In Praise of Capitalism

Despite some accusations of socialism (which I feel are unfounded, but check out Al Schwartz’s latest column) this publication and this author have always been pro-business and pro-American-style free market capitalism.

This is our big Made in America issue where we celebrate the best in domestic manufacturing. Every single one of the companies profiled in our feature is a survivor of a titanic struggle, a struggle sometimes generations-long: to succeed in the arena that is the free market.

To win in that arena you need to be tough-minded, determined, and above all rational. One of the things I admire most about the capitalist system is that it is based, necessarily, on reality. If your company is losing money you can’t just hide your head in the sand, you can’t just sit there and complain. You need to figure out the problem or you’re going to go out of business, shoved aside by those companies that are doing what you do, only better. That means collecting and analyzing data on your processes, your products, your customers, your employees, and then adapting.  

Companies win the marketplace through innovation (think of Steve Jobs with Apple), through improved efficiency (like Henry Ford with his assembly line), through expanding into new markets (Ray Kroc and McDonalds, for example) or any combination of the three.

Those drives towards innovation and efficiency have created amazing new technologies—from the internal combustion engine to the radio to the smartphone—and then made those technologies available to an ever-widening circle of consumers. Those successful companies need to hire workers who are in turn able to sell their labor and skills at a fair price in that same free marketplace.

That virtuous cycle has created a rising standard of living for millions upon millions of people. Millions have been lifted out of the depths of poverty. Millions now live without the fear of famine thanks to modern agribusiness. Millions now live longer, healthier lives thanks to modern medicine, pharmaceuticals and (lest we forget) modern sanitary plumbing systems.

Capitalism is not an absolute good. Too often the push for efficiency came at the expense of the worker (unsafe working conditions, the use of child labor and paying workers in company script are only a few examples) or at a hazard to the consumer (such as unsafe products or impure foods).

To this day there are unscrupulous businesspeople who put making a buck above human life. I get angry every time I have to post a story about workers dying in a preventable trench collapse. And the influx of counterfeit—and sometimes hazardous—plumbing fixtures was a concern at this year’s Plumbing Industry Leadership Council meeting.

Capitalism also tends to concentrate wealth into fewer and fewer hands. I don’t have a problem with people making all the money that they want to, but extreme income inequality is bad for the overall economy leaving large numbers of the population trapped in low-paying jobs and unable to move up the social ladder.  

And let’s not forget that bringing a new product to the market almost always comes at a cost to the environment, a cost sometimes not reflected in the price the consumer pays.

For all that, capitalism has been an amazing force for good. It harnesses some of the most potentially destructive drives of the human psyche—ambition, acquisitiveness—towards constructive ends.

I think it falls to those who have seen the positive side of capitalism most closely—business owners—to demonstrate the virtues of ethical capitalism to the younger generation; it can be too easy to focus on the negative while dismissing or ignoring the positive.