Kong has even outpaced the economic growth of many European countries. For instance, the average income in Hong Kong went from a quarter of the average Brit’s income in 1960 to over 130% of the average Brit’s income in the later 1990s. That’s what adopting a free-market economy did in a thirty year span. Truly remarkable.
That brings to us the final question of this post: Why don’t we hear about just how great free-market capitalism is? Why don’t most people know that global poverty has halved in the last two decades alone? Of course, your average college professor or journalist won’t say tell you that. The truth does not fit the modern narrative that capitalism hurts the poor. Capitalism bad while socialism is good. Got it, right? No, free-market capitalism has been nothing short of a miracle. After millennia of hardship and deprivation, mankind finally found a breakthrough to prosperity: capitalism. We should all be grateful that we are all living in the most econoimcall prosperous time in all of human history.
Sure, nothing is perfect in this world. Capitalism and free markets will not fully eliminate poverty. Nevertheless, the world has become a much better place when people are free to choose how to spend their time, money, and efforts on their own self-interest through voluntary trade and cooperation.
To end, I want to include a quote from the great economist Milton Friedman. If you’re interested, I highly recommend reading some of his books.
“So that the record of history is absolutely crystal clear. That there is no alternative way, so far discovered, of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.” –Milton Friedman