Against Capitalism’s Moral Critics

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Defenders of the capitalist system often rely wholly on economics, ceding the ground of morality to their critics who proceed to brand free market enthusiasts as foul, greedy, selfish, or heartless. Yet it’s entirely unnecessary for the defenders of capitalism to continue the argument on the back foot, ceding that capitalism is an amoral, or even immoral, system. It is true that if we take the modern colloquial definition of a ‘moral action’ as selfless, charitable and self-sacrificing, then capitalism clearly fails. Capitalism runs on self-interest, on the pursuit by individuals of their desires, whether that is the producer seeking a profit or the consumer seeking to improve their happiness and wellbeing. So the question is this – is the dominant world economic system entirely incompatible with morality, or is our modern concept of morality wrong?

The conflicted attitude of capitalism’s moral critics can be effectively explored through the prism of one man – Bill Gates. Seen by many as a bastion of modern capitalism, this is the man for whom it wouldn’t be cost-effective to bend over and pick up $500. Yet there are two sides to his character. The first is the innovator, the industrialist, who invented Microsoft Windows, an operating system on which 95% of all the world’s computers operate. He now has a net worth of $61 billion, Microsoft employs 92,000 people globally and the value added to the global economy by his universal operating software is simply unquantifiable. The other side is the philanthropist, who through the Bill and Melinda Gates Foundation has given almost $30 billion to international charities in the areas of health and education [2].

Modern society tells us that this man is moral only in the latter half. Giving away his fortune is a commendable action, which will surely make Gates the first Silicon Valley Saint. Yet his creation of Microsoft, purely out of the selfish desire to see his creation out in the wider world and benefit from the subsequent profit, is branded immoral. While he was personally benefiting from Microsoft’s growth, his actions were not selfless and therefore at best morally neutral. Regardless of the employees taken on, the taxes paid, the innovations pioneered and the interconnectivity delivered to the world, Bill Gates was not a moral person. Then he started just giving money away, and he was capitalism’s very own Second Coming. Surely, if this is how modern society views morality, it is naïve in the extreme.

This is a point worth exploring in the field of international development, and the ‘trade vs. aid’ debate. Humanitarian aid has thus far focused on giving resources to developing countries – mosquito nets, vaccines, textbooks etc. – in Robin Hood style benevolence. Yet the company that out-sources much of its operations to South Asia, where unit wage costs are considerably lower, is morally reprehensible, in its mere pursuit of profit. Yet which community benefits more? The recipient of Government aid remains reliant on the handouts provided, and has to focus on mere subsistence. The worker in India or Bangladesh has a stable income, and is able to grow more independent, spending their wages in local shops and allowing the area to retain its wealth. Clearly these factories have to adhere to human rights standards, sweatshops can’t be defended economically or otherwise, but trading with developing societies is far more effective than simply giving away money. The capitalist self-interest leads to a far more morally desirable outcome than charity; therefore surely it can be defended as a moral action, despite its roots in selfishness.

This point also holds true on a domestic level, with private providers of public services who work for profit. In Islington, an international private education consultancy took control of the borough’s schools after an OFSTED report found them to be ‘in disarray’ and in 10 years increased the number of 15 year-old pupils achieving five good GCSEs by 45%. Similarly, Doncaster Prison is operated by a private provider who in order to maximise efficiency and profit focuses on the rehabilitation of their prisoners, meaning 23% go into education or training on release, more than double the 11% national target [2]. Obviously the state needs to regulate these private providers sufficiently, and these market principles aren’t suitable in all cases, but it cannot be avoided that these international companies are attracted to the UK by profit, and the results they deliver are often superior to what they replace.

So although capitalism doesn’t fit with what modern society would describe as ‘moral’, it can still be defended on a moral level. This defence is not some kind of Machiavellian cruelty, which focuses on ends not means, because the means are wholly natural and desirable. The baker bakes the bread primarily because he wants money for himself and his family, not to feed the local population. I buy an iPhone because I want an iPhone, not to provide some kind of economic stimulus. Of course giving to charity is moral, but selflessness isn’t and shouldn’t be the entirety of morality, and defenders of capitalism shouldn’t accept an amoral or immoral brand before they’ve even opened their mouths. As Ludwig von Mises put it: ‘Grumblers may blame Western civilization for its materialism and may assert that it gratified nobody but a small class of rugged exploiters. But their laments cannot wipe out the facts. Millions of mothers have been made happier by the drop in infant mortality. Famines have disappeared and epidemics have been curbed’ [3]. These achievements were results of capitalism’s constant strive for innovation, improvement and perfection. Any critic of capitalism – moral or otherwise – must accept the virtue of capitalism’s achievements, rooted undeniably in self-interest.

Article by Adam Hawksbee. Edited by George Richards.

Further reading:

[1] http://www.gatesfoundation.org/about/Pages/foundation-fact-sheet.aspx
[2] http://www.reform.co.uk/attachments/files/50_It_Can_Be_Done_FINAL.pdf
[3] Ludwig Von Mises, Theory and History (Ludwig von Mises Institute, 2007)

  • Jamie

    Excellent article, really enjoyed it. In terms of a counter-argument, I don’t think I could put one better than Oscar Wilde’s ‘The Soul of Man Under Socialism’, which argues that charity is essentially the necessary moral supplement to making the capitalist society viable, in the same sense that by prolonging the suffering of an individual in poverty with charity, you still leave that individual within the circumstances that created their suffering.

    Obviously Bill Gates doesn’t have to give his money away, and he’s a great man for producing Microsoft, but his innovation is proved only by his wealth. Tim Berners-Lee and his team of technological experts are relatively unknown in terms of celebrity-status innovators, certainly in comparison to the Jobs and Zuckerbergs of this world. What did Berners-Lee do? He invented the frickin’ internet. What did he do differently? He realized his invention was almost too valuable to put an economic price on it, so his research team gave it away.