In discussing capitalism with my MBA business ethics class, this objection came up: there is too much freedom in a capitalist society, and it causes all kinds of problems from violent crime to obesity and drug addiction. In other words, we need the government to regulate weapon, food and beverage manufacture and sales, and to keep narcotics illegal—to prevent people from indulging in their whims to initiate physical force on others, to over-consume unhealthy food and beverages, and to snort cocaine and other drugs.

The argument for limiting our freedom—and for objecting capitalism, a system of freedom—is based on a dismal view of human beings. In that view, we are all children, either incapable of knowing what choices are good for us or unable to control our harmful urges, or both. And if we are helpless children prone to self-destruction and harming others, we need to have a strong nanny—the government—to tell us what is good for us and what we should do. A capitalist social system based on the recognition of individual rights and on private ownership of property does not fit that view of human nature.

The first question we need to ask when we hear such arguments against capitalism is: Are those claims about human nature true? And even if some people behave irresponsibly, is that behavior “caused” by freedom? The answer to both questions is no. Let’s see why and why freedom, based on the protection of individual rights, is the most fundamental social requirement of our survival and flourishing.

To argue that we are all like toddlers incapable of knowing what choices are good for us is ignoring the fact that all adults with intact brains possess the faculty of reason, our tool of knowledge. It is true that we are not omniscient and can make errors and poor choices, but the evidence is overwhelming for the human capacity for acquiring knowledge, solving problems, and for making life-enhancing choices, all without the help of governments telling us what to do. There was no government to tell Stone Age cave dwellers how to build tools and weapons, how to hunt mammoths, and how to utilize their kill. No government instructed Thomas Edison how to invent the electric light bulb or electric power distribution, and government certainly did not play a guiding role in the invention of the MacIntosh computer and the iPod, the iPhone and the iPad, led by Steve Jobs.

The same answer can be given to the argument that we are unable to control our whims even when we know what choices are good for our life. Life-enhancing choices aren’t automatic; there is plenty of evidence of bad choices that people make, from initiating physical force on others to indulging their whims. However, this is balanced by the evidence of life-enhancing choices that many people make, from producing material values—such electric light bulbs, laptops, cellphones, and tablets—to trading peacefully with others, and eating healthy foods in moderation, and not abusing drugs.

If the life-enhancing choices aren’t automatic, why can’t the government make us take them? Wouldn’t that solve the problems for which some of my students (and many others) blame capitalism? Government’s use of force to make us behave in ways we wouldn’t choose to behave does not work—because it takes away our motivation. And motivation is crucially important to our flourishing. A forced choice is not a choice; if we cannot choose what to produce, with whom to trade, and what to eat and drink, we are not motivated to work hard, to innovate, to persuade others to trade with us, and to look after our health. We give up personal responsibility and let the nanny state tell us what to do and take care of us.

The freedom to choose that capitalism protects includes the right to make wrong choices—and to suffer the consequences. That teaches us personal responsibility, long-range planning, problem solving, entrepreneurship, and productivity, all of which are qualities and skills that make our flourishing possible. To thrive and to be the best we can be, we need capitalism. Problems such as crime, obesity, and drug abuse are not caused by too much freedom and capitalism, but by too little. (And crime is deterred by strong protection of individual rights.) Such problems come from too little or no personal responsibility and a perennial dependence on the government to tell us what to do and to bail us out when we get into trouble. So instead of objecting freedom, capitalism, and individual rights, let us defend them.

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Jaana Woiceshyn teaches business ethics and competitive strategy at the Haskayne School of Business, University of Calgary, Canada.She has lectured and conducted seminars on business ethics to undergraduate, MBA and Executive MBA students, and to various corporate audiences for over 20 years both in Canada and abroad.Before earning her Ph.D. from the Wharton School of Business, University of Pennsylvania, she helped turn around a small business in Finland and worked for a consulting firm in Canada.Jaana’s research on technological change and innovation, value creation by business, executive decision-making, and business ethics has been published in various academic and professional journals and books. “How to Be Profitable and Moral” is her first solo-authored book.

6 COMMENTS

  1. Excellent article, you’ve covered many points especially negative and positive views of humans, thankyou Jaana.

    To drive home a point, if cavemen did not make rational choices they died. Of exposure if they didn’t find good shelter while out foraging, from accident if not careful, or of starvation if they did not choose a good area for food collection. (The location of animals shifts, and vegetation varies with climate change such as a drought year.) Those who did better overall would be able to reproduce and pass on knowledge of successful ways to their children.

    People in the Hudson’s Bay Company and Northwest Company who were early explorers of what now is Canada and the northern US observed examples of variation among tribes. Some ran short of food – a smart HBC manager taught one bunch a simple way of catching a different kind of fish in a lake, he had observed their presence, the tribe hadn’t. What happened to those types of tribal people before Europeans showed up? (And some tribes made better use of their human resources than others – people in one HBC/NWC post in NE Canada were distainful of the work ethic of males in one local tribe compared to the productivity of the females.)

    Today we prop up those who don’t do well for themselves. Not enough voters recognize what is cause and what is effect.

  2. I agree with your perspective. I think we are all so concerned about failing and think it is a bad thing. Sometimes failure is a part of freedom and provides a wonderful learning experience that can change our lives – in a good way.

    • Thanks for the comment, Jason. Yes, there is a line. It is: Does the person in the possession of any dangerous goods (drugs, toxins, weapons, etc.) violate, or threaten to violate, the individual rights of others by initiating physical force or fraud? If yes, he needs to be prosecuted and punished appropriately by the government. If no, then government should not interfere with the person’s freedom to think and act the way he chooses. Being accountable for one’s choices and actions teaches responsibility very quickly.

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