(excerpt)
A deep longing is visible in this land to build a free society — a society designed for personal responsibility, for initiative and innovation, and for freely given cooperation with others — in short, a society that calls forth and nourishes the three great liberties for which the human spirit has been made. The first liberty is liberty from tyranny and torture, provided by democracy The second is liberty of economic initiative, invention and enterprise, provided by a free and dynamic economy. The third is liberty of conscience and information and ideas, provided by an open and free civil society. These are the three great liberties — political, economic, and moral. Through exercising all three of these liberties, we utter our own distinctive voice in history. Through them, we answer the two great questions of human life. The first of these questions, the personal one, is: ‘who am I, under these stars, with so brief a number of years in which to live?” The second, the social question, is: ‘who are we‘ Through answering these two questions, we work out our destiny: personal and communal.
The Practical Case for Capitalism
From a long distance away, it seems that two of these liberties are easy for the citizens of eastern Europe to understand: the political liberty of democracy; and the moral liberty of the free and pluralistic society. Am I wrong to think that the case for a free economy — for the market economy, for the enterprise society, for the regime of private property, for capitalism — is more difficult to grasp and greeted by some here with a traditional hostility? Of course, the practical case for capitalism is easy to grasp. No other system so rapidly raises up the living standards of the poor, so thoroughly improves the conditions of life, or generates greater social wealth and distributes it more broadly. In the long competition of the last 100 years, neither socialist nor Third World experiments have performed as well in improving the lot of common people, paid higher wages, and more broadly multiplied liberties and opportunities.
This point needs elaboration since, in Marxist analysis, the only beneficiaries of capitalism are said to be the rich. In actual fact, it is the poor who gain most from capitalism. That is why my own grandparents (and scores of millions of others) left Europe for America. They sought opportunity, and they found it. Desperately poor on their arrival (just before 1900), they lived to own their own homes, watching their children and grandchildren advancing in income and education. ‘Give me your tired, your poor’, the Statue of Liberty beckoned to the world; and nearly 100 per cent of Americans did come to America poor. Today fewer than 13 per cent of Americans are poor (which is defined as having an income below about $12,000 per year). That means that 87 per cent are not poor, and we still have about 13 per cent to help.
Moreover, it should be noted that 38 per cent of the American poor own their own homes; that 95 per cent of the poor have their own television sets; and that a poor American is more likely to own a car than the average Western European (Rector 1990). Beyond the poor, half of all families have incomes above $34,000 per year. More than 20 percent have incomes above $50,000 per year. It is sometimes suggested that American blacks arc poor. But under one-third arc poor; two-thirds are not poor. Half of all black married-couple households have incomes over $33,000 per year. The total income of America’s 27 million blacks came to $237 billion in 1989. This is larger than the gross domestic product of all but ten nations.
This is not to say that the task of eliminating poverty in America (or other capitalist countries) is finished: it certainly is not. But it is crucial to grasp that the task of capitalism is measured by how well it enriches the poor. To an amazing extent, it does do this. The great majority of Americans can remember when their families were poor, two or three generations ago; but they are not poor today. In Japan, the case is similar, as well as in South Korea, Hong Kong, Taiwan, and other newly capitalist countries as well as in the nations of western Europe. Measure capitalism by how well it raises up the poor. That is the test it is designed to meet. Look around the world and see.
A second practical argument is also widely accepted. Every democracy on earth that really does protect the human rights of its individual citizens is based, in fact, upon a free economy. Empirically speaking, there is not a single contrary case. (Capitalism is a necessary condition for democracy. A free polity requires a free economy. It certainly needs a dynamic, growing economy if it hopes to meet the restless aspirations of its citizens.
These two practical arguments in favour of a free economy are powerful. But they do not get to the heart of the matter. One could admit that, yes, capitalism does work better for improving the living standards of ordinary people, stocking the shops with goods in abundance, and imparting broad upward mobility and economic opportunity from the bottom of society. One could admit further that, yes, capitalism is a necessary condition for the success of democracy; since without economic progress in their own daily lives, ordinary citizens will not love democracy. No one will be satisfied merely with the right to vote for political leaders every two years or so, if living standards decline. One could agree with all this, but still one could say, ‘But capitalism is not a moral system. It does not have high moral ideals. It is an amoral, even immoral, system’.
The moral case for capitalism is, therefore, the more important case. In addition to being political animals seeking liberty, and economic animals seeking prosperity, human beings are also moral animals, thirsting for fairness, justice, truth, and love. What has capitalism to do with these? In the lands of Marx and Lenin, the moral case for capitalism has been understated. To capitalism, only evil was imputed. For that reason especially, I thought it useful to articulate for you, briefly and only in outline, the moral case for the goal that you have already decided to pursue.
It was precisely through a moral argument that capitalism first commended itself to human consciousness in America, Britain, and France. This is the case that Marx and Lenin overlooked. Indeed, many in Western lands have also overlooked it, or accepted it only inarticulately and in fragments. Practical people often skip past moral arguments. They thereby run the risk of undermining their own accomplishments. For no historical movement can long outlive the conviction of its protagonists that what they are doing is morally admirable. Moral conviction is one of the greatest forces in history. Not even armies can hold it back.
