Advocates of both major economic systems, capitalism and socialism, often attempt to trademark freedom as a product that only their favored system can truly provide.
Capitalists claim that free trade and open markets are essential aspects of a free society, without which tyrannical political figures could exercise any means of control they deem necessary without the consent of the people. In their view, economic freedom is essential for a civilized society in which freedom of choice is virtuous. Socialists take a different approach, arguing that those who are most economically privileged in a free market system seek profit at the expense of the working class. Consequently, without a government to put limits on how much wealth and power the upper class can possess, economic freedom for everyday citizens will inevitably be suppressed.
There are a few essential features of each economic system that should be distinguished. Although economic models may not always correspond to social realities, it is still worthwhile to obtain conceptual clarity on them in order to truly understand the distinguishing factors. Classical capitalism stresses three core factors that separate it from other systems. These are (1) the available acquisition of capital, industrial and otherwise, (2) private ownership of the means of production, and (3) a free-market system. It stresses the importance of the market controlling wages, prices, and production. Free markets allow greater freedom for competitors to enter the market and work to provide a good or service that consumers will want to purchase. Competition results in lower prices and greater efficiency, as businesses must offer these things in order to stay afloat in the market. It gives freedom of choice not only to competitors, but also to consumers to enter into whichever transactions they believe will bring the greatest return to themselves.
Three essential features of socialism are (1) an industrial base, (2) public ownership of the means of production, and (3) centralized planning. Ownership in (2) can refer to state ownership or worker ownership. A large government apparatus is viewed as the proper controller of economic activity, regulating the activities of capitalists in the name of social justice. Central planning would replace competition, which would ultimately work in favor of the working class rather than the wealthier business owners alone.
At the center of this debate lies the issue of the proper role of government. These two economic models stress different roles the government should play.
Under capitalism, the minimum requirements of government are protecting private property, enforcing contracts, and seeing over legal disputes in the private sector. As this closely resembles a laissez-faire attitude rather than the social reality of capitalism, capitalism in the real world consists of certain government regulations imposed on the private sector as well as access to some public goods. Socialism goes further than that, advocating for government control of production entirely, as well as government-funded health and education programs. This theory stretches much further than public goods and infrastructure: it too often translates in the real world to the squeezing out of competition in prominent markets.
Much of what makes socialism attractive to some lies in the promising of better social welfare, usually in the form of government programs. To suggest that social welfare is a byproduct of socialism is an astronomical offense, for capitalism has lifted billions out of extreme poverty and raised the standard of living for everyone, particularly the working class. As Friedrich Hayek wrote in his book The Road to Serfdom, “Nor is the preservation of competition incompatible with an extensive system of social services-so long as the organisation of these services is not designed in such a way as to make competition ineffective over wide fields.”
Socialists gain traction through claiming that freedoms such as freedom of speech and assembly are useless without economic freedom, a freedom which can only be obtained through bureaucratic control of economic activity in order to liberate the working class. They often trademark freedom in claiming that capitalism allows the wealthy to suppress the rights of the poor. As Dr. Walter Lippmann wrote about socialists in 1936:
“Though they promise themselves a more abundant life, they must in practice renounce it; as the organised direction increases, the variety of ends must give way to uniformity.”
After taking all of these factors into consideration, it is clear that capitalism allows for greater freedom of the individual. In contrast to the high correlation between socialism an economic oppression and collectivist attitudes, free markets and private ownership have shown to result in economically prosperous and freer societies.
The views expressed in this article are the opinion of the author and do not necessarily reflect those of Lone Conservative staff.