Although capitalism gets a lot of heat, it is the system that made the US the richest nation

In 2021, Gallup had a poll that said 60 percent of Americans favored capitalism, while 38 percent  favored socialism. The gap between these two decreases as you break it down by generation, however. Another poll from 2019 said that 51 percent  of millennials are favorable towards capitalism, compared to 49 percent  that are favorable towards socialism. This is noticeable especially when you consider that 61 percent  of Generation X and 68 percent  of Baby Boomers were favorable to capitalism.

A lot of people today feel disillusioned by capitalism because of inequalities between the rich and poor. Others feel that it is based on chasing wealth, and is therefore corrupt. So, is capitalism a broken system? What is the cause of the many problems we see today?

First, an explanation of how capitalism is supposed to work is in order. Capitalism, or free enterprise, allows for private businesses to offer goods and services to consumers independent of government interference. Since anyone can offer a similar product, competition for the consumer’s money results. Consumers will usually choose the product or service that is the highest quality for the lowest price. This improves products and services. To pay for those products and services, people work and provide their product or service, or they produce for an employer. Since people have motivation to work and provide the highest quality at the lowest prices, capitalism should result in a better life for all.

One problem is that some corporations are huge and have almost eliminated competition. Lack of competition can lead to inflated prices and loss of quality, since the monopoly has nothing to keep it from forcing people to pay for higher prices. The chase of the profit leads to large companies not caring about their employees and trying to replace them with automated workers. As a result, the elites in control of large businesses get richer while the poor struggle.

However, there is a big reason why many of these problems happen. Some companies may become monopolies through shrewd business within the capitalistic system. However, most are the result of government influence. One way to eliminate competition, instead of producing the best product, is to funnel money to politicians and influence them to pass government regulations that force competitors out of business. When those giant companies are about to go out of business due to not meeting consumer expectations or not handling their finances well, then the government keeps them afloat with bailouts and subsidies. This happened in 2008. According to a CNN Money special report, the Treasury Department invested about $200 billion in banks. This included bailouts that were as much as 25 billion each for banks like Wells Fargo, Citigroup and JPMorgan Chase.

Giant companies that saw their competition forced out of business and were bailed out despite struggling have less motivation to provide the best services and products for the lowest prices to consumers. Government interference, which is not intended to be part of capitalism, has led to many of the problems that people blame on capitalism. However, many people want the government to fix these problems. Another 2019 Gallup poll says that government intervention is more favorable now than it was in 2010. Asking the government to solve the problems that it caused creates a vicious cycle of problems and solutions that lead to more problems.

The idea of giving individuals more freedom over their own economic decisions naturally goes hand-in-hand with political freedom. It is rare for a society that gives its citizens many political rights to take away their economic rights. In the same way, a government that is very oppressive does not often give its citizens many economic rights. So, the economy is related to political systems.

One alternative to capitalism is socialism. Socialism is an idea that governments should have a role in regulating and controlling some aspects of the economy. An extreme of this is communism, which gives complete control over the economy to the state. However, most supporters of socialism do not want to go to communism. They want some government regulation and safety nets, but also free enterprise. However, the problem with giving the government control is that it does not want to relinquish that control. Also, as previously mentioned, government interference tends to lead to monopolies and horrible inefficiency. When a business knows that it has to sell a high-quality product for a low price to get consumers to buy it, that business is more likely to work to cut costs. However, when a company knows it can rely on the government to make up its losses, it will not try as hard to maintain lower costs and quality. Also, when employees are working for the state, who provides for the citizens based on the whims of the bureaucracy, they are less likely to work hard and try to succeed.

There are benefits to capitalism that socialism and government intervention do not provide. For one thing, capitalism provides a greater incentive to work. Also, there is greater innovation. When a person has the right to invent or create something and profit off that, and has to provide new ways to appeal to consumers, they are more likely to produce new and innovative methods, products and services. When a person has no freedom over their own work, and are simply working for the government, there is less motivation to go beyond the status quo. Finally, people have the opportunity to succeed. Many of the most successful Americans in history did not come from wealthy or politically-connected families. Many worked their way up from poverty to succeed. Karl Marx saw it differently. He saw economic success as an exploitation of others. Even though wealth may be passed down, and the top one percent may get richer, the people have opportunities to break the cycle and succeed.

Capitalism may not be perfect, but it is the most successful economic system the world has seen. Socialism and communism do not end well. In Cuba, Venezuela, Cambodia, the Soviet Union, and other countries, these systems ended in poverty, hunger, and oppressive governments. China’s economy has been different because of capitalist practices integrated into their system. This same system brought widespread famines and poverty at its beginning without those capitalist policies. On the contrary, the United States is one of the richest nations in the world. Even though there is a gap between the rich and the poor, even the poor would be wealthy in many countries around the world. The free market has served America well for many years, and is one of the things that has made America a great country. Giving the government more power over the economy is one of the main causes of the problems in the first place, and is not the ideal solution.