The liberal capitalist

Over the last few years, a debate around the term “capitalism” has intensified. Is capitalism good, or should it be thrown out and replaced with socialism? Over 40% of Americans, by the way, believe socialism would be a good thing for the country.

It’s simplistic to think of socialism versus capitalism. I’m not sure most people recognize what socialism actually means: state-owned means of production.

Unfortunately, most critics of capitalism as a system have this simplistic view of things, which you can see in r/LateStageCapitalism. These kinds of critiques, and others you hear about from the talking heads, don’t really get at the complexity of the debate.

Capitalism is certainly having an “identity crisis,” as an op-ed put it in The Guardian last year. Yes, many capitalists have placed profits before people, and we reap the consequences of that error. However, blaming capitalism—an entire economic system—for corporate greed is like “blaming democracy for voter fraud.”

That’s the real issue at the center of the debate: greed. Capitalism is a remarkable system, as is democracy, but it’s human sin that corrupts the system, not the other way around.

Between greed and its opposite, prodigality, lies a middle way: liberality. Aristotle argued for this virtue in one of his most famous works called Nicomachean Ethics. He described liberality this way:

Now the things that have a use may be used either well or badly; and riches is a useful thing; and everything is used best by the man who has the virtue concerned with it; riches, therefore, will be used best by the man who has the virtue concerned with wealth; and this is the liberal man.†

Obviously, Aristotle’s use of the term liberal, or at least the term translated as such, is not the way we use liberal today to describe left-leaning politics.

“And the liberal,” he continued, “are almost the most loved of all virtuous characters, since they are useful; and this depends on their giving.”††

The wealth generated by capitalism is tremendously useful, and those who use it well, according to the philosopher, are the most loved of all. Capitalist-driven wealth has cured diseases, lifted communities out of poverty, increased our standard of living, and many other benefits.

Yet because humans are involved, human sin corrupts even the best of our systems, and greed skews the benefits of capitalism to further line the pockets of the extraordinarily wealthy. Capitalist-driven wealth has led to horrible inequalities, amplified the effects of systemic racism, and sustained many wars.

But I want to be clear: It’s not capitalism per se that does this. It’s sinful human beings abusing the benefits of capitalism for their own greed.

So, a better question regarding our economic systems should be this: What kind of capitalism should we strive for?

New articles in Project Syndicate from respected economists Klaus Schwab, founder of the World Economic Forum, and Laura Tyson and Lenny Mendonca argue for “stakeholder capitalism.”

Stakeholder capitalism is a system at odds with shareholder capitalism, the kind we see in America now, and state capitalism, the kind we see taking root in many parts of Asia.

This system believes that all stakeholders should drive the interests of corporations—from miners and manufacturers to customers and communities. Some companies are gaining ground in this area, but we have a long way to go to achieve a “liberal” capitalism. Stay tuned.

Thanks for reading.

Notes

† Aristotle, Nicomachean Ethics, Book IV, in The Great Books of the Western World, vol. 9, ed. Robert Maynard Hutchins (Chicago: Encyclopædia Britannica, 1952), 366.

†† Ibid., 367.