A recent opinion piece in The Hill titled, “Let capitalism — not government —build needed infrastructure,” deserves both praise and criticism. The author argues that infrastructure owned and maintained by government (e.g., bridges, highways, pipelines, dams, and airports), should be privatized. In his words, “opening the infrastructure market to private ownership would ensure sufficient funding and would introduce innovation and cost-effectiveness.”1
In that, the author is correct. A proper government – one that exists to protect individual rights — has no business building and maintaining infrastructure. In a truly free market, which can only exist under capitalism, the best ideas, when properly executed, will rise to the top — not by subsidies or government protection from competition – but on merit; because they provide consumers with a superior value.
Rather than defend capitalism, however, the author undermines any honest attempt to do so by propagating the idea that capitalism is problematic. For example, the author refers to “inherent warts and blemishes of the capitalist system” and presupposes that prior to now, it was “imperative for the government . . . to finance, own and maintain the country’s infrastructure.”
The author commits multiple fallacies, but the focus of this post is to address his incorrect concept of capitalism; particularly, his act of equating capitalism with the mixed economy; the mix being that of capitalism and statism, which, in both theory and practice, is anti-capitalist.
His is a common misidentification in which one recognizes legitimate problems existing under our mixed economy (e.g., cronyism, political inequality, government protected monopolies) and wrongfully associates them with capitalism rather than their actual cause, the statist elements of the mixed economy. One who accepts this false concept2 of capitalism, therefore, accepts that capitalism has “inherent warts and blemishes.”
Capitalism and statism are opposites. Capitalism is a corollary to individualism and logically follows from the idea that each and every individual possesses the inalienable right to life, liberty, and the pursuit of happiness. Statism is a corollary to collectivism and logically requires that some groups of individuals sacrifice to other groups of individuals and live (or die) for the state, the public, the community, the greater good, society, humanity, a race, or some other collective. Just as good is to evil, freedom is to enslavement, nutrition is to poison, and life is to death; capitalism is to statism.
All of the inherent problems of the mixed economy are characteristics and consequences of its statist elements; not of capitalism. Capitalism necessitates the absence of government interference in the economy. Thus, capitalism exists only to the degree that the economy is free of government interference.
Perilously, few people make the distinction between capitalism and the mixed economy, and even fewer identify the mixed economy’s statist elements as evil or inimical to capitalism. Instead, most identify the mixed economy as capitalism and, consequently, presuppose that capitalism is inherently problematic.3
Consider freedom as it relates to each of the two opposing political philosophies of our mixed economy, statism and capitalism. Statist actions and practices – whether of the regulatory or welfare entitlement variety – possess the distinction of denying freedom. In contrast, capitalism distinctly requires freedom — freedom from government controls; freedom from force; freedom from coercion; freedom from regulation; freedom from government created barriers to market entry; freedom of thought and action; freedom of voluntary association; and freedom of voluntary trade.
The act of denying, abating, and suppressing freedom from a given political socio-economic system disqualifies it from being capitalism. In the 19th century and early 20th century, the U.S. was as close to capitalism as any country has ever been. Major progressive reforms under Woodrow Wilson4 and again under FDR5 moved the U.S. significantly away from capitalism and deeper into statism, and subsequent presidents and congresses have continued the increase of statist elements in the lives of Americans.
Yes, some pockets of capitalism still remain, and some industries are freer than others; but don’t make the mistake of thinking that the mixed economy is equivalent to or synonymous with capitalism. The concepts and, thus, the words that identify them are not interchangeable.
To borrow from Harry Binswanger’s 2013 Forbes column titled, “Statism: Whether Fascist or Communist, It’s The Deadly Opposite of Capitalism”:
A government that taxes 40 percent or more of our income, that controls our medical care, that regulates business so thoroughly that every firm large enough to afford it has a department of “compliance,” a government that controls the money supply, sets bank reserve-ratios, regulates stock offerings, margin-ratios, home construction, determines what pharmaceuticals and medical innovations can be sold, operates schools and universities, runs the passenger rail system, forbids “offensive” speech, increasingly intervenes in diet, subsidizes agriculture and “green” businesses, imposes tariffs, decides which businesses may merge, and . . . spies on its own citizens–is not a government remotely consistent with capitalism.6
The author of The Hill piece correctly acknowledges that government ownership of infrastructure puts it “in a position to abuse its power with impunity.” He observes that the government has “no incentive to keep projects on schedule and within budget,” or to concern itself with product quality. He points out that the government is guilty of “manipulating supply and demand to justify constantly raising taxes, user fees and tolls, ostensibly for building and maintaining roads while neglecting the assets’ maintenance and repair.”7
Kudos to the author for identifying several logical consequences that arise from government involvement in the economy. Indeed, these and many more logical consequences apply to all areas of the economy, not only infrastructure.
Despite his correct acknowledgements and good ideas, the author does more damage than good to the pro-capitalism argument. His credential as a senior fellow at a conservative think tank only makes matters worse. This is a person who most Americans associate with capitalism due to his “conservative” credentials. He is a presumed authority on the matter. What conservatives actually stand for, however, is a topic for a later date.
In her essay, “The Anatomy of Compromise” as published in her book, Capitalism: The Unknown Ideal, Ayn Rand identified a few rules (as she called them) “about the working of principles in practice and about the relationship of principles to goals.” One of the rules is as follows: “When opposite basic principles are clearly and openly defined, it works to the advantage of the rational side; when they are not clearly defined, but are hidden or evaded, it works to the advantage of the irrational side.”8
In order to win, the rational side of any controversy requires that its goals be understood; it has nothing to hide, since reality is its ally. The irrational side has to deceive, to confuse, to evade, to hide its goals. Fog, murk, and blindness are not the tools of reason; they are the only tools of irrationality.9
One who intends to argue for anything in honest standing should educate himself on the principles of both his and his opposition’s positions and use clearly defined terms. Advocates of capitalism are no exception.
To defend capitalism unequivocally and unapologetically, perhaps the easiest thing any honest of its advocates can do is to avoid misidentifying the current system (the mixed economy) as capitalism. Furthermore, a defender of capitalism — or any honest individual — should correct any misuse of the term, capitalism; especially when it explicates or implies subsumed principles contrary to capitalism.
To educate yourself on the principles of capitalism and statism, read Ayn Rand’s Capitalism: The Unknown Ideal and encourage others to do the same.
1., 7. Markovsky, A. (2018, Dec 10). Let capitalism — not government — build needed infrastructure. The Hill.
2., 3. This is an example of what Ayn Rand called the fallacy of package-dealing.
4. Tariff Act, Federal Income Tax, Federal Reserve Act, Federal Trade Commission Act, Clayton Antitrust Act, Adamson Act.
5. The New Deal, Social Security Administration, etc.
6. Binswanger, H. (2013, Nov 13). Statism: Whether Fascist or Communist, It’s The Deadly Opposite of Capitalism. Forbes.
8., 9. Rand, A. (1966). The Anatomy of Compromise. In A. Rand, Capitalism: The Unknown Ideal.