The One Thing Capitalism’s Critics And Supporters Agree On—And Shouldn’t — Laissez FaireLaissez Faire

Both the critics of capitalism and its alleged champions have something important in common—something that helps explain why capitalism is losing.

Exhibit A

In a recent New York Times piece, “Capitalists and Other Psychopaths,” author William Deresiewicz minces no words about his view of capitalism: “[C]apitalism is predicated on bad behavior.”

Capitalism, he says, is based on self-interest and the profit motive, and when people pursue their own interests they do so at the expense of others:

Shafting your workers, hurting your customers, destroying the land. Leaving the public to pick up the tab. These aren’t anomalies; this is how the system works: you get away with what you can and try to weasel out when you get caught.

Capitalism is about selfishness, selfishness is about trampling over others, therefore capitalism is about trampling over others: what could be more evil than that?

Exhibit B

In this piece, Hancock County, WV Republican Chairman Pat McGeehan writes a thoughtful response to a talk by Yaron on the morality of capitalism. Unlike Deresiewicz, McGeehan is a supporter of capitalism.

Capitalism, he argues, does not lead to fraud and exploitation, but to prosperity, respect for others’ rights, and mutually beneficial voluntary trade.

But, McGeehan insists, that is because capitalism isn’t a selfish system. It’s instead rooted in selflessness: putting the interests of others above your own. “What is truly [capitalism’s] most defining element is respect—a real virtue opposed to selfish behavior.”

Common Ground

On this McGeehan and Deresiewicz agree: Selfishness puts us at odds with others. A selfish person is driven to find ways to take advantage of other people in order to feed his pride and his greed. If a system truly did promote selfishness, then it would be an immoral, destructive system, both say.

This is the moral debate over capitalism in a nutshell. Is capitalism a selfish system? “Yes,” say its critics, which is why it’s evil. “No,” say its champions, which is why it’s good.

But if these are the terms of debate, the critics are right. Capitalism is fueled by businessmen seeking profits, not to serve society, but for themselves. It’s fueled by consumers who buy big screen TVs and granite countertops not to stimulate the economy, but for themselves. It leads, not to equality and self-sacrifice but to inequality and the pursuit of happiness. Capitalism is saturated in self-interest.

As Yaron and I argue at length in Free Market Revolution, it is these basic facts—that both sides agree selfishness is evil, and the fact that capitalism is a selfish system—that have handed the opponents of capitalism the moral high ground.

You can’t defend capitalism if you hold this negative view of self-interest.

Rethinking Selfishness

Ayn Rand’s answer was that capitalism is a selfish system—and that is why it’s good.

Of course if all Rand did was point at something people think is bad and declare Monty Python-style that “No, it isn’t!” she would hardly be an interesting or important thinker. What Rand did was something much more profound and much more challenging.

Most people equate selfishness with childishness: with thoughtlessly following your urges, whims, and impulses. You want, you grab—such is selfishness. If that were what “selfishness” properly referred to, then of course it would be a horribly bad and destructive thing. Rand sure thought so. She called such behavior “whim worship” and condemned it in no uncertain terms.

But it’s wrong to call such behavior “selfish,” Rand argued, when it is in fact completely self-destructive. Think of a heroin junkie. He does what he feels like doing, all right, but what he feels like doing destroys his life, his happiness, and often kills him.

A selfish person, Rand argues, one truly concerned with his own interests, would give careful and scrupulous thought to what those interests actually are. He would work to discover what values and virtues will truly benefit his life, what things will actually add up to a lifetime of happiness and success. This is why Rand called her moral theory rational selfishness.

What are those virtues and values? Rand had a lot to say on the matter, and others have gone on to elaborate on her themes at even greater length. But the bottom line for our purposes is that selfishness, properly understood, does not put us in conflict with others. Instead, it leads to respect, goodwill, respect for others’ rights, and mutually beneficial trade.

In short, capitalism’s virtues are, believe it or not, selfish virtues—they reflect the win-win nature of self-interest.