Webster’s II New College Dictionary defines capitalism as an economic system marked by open competition in a free market in which the means of production and distribution are privately or corporately owned and development is proportionate to increasing accumulation and investment of profits.
Open-market competition permeates the evolution of American culture and the American people. Capitalism has led to America’s hegemonic status among the nations of the world. Absent an environment allowing capitalism to be born and incubated, America would not have developed into the world’s only true superpower.
An America sans capitalism would have arrested the flowering of American Democracy, the expression of the American spirit, and the ascendancy of American greatness. The birthright of every American to "life, liberty, and the pursuit of happiness” could not have had the remotest chance of becoming a reality except under a capitalist system.
American capitalism is the framework that allows realization of the concepts expressed in the Declaration of Independence and the Constitution.
Capitalism is the lynchpin in the concept of the American ideal. America’s strength and wealth are a testament to the superiority of capitalism as a political and social system of organization. However, critics of capitalism in general and American capitalism in particular recite a litany of shortcomings, basically revolving around the idea that capitalism is fraught with inequity and unfairness in economic outcomes.
Because of this idea, Karl Marx predicted that capitalism would be the cause of the growing schism between the “proletariat” working class and the industrial class, and at some point, there would be a class revolt.
Even Austrian economist Joseph Schumpeter, who coined the term “creative destruction” to explain the march of economic progress under capitalism, speculated that capitalism would mature to the point that it would be fertile ground for a seamless transition to socialism. The primary characteristics of a capitalist system that had run its course and was ready to ease into socialism, according to Schumpeter, were vanishing investment opportunities and “obsolescence of the Entrepreneurial Function.”
I disagree. Capitalism will not fail because of its maturing and running its natural course of existence, as Schumpeter thought; and capitalism will not fail because of any innate unfairness or failure tofairly advocate a system of material resources, as Marx suggested.
If American citizens were left to make economic decisions that were in their own best interest, capitalism would work fine. It’s the interference of Washington’s elite that has been killing American Capitalism by the death of a thousand cuts.
Washington, D.C. is the torturer and executioner of American capitalism. Politicians, bureaucrats, and lobbyists there constitute a powerful fifth column whose actions diminish every American’s endowment to “life, liberty, and the pursuit of happiness.”
This effort has been prosecuted against the American populace by the current confiscatory progressive tax code, inflationary monetary policy, deficit spending, and protectionism. Complicit in this torture and slow death are the Internal Revenue Service by usurping power from the American people, and the Federal Reserve by debasing the dollar.
Critics of capitalism point to Wall Street and the recent carnage in the economies of America and the Euro zone as evidence of the travails of unfettered or under-regulated capitalism, proclaiming that capitalism must be reined in and controlled.
However, the activities of Wall Street in its present iteration, and the incessant borrowing of America and the Euro zone countries, are not capitalism.
The fact that individuals, businesses, and sovereign governments got caught in a vortex of too-easy credit and developed an unsustainable thirst for easy money is no reflection on the soundness or attractiveness of capitalism as a superior economic system. The present state of the economy is due to collective greed, the universal suspension of common sense, and failure of the referees in our economic regulation.
This greed and lapse of common sense in rationalizing economic decisions originated from the federal government’s interference with the free market through the current confiscatory tax code, inflationary monetary policy, deficit spending, and protectionism.
These Four Horsemen of America’s economic apocalypse frustrate the workings of Adam Smith’s “Invisible Hand,” leading to a misallocation of resources within the American economy and a misalignment of economic incentives.
Federal Reserve Chairman Ben Bernanke and other economists who studied the Great Depression identified their “lessons learned” that would allow the Federal Reserve to steer monetary policy to mitigate business cycles.
With the typical policy options and his study of the Great Depression, Bernanke set out to navigate the American economy back to safety by calibrating money supply. His reliance on these tired and ineffective tactics rank with the foolhardiness of French generals on the eve of World War II, and their faith in the security of the Maginot Line to protect France from a German invasion. It didn’t and couldn’t.
The Federal Reserve’s actions in the current financial crisis are proving just as ineffective and indeed counterproductive. Paired with the actions of the United States Treasury under Timothy Geithner this has turned out to be a total disaster.
Competition is the hallmark of capitalism. Competition guides Adams Smith’s “Invisible Hand.” Competition breeds champions. Even Giacomo Casanova recognized the role of competition and limited government in his autobiography, "History of My Life," describing the success of Lyons, France in the fashion industry: "Low prices come from competition, whose soul is freedom. Hence a government which wishes to see the state prospering by commerce has but to leave commerce completely free, only being watchful to prevent frauds which private interest may invent to the detriment of the general interest."
The Four Horsemen of America’s economic apocalypse are killing American capitalism by strangling competition and thus, American democracy. The way out of America’s self-built economic hell is to change the system structurally, and return to limited constitutional governance that respects the sovereignty of the 50 states and the freedoms of the American people. We can achieve this goal with a fair tax, a balanced budget amendment, a return to the gold standard, and free trade.
Deon Long is a Winter Park, Fla., attorney. He is currently a candidate in the Republican primary for the U.S. Senate. He can be contacted at firstname.lastname@example.org.
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