Anna Jane Davis–Period 7
In order feel secure and safe, humans need to believe that they have some kind of control over what their future holds. To possess this control, they need to be able to privately own property that they can work and manipulate to fit their needs. They need to be able to freely trade with other people without the fear of persecution by the federal government. Capitalism provides the environment for the human desire for control to be fulfilled by allowing for private ownership of property, exchange from one person to another, and minimal government interference (Medaille). Even though capitalism allows for humans to choose who to trade with and at what price, does this mean that humans under this economic structure are truly free?
Before answering this question, I need to establish the way in which I will define being free since many people interpret this word this in different ways. To be free, one must be able to pursue and fulfill the final end, or the purpose and function of a human being. According to Aristotle, the function of humans is to live in accordance with reason. By doing this, humans will be able to achieve full happiness. Therefore, humans, to be free, must choose to act on reason over emotional whims without deliberation or hesitation. For an economic system to be suitable for humans, it must allow the possibility for humans to make this choice.
So how exactly does this relate to economics, specifically capitalism? Well, as Aristotle points out, the state exists so as to help humans to live in accordance with reason and to be truly free. So, the question is whether or not capitalism, particularly the version at work in the United States, aids individuals in their pursuit to live in accordance with reason and to be truly free. No economic structure is perfect, so none can perfectly fit the description of aiding each and every human being towards true freedom. Therefore, the goal is to find and execute the best economic structure and principals that are available today to assist all humans in achieving true freedom. In today’s world, the economic structure that comes closest to fulfilling this criterion is capitalism.
Capitalism defends the individual’s pursuit to be truly free by allowing each individual the opportunity to choose reason. For example, under a capitalistic economy, individuals can freely decide which job to apply for and how to spend the money that they earn. In addition, capitalism is based on individualistic ideals rather than collectivist ideals like those found in socialism. As a result, capitalism encourages each individual to work for their own wealth because individuals get to keep their wealth or use it as they please. By allowing individuals and owners to their own economic decisions, capitalism recognizes that there are smaller aspects of the economy that a centered economic structure would not be able to predict or direct because they are too far removed from the source. As John C. Medaille states, under capitalism “ the price of a resource is set by the person owning it, taking into account the prices others are willing to pay for it, and these people—the owners of a resource and its likely potential buyers—generally have the best available information about the resource’s potential users.” In other words, individuals better possess the ability to exchange, trade, hire, and buy because they are the ones who possess the information required to make an informed decision.
In an economic system such as socialism, however, individuals would not be given this opportunity. Instead, a central authority would be built to direct economic activity. As was discovered in the former Soviet Union, however, “the central authority cannot acquire enough reliable information, much less process it fast enough, to allocate resources efficiently” (Medaille). Ultimately, socialism would take away the choice of individuals to utilize their reason when buying, selling, and distributing products. Capitalism, on the other hand, restores this choice back to the individuals; therefore, allowing the possibility for individuals to further pursue true freedom through reason. Also, socialism tries to get people to work in order to serve the common good. Basically, this means that individuals will not be able to improve their place in society because the product of their labor is taken and distributed by a central authority all in the name of serving the common good. As a Medaille explains, socialism separates effort and reward, so “workers in a socialist economy tend to give less than their best efforts.” Without the opportunity to choose reason for themselves that a capitalistic system provides, individuals constrained by a socialist economic structure will not be able to attain true freedom because the action that they engage in, whether it be acquiring a certain job or selling a product, will have been forced upon them by an authority. Consequently, humans would not be able to develop and grow their ability to function under reason since they simply would not be given the choice to exercise it. An economic system, like socialism, that prevents individuals from developing their ability to live in accordance with reason cripples humans’ ability to be free.
Another important feature that separates capitalism from socialism is the ability to acquire and own private property. The ability to own private property opens up a multitude of opportunities and choices to individuals. Suddenly, with private property, individuals are able to take their future into their own hands. No longer do they need to concentrate on saving and building up the little wealth they might be able to obtain. With private property, individuals and families are able to “invest again and again in those lines in which it best fills the wants of the consumers” (von Mises). Individuals are able to adapt quickly to the demand of consumers rather than be forced to produce and sell products by a dictator or central figure who claims to have knowledge of what is best for the economy. Ownership of private property is “the means that assigns the common man, in his capacity as a buyer, supremacy in all economic affairs” (von Mises). Because owners of property react to the demand of the consumers, the consumers are the ones who control the economy. In other words, under capitalism, the consumers, or the masses, take back the control that had been withheld from them under socialism through the ownership of private property. With this control over their lives, people are able to function without restraint and live in accordance with reason, resulting in the possibility of becoming truly free.
Under socialism, the economy is dictated by a central authority that claims to attempt to provide for the overall good. However, the masses who submit to this authority in an attempt to provide for the common good and create posterity for all, give up their freedom (von Mises). Some who support socialism say freedom “’is not worth having’ if it implies poverty” (von Mises). However, as the past of the Soviet Union exemplifies, the cost of giving up freedom is great, resulting in the thousands of peasants who died from starvation, the people forced into labor camps, and the thousands who were purged because they opposed the central ideals of socialism (von Mises). Although appealing in theory, socialism put into practice in today’s world does not bring about sufficient means for a human to become truly free.
Even though capitalism assists humans in becoming free, it and all other economic structures cannot make us free. Yes, certain economic systems can free people from certain responsibilities. Socialism, for example, frees people from the choice of how to price their products, but this does not lead them to true freedom. However, an economic structure can provide people with the best environment and opportunities that they can use to obtain true freedom. Capitalism may not be the perfect economic system under which people can obtain freedom, but it does provide the best chances for people to obtain freedom than any other economic systems available today. Capitalism supplies a suitable environment for people to be free, but, ultimately, the attainment of true freedom comes down to whether individuals choose to live in accordance with reason under this economic system.
Macintosh, Sarah. Freedom. 2012. Photograph. Freedom-Loss. Web.