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Why Does Capitalism Get Such a Bad Name?

By: Priscila Guinovart - @PrisUY - Oct 10, 2016, 3:14 pm
The world is full of examples of the systematic failure of socialism and communism. (Flickr)
The world is full of examples of the systematic failure of socialism and communism. (Flickr)

EspañolThe bad reputation of capitalism has spread over time probably since the publications of Karl Marx’s in the 1860s. At the least, it was the German philosopher who named capitalism — because the market economy is almost as old as civilization itself.

Socialism and communism have failed consistently, causing poverty, hunger, repression, persecution, censorship, death and all kinds of intellectual and physical misery. A look at North Korea, East Germany, the Soviet Union, Cuba and Venezuela should be enough proof.

However, the term “capitalism” still sounds highly unfriendly to critics and even some supporters. The associations with the name are often negative, connecting to notions of exploitation and imperialism. Through a series of blunders and misconceptions, it seems nobody can declare themselves a strong supporter of capitalism.

You could find some explanation for this reaction in the world’s perception of the United States, who truly is a false ambassador. The country is interventionist, often bellicose and an arms manufacturer. Who wants capitalism when it’s representative of those things ?

But The United States is not actually capitalist.

Capitalism is partially based on free markets, and the United States has some of the most regulated markets on the planet. If a country renounces the cornerstone that defines an ideology, it should no long be the standard-bearer.

The United States actually has regulations that border on the absurd. For example, it is illegal to buy fresh milk that has not gone through processing at a dairy farm. Something as innocent as collecting rainwater, is also illegal.

A country that intrudes so much in the market and on the lives of its citizens, can not be called capitalist.

Capitalism and socialism/communism have something in common: they are not only economic theories, but also have philosophical postulates that support them.

Capitalism is supported by freedom — a freedom that is inherent in human beings. Capitalism believes in consensual agreement between parties and such agreements are outside of the need for regulation, or should be.

Imagine that you sell apples. As to prosper in your business, you decide to sell at a competitive price of one dollar per kilogram.

It is the cheapest price in the neighborhood, so you make money and the client saves money.

One day you receive a citation. It turns out that the Union of Apples Sellers has decided you are unfair competition. They were lucky enough to find two bad apples in every barrel you sold. The government tells you then that you can continue to sell apples, but only with the price established by the union. That’s not capitalism.

Capitalism also doesn’t have that many friends because of the right. The left represents socialism (in theory), and has argued that the right represents capitalism. But this is false.

The right around the globe have used and continue to use moderately liberal economic measures, such as tax exemption for multinational companies residing in-country.

The right does not honor the guidelines of capitalism. It is usually conservative socially, which actually contradicts the principle of freedom.

The right has been engaged across the globe with bank bailouts. A pure capitalist would dread such horror.

In many cases you can read how the terms “capitalism” and “consumerism” are used interchangeably, but nothing is further from the truth. Some believe that capitalism needs consumerism to survive, but it’s not true. Capitalism needs the free market, which is far from consumerism.

The free market is handled with principles of supply and demand and consumer choice. It has nothing to do with buying three cell models per year. Capitalism believes in its freedom to do so, but this freedom is not imposed on the people.

Perhaps the biggest myth is the exploitation of the worker. In a free market, capitalism can not only provide more jobs, but the worker has more liberties when choosing how much work and under what conditions that work exists.

Regardless of the enemies that capitalism may have, at the end of the day we have the numbers. The world is far from perfect, but since the advent of capitalism and its strengthening after the Industrial Revolution, and even despite all regulations and state intervention, we are healthier, live longer and yes, have more money.

Priscila Guinovart Priscila Guinovart

Priscila Guinovart is an Uruguayan teacher and writer. She has written for outlets in Latin America, the U.S., and Europe. While in London, she wrote her book La cabeza de Dios. Follow her: @PrisUY.