A Defense of Capitalism and Critique of Biden’s Economic Agenda

Governments can either provide a platform for prosperity or for oppression depending upon which economic system they enable. Capitalism—and governments that support it—empowers citizens to pursue productive activities in a manner constituent to their nature. Socialism and communism—the antithesis of capitalism and free government—develop from governments that have no objective beyond feeding their own metabolic urge for growth thus yielding repressive regimes. The only just government is the one that enables capitalism.

What follows is a return to first principles to understand why capitalism works and the other systems do not. A return to first principles also exposes why socialism and communism are flawed constructs that undermine human flourishing. This is an important consideration as we debate new taxing and spending bills put forth at the national level. To escape the tyranny of clichés it is necessary to reset with first principles which then elevates the debate.

James Madison wrote in Federalist #62, as consistent with the Declaration of Independence, “The object of government is the happiness of the people.” Madison and the other Founders who inherited their understanding of happiness from John Locke and Aristotle, considered happiness to be a durable state of satisfaction that flows from the vigorous employment of faculties that distinguish humans from other animals—reasoning and social participation directed towards a higher good. Humans utilize reason to develop a deeper understanding of the true, the good, and the beautiful in a way that animals are incapable of doing. And we come together in societies to pursue those virtues whereas other animals cooperate merely for subsistence. Humans advance toward a higher good when they come together as we are intended to. This means happiness is not derived from idleness, gossip, or frivolity. Only the deployment of our talents toward the higher good can move us toward happiness.

For example, a tailor who has a natural proclivity toward being a tailor, and has honed his natural skills through hard work, study and training will be a happier person than someone who wastes away their day scrolling through social media or spends their time in unproductive banter. Most of us can agree that when we come home from a hard day’s work, we feel much better about ourselves than when we’ve spent our time doing otherwise. When we work with others to accomplish those goals that are mutually beneficial, we feel even more rewarded.

Because the deployment of those characteristics that are uniquely human is what gives us the greatest happiness and produces the greatest amount of good for society, any economic system that stifles the deployment of those characteristics is inherently bad. Centrally planned economic systems—like socialism and communism—undermine those characteristics that make us human thereby depriving us of our humanity. Regardless of outcomes—and the outcomes of socialism and communism are irrefutably bad—their origin in relation to the human condition is the first step in demonstrating their harm.

Capitalism also operates from a position of humility thus making it a more realistic economic system. A capitalist must recognize that humans cannot know everything at all times and can, therefore, never centrally plan for all of society’s needs. A capitalist system aggregates all relevant information through a free exchange of information by market participants to efficiently allocate resources in order to meet the needs of individuals and society. A centrally planned economy, on the other hand, is one that rests on a foundation of hubris. Any government official who thinks they can marshal and deploy resources single-handedly through centralized planning is arrogant beyond comprehension. The evidence is clear: Centrally planned economies have the highest levels of famine and poverty due to the inability to allocate resources efficiently and allocate according to demand. Only a decentralized, freely associated market can aggregate information and marshal resources as needed. Hubris is one of the root causes of failure for both socialism and communism. Only capitalism is based upon an accurate understanding of human nature and human capacity thus making it intrinsically good and the others intrinsically bad.

Supporting a sound system of public finance is one of the core responsibilities of government. Governments must be able to fund themselves. But, the system of public finance—taxes—must be constructed in such a way that allows and supports capitalism. Any encroachment by another system will yield negative outcomes. Thus, when we look at taxing and spending plans at the national, state, and local levels we must assess their goodness based upon whether they support free markets or stifle them. The current “Build Back Better” boondoggle assumes that the government is in the best position to deploy resources effectively. This centralized planning is inimical to human flourishing and economic prosperity. The only way we can move our economy forward is through free-market principles and allowing a free people to do what we do best.