24 May 2015

Capitalism is setting us free


As the protesters took to the streets the day after the election, the usual rhetoric emerged. The system had failed. The Tories with their love of the free market were back in power and back in the business of helping those who already have plenty at the expense of those who do not.

Such criticism of the system is persistent: capitalism has transformed us into heartless materialistic machines whose only moral code is fame and money. It is a world where the success of one can only come at the expense of another.

Whilst such rhetoric suffers from a fundamental lack of understanding about the creation of wealth, its observations can resonate. Picture the scene: a pile of boxes is brought before a frenzied crowd who surge forth at the sight of the object for which they have queued for hours. Arms reach out to grab the boxes and the uniformed men tasked with their distribution. Those who get their hands on a box find themselves punched, dragged, and wrestled by those who missed out.

This was not Nepal, where abject despair is etched on the faces of mothers sheltering their children under plastic sheets.  This was Wembley, North London. Inside these boxes were 40 inch plasma TVs, fought over by the world’s privileged, not its poor.

Blame was quickly apportioned: the scene showed our consumer obsessed society at its most vile. Capitalism had unleashed the primeval monster and dressed it in the cheap fashion of materialism. The sense of outrage was justified, but blame cannot be laid at the door of the market. Far from being the cause of the perceived decline of the moral sphere, capitalism is its best defence.

The moral sphere is under threat from the belief that life is about having or getting ‘stuff’, rather than about the sort of person we want to be. The idea of the moral life as one of ‘becoming’, where the value lies in the process itself not some ‘perfect’ end state, traces its roots back to the Greek philosophers, most notably Aristotle.

The moral life, according to Aristotle, is the one lived in the practice of a series of virtues, subject to the exercise of practical wisdom to resolve conflict. In short, if we allow our lives to be guided by a series of moral principles (e.g. honesty, temperance, prudence) and our life experiences, we will flourish. This virtue approach to ethics is central to the idea of life as a process of becoming rather than having. This is not an argument about the perfectibility of man, but about perseverance. The moral life is the one marked by the effort to be the best that you can be, both in terms of your own abilities, but also in terms of our capacities as human beings. Hume once referred to benevolence as the greatest virtue of which human beings are capable. Such virtues matter.

The moral value of capitalism in this context lies in the economic freedom that it brings. The individual is unleashed to fulfill their potential when they are given the freedom to do so. The basic principles of capitalism bring the freedom to specialise, to create, to provide economic opportunity to others, or to seek the capital to actualise an idea. So too are our moral lives enriched by the wealth that capitalism has generated. This wealth has freed millions from the constraints that poverty placed on their ability to be the best that they can be. The same can be said of poor education or ill health. Our moral lives are at their most rich when we are free and the forces of capitalism have done more to free us from constraints than any other system in history.

The decline of the moral sphere is not an inevitable consequence of a capitalist system. Moral degradation is not a failure inherent in capitalism itself. If there is a failure in the system, it lies in the political sphere, where the obsession with ‘who gets what’ is reinforced by the distributional orientation of the political axis. Elections are fought and votes bought with promises of money or ‘stuff’.

The system fails us because we focus on the wrong thing. In the process, the ideas about what a good life actually looks like and how the state can secure the freedom needed for its pursuit are lost. Unless they can be found, the distributional pressures will continue to erode our economic freedom, and with it our ability to live free and meaningful lives. The principles of the capitalist free market system can restore our moral fibre. To save our moral souls, we must let it.

Harriet Maltby is the Government & Economic Policy Researcher at the Legatum Institute.