Capitalism vs. Socialism: A Question of Freedom

Becca Byrne Period 6 – Capitalism is an economic system based on protecting property rights and it ultimately makes us more free as a whole society. It acts as one of the only moral systems and allows market participants to interact freely and take control of their own property and money. The antithesis to capitalism is socialism, where, some would argue, there cannot be any freedom.

While Capitalism allows the market participants to interact freely; socialism outlaws all bargaining and buying and selling without the consent and approval of the government. The philosophy of socialism is based on the teachings of Karl Marx, who didn’t trust individuals with economic power, but did trust politicians with that power. Socialism can lead to tyranny by a single individual or power by a group of politicians. All citizens are subject to the orders of the government, the state is a total state led by a totalitarian regime. The government alone plans and forces everyone to behave according to their own agenda. In a free market economy individuals are free to choose the way in which they want to incorporate themselves into social cooperation. Socialists argue that this laissez-faire approach leads to greed and unbalance between the rich and poor, but their alternative of complete and equal control will never work. They try to obliterate the difference between the servile state and economic freedom (Capitalism Institute) by denying that there is any freedom in the mutual exchange of commodities and services on the market.

Von Mises argues that government is a necessary institution but is essentially the negation of liberty. While every person should be allowed their inherent human rights and freedom, there could not be civilization or peace without the government to set boundaries and rules for the safety and best interests of the people. The question stands today on how much the government is allowed to regulate and control. In many ways, government is a form of repression rather than freedom. Liberty and freedom is found when government does not interfere. The main idea of capitalism is that economic power in a market economy is in the hands of the consumers rather than in the hands of the government.  Mises states, “The whole acts as one market, not because any of its members survey the whole field, but because their individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated to all. Instead of a single mind possessing all the information and the answers, single individuals rise to enough knowledge to disperse it efficiently to the people.” In a free country nobody is prevented from acquiring riches by serving the consumers better than they are served already, and not forced to give away their excess simply to close the balance. If there was complete and total balance there would be no competition, and competition is what motivates individuals and consumers in the economy to grow and prosper. The bigger a corporation is the more people it serves, and the more it depends on pleasing the consumers and the masses.

Private property of the material factors of production is not a restriction of the freedom of all other people to choose what suits them best, unlike what some socialists may think. On the contrary it is the means that assigns to the common man in his capacity as buyer supremacy in all economic affairs. It is the means to stimulate a nation’s most enterprising men to exert themselves to the best of their abilities in the service of all of the people.  It is capitalism that has made is possible for someone to save, to accumulate capital and invest in it in the first place. The resulting progressive prosperity that is given by the free market creates a social environment in which the exceptionally gifted individuals are free to give their fellow citizens all they are able to give. This social system of private property and limited government is the only system that tends to integrate those who cannot participate in leading businesses and corporations into society. Capitalism allows for monetary growth and individualism to become more apparent.

The United States of America was formed and shaped around freedom and liberty. The Constitution established a government of limited and enumerated powers. It is considered a radical document in the history of liberty because it has such a restrained view of what the government should do. The problem with the socialist’s economic critique of capitalism is their failure to grasp the sovereignty of the consumers in the market economy. They focus on the concentration of economic power, but they don’t realize that economic power is ultimately in the hands of the buying public of which the employees themselves make up the immense majority. They forget that workers in a business are also customers, free to purchase capital of their choosing, which ultimately helps stimulate the economy overall. If someone is restrained in the economy and in their job, they are also restrained politically and morally as well, because a regulated market can make decisions that are not objective and not everyone agrees on them. This is proof on how socialism makes people less free, and how capitalism protects that freedom.

The rise in power of individuals due to their skills and knowledge in a specific field is an important quality in capitalism. Socialists are afraid of that power and the unbalance it can cause socially. Their solution is to have power distributed evenly in political groups that determine the rules and regulations for the masses. The masses will then receive equal opportunities and equal property, but no way to rise up against each other, and no competition (or conflict) between each other. It is true that in a capitalist society a man with average intellectual abilities has no chance to rise to the rank of a captain or leader in a particular industry. But the natural sovereignty that the market assigns to him in economic affairs stimulates technologists and promoters to convert to his use all the achievements already accomplished by the leaders. Only people whose intellectual horizon does not extend beyond the internal structure of the factory and who do not realize what makes the businessman run fail to notice this fact. Everyone can succeed in a free capitalist market if they make the right decisions and work hard enough. The problem is that socialists attempt to convince the masses that they cannot prevail and offer easy alternatives over work in order to gain power politically for themselves.

Capitalism is ultimately a system that gives more freedom to the people, asking that they work hard in return to allow their businesses and work stabilize the economy. Socialism takes away that freedom and gives power to people affiliated with the government so that they may ensure a stable economy and equality for everyone. The difference in equality for capitalists is that everyone starts out with the same opportunities and positions given to them, but competition allows for power to go to one individual over another. Freedom is not distributed by any one party, but rather won by those who work hard enough and fully utilize every opportunity given to them to reach their full potential. Socialists argue that freedom is not worth having if there is unbalance between people, meaning having some people be rich and some people live in poverty at a singular period in time. While no capitalist wants people to suffer or be in poverty, they also understand that competition and individual power is necessary in order to have a free market. Any individual can be stripped of their power if they stop utilizing their access to full equality and freedom, but with socialism a man begins without full equality and freedom and without any way to reach individual power; they are less free than any capitalist.  


Works Cited

“The Simple Reason Socialism Always Fails.” Capitalism Institute The Simple Reason Socialism Always Fails Comments. N.p., n.d. Web. 13 Dec. 2012.


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