Monday 29 / April / 2024
Last Saturday, a network of activists started a Twitter campaign with the hashtag #ResistCapitalism. A hashtag with leftist overtones might seem like a fairly minor story, but the rhetoric of politicians like presidential candidate Bernie Sanders -- who proudly declares himself a “democratic socialist” -- has revived general interest in the question of which economic system is best. As for the Twitter activists, the website Vocativ reports that many of those tied to #ResistCapitalism are also involved in the #BlackLivesMatter campaign against police violence. So perhaps this latest hashtag phenomenon is worth paying attention to.
You might think that the fall of the Soviet Union and the successful economic liberalisations in China and India would have ended the debate over whether capitalism is the best economic system. And in fact, according to a 2014 Pew survey, support for a “free market economy” -- a term many use synonymously with “capitalism” -- remains high in almost all countries and regions of the globe. Only in a small handful of nations -- Greece, Spain, Japan, Argentina, and Jordan -- do a majority of people disagree with the statement that “most people are better off in a free market economy, even though some people are rich and some are poor.” Even in those few countries, the margin of opposition to capitalism is very slim.
There is good reason for capitalism’s widespread support. The past quarter-century has seen an enormous increase in the standard of living of people in poor and developing countries. Inequality has fallen as countries in Asia, Africa and elsewhere have closed some of the gap with rich countries. The number of people living in extreme poverty has plunged, even as the world's population has continued to climb. As a result, far fewer human beings are going hungry.
It’s pretty clear that capitalism has been the instrument of this remarkable improvement in the condition of the human race. The increase in living standards has been especially pronounced in China and India, which implemented substantial free-market reforms in the 1980s and 1990s, respectively. In each of these giant countries, rapid poverty reduction began shortly after economic liberalisation. Though China is still nominally a Communist country, and its remaining economic controls may prevent it from reaching full rich-country status, there is no mistaking the retreat of the state, or the beneficial effects thereof.
In other words, in the past 25 years capitalism has made the world a much better place, and helped the people who needed it most. So why are idealistic young people crying out for us to resist a force that has been so amazingly positive?
One reason might be simple ignorance. Like young Wall Street traders who ignore bubbles because they’ve only been alive and working during boom times, young people in rich countries have never experienced the deprivation of living in a failed communist economy or a pre-capitalist feudal system. The leftist activists tweeting #ResistCapitalism have only suffered from the problems that capitalism fails to solve -- inequality, job insecurity and the shallowness of consumer culture. To them, the shortcomings of capitalism loom large, because in rich countries those are the only problems left.
But before we dismiss the activists of #ResistCapitalism as spoiled kids who don’t know how good they have it, we should take a look at what they’re fighting against.
The libertarian, free-market right has, in my opinion, greatly overreached in the last 35 years, especially in the US. Former president Ronald Reagan declared simplistically that “government is the problem,” and conservative intellectuals and politicians alike have taken this as an article of faith in the decades since. In their zeal to kill the welfare state, libertarians and conservatives have ignored the crucial public goods that the government provides -- infrastructure, research and development and other things that private companies won’t do enough of on their own.
The focus on slashing the welfare state also coincided with a dramatic rise in inequality in rich countries. Even as the world became more equal, the working class fell behind in the US, Europe and Japan, probably because of globalisation. In other words, ardent libertarians reduced support for the poor and working class just as they began to need it more.
Most importantly, the right has ignored one incredibly critical fact: Big government is a reality in all rich countries. In none of the rich nations in the Organisation for Economic Co-operation and Development is government spending less than 30 per cent of gross domestic product, and in most countries it is higher than that.
Excessive market liberalisation, of the type pushed upon us by libertarians, runs the risk of depriving people of the government interventions they need and want. If government really is instrumental in creating growth, and much of the evidence supports this idea, then too much Reaganism might make us poorer.
Faced with overzealous rhetoric on the free-market right, perhaps the left needs fiery rhetoric of its own. Free markets have worked wonders for the world’s poor, but pure unrestricted capitalism has elements that do need to be resisted. In the end, the boring old mixed economy -- a capitalist base with some socialism on top -- remains the most successful economic system ever created. But sadly, #MixedEconomy doesn’t make an inspiring hashtag. - Bloomberg View
