Debating First Principles: Is Capitalism Moral?

Sunday, April 24, 2011

First Principles is a series of three debates on the moral underpinnings of today's politics co-sponsored by DemosThe Ayn Rand Institute and It's A Free Country. Part one explored the role of government, and part two discussed freedom; part 3 featured Washington Post political columnist Ezra Klein (here represented by Demos' David Callahan) and BB&TChairman John Allison, debated:

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John A. Allison is Retired Chairman and CEO of BB&T Corporation, the 10th largest financial services holding company headquartered in the U.S. In March 2009, he joined the faculty of Wake Forest University School of Business as Distinguished Professor of Practice.

The America we live in today is not a capitalist country. For more than a century, we have lived in a mixed economy - a mixture of capitalism and socialism - in which the government interferes in more and more of our decisions, and takes away more and more of our wealth.

Genuine capitalism is based on the principle of individual liberty--the inalienable right to follow your own dreams and act according to your own judgment. It means the right to start a hair salon without seeking a government license, or the right to take a drug your doctor thinks could save your life, regardless of what some FDA bureaucrat thinks.

Genuine capitalism is based on the principle of inviolate private property - including the inalienable right to the product of your own work. It means the right to spend your money on expanding your business rather than on someone else’s retirement, or on a family vacation instead of your neighbor’s tonsillectomy.

Genuine capitalism is based on the principle of voluntary association - individuals deal with one another by persuasion and trade rather than physical force. It means that no matter how noble someone thinks his goals are--whether it’s building wind farms or sending other people’s children to college or erecting a bridge to nowhere--he has no right to force them on you. And it means that no matter how misguided someone thinks your goals are, so long as you are peaceful he has no power to stop you from living the kind of life you want to live.

Capitalism is the system where there is no government manipulation and distortion of the market (e.g., the Federal Reserve and Freddie and Fannie’s affordable housing policy that created the financial crisis), no alphabet regulatory agencies dictating and overseeing your every action, no wealth redistribution schemes to give your hard-earned income to causes someone else thinks are worthy.

Capitalism, in brief, is the system where you’re free to set your own goals and make your own choices, to find a career you love and rise as high as your ability and ambition will take you, to deal with others through win-win trades, and to keep the fruits of your labor.

I believe that this is the moral system. But the supporters of the mixed economy disagree. They call it selfish, greedy, heartless, immoral--and righteously claim the power to use force to get you to obey their vision of the “common good.” They hold that a society based on voluntary association is “exploitive”--and have replaced it with a dog-eat-dog system of pressure group warfare, where your freedom and wealth are at the mercy of how much political influence you can muster.

But capitalism is not exploitative. I spent nearly twenty years as the CEO of one of America’s largest financial institutions, BB&T, and one of the things I saw again and again was that a businessman who abandons principle and tries to make money at the expense of others, although he may succeed in the short run, is doomed in the long run. Taking advantage of people is not truly selfish, it is self-defeating: people will not trust you. You might fool Fred and Suzie, but they will tell Tom, Dick, and Harry and no one will trust you. Being untrustworthy will put you out of business.

The reason BB&T has been so successful is because we help our clients achieve economic success and financial security. They voluntarily pay us for this service, allowing us to make a profit. Both BB&T and our customers are better off from this win-win relationship. On a free market, where you can’t seek favors or bailouts from Washington, business is about creating these types of win-win relationships--by figuring out ways to benefit your clients while making a profit doing so. (And, if you do defraud your customers or engage in some other crime, the government in a free market is there to put a stop to it.)

But, you may be thinking, isn’t pursuing profit and your own self-interest wrong? Don’t we have a moral obligation to altruistically put the needs of others above our own? That is what we’re taught--but why is it true? Why is it moral to serve other people’s happiness, but not your own? Why is it wrong to try to make the most of your own life, neither sacrificing yourself to others nor others to yourself? Don’t you have as much right to your life as anyone else has to his?

You may have detected a theme running through the arguments made by the Ayn Rand Center representatives over the course of the debates. Underlying all of our arguments is a single basic principle: that you should be free to live your own life, and that no one--not the government, not your neighbors--should be able to force you to live the way he thinks you ought to. Our view, in other words, is that you have an inalienable right to pursue your own happiness. What could be more moral than that?

David Callahan is a Senior Fellow at Demos and author of The Cheating Culture and The Moral Center, among other books.

There is much in capitalism that brings out the moral best in people. And there is much that can bring out our immoral worst. The challenge in any society with a market economy is to maximize the best of capitalism and minimize the worst. In turn, that requires striking the right balance between a dynamic private sector and an empowered public sector as well as civil society.

I’ll say more about that balance in a minute. But first let me say what is moral about capitalism. For starters, capitalism is great at producing wealth and prosperity correlates with any number of positive moral outcomes. As Benjamin Friedman has persuasively argued in his book, The Moral Consequences of Economic Growth, rich, market-based societies tend to be more tolerant and open minded; they tend to be more rational, basing collective decisions on science rather dogma; and they tend to foster more social mobility and fairness.

So all that is good. As well, it’s pretty clear that markets can nurture positive moral behavior on the individual level. To prosper in a competitive market economy, you need to have certain virtues, like the ability to work hard and plan for the future and try to improve yourself and be creative. In theory at least, those with more of this kind of virtue, get bigger rewards in a free market system.

But the moral downsides of capitalism are equally obvious. Thirty years ago, in his classic book, The Cultural Contradictions of Capitalism, Daniel Bell argued that modern capitalism, and the consumer culture that went with it, elevated the pursuit of short-term gain and pleasure over the more traditional values of self-restraint and obligation toward others.

This is a pretty elementary idea, and more relevant now than ever. The way I see it, capitalism, at least the aggressive brand of it we practice here in America, has come to erode some very important shared human values. Increasingly, we’ve seen the ascendancy of the rational, amoral logic of self interest, profit and efficiency, not to a mention a me-first, consumer mentality. In the face of this logic, it has become harder to defend a fuzzier set of ideals, like our kinship with other people – our compassion for others, our respect for others, our obligation to others. As well, it is harder to see ourselves as citizens who share a common fate with total strangers, who think in terms of we, not me.

Examples of the moral downsides of capitalism are everywhere around us. Just take a moment to contemplate what I call the “morality gap.” On the one hand, there have been major improvements in many moral areas over the past few decades – crime is down, divorce is down, drunk driving is down, teenage pregnancies are down, drug use is down – yet at the same time, as I’ve documented in my work on cheating, we have seen a surge in all kinds bad behavior: more corporate frauds, more tax evasion, more usurious lending, more doctors in bed with drug companies, more lawyers overbilling their clients, more employers cheating their workers out of wages, more accountants looking the other way as books are cooked, more students cheating, more athletes taking steroids, and so on. It is no exaggeration to say that every major profession today is in something of an ethics crisis.

What accounts for all these problems? The answer lies in the way that market values have become dominant in this age of turbo-charged capitalism.

There are many other examples of how unrestrained market forces have come to undermine values that nearly all humans care about. You can see this damage in the environment, in our popular culture, and in family life, to name just three areas.

The solution is not to get rid of capitalism. Capitalism is the goose that lays the golden egg. Rather, the answer is to check the moral downsides of capitalism with institutions that defend human values. Government regulation is all important in this regard. But, as I said, we need to get the balance right: We don’t want so much government as to significantly undermine wealth creation or individual initiative. But we don’t want so little that immoral behavior goes unrestrained.

In my view, the balance in recent years has been tilted way too far toward deregulation and it’s time to redress that imbalance.


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Comments [58]

Glenn from Australia

The USA is an entirely capitalist nation. Capitalism isn't about "free markets" and never was; that's a myth peddled to have competing nations bend over for exploitation. Capitalism is about subjugating all things to the cause of capital accumulation by those who have already accumulated. Capitalism is by the rich for the rich. The capitalist state and pseudo-democracy are the doing of capitalists; mere tools capitalists compete for control over. The utopian Libertarian departure from reality is testament to the power of capitalism indoctrination and propaganda.

Dec. 17 2012 10:47 PM

Capitalism and Morality are not concepts or domains that share the same conceptual, physical or philosophical arena. Surely someone explained that Capitalism is an economic markets' operating system, Morality is a cultural system defining the basis for judging right from wrong.

You can as easily have immoral Capitalism as moral Capitalism, and I would contend you can have capitalistic Morality or non-capitalistic Morality.

The question you have to answer first is whether your definition of capitalism is accurate, whether that definition is acceptable under the societal contract in which it is to operate, and how it is administered under the governmental laws approved by the society. It doesn't have to be moral to be a right, to be legal, to be efficient, or to be American.

When you mix Capitalism with moral judgements you should fess up to wanting to impose a philosophical judgement on a free market paradigm.

Jan. 15 2012 02:59 PM
MakeThemEatCake from United States

I cannot see why a political concept (democratic republic) - responsible for the health and well being of all is expected to turn a blind eye to an economic concept (capitalism) - responsible for the health and well being of some.

Jan. 04 2012 08:45 AM

Am I out of line to notice that, after the debate, the DEMOS "share-the-wealth" crowd had "on premise" refreshments exclusively for DEMOS members. I was left wondering how characteristic that was of DEMOS hospitality? And could someone explain what was fair about not offering access to the other attendees if they were willing to agree to meet a stated price for the refreshments?
Just wondering. : )

(or should it be seen as a measure of the Ryandian spirit of entrepreneurship?)

May. 08 2011 09:01 PM
Marcello from Brooklyn

@ Amaroq

The fact that the percentages of wealth distribution figures are related to total economic output (that the slices grow according to the growth of the whole pie...) it's obvious but that doesn't mean that wealth inequality doesn't have a negative effect on the less affluent.
If I want to get health care and I am a European citizen, I pay for my coverage in the form of taxes to the government and since the government's goal is to run the program and nothing else, the taxes that I pay for my care are, let's say... 6.
If I want to do the same thing in America, the money that I have to pay to get my health care comes in the form of premiums to private insurance companies. These are commercial businesses whose goal is not simply to run the program but to make a profit ON TOP of the cost of running the program. Moreover, these programs need to factor in the additional overhead constituted by the huge salaries of CEOs running these private firms. So, if I want to buy helath care in America my cost is not 6 (the cost of running the program) but 6 + 2 (the higher cost necessary to generate profit for the company) + 1 (the cost of having to factor in the multi-million dollar salary of the CEO).
So, the concentration of money (in the hands of the CEO and the shareholders...) that results from this practice is NOT neutral, like many conservatives would like us to believe, but it has a very substantial effect on the premiums we pay to get what we need and, very often, on our ability to pay at all.

May. 07 2011 10:55 AM


Even if the percentages of the wealth stay exactly the same, both the rich and the poor gain in a productive, free society. If you have the same percentage of the pie, and the pie grows, you gain.

Let's say that in both America and in North Korea, the rich have 99% of the wealth and the poor have 1% of the wealth. (Considering these countries apart from each other.) America, the much freer country, has an enormously bigger pie than North Korea. So the poor in America are way better off than even the middle class in North Korea.

The contrast between these two countries should show you that capitalism is better than socialism and other forms of statism.

May. 04 2011 03:12 AM
Marcello from Brooklyn

"The right to start a hair salon without seeking to request a government license. The right to take a drug...regardless what some FDA bureaucrats thinks...". I don't even know how to respond to such nonsense...
What happens when the hair salon owner, free from the "government regulation yoke", does not sterilize his/her tools and gives you hepatitis or HIV?
Or what happens when the pharmaceutical industry, free from the FDA bureaucracy, pushes some drug on the market with the incentive of short term financial gains and that very same drug later turns out to give you cancer?
The Ayn Rand Center!...What planet are these people from?....

May. 03 2011 03:48 PM
Emma from Brooklyn

I attended last night's debate and was extremely disappointed. The participants didn't even debate the question -- both took it as a given that capitalism is the only viable option, debating instead familiar questions about whether and how much government should be involved in health care, schools, etc. Neither addressed the question of whether capitalism is sustainable for our environment. No one discussed whether growth is, in itself, a positive thing. The participants used terms like "standard of living" and "happiness" without really discussing what those terms meant. The Randian seemed to take it as a given that all hard work that earns that particular individual money is good for society, because it's producing a good or service that we need -- a position that seems indefensible in the wake of the financial crisis where we saw how Wall St. was lining its pockets by creating worse-than-worthless exotic financial instruments. I personally am not sure where I stand on capitalism v. its most obvious alternative, socialism. But in an era where the center seems to have moved so far to the right that even self-identified liberals don't often question the inevitability of capitalism, I was looking forward to a debate that would challenge that mindset. I was very disappointed and emerged feeling even more pessimistic about our future.

May. 03 2011 12:03 PM

I read two sentences in and came across a completely false statement. " the government interferes with more and more of our decisions, and takes away more and more of our wealth." But if you compare the current situation to say 1970,most industries have less regulation, and tax burdens (on the wealthy especially) are lower. Not to mention the absurdity of calling any government action whatsoever "socialism" which dilutes the term to the point of meaninglessness.

May. 03 2011 01:11 AM
Sinchy from Manhattan

@Ervin Hill

Yes, the government failed to do it's job and actually rewarded some of the corporate crooks. But the fact remains that regulation was necessary, and it seems that Rand followers dispute this. The fact that government had regulations is not what caused the financial meltdown. What caused the meltdown is that the government became overrun with people who share your views and they embarked on a campaign of slashing common sense regulations and gutted the regulatory agencies. And lest you think I'm a political partisan, this is a problem in both the Dem and Rep parties. It is a pathology of blind faith in capitalism, either that or it is a criminal enterprise hiding under cover of an ideology. Please, give this interview with William K. Black a listen:

In it he explains how the Randian notion of capitalism is purely magical thinking. In fact, some of the leading proponents of this mode of economic thought actually said that we don't need any laws against fraud! Well that is just nonsense.
So how can a system be moral if it incentivizes greed and needs strong laws and regulations, from government, to prevent it from destroying lives and wealth? It isn't necessarily evil either, in that given sound rules it can create great wealth and advancement. No it is amoral, it has no morals. It can only be moral if it is regulated.

May. 02 2011 11:23 AM

The real question is can we survive capitalism at its late state of rent seeking and anti-competition? That is the real question. And is all the death and destruction that comes with that moral?

May. 02 2011 10:05 AM
Ervin Hill from Boise, ID

What amazes me with Mr. Callahan and about half of the posts in the comments is the confusion between freedom and being happy. Freedom guarantees the individual the right to pursue happiness, however they define it, not to be happy.
As for the housing bubble, there is plenty of blame to go around. The FBI (a government agency) reported that there appeared to be serious fraud in the derivative markets and the SEC (another government agency) refused to act upon it. When things came crashing down, the government bailed out the perpetrators of the fraud under the guise of "too big to fail". This sends a very clear message to the perps, as long as you commit fraud from the confines of a large company, the government will cover your risks.
In Atlas Shrugged (the book), there is a scene where a couple of main characters are searching for an individual who purchased a factory, they ask if he ever made money with the factory and the reply that they get is "he was never interested in making money, only getting money".
This is the differentiator between a true capitalist and a parasite claiming to be a capitalist. There are plenty of parasites in the system today across all income brackets. The government has set up multiple protective systems for these parasites since they are dependent on the power wielded by the government functionaries.
Government regulation, in large part, is promulgated by influential corporations to raise the barrier of entry for others. It is intended to protect the status quo rather than to protect the individual.
For those that think that this is just a "Randian" position, try doing some reading. I would recommend Hayek, Mises, W.G. Sumner, H. Spencer, Bastiat, Lysander Spooner, Adam Smith, Cicero, and Aristotle. Ayn Rand spelled it out quite elegantly, but so did the others mentioned above.

May. 02 2011 07:56 AM
Sinchy from Manhattan

@ Michael Caution
"If you judge his arguments to be wrong find another economist."

It's that exact mentality that led ratings agencies to compete for who could give the highest ratings to crap derivatives. You rate my product C, well I don't like your economic analysis so I'll pay your competitor more to give me a AA.
It is precisely that amoral attitude you espouse that has dragged America down.
Clearly capitalism is amoral.
Furthermore, how is a system moral when it's top players, like Goldman Sachs, can, for no other reason than greed, cause the rise in food prices which is so devastating to the well being of billions of people?

Apr. 30 2011 02:46 AM
Sinchy from Manhattan

@Michael Caution

Well if you don't like laws that prohibit fraud then you have no right to argue about morality. I don't see how you have addressed the fact that you are willing to believe what businessmen say even if they are wrong. That just makes you a dupe.

Apr. 30 2011 02:34 AM
Michael Caution from Columbus, OH

I don't find my comment controversial as you portray it. When obtaining information on a certain subject it is normal to seek out those who actually know about the subject matter first hand, in this case economists or businessmen. And only then go to other sources if need be. I don't disregard testimony out of hand if it comes from other sources. It's that they are not primary and the further away you get from specialized field the less reliable that testimony may turn out to be. That's why I say regardless of the merits of an economists arguments on a certain topic, I'm going to listen to him first before outside sources like the FBI. If you judge his arguments to be wrong find another economist.

Last I checked the FBI was a law enforcement agency whose actions and viewpoints depend upon the current standing of the law which may change from time to time and which is not always guaranteed to be good law.

Apr. 29 2011 10:18 PM

I agree with Mr. Allison. If you believe in living by moral principles then it can never be right to take someone's property against his will for another's use. When that line is crossed the government becomes a rights violator rather than its protector, and the end of that road is totalitarian dictatorship of whichever style: socialism, communism, fascism, and today, Islamic theocracy under Sharia law.

Apr. 29 2011 09:14 PM
Sinchy from Manhattan

@ Michael Caution

"Also, I'm going to take an economist/businessman's word before I consult the FBI on the causes of the financial meltdown regardless of whether they're right or not."
Wow, I missed he "whether they're right or not" part of your response. I'll give you a chance to take that part back, but if you don't it's pretty self evident that you are totally ideologically driven and a sycophant.

Apr. 29 2011 05:16 PM
Sinchy from Manhattab

Your simple example is meaningless when you factor inflation into the mix and besides we are talking about percentages of the wealth.

Apr. 29 2011 05:12 PM
Sinchy from Manhattan

@Michael Caution

You seriously disregard the findings of FBI investigators in deference to the ideological musings of a businessman / economist? As if economists can never be wrong. Greenspan himself conceded his errors on regulation. How can you blindly defer to the wisdom of businessmen when they were the ones who got us into this mess in the first place.
Furthermore Bill K. Black is an economist and lawyer so you may want to give him a listen.

Apr. 29 2011 05:10 PM

@Eric from Brooklyn

Let's say that you own 1 dollar, and a buddy of yours owns 99 dollars. You and him work together on a business venture. He's the brains of the operation, and you're not very smart, so you're just the brawn.

With his brains and your nearly mindless labor, you two make about a thousand dollars. He keeps $990 of it and you keep $10 of it. He now has $1089 and you now have $11.

At the beginning, he had 99% of the wealth and you had 1% of the wealth. You still only have 1% of the wealth, yet you have 10x more money than you had before.

Now let's say he only gave you $5 instead of $10. So he has $1094 and you have $6. Before, he had 99% of the wealth and you had 1%. Now, he has about 99.45 (repeating) %. And you have .54 (repeating) % of the wealth. The gulf between the rich and the poor has grown. In terms of percentages, the rich has grown richer and the poor has grown poorer. But in reality, you still have 6x more money than you had before.

"The rich get richer and the poor get poorer" is a fallacy. When the rich get richer, the poor get richer too, in a free society. The poorest people in our country are, for example, much better off than the middle class in North Korea.

Apr. 29 2011 03:19 AM
Michael Caution from Columbus, OH

Regarding the Gilded Age check your history and don't rely on colloquial presuppositions, i.e., don't listen to soundbites. History shows the titans on industry to be the greatest benefactors of mankind. Their productivity is what enabled the US to drag itself out of a menial agrarian existence. People flocked to the cities b/c working conditions were better than starving on the farm working sun up, sun down.

Apr. 29 2011 12:40 AM
Michael Caution from Columbus, OH

The underlying premise of your comment assumes a zero-sum game. However, this is patently false, an old economic fallacy. One person's wealth is not a threat to another person's livelihood. I say good for those top 1%. There is no static quantity of wealth that they are hoarding at my expense. Wealth is created by the reasoning mind applied to man's practical survival.

Capitalism doesn't become rational b/c of some form of deterministic reading of history. Capitalism is always the rational choice and will always be needed b/c it adheres to the facts of reality and the facts of man's nature.

Your pure marxist propaganda is disturbing. Are we supposed to take those old arguments seriously? Your concrete-bound analysis of "production" and "exploitation" have been blown out of the water. Read Atlas Shrugged for a detailed exposition of Marx's ideas in action.

You're talking about a mixed-economy whereas Allison is talking laissez-faire. Market distortions caused by gov't help create the possibilities of the corporate criminals you mention. You can't stop ppl from being irrational but a free system would strengthen the banking system and have objectively defined laws to mitigate risks. Also, I'm going to take an economist/businessman's word before I consult the FBI on the causes of the financial meltdown regardless of whether they're right or not.

US markets are no threat to other countries. The only caveat to that is that the market must be free for it to be true. There needs to be a complete separation of economics and state just like church and state and for the same reason. Our present economy is a mixed-economy. Which means that the US can manipulate trade w/ other countries through tariffs just to name one.

Apr. 29 2011 12:33 AM

@nolan from NYC, in reference to the Marxism.

Who do you think created/earned the means of production?

A factory is not a natural resource. Factories are owned by whoever paid for them to be built. When you work at a factory and create products, you're doing it on a voluntary agreement that your employer is allowing you on his property, and letting you use his property to create a product that he keeps as his property, in exchange for paying you for your labor.

If you want "the little people" to own the means of production, all you have to do is get together a bunch of working-class people, have everyone pool their resources, and buy a factory, pay to have one constructed, or build one yourselves. Then manage it.

But you don't get to redistribute what isn't yours in the first place.

Apr. 29 2011 12:26 AM
Brianna from Champaign, IL

"How is it that a home health care worker, who provides essential care to the elderly and disabled (often to allow thier family members to go to work and be productive members of society instead of unpaid caretakers) can make poverty level wages for backbreaking, socially essential labor if we live in the world he describes where people are compensated according to the value of thier work."

By saying that in capitalism, people earn what they deserve, Allison isn't saying that they earn what they deserve according to how we feel about the profession (i.e. it's supposed nobility). He's saying we earn what it is worth to others. That depends on such factors as 1) how many people can do it, 2) how demanding it is and 3) how much wealth or value it brings into society. The CEO of a major company makes millions because he provides very rare and demanding services that benefit millions of people. Someone who provides essential care to the elderly might be a great person, but they do not make much money because many people can do it, because they do not actually benefit very many people, and because the skills are not that hard to learn.

That doesn't mean there aren't exceptions. Actors make millions, the guy who invented the polio vaccine never goes above upper-middle class, and criminals are real. But laissez-faire capitalism is the closest thing to a perfectly fair system that has been found to date, and it is certainly fairer than a mixed or socialist economy where the politicians, crony capitalists, and crooks make off with the goods through government subsidies and other underhanded shenanigans.

Apr. 28 2011 11:06 PM
jideofor chukwuagozie from nigeria

the guidelines seems complicating, some of the principles looks like method as if information is magical. is the first principle a method?

Apr. 28 2011 07:18 PM
geTaylor from Bklyn.,NY

Trickling Down!

Apr. 28 2011 05:55 PM

An United States’ world-dominated capitalist economy is not good for emerging democracies around the world. The real issue as Noam Chomsky points out in his “Hegemony or Survival” is to question the morality of America’s quest for global dominance. Any ideology such as Capitalism which prevents empathy and compassion in fact is devoid of human intelligence.

Apr. 28 2011 01:46 PM
Sinchy from Manhattan

And surely no one was misleading anyone about the housing bubble:

Apr. 28 2011 01:33 PM
Sinchy from Manhattan

This straight from the FBI website:

"Based on existing investigations and mortgage fraud reporting, 80 percent of all reported fraud losses involve collaboration or collusion by industry insiders."

Look it up Allison.

Apr. 28 2011 12:32 PM

An United States’ world-dominated capitalist economy is not good for emerging democracies around the world. The real issue as Noam Chomsky points out in his “Hegemony or Survival” is to question the morality of America’s quest for global dominance.

Apr. 28 2011 12:22 PM
Sinchy from Manhattan

Mr. Allison's essay is full of platitudes and some outright lies that in my opinion really undermine anything he has to say about the morality of capitalism, because if one has to lie to make his argument then we can't really trust his opinion. The lie I refer to is "(e.g., the Federal Reserve and Freddie and Fannie’s affordable housing policy that created the financial crisis)." This typical Republican/Randian excuse has been so thoroughly debunked that any informed reader should have a LOL moment. In fact the FBI in 2004 warned that "rampant fraud in the mortgage industry has increased so sharply that the FBI warned Friday of an "epidemic" of financial crimes which, if not curtailed, could become "the next S&L crisis." Despite this, people like Mr. Allison and the free market robots would rather blame those who got in over their heads, yes foolishly, than the people who were orchestrating this crime of the century. Listen to any interview with William K. Black, a former bank regulator, to break this down.
Mr. Allison says that capitalism regulates itself by punishing bad actors by hurting their reputations.
Well that is true to an extent, but how did that work out for all the corporate criminals who walked away with HUNDREDS of MILLIONS after destroying the wealth of millions of ordinary people. What do they care about their reputations when they and their families are set for generations with their stolen loot.
I don't want capitalism to be curtailed when it comes to new products and innovations but it is blind ideology to think that unrestricted capitalism
can work for society as a whole in certain sectors such as the financial industry. History has proven that over and over again.

Apr. 28 2011 12:21 PM
Nolan from NYC


" logical argument as to why it is a universal human value to 'care for others.'"

By this logic we have to question real 'first principals' -- Values such as 'Freedom' and 'Private Property' among them. If you're going to call one into question, why not the rest?

Why should we believe that caring for a stranger as you care for one's self is any less legitimate than its opposite. This is a question of ideology, not of logic.

Apr. 28 2011 11:58 AM
nolan from NYC

@Michael Caution@Ray

"It is Right for a man to keep and dispose of that which he creates and produces."

This is a point at which you can see that a deep flaw in Rand's logic was not seeing how much she was arguing from a misunderstanding of Karl Marx. In Capitalism *no one* keeps and uses what they produce. That's what Marx meant by "workers controlling the means of production." Capitalism is a system of appropriation of property and value by Capitalists and exploitation of the means of production (including workers) by those who DON'T do the producing.

@ Amaroq

The desire to focus on rational agency is a response to this misunderstanding. It doesn't matter if people act rationally towards their own self interest. Capitalism is now the matrix within which those rational decisions are made, and that system has a means of directing those interests. It's called 'Class.' Even in the Randian ideal, there are classes which have competing interests, all of which are morally justifiable. The incompatability (contradiction) of those competing interests is called Class Conflict.

Apr. 28 2011 11:40 AM
Louis Guida from NYC

I understand Mr. Alison probably genuinely believes what he just said about people being rewarded according to the value of thier contributions in a capitalist society, but this is where he displays the extent to which his ideology overpowers his logic.

How is it that a home health care worker, who provides essential care to the elderly and disabled (often to allow thier family members to go to work and be productive members of society instead of unpaid caretakers) can make poverty level wages for backbreaking, socially essential labor if we live in the world he describes where people are compensated according to the value of thier work. It is an outrageous and highly insulting statement. You can say the same of child care workers, domestic workers, service workers and all of the other low wage workers who do everything that the "producers" depend on to live thier lives, do thier work, and enjoy thier standard of living (and often do so for far less than what they need to have a decent quality of life themselves).

At the same time, a CEO who offshores jobs, evades taxes, exploits workers, rips off consumers and pollutes the environment can be rewarded with millions in salary and stock options? We've just watched as the very same people who presided over one of the greatest economic collaspes in world history have reaped trillions in salaries, bonuses, profits, tax benefits and countless other rewards that seem highly questionable - especially given thier abysmal stewardship of our economy.

Seems to me, the facts are just not in favor of the Randian worldview and that objectivism is just a cultish, pseudo-scientific way of rationalizing greed, selfishness and contempt for those less fortunate.

Apr. 28 2011 11:17 AM
Eric from Brooklyn

In 2006, according to the report, published by the World Institute for Development Economics Research (WIDER) and based on data from 2000, the top one percent of the world’s adult population (about 37 million people) owns 40 percent of the world’s wealth, while the top two percent owns over half and the top 10 percent owns 85 percent. Wealth is defined as physical and financial assets minus liabilities.
In contrast, the bottom 50% --half of the world’s adult population-- owns collectively only one percent of the world’s assets.
Based on the facts on the ground, where market capitalism is the dominant economic system globally, and more than 3 thousand million people live on $1-2 a day, the system is clearly not working for most of the people and thus is indefensibly immoral.

Gandhi said it all, "Earth provides enough to satisfy every man's need, but not every man's greed.”

May I suggest that Brian come to the debate w some actual statistics.

Apr. 28 2011 11:13 AM
E.P. from NY

Your website needs attention. It is difficult to find the link to this event. I do not find a page saying what time the event is. The RSVP link forward to a page of "Demos" which lists the event as occurring on a date other than May 2. I wanted to invite friends via Facebook. Because of the scattered and conficting information I will not.

Apr. 28 2011 10:56 AM
Theresa from Brooklyn

Having a Randian on one side of this debate is ridiculous and makes a mockery of the subject. He says right out that he wants a return to a Gilded Age regulatory system (which is to say none). People who want completely unfettered markets need to look at the standard of living in such kleptocracies and failing states as Congo.

Apr. 28 2011 10:53 AM
brn442 from Brooklyn

Capitalism is rational, and it is rational because it is necessary at this stage of human history.

Apr. 28 2011 10:48 AM
Michael Caution from Columbus, OH

"Taking money rightfully earned and giving it to amoral"? Amoral as in not within the realm of morality? Or do you mean anti-moral, i.e., immoral? If the money is by right mine, as you state, then it would be wrong to steal it and therefore immoral.

Apr. 27 2011 11:03 PM
Let's Think Clearly

Ray said, "How is private ownership an issue of morals? The same can be asked of public ownership. How does the topic of morality factor into this equation at all?"

Some systems promote and institutionalize immoral behaviors. An obvious example is a system of slavery. Most of us would agree that slavery is an immoral system because it makes some people the property of others.

We could discuss the moral status of feudalism and a caste system along the same lines.

The question being discussed here is whether aspects of capitalism systematically violate morality, or whether the system is one that aligns with and respects morality.

Proponents say that capitalism rewards morality and punishes immorality.

Opponents claim that capitalism rewards immorality and stifles morality.

Apr. 27 2011 01:02 PM
pam from Portland OR

Taking money rightfully earned and giving it to others who are too to earn it, against the will of the earner, is amoral. Today America is turning into a complete amoral society.

In a complete capitalist society, the best motivation to feed yourself is to be hungry.

Apr. 27 2011 10:30 AM

(Continued from previous.)

That's what rights are. They're a moral concept. It is right for us to have our life. It is right for us to have liberty. It is right for us to own property (that we've earned). It is right for us to pursue happiness. To protect these rights means to protect those conditions in the face of others who you interact with. (And of course, these conditions must be upheld for every human, or what guarantee do you have that they will be upheld for you?)

Once you understand this, you can see that Capitalism is the only moral social system. Because it is the only social system that protects those conditions. Those inalienable, righteous rights. It is the only system that is -right-.

Apr. 27 2011 06:17 AM

Capitalism is the only moral social system possible to mankind. And by capitalism, I mean laissez-faire. Not the mixed economy we have now.

As you can already tell (probably) by the above paragraph, I'm an Objectivist.

If it is right for me to live (I believe it is), then it is right for me to pursue my own happiness, my own rational self-interest. Then there's certain external conditions that I need in order to do so.

Man's mind is his primary tool of survival. Even if I don't think about how things work, my survival is still made possible by human thinking. Everything man-made around me took some process of thought by someone to make possible. Yet even though the thoughts of others have made so much possible, I still have to think for myself in order to make use of these things. So in order to survive, and thrive, I must be able to think, and I must be able to act on my judgment. The more I do so, the more I can thrive. That's the first condition: We need to be able to act on our judgment in order to thrive.

But what if I think and act on my judgment, and by doing so, I create/earn the things I need/want? If I don't get to keep and use those things, then what good is it? That's the second condition: the ability to keep what we earn/create and use it to our own benefit.

But just the ability to think, act, keep, and use isn't quite enough. (Though the ability to keep and use is a very important one.) There's one more condition. The ability to decide what we want and to act to gain it. If you have the ability to act on your judgment, and you have the ability to keep what you create or earn, yet you aren't able to plan what you want to act to gain/use, then what good is it? That's the third condition: We need the ability to set goals and act toward them, to pursue values.

You can conclude these requirements of human life by examining the nature of human beings. And the founding fathers of this country actually had the right idea. They, perhaps implicitly, saw that the afore-mentioned conditions were right. They had a word for the first condition: liberty. They had a word for the second condition: property. They had a phrase for the third condition: the pursuit of happiness. All requirements of life.

When I say that we, as humans, need these rights, it's the same kind of statement as "That plant needs water and sunlight." It's a generalization about a being's needs based on an understanding of the nature of this particular being (man) that we're talking about. And if it is right to live, then it is right to have these conditions protected.

On a desert island, you don't have to worry about protecting these conditions. They're already there, in the absence of anyone who might interfere with them. But in a society, you need these conditions guaranteed against people who might want to violate them.


Apr. 27 2011 06:17 AM
Brianna Aubin from Champaign IL

"Thirty years ago, in his classic book, The Cultural Contradictions of Capitalism, Daniel Bell argued that modern capitalism, and the consumer culture that went with it, elevated the pursuit of short-term gain and pleasure over the more traditional values of self-restraint and obligation toward others."

That's funny. I would actually hold the modern welfare state far more responsible for this than laissez-faire capitalism. After all, why worry about retirement if you've got social security? Why worry about putting aside money for the medical bills if you've got medicare? Why worry about having another child if you know that the state will feel sorry for that child and give you money on the premise of not punishing the child for the sins of the parents?

When you are responsible for your own life, you behave accordingly or you pay the price; when you are allowed to foist off that responsibility onto the State, you have no reason to bother trying.

Apr. 26 2011 09:57 PM
Michael Caution from Columbus, OH

If a person wishes to live they need to produce in order to maintain their very existence. The right to property is a fundamental aspect of the right to life. Without being able to keep the material means needed to maintain our lives we would die. As Rand said without property rights no other rights are possible. It is Right for a man to keep and dispose of that which he creates and produces, that is it is moral for a man to own property. Otherwise he would be a slave dependent upon some dictator or would be left to die.

Apr. 26 2011 08:59 PM
Daryl Sroufe from NV

The solution, Mr. Callahan, is not more government regulation of businesses and individuals. The problem is that we don't adequately punish those who cheat the capitalist system. When people think they can "get away with it," whether by hoping they won't get caught or, even worse, manipulating the regulations to their advantage, only bad things can happen. Rational people realize that cheating is not productive. Let the courts adequately punish the cheaters.

Apr. 26 2011 08:05 PM

How is private ownership an issue of morals? The same can be asked of public ownership. How does the topic of morality factor into this equation at all?

Apr. 26 2011 07:21 PM
Michael Caution from Columbus, OH

To say that people are too stupid for freedom and therefore must be compelled to obey is an insult as well as contradictory. Who is to set up the edicts by which the slaves are to obey? Aren't these people just "idiots" like everyone else? By what standard do they claim supremacy? We are free by Right and the "idiots" will be dealt with by the police and court system is they break the law.

What is to keep a free society free? What is to stop it from devolving into lawlessness or dictatorship? Nothing except constant vigilance on behalf of a self-interested free peoples. There is no higher authority above the gov't which would protect a free society. Ben Franklin said after being asked what the American Revolution created, "A Republic, if you can keep it." How apt this is. Rights are secured by keeping a constant watch for any encroachment against them. You don't just rest on your laurels.

Contrary to some Capitalism isn't immoral it's not even amoral it's the *only moral* socio-economic system. It's moral b/c it protects individual rights as required by the nature of man qua rational animal. Of course the demonstration of this is the whole point of this last debate. But I'm sure John Allison won't be able to cover everything. Try watching Eric Daniels lecture, "The Morality of Capitalism"

Apr. 26 2011 03:35 PM

Isn't its amorality the exquisite beauty of Capitalism?

And isn't its amorality the genetic link it shares with its political sibling, the one that bore naziism, the invention of palestinian suicide bombers and the kkk -- democracy?

Apr. 26 2011 03:07 PM
richtfan from georgia

Mr. Callahan,

Basically, you have to decide whether or not real capitalism is what you want because you can't have a partial capitalism like we have in today's society. You mention that you believe that there is an "amoral logic of self interest". That is patently ridiculous. You are confusing self-interest with selfishness. By your standards, attempting to get a better job in your own self interest is amoral. Trying to make more money so that your family can afford some nicer things such as a home or an education or a vacation property or whatever---all of these things are out of self interest, and none of them is amoral. In fact, I would argue vehemently that trying to steal from productive citizens, through taxation, to give to those unproductive ones is truly amoral. It's been said that "a man shouldn't eat if he won't work". There is nothing more telling in our society than this. We have largely become a society where work, really hard work, is not lifted up and promoted. Rather, the lack of hard work is excused away with all types of victimhood and bogus reasons why this or that person can't get a job. Do you not think that a businessman who grows his business and makes significant profits and employs lots of people is doing more for society than someone who doesn't do that? What is wrong with profit? Profit does great things in our society, or at least it used to. And that pursuit of profit helps provide for lots and lots of other people. This is the effect of trickle down economics, which, by the way, works very well every time it's tried. You claim that "There are many other examples of how unrestrained market forces have come to undermine values that nearly all humans care about. You can see this damage in the environment, in our popular culture, and in family life, to name just three areas." Do you remember in our history that William Bradford tried the communistic approach and all that it did is tick off the productive in society? They didn't or wouldn't work for what they got and weren't motivated to do anything. You and the left claim to want to help "the environment" and all, but what you appear to want is for people to be forced to do things your way because your way, you believe, is morally superior to theirs. What a load of garbage. The society that we need desperately to return to is one where our efforts as individuals are evaluated on their own merits, where we have a truly uninhibited chance to do our best and see how far that takes us. We need to get away from a mentality of "forced association" and "forced giving" to the underprivileged in our society. Why? This is what freedom-loving people believe. Do I want to do for those in our society who have the least? Absolutely I do. But I want to do it on my own terms, a truly voluntary act. When the single mother with 6 kids on welfare gets pregnant yet again, she appears to be looking for another government check at my expense.

Apr. 26 2011 03:03 PM
Let's Think Clearly

Freddy says: "...what's to keep the organization ethical upon reaching the top?"

Being ethical is a matter of choice; no political or economic system can or should keep people from being immoral.

But a system can make it so people who are immoral suffer the consequences--and so that people who are moral cannot be prevented from competing against

A system that does this is a system that has no favors to grant anyone--a system that has no political power to offer anyone. A system that gives people the right to produce whatever they can, but not political power of any kind to get any sort of favors above others or to interfere with anyone else.

This is the system of capitalism: a system that prevents those who choose to be immoral from interfering from those who choose to be moral. And with no protection against the consequences of their irrational behavior, those who are immoral suffer.

This is far too short a space to be convincing about any of this, but please think clearly about the nature of power that is required to have the "pull" to pull-off immoral behavior. Consider whether it is the weakness of the policy of government intervention that makes such "pull" possible, not that of property rights (capitalism).

Apr. 26 2011 02:29 PM
Jon Odsather of Alaska from Alaska

"The ability to fight another Day"
Self preservation/promotion is one of the highest measures of 'Morality' in capitalism. If a well meaning Altruist sacrifices their ability to be charitable by giving themselves entirely and can no longer be charitable another day. Then their Singular, Empirical Martyris act precludes them from ever doing their charitable act again. However, by Selflessly promoting self and allowing charitable contributions from ones excess wealth the selfish man is far more helpful to the community in the long run by giving a little bit at a time as he can afford. Altruistic judgments or flash in the pan Knee Jerk reactions make good sound bites but over the long haul they amount to 'BUTTKISS"

"No man or group of men have the right to tell any producer of what, or to where he should Avail his Profits!"

Apr. 26 2011 02:12 PM
Freddy from Honolulu, HI

Where I run into problems on the question of capitalistic morality is the with the old axiom, "Power corrupts, absolute power corrupts absolutely."

While I embrace the idea that ethics play a vital roll in the growth and success of a productive enterprise, and thus by Darwinian processes only the ethical can reach the top, what's to keep the organization ethical upon reaching the top? More risky than that, what's to keep a corporation ethical once its own creator passes the reigns to his successor or a board of directors - those who did not run the gauntlet themselves?

Another temptation I question - upon attaining success, what moral flexibility would an otherwise ethical entrepreneur endure if faced by an eminent calamity that could only be averted by bending his own code? Having the power, the influence - indeed, the "pull" - to save his creation, would he resist the urge to do so?

Thus, the place of state in policing the activities of the free market is justified and appropriate - and that line is forever blurred. It both salves one problem (necessary policing), while leaving the entire system vulnerable to the temptation of corruption in reverse (political philandering).

I believe we find ourselves in the predicament we are today - over involvement of the government in the free market - strictly because of this weakness in the ideal of pure capitalism. In some ways, capitalism can be said to be even more dependent on the goodness/morality of the people involved than socialism.


Apr. 26 2011 01:56 PM
Let's Think Clearly

David Callahan says: "Examples of the moral downsides of capitalism are everywhere around us," and he then states a list of immoral behaviors that he's observed.

His thesis is that an economic system based on private ownership of capital (capitalism) is the reason people act immorally. If only we had less private ownership and more regulations, people would not value cheating and immoral behavior.

The only evidence that he provides that a system of private property leads people to value and pursue immoral behavior is that he sees these behaviors happening today.

However, since we live in mixed economy of some private ownership rights and all kinds of controls and regulations, pointing out the fact that something is happening today does not prove--or even suggest--whether this was a result of capitalist elements in the economic system, a result of socialist elements, or whether it was behavior that happened for reasons completely independent of the economic system.

Callahan's reasoning is messy and vague. The only way a reader can agree with any of his conclusions--or even make any sense of them--is to begin in agreement, since Callahan offers nothing but vague assertions of connections among messy, undefined concepts.

Who is this supposed to convince of anything?

Apr. 26 2011 01:50 PM

However wonderful and Utopian sounding capitalism is, I really just wonder how the majority of the population would take this freedom. Do we have enough intellectual people to overpower the idiocy that could easily arise from today's population? Or are we building a skyscraper on a sandy foundation?

Apr. 26 2011 01:46 PM
Park from New Jersey

The cause of most of these problems that Callahan has mention seem to really be the result of the inappropriate use of government power. The government should be there to make sure that business takes place without the cheating and scamming we experience. The reason for tax evasion is the existence of the taxes (taking of private property). When a transaction takes place (e.g. stock trade), the government may verify the authenticity and appropriate terms of the transaction are adhered to. The buyers and sellers pay a small fee for this service and feel more secure that capitalism operates "fairly." Unfortunately, the politicians see the power and money and get in bed with the businesses (money) to pay for a reelection. Amply funded, the senators manipulate public opinion to hold on to power. This was not so much of a problem when senators were appointed by the state legislatures rather than buying elections with funding from corporate lobbyists.

The morality of capitalism and free markets is based on production and efficiency being rewarded by satisfied, paying customers. Immorality occurs when the process is polluted by the human hunger for unearned power (politicians).

Apr. 26 2011 12:46 PM

I'm happy to see that Mr. Callahan has exposed quite clearly that he is a collectivist.

Also, he has misidentified the cause of the moral crisis in society: it is not capitalism that has harbored short-term thinking. Free-market Capitalism (and I find it amusing and ridiculous that he would say that we have been "deregulating" the economy) supports long-term thinking as one stands and falls by his own ability to think in the long-term. He doesn't have his neighbors dollars, or a government bailout, to fall back on.

This Demos debater advocates that "we need to get the balance right: We don’t want so much government as to significantly undermine wealth creation or individual initiative."

Not significantly, just *kind of*. The individual, to Mr. Callahan, apparently is only important insofar as he benefits others. Forget individual freedom, that is not a progressive enough idea for Demos, it is the "collective" decision that matters, and if the individual's freedom is sacrificed when the collective decides so, so be it. Does this implication not expose how immoral collectivism is?

He also makes claims that Capitalism doesn't support the "human values" of "caring for others;" although he provides no logical argument as to why it is a universal human value to "care for others." I am not implying that one should never seek value in friendships - but Callahan has made it obvious that he holds "others" to be not just those that you value, but strangers as well. He holds "others" to be the primary standard of value, regardless of who those "others" are or whether they are good or not. He made that explicit when he said that in a Capitalist society, "it is harder to see ourselves as citizens who share a common fate with total strangers, who think in terms of we, not me."

He apparently forgot to explain why individuals should hold a stranger's life to be more important than his own or his loved ones' lives (or even equally as important).

There is nothing inherent in Capitalism that prevents people from caring for one another based on shared values - but Capitalism certainly does not demand that you care for strangers because of some floating abstraction regarding your "duty" to them.

These recurring debates have made it clear that the First Principles being debated are Selfishness versus Otherism, and Individualism versus Collectivism.

Apr. 25 2011 10:14 PM
Michael Caution from Columbus, OH

David Callahan says:
"There is much in capitalism that brings out the moral best in people. And there is much that can bring out our immoral worst."

His very first statement already shows how wrong his approach is to the question. Is capitalism qua political system moral? This is a normative question and yet he's already focused on statistics saying things like, under capitalism "[people] tend to be..." as on an individual person by person basis. This is the wrong approach. Statistics can provide correlation but cannot demonstrate causation. Of course you won't be convinced that capitalism is moral if you only go by this. What is lacking is an ethical foundation.

Fundamentally on it's principles is capitalism moral? Properly understood as the only system that protects individual rights 100% you have to say yes.

Apr. 25 2011 06:09 AM

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