Capitalism and Liberty

According to our individual skills combined with our energy and enthusiasm, capitalism in a free society allows each individual an equal opportunity to prosper. This drive is referred to as our right to an individual pursuit of happiness. It is also the first objective of government. (Rauchut, 2008, p. 215) Rauchut has called capitalism “the fairest and most beneficial economic systems that has ever been devised, one that works best with our political freedoms.” (Rauchut, 2008, p. 219) It all comes down to freedom. The President of the United States, in recent months, has sought to intervene where it regards the current economical turmoil being faced in this country. The contention of this author, however, is that such intervention is wrong because the liberty of this generations and generations to come will be limited because of his bailout plan.

Freedom is the first objective of government to secure but is being compromised by the same government obligated to protect it. Assuming that the bailout is the right solution (which point is debatable) my grand children will have to wonder why they continue to divert their personal property to pay a debt incurred decades earlier. As Milton Friedman states, if someone else, i.e. our children, bear the consequences, should we be permitted to make the decisions? (Friedman, 1979, p. 481) Adam Smith alluded to this same type of thing in his Wealth of Nations as he states that when a single man or kingdom becomes involved in directing the economy, they are in a sense determining how the individual distributes their own wealth. (Smith, 1776, p. 586) Distribution of another’s wealth or “spreading it around” as was suggested by President Obama, ultimately isn’t “good for everyone.” (FOUHY, 2008) It limits liberty and the freedom to dispose of one’s property, which really is what is good for everyone. It’s good because it allows all men the opportunity to prosper and, when they prosper, whether they intend it or not…the whole nation prospers and life becomes better for all. That freedom fuels capitalism. “The history of the world over the past 200 years shows that capitalism did indeed permit and encourage ordinary men and women in the pursuit of their happiness to improve their condition.” (Kristol, 1978, p. 544)

One particular concern with the bailout is how government has become more involved with industry. While one probably shouldn’t go as far as to call our government communist, some would say that in this sense it appears to have some communist leanings. The Communist Manifesto talks about industry becoming the domain of the state. (Marx & Engels, 1848, p. 597) One must question if that hasn’t started to happen with the majority ownership by the US taxpayer of GM and AIG. Communism hasn’t shown itself to be conducive to actual individual liberty in any country in which is practiced. Are we to believe that the US can do better? While the aim of the Obama administration is likely not communism, any time that we adopt the policies of communism we must wonder how much further down that road we are headed and what the fate of individual liberty will be.

The natural order of things, at least the way they should be isn’t economic bailouts by the government. If an organization is being mismanaged, according to Walter Williams, the collapse of that business should be allowed to happen with the understanding that there will be others who come in to fill the gap. Williams states that the process is “short-circuited if government offers bailouts….Government ‘help’ enables failing companies to continue to squander resources.” (Williams, 2005, p. 604) Now, the idea that we should let businesses fail on one hand is a concern when one considers the impacts on society and the overall economy, but on the other hand, it’s important to understand that there will always be someone to fill the gap as long as a need exists. It is better, in this author’s opinion, to adhere to sound principle rather than the inflammatory comments of ‘experts’ whose interest might be more self-serving or simply uninformed.

One can ask, “who is to blame for this? Who has allowed this bail-out to happen?” Unfortunately we have only ourselves to blame. It was Eberling who stated that it is up to the public, we citizens, to hold our elected officials accountable to the rule of law. In fact, we have elected officials that espoused economic principles that are contrary to liberty and the right to personal property, (Eberling, 2008, p. 606) principles guaranteed us by our constitution. It is true that there are many who did not vote for these officials, but did we each do enough to make sure the voice of reason was heard? Unfortunately, there were some of those who voted for those who had misguided economic solutions because of fear. Howard Buffett stated that “people controlled by their emotions in political matters have always been, and are today, easy prey for tyrants.” (Buffett, 2008, p. 601) The emotion of fear has left the intellectually incompetent resorting to knee-jerk decisions about the best course to right the economic ship.

What’s to be done though? What is the alternative? Leonard Read suggests that we just need to have a little faith in mankind. (Read, 1992, p. 616)Given time, freedom to act, and adherence to sound economic philosophies, America would have been able to recover from this economic crisis. The fear and lack of faith, however, resulted in a majority of citizens to assume that we would find no success without government intervention. How often have we, as a country, made this fateful decision? As Ronald Reagan said in his first inaugural address, “Government is not a solution to our problem, government is the problem.” (Reagan, 1981) Interestingly enough, he was speaking about the economic problems of the day and suggested that we would be better off with faith in mankind. Somehow, the economy recovered without a bail-out, but let’s not learn from experience.

A right to the pursuit of happiness is as old as the country itself. There has long been a spirit of freedom. It was noticed by Tocqueville in 1835. He noted that Americans were always pursuing advantages and new endeavors. He remarked that the real novelty was not that such an attitude existed, but that “a whole people furnish an exemplification of it.” (Tocqueville, 1835, p. 583) American’s were free to advance their own self-interests and that opportunity was universal and limitless. There was not even the social condition to discourage such behavior. Today, however, the intrusion of government most recently manifested by the bail-out promises to create an environment where such liberties will be restricted. There is only so much liberty to be had and as government takes more, the people have less. Discord will continue to occur amongst the citizens of our country as more and more a long established and important facet of our culture is no longer supported by government and a new culture, the welfare mentality, is supported by a governmental culture that never intended its existence.

Howard Buffet indicates that America became great not because of the quality of the intellect of Americans but because our government was the first ever to allow man the freedom to create and keep wealth. (Buffett, 2008, p. 599) He goes on to quote Sokolsky in suggesting that as people become more reliant on government for their well being there is a negative and proportional affect on individual liberty. (Buffett, 2008, p. 601)On the part of the person reliant as they become conditioned to not exercise their liberty, and on the portion of those who choose not to rely on government as government removes from them their property to provide for the former.

There is an anecdote that discusses placing a frog in a pan of boiling water. If one were to do this, the frog would immediately jump out. If the frog is placed in cold water that is heated gradually enough until it is boiling, the frog won’t jump out but boil to death. It’s difficult to say whether this is true, but it does illustrate a principle. Gunnar Myrdal writes about how our country is being conditioned in a similar way. He says we no longer debate taxes, but take them for granted. The debate now is how the money will be spent. Even conservatives have given way to social reform in the welfare state. (Myrdal, 2008, p. 463) The bailout is just one step further down the road. Intervention, however, is against sound economic principle. It taxes future generations and will likely do little that wouldn’t have naturally happened if the principles of a free market were allowed to work. Those principles are truly consistent with the original idea of liberty espoused by our founding fathers. They sought to secure those rights in creating a constitution, but that great document has been abused and government, once instituted to secure the freedom of its people, now takes an active hand in applying economic shackles.

Works Cited

Buffett, H. (2008). The Economic Foundation of Freedom. Kirkpatrick Signature Series Reader , 599-601.

Eberling, R. M. (2008). Free Markets, The Rule of Law, & Classical Liberalism. Kirkpatrick Signature Series Reader , 605-611.

FOUHY, B. (2008, October 16). McCain hails 'Joe the Plumber' as winner of debate. Retrieved December 1, 2009, from www.foxnews.com: http://www.foxnews.com/wires/2008Oct16/0,4670,McCain,00.html

Friedman, M. &. (1979). Equality of Opportunity. Retrieved December 2, 2009, from Bellevue University Electronic Reserve System

Kristol, I. (1978). A Capitalist Conception of Justice. Retrieved December 2, 2009, from Bellevue University Electronic Reserve System

Marx, K., & Engels, F. (1848). From The Communist Manifesto - Proletarians & Communists. Kirkpatrick Signature Series Reader , 594-598.

Myrdal, G. (2008). Planning in the Welfare State. Retrieved December 2, 2009, from Bellevue University Electronic Reserve System

Rauchut, E. A. (2008). Democratic Capitalism & Individual Liberty. American Vision and Values , 201-223.

Read, L. (1992). I, Pencil. Kirkpatrick Signature Series Reader , 614-616.

Reagan, R. (1981, January 20). Ronald Reagan First Inaugural Address . Retrieved December 3, 2009, from www.bartleby.com: http://www.bartleby.com/124/pres61.html

Smith, A. (1776). From An Inquiry into the Nature and Causes of the Wealth of Nations. Kirkpatrick Signature Series Reader , 585-587.

Tocqueville, A. d. (1835). From Democracy in America . Kirkpatrick Signature Series Reader , 583-584.

Williams, W. E. (2005). The Entreprenuer as American Hero. Kirkpatrick Signature Series Reader , 602-604.