Is capitalism moral?

WaPo Opinions ^ | 3-15-2013 | Steven Pearlstein

[Sir Napsalot]

Careening from debt-ceiling crisis to sequestration to a looming government shutdown, the nation is caught up in a historic debate over the proper size and role of government.

That’s certainly one way to think about it. Another is that we are caught up in a historic debate over free-market capitalism. After all, if markets were making most of us better off, regulating their own excesses, guaranteeing equal opportunity and fairly dividing the economic pie, then we wouldn’t need government to take on all the things it does.

For most of the past 30 years, the world has been moving in the direction of markets. The grand experiment with communism has been thoroughly discredited, a billion people have been lifted from poverty through free-market competition, and even European socialists have given up on state ownership and the nanny state.

Here at home, large swaths of the economy have been deregulated, and tax rates have been cut. A good portion of what is left of government has been outsourced, while even education is moving toward school choice. In embracing welfare reform, Americans have acknowledged that numerous programs meant to lift up the poor instead trapped them in permanent dependency and poverty.

But more recently, we’ve seen another side of free markets: stagnant incomes, gaping inequality, a string of crippling financial crises and 20-somethings still living in their parents’ basements. These realities are forcing free-market advocates and their allies in the Republican Party to pursue a new strategy. Instead of arguing that free markets are good for you, they’re saying that they’re good — mounting a moral defense of free-market capitalism.

[ProtectOurFreedom]

A truly free market is the greatest social equalizer ever devised by man.

It's not hard to grasp, is it? You don't work, you starve and die. You don't save for your future, you face bleak prospects.

[dfwgator]

Capitalism - Oingo Boingo

There’s nothing wrong with Capitalism
There’s nothing wrong with free enterprise
Don’t try to make me feel guilty
I’m so tired of hearing you cry

There’s nothing wrong with making some profit
If you ask me I’ll say it’s just fine
There’s nothing wrong with wanting to live nice
I’m so tired of hearing you whine
About the revolution
Bringin’ down the rich
When was the last time you dug a ditch, baby!

If it ain’t one thing
Then it’s the other
Any cause that crosses your path
Your heart bleeds for anyone’s brother
I’ve got to tell you you’re a pain in the ass

You criticize with plenty of vigor
You rationalize everything that you do
With catchy phrases and heavy quotations
And everybody is crazy but you

You’re just a middle class, socialist brat
From a suburban family and you never really had to work
And you tell me that we’ve got to get back
To the struggling masses (whoever they are)
You talk, talk, talk about suffering and pain
Your mouth is bigger than your entire brain
What the hell do you know about suffering and pain . . .

(Repeat first verse)

(Repeat chorus)

There’s nothing wrong with Capitalism
There’s nothing wrong with Capitalism
There’s nothing wrong with Capitalism
There’s nothing wrong with Capitalism

[r-q-tek86]

Thank you for a good start to refuting this pile. Fee clearly doesn’t understand how free markets work.

[ProtectOurFreedom]

morality has as much to do with capitalism, as it does with arithmetic... NOTHING!!!

You need to rethink this. In a free society, you must be secure in your person and property. You create your own wealth and property through your own industry and hard work..others are not allowed to steal it from you. At its very heart, capitalism is a moral endeavor.

[Joe 6-pack]

Did the author get paid to write this, or did he do it for free?

[Slyfox]

The seeds of this moral defense of free markets were planted by John Locke, Adam Smith and Ludwig von Mises

Actually the seeds were planted by the Spanish Neo-Scholastics and picked up John Locke and Adam Smith. Adam Smith actually only gave us a somewhat fractured version of true economic thought.
"Redeeming Economics: Rediscovering the Missing Element" by John D. Mueller

Nonetheless, when Karl Marx began doing research for his opus, "Das Capital," he spent hours upon hours in London libraries going over the works of Adam Smith primarily to find out how to smash capitalism.

Our Founders put everything into the free market, including religion. Everything was given a chance to succeed or fail based upon its own merits.

The federal government has its grubby hands on the neck of America trying to fulfill the "subjectives" of Karl Marx.

[Chode]

theft is a criminal issue, right and wrong not withstanding...

when communists speak of morality and capitalism in the same sentence it's the word they use to abuse capitalists by telling them they have to much of something/wealth and they need to share it with those to lazy to get it for themselves

communists have no morals they just try to make those that do feel guilty for no reason about what ever they are ranting about at the moment...

[depressed in 06]

So this is the basis we should now 'regulate good genes and equalize opportunities'?

We should license copulation so that only good genes get created in good places. Super race done right, the Bolshecrat way.

[dennisw]

pretty much agree with you and yours will be the most intelligent post on this thread. To me the cruelest joke is the boosterism for entrepreneurs. These days entrepreneurism means 5,000 bodegas in NYC cheating on taxes instead of only 1000. Many foreign born entrepreneurs get huge advantages from cheating on taxes and hiring illegals. How many ethnic restaurants does America need? How many sushi and Thai restaurants?

If you have a real entrepreneur who is inventing and/or striking out in a new field then I salute him. But at this point when entrepreneur A gets clever and increases his business he can only do it by taking businesses from entrepreneur B and C in the same line of work. Why? Because today’s economic pie is static or shrinking (thanks for nuttin’ 0bama!)

[Truth2012]

Well, I agree.. since Obama’s government includes the GOP sell outs.

[Fee]

Did you know the FBI detected liar loans and briefed the problem to the US Treasury? The FDIC chairwomen was concern and wanted action and Sec of Treasury Sumner shoved her concerns aside. Liar loans are illegal if pro free market freepers want to know. Even more illegal is investment firms who buy them write up the Prospective for the investors stating the mortgage portfolio is AAA and all paper work (titles) are in order. Well those Wall Street bankers (idol of free market freepers) sold those fraudulent portfolios to pension funds, hedge funds, investors, etc etc etc. The WORLD economic system imploded from those toxic papers, and we are lucky the world has not used the US as a scapegoat for their economic problems. Lucky for us, their bankers and gov officials were equally reckless and corrupt. The sad part is AG Holder was asked why bankers were not prosecuted, and he basically said if he did, the bankers would freeze operations and implode the financial system. IAW Wall Street bankers were too big to prosecute. That is one hell of a message to tell Wall Street, they have a license to steal. Like I said earlier, we don’t need regulations, we need to enforce our regulations. As it stands today, the system broke down and Wall Street is lawless. The free market GOP keeps stepping in it by ignoring this development, letting the law breakers go free and continue to do business as usual. Just as the Dems have blind ideologies that ignore reality which eventually cost them elections, the GOP has blind ideologies that ignore crooks and ironically cannot figure out why they keep losing elections. IMHO the problem with the free market debate is it is framed as right and wrong. Nobody asks what was the American experience under this free market theory? My opinion is 2008 was the defining moment of the theory just as the stagnation and fall of the Soviet Union was the defining moment for Communism, and today Greece is the defining moment of EU socialism. All three theories is an absolute failure. What we need is a mixed system that is based on what we experienced and wisdom of the past and present. We have powerful crooks in our economic system. Their influence and criminal enterprise needs to be dismantled or this republic will not survive before the end of this century. The first party that figures a way to do away with them, will win elections and save the prosperity of the future.

[LtKerst]

The grand experiment with communism has been thoroughly discredited,

And Yet Here we are...With Obama and the democrats still
practicing it with rellish....Proving they are Mentaly Ill.

[palmer]

Do you know why liar loans existed? The housing bubble created by the Fed. Same for the falsely secure tranches of securities, fake insurance on those tranches, fake AAA ratings, etc. All created by the housing bubble which was created by the Fed. The market simply did what it was told to do which is underprice risk.

Like I said earlier, we don’t need regulations, we need to enforce our regulations. As it stands today, the system broke down and Wall Street is lawless. The free market GOP keeps stepping in it by ignoring this development, letting the law breakers go free and continue to do business as usual.

Like I said earlier, the Fed created the bubble, thus the Fed is the problem, not regulations or lack of enforcement that would amount to bandaids on a torn artery.

Nobody asks what was the American experience under this free market theory? My opinion is 2008 was the defining moment of the theory just as the stagnation and fall of the Soviet Union was the defining moment for Communism, and today Greece is the defining moment of EU socialism. All three theories is an absolute failure.

The defining moment was 1981 when Volker actually deflated a Fed-created bubble. Every other time they got it wrong, creating new bubbles to soak up excess credit from the old bubble. Your "defining moment" in 2008 was a triviality compared to the upcoming popping of the Treasury bubble.

The theory that has failed is not unregulated capitalism, but unregulated money creation.

We have powerful crooks in our economic system.

Fiat money has gushed, not trickled, from the Fed to big banks to Wall Street on the theory that some of that would trickle into the real economy. That is what has failed. The only reason there are crooks with power is that the Fed has empowered them.

[Fee]

Fed created holes in regs, but the bankers ultimately made the amoral decision. The only thing the Fed and HUD is responsible for is subprime loan failures where they tried to reduce standards to make up past discrimination (which is very stupid and financially unsound). Liar loans are a different matter. If an effort was made by the gov to put bankers in jail over the liar loan process, robosigning, loss of title due to MERS, false info in Prospective for mortgage backed investments, false ratings by rating agencies, many bankers, bank staffers, rating agency heads and staffers would be facing criminal referrals, convictions, fines and prison. At minimum, the screwed up process was enough grounds for closing the firms down due to technical incompetence. Study the Savings and Loans crisis of the 1980’s and there are fraudulent parallels to the current crisis. Difference was the Fed regulators did their jobs resulting in conviction of 900+ S&L officers, staffers, real estate agents, mortgage officers, etc etc etc. That involved losses that were 1/60 the amounts lost today. Even worst the Wall Street bankers backed Obama in the Dem primary after H Clinton made the mistake of promising to investigate the banks for the collapse of 2008 and if found guilty she would have the gov prosecute them. IAW the bankers were willing to subject the US to a socialist leftwinger in order to save their own hides. Well the arrangement worked. We end up with a socialist POTUS and Obama in return did nothing to prosecute the bankers and let the statue of limitation run out. If no major prosecutions are made in 2013, the five year statue of limitations for the banking crisis just ran out. There were many cases settled between the state AG and bankers, where fines were paid to cash strapped states in return for a sealed settlement where no acknowledgment of guilt is entered. Sealed records cut off private civil suits and consumer ability to recover their losses. So we ended up with bankers paying fines that are a fraction of what they made thru fraud, settlements that cut off private law suits, and everyone in the country is on the hook to bailing out the banks and the gov (taxpayers) via borrowing buy up all the toxic and worthless the banks created by bad bets in the market. I know, freepers will claim this is not capitalism, just like Communist claim the Soviet Union is not communism, each want the world to ignore the disaster of their theories and a chance to repeat the process because the prior practitioners did not do it correctly. What am I, a six year old who could be con with fairy tales!!???

[palmer]

It is very simple. The Fed told the market to underprice risk. The market simply figured out a way to obey the Fed. No amount of regulatory enforcement would have stopped the bubble including the resale of the loans.

IAW the bankers were willing to subject the US to a socialist leftwinger in order to save their own hides. Well the arrangement worked. We end up with a socialist POTUS and Obama in return did nothing to prosecute the bankers and let the statue of limitation run out.

There is certainly truth to that, but the banks also gave to McCain who would have done pretty much the same thing.

I know, freepers will claim this is not capitalism, just like Communist claim the Soviet Union is not communism, each want the world to ignore the disaster of their theories and a chance to repeat the process because the prior practitioners did not do it correctly. What am I, a six year old who could be con with fairy tales!!???

Do you understand that low rates create a series bubbles that ultimately destroy capitalism? You have created your own fairy tale, one in which little bandaid regulations stop a bubble from expanding, getting too big and then popping. I'm here to inform you (and others) that in the real world, regulations do not stop bubbles, they usually make it worse.