Is Capitalism Cruel?
By Tibor Machan - November 20, 2010

Now these issues must always be dealt with comparatively – is capitalism cruel, harsh, heartless compared to what?

Some folks I know have maintained that compared to socialism, capitalism is indeed all these things but I just cannot buy it. Partly it's because I have lived under at least one kind of socialism, the Soviet version, which, as only someone who has been living in a cave for a hundred years would deny, is brutal, never mind cruel, harsh, and heartless.

But let's not focus on the worst case scenario of socialism. Let us take socialism "with a human face," the sort that is usually associated with Sweden, France, Greece or some other country where the government manages much of the society's economic affairs but doesn't punish dissidents and ban freedom of speech. Are these bona fide socialist systems and are they gentle and kind to their population?

Again, compared to what? A fully free market, capitalist system in which everyone must live without resorting to extorting their support from others, without getting bailed out by the government with other people's resources when they have mismanaged their financial affairs – is such a system more cruel than, say, democratic socialism?

Not really, not by a long shot. Any kind of socialism subjects the citizenry to coercive wealth redistribution and makes it impossible to accumulate wealth for oneself, one's family, one's enterprise thus impeding investment, savings and economic development. Instead people in socialist systems have to contend with being slowly bled to economic destitution unless they are savvy enough to circumvent all the damaging socialist practices (think here of George Soros). And, yes, there are quite a few people in socialist societies, even the harshest version of them, who manage to game the system. They may not openly attack their fellow citizens but because they game the system at the expense of these fellow citizens, those others are in fact – although sometimes not visibly – being seriously harmed.

These socialist systems with human faces manage to disguise their mistreatment of all those who are made to pay for the mistakes of many who become used to being taken care of, who feel they are entitled to endless help from the government, who don't want to reach out to people and contend with the fact that generosity and charity must be voluntary whereas being on the dole is coercive but not easily noticed. Who is paying for those food stamps? The minimum wages one receives? The subsidies to farmers and all the rest of the costly welfare measures? No one can tell because it all goes through politicians and bureaucrats and they do not accept responsibility of how they treat the citizenry, for depriving Peter of what belongs to Peter and hand it to Paul (not before they skim a good deal off for themselves). (I develop this idea in my 1970 paper, "Justice and the Welfare State," The Personalist.)

Moreover, many people judge socialism by the announced intentions of those who support the system, not by the actual consequences it produces throughout a society. All the unseen losses suffered because of the public mismanagement of the economy are overlooked and, instead, people often believe it is "the thought that counts." But a little serious, disciplined thinking should soon reveal just what is going on and how what appears on superficial sight gentle and sweet becomes, instead, insidious and harmful.

Capitalism is up front about placing responsibility on free men and women and for this it gets a bad rep from those who are duped into thinking that one can tell the full content of a book by its fancy cover. Capitalism, unlike the welfare state, is more like parents who impose discipline and refuse to spoil their children however much they whine about it. Those who think the system is therefore a cruel one are comparable to teens who bellyache about their parents because they are more interested in justice than in mercy (which in exceptional cases is fine but not as a routine).

Because so many people have found free market capitalism too harsh, too cruel, or too mean, the system has never been allowed to function as it had been meant to by those who considered it best for a society's economic well being, the likes of Adam Smith, Herbert Spencer, Ludwig von Mises, F. A. Hayek, Milton Friedman and Ayn Rand, among others. (Spencer, especially, got no end of grief because of sentiments like the following: "Sympathy with one in suffering suppresses, for the time being, remembrance of his transgressions. … Those whose hardships are set forth in pamphlets and proclamations in sermons and speeches which echo throughout society, are assumed to be all worthy souls, grievously wronged; and none of them are thought of as bearing the penalties of their own misdeeds." [Man versus the State, p.22].) Instead they followed the lead of John Maynard Keynes and insisted that people who mismanage their economic affairs are entitled to endless bailouts from the government.

Is this actually less cruel, less mean than the alternative, once all the results are considered? I seriously doubt it – just think of Greece, Portugal and, of course, the former Soviet colonies, as well of the members of America's and many other nations' future generations!

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