Why Capitalism Is Such a Staggering Success

New Zealand Herald, October 17, 2003

Denis Dutton


There is something about capitalism. It is the most wildly successful set of economic arrangements known to history. It thrives on freedom and, indeed, promotes it.

It has done more to increase the standard of living for everyone than any other human device. Anyone doubting its staggering success has only to compare it to the dismal, blood-soaked failures of dictatorial socialism in the twentieth century.

Yet capitalism does not inspire love. In most big cities you can generate a mob to trash the local McDonald’s, but who would demonstrate in favour of capitalism? History seems to show that even if people think they like freedom and democracy, they are attracted to repressive but more exciting ideas of government.

Heroic military states from those of the Iliad to Napoleon to Hitler have celebrated conquest and prowess. It’s a nifty way for any society to acquire wealth - you just take it from other people. Systems of despotic kingship also attract in the ways they elevate a glorious dictator, with all the splendour of ceremony that attends royal despotisms. Despots get their wealth by stealing from their own people.

Capitalism is not nearly as sexy. Instead of glorifying conquest or pomp or deifying a leader, its chosen virtues are mundane and boring - thrift, self-reliance, cautious investment, politely serving customers, obeying the law and paying your debts.

What’s worse, there is no divine right or grand moral justification for capitalism: it accepts that self-interest is at the bottom of most human action and figures out how to use this impulse for the good of everyone.

As capitalism’s greatest philosopher, Adam Smith, said: “It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest.”

Simply put, capitalism lacks moral grandeur. Smith’s invisible hand is innumerable accountants tediously balancing their books. Marx’s more stirring, romantic vision has invisible forces of historic destiny pulling us towards utopia.

This is part of the reason the last believing Marxists left include more than a few academics and intellectuals. The brilliant American academic and federal judge, Richard A. Posner, characterises the academic personality. It has “a taste for universals and abstraction,” he says, “and a desire for moral purity.”

Of course, academics are not worldly - they don’t call it the ivory tower for nothing - and they can be judgmental and arrogant about creatures they see as less worthy than themselves.

Writing as an academic, and a philosopher to boot, I’m ready to defend the importance of abstract, speculative thinking, and my colleagues who do it. But Judge Posner has a point. Intellectuals and academics are, for example, forever full of wonderful ideas for better, “fairer” ways to distribute society’s wealth, although they often have little notion of how it is created.

Though many left-wing academics dislike the self-interest of capitalism, it is remarkable how often their redistribution plans include more money for universities.

Intellectuals imagine that workers under capitalism are alienated. In fact, some of the most alienated, unproductive workers in the world outside of slave societies have been those in the socialist workers’ paradises.

The Soviet Union collapsed in part because its labour was close to the world’s least productive. Remove all artificial supports and fake statistics and - poof! - it turned out that the economy of Russia was hardly any bigger than the Netherlands’.

In any event, intellectuals should be told that it isn’t work that alienates people, it’s idleness. Human beings by and large like to work, often appreciate their employers, and can endure and even creatively enjoy the stresses involved. (Only a Government of schoolteachers and academics would think that any social benefit could come from allowing workers to sue their employers for “stress.”)

That capitalism causes materialism and acquisitiveness is another objection to it. I once had a Marxist friend, a New York University academic, who railed against materialism and the “unnecessary" consumer goods piled on shop shelves in rich capitalist countries.

I pointed out that his disdain for materialism had not kept him from acquiring an extensive and costly collection of jazz recordings - in sheer numbers bigger than the contents of Imelda Marcos’s shoe closet. Ah, but jazz, he explained, is an important modern art form. “Materialism,” it turned out, was always about other people’s silly, vulgar tastes and desires.

Capitalism goes dead against the moralising, censorious tendencies of intellectuals by satisfying the most debased proclivities, including trashy novels, tabloid television and junk food. In catering to every human desire, no matter how exalted or trivial, it applies democratic principles to the marketplace.

It also diffuses power (neither Microsoft nor the United States Government can ever hope to control it all) and demands the free flow of knowledge and information. For the modern world, this is the final nail in the coffin of totalitarianism.

Still, it’s no wonder that nostalgia for a Marxist utopia persists. Marx at least gave us a vast, coherent perspective on human destiny, with its dramatic picture of good and evil, workers and the ogres who would exploit them. It's a secular replacement of Christian eschatology.

All capitalism offers, on the other hand, are workers who are transformed into consumers and spend all their money on things that probably aren’t good for them. What chaos human freedom is.

Last year, I found myself in the Koru Club at Wellington Airport, amid all the busy people chatting, reviewing their papers and savouring food and wine between important Government meetings. There among parliamentarians and corporate pinstripes I spied one of our leaders of the anti-globalisation movement chatting enthusiastically on the phone, doubtless en route to deliver another anti-capitalist keynote address or watch a McDonald’s trashing.

It was a delicious image, and in a way reassuring for anyone who really loves the idea of a free society. Communism needed to shoot anti-communists. Capitalism, by contrast, can afford to indulge anti-capitalists, as long as they pay their Koru Club dues.

Immanuel Kant once remarked that “from the crooked timber of humanity no truly straight thing can be made.” Capitalism does not try to straighten the warped wood that we are but adjusts itself to us.

For people in search of a perfect world, that will always seem an unsatisfactory solution. For those who love freedom, it’s not a bad thing at all.


Denis Dutton teaches philosophy at the University of Canterbury.