Wealth of Nations May 2005

Why Does Capitalism Get Such A Bum Rap?

The idea that capitalism is the enemy of social progress calls for an impressive resistance to some large and pretty obvious facts.
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There are many kinds of anti-capitalism. The most militant variety, involving street protests and kicked- in windows, has subsided a little lately. But this was never the most important kind. A broader, milder, even cordial, discontent with capitalism saturates Western culture. It has become so familiar that it barely registers at the conscious level. But the feeling is there, and it creates the climate in which public policy is framed.

Sipping a cup of Starbucks Fair Trade Blend—the kind that guarantees growers a "living wage," while encouraging "equitable and sustainable development" (as opposed to the more normal kind of coffee, which enslaves the poor and is leading the planet to destruction)—I note that May 14 is World Fair Trade Day. Many events are planned. To mention just one: a chocolate tasting and fashion show in Olympia, Wash., which sounds like fun, as long as things do not get out of hand. Sample the goods and pick up your material on economic injustice.

The conviction that ordinary economic transactions are morally tainted—or amoral, at any rate—is not just a preoccupation of grassroots handwringers. Leading politicians of both main parties in the United States appear to think the same way, especially when it comes to worrying about the effect of surging imports on American jobs. The market is blind. The market has no feelings. The market is incompetent, or so it is argued, to make these choices.

In Europe the same is true, only more so. Now and then, its politicians become hysterical on the subject. Franz Muntefering, chairman of Germany's ruling Social Democratic Party, has just condemned foreign investors (companies that have transferred capital to the German economy) as "swarms of locusts that fall on companies, stripping them bare before moving on." There's gratitude. But the comment played well. Predictably, demands have followed for boycotts of "socially irresponsible" companies, and for curbs on top executives' pay. Watch Germany's struggling economy spring back to life once those recommendations are acted on.

Church leaders are none too keen on capitalism, either. A few days ago, one of Britain's most eminent spiritual leaders, the archbishop of Canterbury, spoke at an event to celebrate Christian Aid, a big charity, and took the opportunity to assault "naive confidence in free trade." (Question: Where, in the realm of actual politics, does one ever see "naive confidence in free trade"?) Market economics, the archbishop went on, "forces choices on vulnerable countries, whose effects may be in the short to medium term very costly indeed to a whole generation of workers, to the environment, to political stability."

On this point, Hollywood, that temple of sybarites, aligns itself with the church, noting sadly the excess and easy virtue of the capitalist model. Has there ever been a movie featuring a large corporation that does not cheat, or poison, or otherwise harm its customers and workers? The other view is better represented, and not just by Michael Moore. The irredeemably wicked corporation is the premise of countless films: Erin Brockovich, The Insider, Super Size Me, the canonical Wall Street, who knows how many? And it is the background scenery in far more. Anti-capitalism is not so much a movie genre as a universal presumption of the entertainment industry—itself, of course, a capitalist enterprise.

Indeed, the oddest thing is how many top business leaders are joining this chorus of condemnation, sometimes perhaps out of genuine belief and sometimes because it is smart tactics. Recently I researched an article on corporate social responsibility. After a spell of reading companies' annual reports, I set myself the task of finding a major public company that did not say, somewhere in its document, that it honored its broader responsibilities to the community. Surely there must be one such company that says its purpose is to make money for its owners—and leaves it at that. I'm still looking. If even the bosses are apologizing, entering pleas in mitigation, and asking for forgiveness, then obviously, there must be something to apologize for.

But what, exactly? It is as though the 20th century never happened. Capitalism has delivered hitherto-unimaginable advances in living standards across the developed world. And this is not just measured in dollars and cents. Broader social progress has been made too, again at historically unprecedented rates. Life expectancy, infant mortality, access to health care and education—regardless of which of these measures you take, capitalism has achieved stunning results.

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