from Selfishness, Greed, and Capitalism by Christopher Snowden

As David Boaz (2011: 35) puts it:

Critics of markets often complain that capitalism encourages and rewards self- interest. In fact, people are self- interested under any political system. Markets channel their self- interest in socially beneficent directions. In a free market, people achieve their own purposes by finding out what others want and trying to offer it.

Capitalism does not rely on selfish motives, but it is able to put selfish motives to good ends where such motives exist. In any case, the moral objection that capitalism ‘rewards greed’ (Kaufman 2012: xi) is ill- founded. Greedy men dislike free markets because the existence of competition prevents them from charging too much and providing too little. They are forever seeking special protection from the government to make markets less free, keep prices high and exclude competitors. Capitalism is robust against selfishness, not dependent on it. Socialism, by contrast, depends on altruism. In the words of Arthur Seldon (2004: 344):

The virtue of capitalism is that it divorces purpose from result. It does not require good men or women. The vice of socialism is that men and women who may start with good intentions, but who are skilled in acquiring coercive power, can use it to do harm.

Such a society would, he says ‘collapse under the weight of continuous cheating, monitoring, punishment and bargaining’ (Chang 2010: 255). In fact, this is a pretty good description of what happened in the socialist utopias of Eastern Europe in the twentieth century. Continual monitoring and punishment were necessary in those unfortunate countries precisely because there was no invisible hand to peacefully direct labour towards socially beneficial outcomes. By replacing the invisible hand of free enterprise with the dead hand of the state, communist societies were forced to rely on surveillance and propaganda to keep workers in line. Without adequate financial incentives to reward them, citizens felt little urge to toil for the betterment of society. Their self- interest was best served by shirking, cheating and stealing. As the Russian joke went: ‘We pretend to work and they pretend to pay us.’

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