GOVERNMENT Capitalism vs. Socialism

From: Kevin

This is a campaign in support of capitalism and against socialism.


Many Americans are confused about what “capitalism” means. They think it means “what’s going on in America today.” The government takes your money and gives it to a big business like Halliburton; that’s “capitalism” in the eyes of many people. And many who oppose “crony-capitalism,” or “corporatism,” and call it “capitalism” don’t mount the most articulate or reasonable arguments against government-buttressed business:

What I Learned About Capitalism By Walking Into A Starbucks And Screaming ‘Capitalism!’ At The Barista Over And Over Until They Had To Call The Police by Carson Selway, Activist

Their proposals often call for more government involvement in economic activity.                

Capitalism means freedom. It means you get to decide what to do with what you earn and own. If you want to go into business and produce widgets and sell them to consumers, you’re free to do so under capitalism. Under socialism, the government tells you what you will produce. Under capitalism, your neighbor is also free to make widgets and compete with you. As a consumer, I am free to buy from you or from your neighbor. You must compete with your neighbor to get my business. If your widgets are the highest quality and lowest price, you’ll get my business. If your widgets are not as good as those made by your competitor, or cost more, you won’t get my business. Under socialism, consumers have to buy everything from the government’s monopoly.

If you’re a great American, you’ll work harder and more efficiently, and eventually get my business.

If you’re a lousy American — if you’re a whiner — you’ll ask the government to force me to buy your widgets rather than your competitor’s, or you’ll ask the government to impose a tariff, making your competitor’s widgets more expensive and less competitive, or you’ll ask the government to require your competitor to get a license to make widgets. Whiners are not capitalists, as that word is used on this website. Perhaps you’re a “fascist,” or some form of “socialist.” But you’re not a capitalist, no matter how big your business becomes.                                                                                                                                          

A true capitalist believes in free competition and free markets, and does not seek to succeed by using government force or coercion.                                                                               

Capitalists believe in persuasion, not coercion.

“America” stands for “capitalism.”  “Capitalism” means “liberty.”

The whole world knows that capitalism works and socialism is a failure. The fall of the Berlin Wall and the breakup of the Soviet Union shout this truth across the globe.

  • Capitalist countries are free and prosperous,
  • Socialist countries are enslaved and impoverished.

And yet, virtually everyone in the United States has been trained in government schools and by a government-dominated media to believe that socialism is better than capitalism, and that no economy can succeed without somesocialism.

This is what makes this campaign so controversial: we are working to eliminate all socialism and establish pure “laissez-faire” capitalism.

Purism is Practical | The Ron Paul Institute for Peace and Prosperity

Capitalists are the Heroes of the World

 I think of a paragraph in Ludwig von Mises’ book Human Actionwhere he says that the market economy does not need apologists or propagandists. The best argument for the market economy can be found in the epitaph of Sir Christopher Wren, the architect who built and is buried in St. Paul’s Cathedral:“si monumentum requiris, circumspice”(if you are looking for a monument, look around you). Look at what he built. Look at his vision. You are standing in it right now.       That, I think, is the best defense that the market economy can ever hope for—that people look around and ponder the amazing things and opportunities that entrepreneurs and businesses have given the world during the last 200 years. Just look around at the health, the wealth, the technologies, the opportunities, and the food on your plates. Could any of that have been possible for a king or a queen 200 years ago?       The amazing fact is that entrepreneurs and innovators and businesses have turned luxuries that not even kings could afford into low-priced everyday items at your local store. That is the best defense of capitalism.Are the rich getting richer and the poor getting poorer under capitalism? Yes. The rich are getting richer, but so are the poor. The poor are only relatively poorer, relative to the rich, who are rich beyond the wildest dreams of anyone living a century ago. The poor are super-rich compared to the poor a century ago. Why is Capitalism Hated?

Most Americans over 50 were taught that “capitalism” was better than “socialism,” and that America was “capitalist.” More recently, “capitalism” has fallen out of favor. The ostensibly conservative Richard Nixon[3] famously quipped, “We are all Keynesians now,” by which he meant, nobody is a “capitalist” anymore.[4] Few people today are willing to identify themselves as defenders of capitalism. Capitalism is not trendy in our day. A self-identified “socialist” is far more likely to get a teaching position at a major university than one who openly defends “laissez-faire capitalism,” ceteris paribus.

In the last few years I have been studying capitalism in more detail, by reading the works of those who defend it most passionately. This study has been an eye-opening experience. I believe “capitalism,” rightly understood, is more compatible with Christianity than socialism in any degree.

That little phrase “rightly understood” is the whole enchilada.

The story is told of the six blind men who offered descriptions of an elephant. Each was viewing only a part of the animal, one feeling the trunk, another the tail, another the huge legs, etc., and their varied descriptions of “an elephant” reflected their limited investigation.

Most descriptions of “capitalism” (particularly by those who attack it) are as far from reliable as those of the blind men. More ironically, the blind critics of capitalism are not only viewing only a part of the economic animal, but they are actually describing themselves, with one socialist critic of “capitalism” describing his own leg, another socialist critic of “capitalism” describing his own ear, etc. In other words, most criticisms of “capitalism” are criticisms of policies which are completely un-capitalistic, or they are pointing to problems created by socialism, not capitalism.

The name “capitalism” was coined by Karl Marx, a vehement opponent of capitalism. Capitalists have adopted Marx’s term as their own (without accepting Marx’s content, of course). One of the most comprehensive defenses of capitalism is George Reisman’s treatise on Capitalism.[5] It is a huge book, but easy reading, and full of insights. I would now put him among my top ten favorite writers.

After a good deal of study, I offer this definition of capitalism:

Capitalism is a social system based on the rejection of the initiation of force or violence against others.

This definition will surprise many who attack capitalism. Ask a critic of capitalism to define “capitalism” and the critic’s definition will not even be close to this definition[7]. Nevertheless, I do not know a single self-described defender of capitalism who would disagree with this definition. In fact, most would agree it gets to the very heart and soul of the dispute between capitalism and socialism. For the benefit of those who doubt, I would be happy to supply the quotations and footnotes from the writings of self-conscious defenders of capitalism to buttress my claim. The quotes would be many and lengthy. I would quote Ayn Rand,[8] George Reisman, Milton Friedman,[9] Ludwig von Mises,[10] F.A. Hayek,[11] and many other defenders of capitalism.

As an example, the Libertarian Party, unquestionably the political party most vigorously committed to capitalism, requires its members to sign this pledge in order to join the party:

I do not believe in or advocate
the initiation of force

as a means of achieving political or social goals

That is the full extent of the Libertarian Party membership pledge. It is widely viewed as the sine qua non of libertarianism. It is often referred to by defenders of capitalism as “the principle of non-aggression.”[13]  (Of course, anyone can vote Libertarian, without taking “the Pledge.”)

This is not just an abstract academic debate. Socialism rationalizes violence. Socialism has meant slavery and death to hundreds of millions of human beings. Too many on the left who claim to be for peace defend The Welfare State (welfare socialism), which turns out to be window-dressing for The Warfare State. To oppose capitalism is to oppose the only economic system that repudiates the initiation of all violence. To wrongly define capitalism as a system that “exploits” the poor or in some other way initiates force against others is to pull the plug on an effective force for peace.

Rightly understood, then, an attack on capitalism is an attack on the heart and soul of Christian ethics. To say “I am not a capitalist” is to say “I support the use of violence to get what I want.”

Again, this is based on the definition of capitalism offered by the most scholarly defenders of capitalism, not those who attack it.

Find someone who is called a “capitalist” who uses the violence and coercion of the State to crush his competitors and exploit the poor, and you have found someone that every self-identified defender of capitalism would say is not a “capitalist.”

This is the issue: Is there any human activity that is more efficiently carried out under threats of violence and force than under liberty?
  • Is it the case that human beings cannot be trusted to produce milk and bread for the children unless they are threatened with prison terms by “the government?”
  • Is it really true that Americans cannot manufacture and distribute computers, clothing, housing, groceries, without “the government?”

America became the most admired nation on earth because it stood for the proposition that capitalism (liberty) succeeds and socialism fails.

Throughout this website we have discussed over 200 areas of human endeavor where it is often alleged that Americans could not succeed without government regulation. But all you have to do is look at the things you have and enjoy, compare your life with that of most people living in socialist countries, and ask, “If the federal government were to be abolished, would entrepreneurs and businessmen make sure that I had access to the best quality at the lowest price?”

If you answer no — for example, “No, businessmen are greedy and immoral and would only manufacture shoes of low quality and sell them at rip-off prices, unless bureaucrats were regulating them,” and you added,

“And consumers are stupid, and would always buy low quality at a high price and wouldn’t care for their family unless federal bureaucrats were making sure families paid attention to the most important things.”

— then you have a religious faith in the State and its regulators, and believe that when greedy businessmen and stupid consumers are elected to government positions by their greedy and stupid peers, these newly-elected human beings suddenly lose their greed and stupidity and become altruistic and intelligent overseers of others. “Statism” is a religious belief in the depravity of human beings and faith in the sanctified State.

History tells us that where there is “Liberty Under God,” you and I will work hard, with creativity and integrity, to provide goods and services which benefit the lives of others. We will find ways to produce better goods than our competitor and will bend over backwards to do so at a lower cost. In our efforts to get the business of others, we will improve the lives of our customers, because we know that where there is liberty, our customers have the freedom to shop elsewhere, and other Americans have the freedom to start a business which will sell what consumers demand.

History proves that capitalism works and socialism fails. The great economists have explained why:

  • Ludwig von Mises, Human Action, Yale Univ. Press, 1949, 885pp. + index
  • George Reisman, Capitalism, Ottawa, IL: Jameson Books, 1998, 998pp. + index
  • Thomas Sowell, Knowledge and Decisions, NY: Basic Books, 1980, 383pp. + index

Mises in particular, and his Nobel Prize-winning student, F. A. Hayek, conclusively proved that without the price mechanism of the free market, socialist planners can never allocate resources in the most efficient manner. Mises’ work has never been refuted:

Kevin Craig accepts as a matter of unchanging economic law the fundamental inefficiency of centralized government planning over free market decision-making. The reader can turn to the bibliography below for a nearly complete defense of the concept.

Some Fundamental Insights Into the Benevolent Nature of Capitalism

How Capitalism Civilizes Greed – Dinesh D’Souza

Tragically, most Americans do not understand how capitalism works. This makes them easy prey for socialist demagogues.

Suppose we lived under a completely socialist government. All of our shoes are made by the government and distributed to the people by the government “Ministry of Shoes.” Suppose some radical libertarian proposed turning over the business of making shoes to a competitive, profit-based system. We might hear something like this:

How could you? You are opposed to the public—and to poor people—wearing shoes! And who would supply shoes to the public if the government got out of the business? Tell us that! Be constructive! It’s easy to be negative and smart-alecky about government; but tell us• who would supply shoes?• Which people?• How many shoe stores would be available in each city and town?• How would the shoe firms be capitalized?• How many brands would there be?• What material would they use? What material lasts?• What would be the pricing arrangements for shoes?• Wouldn’t regulation of the shoe industry be needed to see to it that the product is sound?• And who would supply the poor with shoes? Suppose a poor person didn’t have the money to buy a pair?Libertarian economist Murray Rothbard answers these questions:

These questions, ridiculous as they seem to be (and are) with regard to the shoe business, are just as absurd when applied to the libertarian who advocates a free market in fire, police, postal service, or any other government operation. The point is thatthe advocate of a free market in anything cannot provide a “constructive” blueprint of such a market in advance.The essence and the glory of the free market is that individual firms and businesses, competing on the market, provide an ever-changing orchestration of efficient and progressive goods and services: continually improving products and markets, advancing technology, cutting costs, and meeting changing consumer demands as swiftly and as efficiently as possible. The libertarian economist can try to offer a few guidelines on how markets mightdevelop where they are now prevented or restricted from developing; but he can do little more than point the way toward freedom, to call for government to get out of the way of the productive and ever-inventive energies of the public as expressed in voluntary market activity. No one can predict the number of firms, the size of each firm, the pricing policies, etc., of any future market in any service or commodity. We just know—by economic theory and by historical insight—that such a free market will do the job infinitely better than the compulsory monopoly of bureaucratic government.

 “How will the poor pay for defense, fire protection, postal service, etc.,” can basically be answered by the counter-question: how do the poor pay for anything they now obtain on the market? The difference is that we know that the free private market will supply these goods and services• far more cheaply,• in greater abundance,• and of far higher qualitythan monopoly government does today. Everyone in society would benefit, and especially the poor. And we also know that the mammoth tax burden to finance these and other activities would be lifted from the shoulders of everyone in society, including the poor.The “orchestration” of which Rothbard speaks has also been called “the Invisible Hand.” Liberty Under God organizes society better than atheistic socialism. Or even “Christian” socialism.

The Miracle of the Market| Jacob Hornberger

If socialism is a violation of basic economic laws, then our concept of “the government” must be repudiated. The key to a well-governed society is “Liberty Under God,” not “the government.” The key to prosperity is capitalism, not socialism. Every action of “the government” is the imposition of socialism. We must eliminate every trace of socialism from America.

Socialism is immoral.

But what about crime?

OK, you concede, capitalism builds better and cheaper cars than the Kremlin. But what about crime? If we abolish the government, crime will break out and capitalism will collapse into “anarchy” (chaos).

This too is statism.

This is the belief that you and I are basically criminals in waiting, and only politicians can be trusted to keep us in line. Of course, you and I and other criminals in waiting are the ones who will “vote” for these sanctified and benevolent overseers, who will keep us from acting out our criminal proclivities. Although in every other area of our lives we are “depraved,” when we vote we are wise and community-oriented. Once criminals like you and I “vote” for our fellow criminals, they become sanctified protectors of law and order and keep us from our depraved ways.

If you own a business, you cannot be trusted to hire a security agency to guard your store. Your insurance agency isn’t smart enough to tell you to hire a protection service in order to continue your insurance coverage. And I must be forced to pay for your security service with “taxes,” because I am too greedy and you are too stupid to make sure your business is safe.

Here are the links to prove that this statist thinking is unrealistic:

  • Check the “Crime” article in the pull-down menu.
  • Check the “sanctions” article in the pull-down menu.
  • The Founding Fathers believed that “the government” could never be powerful enough to prevent all crime — and we shouldn’t try to make it that powerful. Read their warnings.
  • Most businesses today rely on capitalist security agencies, because socialist police forces have given up on preventing crime. They only arrest some of the criminals after the crimes have already been committed and the damage has been done. If the government were taken out of the crime-prevention business, capitalists would scatter to provide high-tech crime prevention services that would dramatically reduce crime.
  • Socialist courts have no competition, and no incentive to become increasingly just and fair. There is no reason why competing courts provided by the Free Market cannot adjudicate disputes and provide redress of injury.
  • The history of the “Lex Mercatoria” is a history of the conquest of crime by Laissez-faire Capitalism
  • Murray Rothbard has applied the ancient wisdom of the Lex Mercatoria to contemporary criminal and legal issues.

* “Laissez-faire” comes from a French phrase meaning “let us do,” or “let us work” — let us do what we do best.

  • Let Henry Ford make cars so efficiently and at such a low price that even the poor can own one.
  • Let Bill Gates make software that enables even the most machine-shy to operate a computer.
  • And let Sam Walton establish a chain of stores to sell the products of capitalists in every American town.

Socialism could never have done these things, so we say to socialists, “Laissez-faire!” [back]

Congress should

  • reject all legislation which relies on the initiation of force, coercion, or violence as a means of achieving political or social goals

Government sends the wrong message. It says “Whenever you’re frustrated, and things don’t go your way, you can resort to force or violence to get what you want.”

  • Want to raise a little extra money, but can’t persuade anyone to give you any? Put a gun to the head of the next American you see. Threaten to lock him up for a few years with pathological felons if he doesn’t cough up.
  • Did someone in the next city break into your home and steal something? Drop a “smart bomb” on his home and destroy everyone in his neighborhood!
  • It’s OK to violate the Eighth Commandment (“Thou shalt not steal“)
  • It’s OK to violate the Sixth Commandment (“Thou shalt not kill“)
  • Need somebody to help you? Enslave as many people as you need!
  • Don’t call it “armed robbery” — call it “taxation.”

The Libertarian Party is the party of principle. To publicly affirm what we believe — and to ensure that our party never strays from our principles — we ask our members to proudly sign this statement:I do not believe in or advocate the initiation of force as a means of achieving political or social goals.

This is simply a short-hand for everything contained in “the Laws of Nature and of Nature’s God.” Government bureaucrats have forgotten this. Most Americans would never even think of running their businesses the way the government runs theirs.

More and more Americans are seeing that there are a thousand and one things that can be done to reduce crime and solve social problems that are peaceful and do not involve force or violence. Some ideas are found here.

This is the heart and soul of capitalism.

next: “The State” as Criminal I appreciate your comments
Do you disagree with me?
I will thoughtfully, prayerfully, respectfully and
personally respond to your criticisms
email: comments@KevinCraig.US

[3] On the myth of Nixon as a conservative, see

[4] John Maynard Keynes (pronounced, “Canes”)(1883-1946) was possibly the single most influential person in transforming America from a “capitalist” “free enterprise” nation into a “mixed” socialist economy. Most Americans are completely unaware of this transformation, still vaguely believing that America is a “capitalist” nation.

[5] George Reisman, Capitalism: A Treatise on Economics, Ottawa, IL: Jameson Books, xlviii + 1046 pp, 1998. Reisman studied with Ayn Rand and Ludwig von Mises, and translated some of Mises’ works into English.

[7] Most definitions in mainstream economics texts or encyclopedias are not only inconsistent with this definition, they are nearly incomprehensible. In her essay “What is Capitalism?” Ayn Rand dissects these definitions, notably the entry from the Encyclopedia Britannica, and shows how they are not only self-contradictory, but subtly designed to advance a socialist agenda. They are not “neutral” or “objective.” See below, note 8.

[8] Ayn Rand, Capitalism: The Unknown Ideal, with additional articles by Nathaniel BrandenAlan Greenspan, and Robert Hessen, New York: Signet Books, 1967

[9] Milton Friedman, Capitalism and Freedom, University of Chicago Press, 1962. Friedman was awarded the Nobel Prize in Economics in 1976.

[10] Ludwig von Mises, Human Action, Yale University Press, 1949. See also the Mises Institute,

[11] Friedrich A. Hayek, The Constitution of Liberty, University of Chicago Press, 1960. Hayek was a student of Mises, and was awarded the Nobel Prize in economics in 1974.

[13] A search for “capitalism” and “non-aggression” will bring up hundreds of relevant pages.

How well do today’s students understand “capitalism?” Considering that nearly half could not read the printed word “capitalism,” compare them with these students from an earlier era:

Capitalism and Morality

The connection drawn above between capitalism and non-violence is just the tip of the iceberg. Capitalism depends on all ten of the Ten Commandments. America’s Founding Fathers recognized that without Christian morality, society would be doomed to totalitarian despotism. Liberty (and a rising standard of living) depends on morality.

Capitalism and Globalism

Summary: Millions, even billions, of children around the world are enjoying a higher standard of living today than their great-grandparents did 100 years ago. This is because dictators, socialists, tyrants, and lords, are being replaced by liberty and freedom of choice. In other words, by capitalism.

Detail: During the past two decades, [capitalism] has spread throughout the world via the process termed globalization. The communist dictatorships in the East and the military dictatorships of the Third World collapsed, and the walls they had raised against ideas, people, and goods collapsed with them. Instead, we have seen the dissemination and widespread acceptance of the idea that creativity cannot be centralized, that it can only be encouraged by entitling citizens to decide for themselves, to create, to think, to work.

The growth of world prosperity is not a “miracle” or any of the other mystifying terms we customarily apply to countries that have succeeded economically and socially. Schools are not built, nor are incomes generated, by sheer luck, like a bolt from the blue. These things happen when people begin to think along new lines and work hard to bring their ideas to fruition. But people do that everywhere, and there is no reason why certain people in certain places during certain periods in history should be intrinsically smarter or more capable than others. What makes the difference is whether the environment .permits and encourages ideas and work, or instead puts obstacles in their way. That depends on whether people are free to explore their way ahead, to own property, to invest for the long term, to conclude private agree­ments, and to trade with others. In short, it depends on whether or not the countries have capitalism. In the affluent world we have had capitalism in one form or another for a couple of centuries. That is how the countries of the West became “the affluent world.” Capitalism has given people both the liberty and the incentive to create, produce, and trade, thereby generating prosperity.

Capitalism means that no one is subject to arbitrary coercion by others. Because we have the option of simply refraining from signing a contract or doing a business deal if we prefer some other solution, the only way of getting rich in a free market is by giving people something they want, something they will pay for of their own free will. Both parties to a free exchange have to feel that they benefit from it; otherwise there won’t be any deal. Economics, then, is not a zero-sum game. The bigger a person’s income in a market economy, the more that person has done to offer people what they want. Bill Gates and Madonna earn millions, but they don’t steal that money; they earn it by offering software and music that a lot of people think are worth paying for. In this sense, they are essentially our servants. Firms and individuals struggle to develop better goods and more efficient ways of providing for our needs. The alternative is for the government to take our resources and then decide which