Chapter 8

American Capitalism: Moral or Immoral

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The American Economic System

American capitalism, from its inception to the present day, has grown, developed, and changed. Although it continues to contain the general features of capitalism, its varying relations to government are central to the changes that have taken place in its development. The American economic system is closely tied to the political, cultural, and social system of the United States, and an adequate moral evaluation of it must take these relations into account.
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Relationship Between American Government and Economic System

The economic system can operate only in a broader social system of reasonable security and stability. Government has traditionally provided security and stability for the people. Over time, at least five other needs arose, which the government sought to meet:
Development of a Welfare Safety Net Provision of Common Goods Control of Economic Cycles Correction of Unfair Tendencies and of Market Failures Within the Free-Enterprise System Taxation
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The Marxist Critique (Exploitation of the Workforce)

Capitalism is based on exploitation of the workerthat is, not paying him what he truly deserves. The basis for the claim of necessary exploitation is Marxs labor theory of value.

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The Marxist Critique (Alienation of the People)

Capitalism is inherently immoral because it alienates human beings. It does not treat them as ends in themselves; it separates them into antagonistic camps and sets one against another; it stultifies the workers; it involves domination of some by others; and it produces other negative effects on all those who live within the system.
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The Marxist Critique (Vested Interests)

Capitalism defends the vested interests of the few and prevents the vast productive forces of society from truly serving the masses. The natural tendency of the productive process is toward social ownership instead of private ownership of the means of production.

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Non-Marxist Moral Critiques

There are three non-Marxist criticisms :
(1) Capitalism creates waste and false needs; (2) capitalism feeds the military/industrial complex at the expense of the general population; (3) capitalism creates gross and unjust inequalities.
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Moral Defense of American FreeEnterprise System

Freedom and Efficiency The free-enterprise system allows the greatest freedom of action and choice to each person, compatible with a like freedom for all. Political freedom, the defenders of free enterprise insist, is possible only when economic freedom is its concomitant. In terms of Rawlss theory of justice, the American free-enterprise system thus satisfiesat least in principlethe first principle of justice. Because recognition of human freedom is an essential ingredient in treating people morally, the free-enterprise system is morally based. It values and enhances all aspects of human freedom, and it makes this the centerpiece of its moral justification.

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Moral Defense of American FreeEnterprise System

The Production of Wealth With the introduction of the machine and the rise of the industrial age, there has been a manifold increase in human productivity. The U.S. economic system has unquestionably enhanced human life and welfare, not only for Americans but also for many people in other lands. All this must certainly be to its moral credit. Hence, the American free-enterprise system satisfies Rawlss second principle of justice.
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Moral Defense of American FreeEnterprise System

Preferability to Actual Socialist Systems

The moral defense of American capitalism begins with the admission that it is not perfect. Every system can be improved, and the moral task of American free enterprise requires that its immoral aspects be constantly fought and that human welfare be further enhanced.
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Non-Socialist Alternatives to American Capitalism

The Libertarian Alternative
Only a minimalist government is compatible with liberty. Libertarians therefore complain that government has entered the marketplace with its laws, regulations, and taxes to the detriment of the freedom of the American citizen and businessman. The libertarian view is based on the notion of the sanctity of private property. Private property belongs to an individual. If he has worked for it, he deserves to keep what he has earned. If he has taken risks, if he has been lucky, if he has worked especially hard, and if he has been innovative, the market will reward him. The libertarian view has, therefore, a moral thrust. It champions liberty as a moral virtue worthy of human beings. It faults government as acting immorally through taxation, welfare, and many of its other programs.
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Non-Socialist Alternatives to American Capitalism

Workers Democracy
Workers democracy sees government as inextricably intertwined with big business. Defenders of workers democracy point out that many of the decisions made by the major corporations in America affect all of our lives more than the decisions made in Congress. The allocation of resources, the building and closing of plants, and the creation and termination of jobs are all decisions that directly affect large numbers of people who have no voice in these decisions. Government regulation is not the answer, because government is intertwined with big business.

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Non-Socialist Alternatives to American Capitalism

Piecemeal Change
The consensus in the United States is that no new system is needed. No other system is clearly morally preferable, or waiting to be adopted. Americans can and should make the morally necessary changes in American capitalism, improve it, and work toward a yet unattained maximal mix of freedom and justice. The real alternative to the present American system does not consist in holistic change. What is most likely to succeed is piecemeal change: correcting ills where possible, outlawing immoral practices, and implementing structural changes that promote moral conduct.

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Philanthropy
Philanthropy on a large scale is criticized because the system should not allow individuals to accumulate such enormous wealth that they can indulge in such great philanthropy. A more equitable society would not have any superrich with the ability to contribute so much. Nor would a more equitable society have the need for individual philanthropy and charity, if the needs of people were properly addressed by society as a whole.
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