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Sep 14, 2015
Presented by
Walter Williams

Is capitalism moral or greedy? If it's based on greed and selfishness, what's the best alternative economic system? Perhaps socialism? And if capitalism is moral, what makes it so? Walter Williams, a renowned economist at George Mason University, answers these questions and more.

In a free market, consumers limit the power of corporations. Free market doesn't mean "pro-business"—it means "pro-consumer."

  • Free market capitalism forces corporations to choose between working to satisfy their customers and use their resources efficiently, or dissatisfying those they serve and going out of business.View Source
  • The government undermines the power of the people to determine a corporation’s fate when it dispenses corporate subsidies and handouts. Such “crony-capitalism” is antithetical to free markets.View Source
  • “Free market” does not mean “pro-business.” Rather, it means “pro-consumer.”View Source
  • Related reading: Ethics and Economics – Stephen R.C. HicksView Source
  • Related reading: Economic Facts and Fallacies – Thomas SowellView Source
  • Related reading: Economics in One Lesson – Henry HazlittView Source

In a free market, the economic pie is always growing. In a socialist economy, the pie is fixed and the government slices it up.

  • The free market is a positive-sum game. In any free market transaction, both people receive something that they value more than the thing they are giving. In other words, both sides are better off after transacting than they were before.View Source
  • When all parties are free to act voluntarily, without coercion, every trade is, by definition, mutually beneficial.View Source
  • It is the government, not the free market, that creates zero-sum games in an economy. Mandated government redistribution of resources—such as sugar and ethanol subsidies—is a coercive action that benefits some by forcibly taking from others.View Source
  • Related reading: Economic Facts and Fallacies – Thomas SowellView Source
  • Related reading: Economics in One Lesson – Henry HazlittView Source

Capitalism is inherently moral because it promotes voluntary, mutually beneficial actions between individuals. 

  • A free market capitalistic system creates an environment in which people only make financial and business choices they want to make, without coercion (governmental coercion being a fundamental part of all non-capitalistic economic systems).View Source
  • Mutual betterment, not selfishness, is the foundation of capitalism.View Source
  • Related reading: Ethics and Economics – Stephen R.C. HicksView Source
  • Related reading: How an Economy Grows and Why It Crashes – Peter D. SchiffView Source
  • Related reading: How Adam Smith Can Change Your Life – Russ RobertsView Source

Capitalism is based on voluntary, mutually beneficial transactions. Non-capitalistic economies are based on governmental coercion. 

  • A free market capitalistic system creates an environment in which people only make financial and business choices they want to make, without coercion (governmental coercion being a fundamental part of all non-capitalistic economic systems).View Source
  • Mutual betterment, not selfishness, is the foundation of capitalism.View Source
  • Related reading: Ethics and Economics – Stephen R.C. HicksView Source
  • Related reading: Economic Facts and Fallacies – Thomas SowellView Source
  • Related reading: Economics in One Lesson – Henry HazlittView Source

Any economic choice made between two people in a capitalist system is, by definition, one that each person believes will benefit them.

  • A free market capitalistic system creates an environment in which people only make financial and business choices they want to make, without coercion (governmental coercion being a fundamental part of all non-capitalistic economic systems).View Source
  • Mutual betterment, not selfishness, is the foundation of capitalism.View Source
  • Related reading: Ethics and Economics – Stephen R.C. HicksView Source
  • Related reading: Capitalism and Freedom – Milton FriedmanView Source
  • Related reading: Basic Economics – Thomas SowellView Source

Capitalism is not really a system at all, but the absence of a governmental system controlling our economic choices.

  • The free market is a positive-sum game. In any free market transaction, both people receive something that they value more than the thing they are giving. In other words, both sides are better off after transacting than they were before.View Source
  • When all parties are free to act voluntarily, without coercion, every trade is, by definition, mutually beneficial.View Source
  • It is the government, not the free market, that creates zero-sum games in an economy. Mandated government redistribution of resources—such as sugar and ethanol subsidies—is a coercive action that benefits some by forcibly taking from others.View Source
  • Related reading: Economic Facts and Fallacies – Thomas SowellView Source
  • Related reading: Capitalism and Freedom – Milton FriedmanView Source
  • Related reading: How an Economy Grows and Why It Crashes – Peter D. SchiffView Source

Capitalism is based on the idea that if you help others, in return others will help you.

  • A free market capitalistic system creates an environment in which people only make financial and business choices they want to make, without coercion (governmental coercion being a fundamental part of all non-capitalistic economic systems).View Source
  • Mutual betterment, not selfishness, is the foundation of capitalism.View Source
  • Related reading: Ethics and Economics – Stephen R.C. HicksView Source
  • Related reading: Basic Economics – Thomas SowellView Source
  • Related reading: Economics in One Lesson – Henry HazlittView Source

Capitalism believes in “power to the people.” Socialism believes in “power to the government.”

  • A free market system with minimal corruption can only work if there is limited government in which the people, not the government, decide which businesses survive.View Source
  • Government bailouts and subsidies distort the people’s consumer-based influence over businesses. When the U.S. government bailed out GM and Chrysler, it punished other automotive manufacturers who had been successful in the market.View Source
  • The move cost the American public at least $9 billion and was ultimately a form of legalized theft designed to protect the government’s favored car companies.View Source
  • Related reading: Ethics and Economics – Stephen R.C. HicksView Source
  • Related reading: Basic Economics – Thomas SowellView Source
  • Related reading: How an Economy Grows and Why It Crashes – Peter D. SchiffView Source

Big Business does not care for capitalism and competition. Big Business prefers that Big Government protects it from market forces.

  • Free market capitalism forces corporations to choose between working to satisfy their customers and use their resources efficiently, or dissatisfying those they serve and going out of business.View Source
  • The government undermines the power of the people to determine a corporation’s fate when it dispenses corporate subsidies and handouts. Such “crony-capitalism” is antithetical to free markets.View Source
  • “Free market” does not mean “pro-business.” Rather, it means “pro-consumer.”View Source
  • Related reading: Ethics and Economics – Stephen R.C. HicksView Source
  • Related reading: Capitalism and Freedom – Milton FriedmanView Source
  • Related reading: How Adam Smith Can Change Your Life – Russ RobertsView Source

Capitalism is inherently altruistic. Socialism is inherently selfish.

  • The free market is a positive-sum game. In any free market transaction, both people receive something that they value more than the thing they are giving. In other words, both sides are better off after transacting than they were before.View Source
  • When all parties are free to act voluntarily, without coercion, every trade is, by definition, mutually beneficial.View Source
  • It is the government, not the free market, that creates zero-sum games in an economy. Mandated government redistribution of resources—such as sugar and ethanol subsidies—is a coercive action that benefits some by forcibly taking from others.View Source
  • Related reading: How Adam Smith Can Change Your Life – Russ RobertsView Source
  • Related reading: Economic Facts and Fallacies – Thomas SowellView Source
  • Related reading: How an Economy Grows and Why It Crashes – Peter D. SchiffView Source

Capitalism makes people ask, “What can I provide for others?” Socialism makes people ask, “What will others give me?”

  • Free market capitalism forces corporations to choose between working to satisfy their customers and use their resources efficiently, or dissatisfying those they serve and going out of business.View Source
  • The government undermines the power of the people to determine a corporation’s fate when it dispenses corporate subsidies and handouts. Such “crony-capitalism” is antithetical to free markets.View Source
  • “Free market” does not mean “pro-business.” Rather, it means “pro-consumer.”View Source
  • Related reading: Ethics and Economics – Stephen R.C. HicksView Source
  • Related reading: Capitalism and Freedom – Milton FriedmanView Source
  • Related reading: How Adam Smith Can Change Your Life – Russ RobertsView Source

In a free and open market, each person has to give back to others and to society before taking anything from anyone.

  • The free market is a positive sum game. In any free market transaction, both people receive something that they value more than the thing they are giving. In other words, both sides are better off after transacting than they were before.View Source
  • When all parties are free to act voluntarily, without coercion, every trade is, by definition, mutually beneficial.View Source
  • It is the government, not the free market, that creates zero-sum games in an economy. Mandated government redistribution of resources—such as sugar and ethanol subsidies—is a coercive action that benefits some by forcibly taking from others.View Source
  • Related reading: Capitalism and Freedom – Milton FriedmanView Source
  • Related reading: Basic Economics – Thomas SowellView Source

Many people believe that free market capitalism is selfish, even immoral. They say it's about greed, about a hunger for money and power; that it helps the rich and hurts the poor. They're wrong. The free market is not only economically superior, it is morally superior to any other way of organizing economic behavior. Here's why.

The free market calls for voluntary actions between individuals. There's no coercion.
In a free market, if I want something from you, I have to do something for you.

Let's say I mow your lawn and you pay me twenty dollars. What does that twenty dollars really mean? When I go to the grocer and say, "I would like to have four pounds of steak" He, in effect, says to me, "You want a lot of people to serve you -- ranchers, truckers, butchers, and packagers. All these people have to be paid. What did you do to serve your fellow man?"

"Well," I say, "I mowed my fellow man's lawn." And the grocer says, "Prove it." Then I offer him the twenty dollars. Think of the money that you've earned as a certificate of performance. It's proof that you've served your fellow man.

People accuse the free market of not being moral because they say it's a zero-sum game, like poker, where if you win, it means that I have to lose. But the free market is not a zero-sum game. It's a positive sum game. You do something good for me, such as give me that steak and I'll do something good for you -- give you twenty dollars. I'm better off because I valued the steak more than I valued the $20 and the grocer is better off because he valued the $20 more than he valued the steak. We both win.

Ironically, it's the government, not the free market, that creates zero-sum games in our economy. If you use the government to get a food stamp, a farm subsidy or a business bail out, you will benefit -- but at the expense of your fellow citizens. Isn't it more moral to require that people serve their fellow man in order to have a claim on what he produces rather than not serve others and still have a claim?

But, a lot of people ask, what about giant corporations? Don't they have too much power over our lives? Not in a free market. Because in a free market We, the People, decide the fate of companies who want our business.

Free market capitalism will punish a corporation that does not satisfy customers or fails to use resources efficiently. Businesses, big and small, that wish to prosper are held accountable by the people who vote with their dollars. And, again, it's the government that can undo this.

Take the example of the American automobile industry. It was struggling to survive in 2009. Why? Because they were producing cars that did not please a sufficient number of their fellow men. In a free market, they would therefore have gone bankrupt. The market would have said, "Look, you're done. Sell your plant and equipment to somebody who can do a better job." But when Chrysler and General Motors failed, they went to Washington D.C. and got the government to bail them out.

The government bailout essentially meant to them: "You don't have to be accountable to customers and stock holders.' No matter how inferior your product is and no matter how inefficient you are, we'll keep you in business by taking your fellow man's money. When government interferes in this way, it takes the power away from the people and rewards companies that couldn't compete successfully in the marketplace. That may work out very well for politicians, big unions and corporate officers, but it seldom does for the tax payer. That's why a free market system can only work if there is limited government. Limited government means you and I decide which businesses survive.

That's the America that our Founding Fathers envisioned -- a limited government that has only a few specifically mentioned -- or enumerated -- powers that are listed in Article I, Section 8 of the United States Constitution. It's this brilliant, limited-government notion that produced the wealthiest nation in history. In a free market, the ambition and the voluntary effort of citizens, not the government, drives the economy. That is: people, to the best of their ability, shaping their own destiny.

Sounds pretty moral to me.

I'm Walter Williams of George Mason University for Prager University.

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