In defense of capitalism

Michael Bröning is director of the Friedrich-Ebert-Stiftung in New York and serves on the basic value commission of Germany’s Social Democratic Party. He is the author of “Vom Ende der Freiheit” (2021).

The capitalist paradigm is rapidly falling out of favor.

Socialist rhetoric is winning elections in large parts of Latin America and many Western democracies, with voters turning their backs on the principles of the free market and economic growth.

Notably, however, dissatisfaction with the capitalist paradigm isn’t just based on perceived failures of the present but also increasing skepticism with regard to the future. And this is where legitimate criticism is escalating into self-damaging revolutionary rigor.

Opinion polls in the United States show that support for socialism among young people has outpaced support for free enterprise. And in the 18 to 29 age group, only 40 percent of Americans currently have a positive view of capitalism.

Findings from the United Kingdom confirm an even more drastic trend. In the birthplace of the free market’s patron saint Adam Smith, almost two-thirds of young people today would prefer a socialist system. At the same time, around 40 percent of British millennials believe “communism could have worked if it had been better executed.”

Meanwhile, in France, the anti-capitalist groundswell transcends generational boundaries, with 62 percent of French adults currently expressing a negative view of le capitalisme.

Part of the reason so many are turning away from the defining economic system of our times has to do with a failure to deliver. Excesses of supply-side policies and an all-pervasive winner-takes-all approach have shaken faith in capitalism’s virtues, highlighting its undeniable vices instead.

Why should young people root for capitalism when confronted with an unpredictable future in an unstable gig economy? Why should voters swear by the opportunities of supposedly free markets in a world of digital monopolies and ever-growing social polarization?

And if left unchecked, the specter of global recession and inflation will only feed growing public discontent and anxieties regarding our planet’s future.

Of course, the more radical parts of the global climate movement have been pointing at the ostensibly unbridgeable clash of “capitalism vs. the climate” for years. Recently, however, this belief has made its way to the mainstream, with “system change, not climate change” becoming a leitmotif at the annual United Nations Climate Change conferences, as well as in street protests across the world.

Moreover, the very notion of “green capitalism” is being derided a “gimmick to avoid a real reckoning.” And even global climate icon Greta Thunberg recently cast her lot with the anti-capitalist Zeitgeist.

After avoiding questions regarding practical political alternatives for years, Thunberg’s recently published “The Climate Book” is an open break with the capitalist system. “The only known civilization in the universe” cannot be left to the stewardship of “capitalist consumerism and market economics” she thunders. And she’s not alone.

This year in Germany, Ulrike Hermann topped the bestseller list with “The End of Capitalism.” For her, Britain’s war machine during the Blitz isn’t a tale of blood, toil, tears and sweat but rather an inspiration for a sustainable future. “A planned economy emerged that worked remarkably well. The factories remained in private hands, but the state controlled production — and organized the distribution of scarce goods,” she writes.

Certainly, concerns over economic paradigms are always legitimate.

Capitalism is a wild animal. It doesn’t always equal democracy; it often increases inequality; and it fails to put a price tag on essential common goods. At the same time, however, it isn’t a fixed ideological structure that can simply be torn down and replaced with an optimized all-encompassing alternative.

Capitalism doesn’t have a foundational document or a philosophical magnum opus enshrining its confessions of faith. Rather, it’s a set of historically evolved practices including, but not limited to, competition, growth, private initiative, individual choice and property rights.

Abandoning these principles and replacing them with degrowth, the redistribution of diminishing wealth, and comprehensive government control to manage a permanent state of emergency would be guaranteed to make a dire situation worse and undermine civil liberties. Competition would be replaced with unprecedented battles for resource allocation — not to mention, any attempt at implementing such changes by way of democracy would be unlikely to survive electoral challenges, regardless of efforts to celebrate the alleged virtues of enlightened post-materialism.

Faced, as we are, with growing anti-capitalist backlash, it is therefore time to put the baby back in with the bathwater. And while the status quo’s shortcomings need not be concealed, the other side of the ubiquitously lamented list of capitalist calamities shouldn’t be neglected either.

It wasn’t feudalism, mercantilism or socialism that facilitated technological progress, raised living standards, liberated women, empowered citizens, cured and alleviated disease, and lifted millions out of poverty. It was the human instinct for capitalist ambition —well-managed and tamed by democratic governance in the most successful cases.

Additionally, any stock-taking of capitalism’s pros and cons, even in its most basic form, would also have to consider that the anti-capitalist dogmas of the 20th century didn’t protect but rather wreaked havoc on the environment. And equality was only furthered insofar as — almost — everyone was relegated to the same level of deprivation.

Are the anti-capitalist activists of our day willing to accept this inconvenient truth?

To ignore these existing lessons of the past’s anti-capitalism isn’t innovative — it’s ignorant. And simply wishing that a rerun of an experiment will miraculously produce different results is hope over experience.

The key to resolving the world’s multi-layered crises won’t emerge from simplistic anti-capitalist tropes and nostalgia for disproven utopian solutions. Neither will it come from equally naive calls for the invisible hand of the market and the false gospel of laissez-faire.

Instead, real solutions will come from green investment, the democratic governance of free markets, technological innovation, and from activating and channeling the powers of capitalism — not from disregarding and delegitimizing them.