The results of a recent Fox News poll showed that nearly a third of registered voters hold a favorable outlook on socialism. This proportion has grown since the previous Fox News poll in February 2019. Why, in an affluent country, would capitalism lose ground to socialism?
Capitalism is defined as an economic and political system in which the trade and industry of a country are controlled by private owners for profit — rather than by the state, as in socialism.
Capitalism is often considered the most moral and just system of economics because of the relationship between private property and voluntary arrangements of the individual. Private enterprise offers the most efficient and effective means of providing people the goods and services they want.
Yet, naysayers believe capitalism is unfair, the cause of many problems on earth. These anti-capitalist individuals blame the problems on capitalism instead of an adulterated form called “crony capitalism.” Crony capitalism is defined as an economic system characterized by close, mutually advantageous relationships among business leaders and government officials. When the capitalistic system is manipulated by those in political power to serve special interests to acquire wealth without the consequences of market competition, corporations gain an unfair advantage and the consumer is the biggest loser of all.
Crony capitalism is demonstrated in many ways, including government grants, favored status in acquiring permits, specific tax breaks, subsidies and policies of government protection. Once this arrangement is set, consumers don’t benefit from rapid innovation or market forces that drive down prices because corporations linked to government funding have no incentive to run efficiently. Their survival isn’t based on innovation or competition. Remember Solyndra and the massive amounts of federal dollars that funded that company’s failed efforts?
Despite evidence to support capitalism as the most moral economic system thus far designed, capitalism still doesn’t fare well in the polls. Another reason could be the mistaken comparison of capitalism with some utopian ideal. The fact remains that any other system practiced besides capitalism has been demonstrated to be disastrous for countries and their citizens. Glaring examples of failed economic systems include those of Cuba, North Korea and Venezuela as well as the former Soviet Union. When governments direct the economy, as in those countries with central planning, or partner with corporations, as in crony capitalism, the economy becomes stifled and scarcity and poverty exist to a greater degree.
Capitalism needs freedom to remain responsive to the wants and needs of citizens. With every fee, regulation, rule and tax imposed on businesses, there’s a loss of freedom. Consumers purchase goods and services they value. The freer the markets, the more consumers benefit from access, choice, competition, innovation and lower prices. Think automobiles, cell phones, computers and televisions.
Poll results reflecting a negative view of capitalism might simply reflect instead a lack of knowledge about capitalism and free markets.
Phyllis Hunsinger is founder of the Freedom & Responsibility Education Enterprise Foundation in Grand Junction. The foundation provides resources to students and teachers in Western Colorado to promote an understanding of economics, financial literacy and free enterprise.
For more information, visit www.free-dom.us.com. A former teacher, principal and superintendent, Hunsinger wrote “Down and Dirty: A ‘How To’ Math Book” Reach Hunsinger by email at firstname.lastname@example.org.