Misconceptions About Capitalism

Ever since its inception, capitalism, an economic system based off of private ownership of the basic means of production and free trade, has received both lots of love and seemingly more hate from millions of thinking humans. 

In the United States, people on the political right wing are more accepting of capitalism. Those on the left tend to be highly critical of the system. However, those who criticize capitalism ultimately do so on the basis of blatant misconceptions of the economic system.

The first of these misconceptions is that capitalism is fundamentally exploitative of the lower social classes. It seems one doesn’t have to go far in any direction to encounter this bolstered narrative. 

What critics fail to realize about capitalism is that it’s based off of free, voluntary trade and interaction. This means that both employees as well as employers freely consented to associate with each other. Hence, the outcome is likely tobe mutually beneficial. At least that’s according to free-market economists like Milton Friedman and Frederick Bastiat. This is in contrast to the anti-capitalist narrative that the poor suffer exploitation from the rich.

Another popular misconception of the economic system of capitalism is that it mainly benefits the rich at the expense of the poor. 

Of course this also is ultimately false since, as I noted earlier, economic interactions within capitalism are voluntary, thus we can know that they are mutually beneficial. BOTH parties will benefit from the trade. Otherwise the trade wouldn’t have happened in the first place. For example, when one buys a hamburger from McDonald’s, the customer obviously wants the burger more than he wants the money, and the worker wants the money more than he wants the burger. In which case, both people involved are better off than they were before because of the trade. Aside from this, It’s also good to note that both the rich and the poor in the US have gotten richer over decades, according to an article by Abigail R. Hall of The Independent Institute.

In a truly capitalistic society, people can really only become rich if they supply others what they want. We can know this to be the case, once again, because all human interactions under capitalism are voluntary and thus mutually beneficial. In other words, those who wish to benefit themselves and become rich can really only do so by benefiting those whom they interact with in the economy. Ask yourself why, for example, Walmart is so profitable. It’s because millions of people do business at Walmart, and we can reasonably assume they do business there because it makes them better off. Therefore, Walmart’s economic success is due to benefiting millions of people, not exploiting them.

Capitalism is obviously not a perfect system, but it sure does seem better than the "capitalism" we have now, that is corrupted by a big government, bureaucratic system that forcefully exploits taxpayers for the interests of powerful entities, something which is certainly not mutually beneficial.