Capitalism - Not a TOE

Capitalism is a certain arrangement of some (not all!) economic affairs. It is not a comprehensive system of human interaction. "The United States is a capitalist country" is correct (or used to be correct; thanks, Presidents Bush and Obama!) if it means that production and trade in the United States are organized on roughly capitalist lines. It is incorrect if it means that the citizens of the United States take the capitalist economic system to be a model for all theoretical and practical principles.

I blame Marx for the confusion. Seeing that capitalism was consistent with the "bourgeois" values of the middle class, especially in the Anglosphere, Marx assumed that the English and Americans modeled their ethics on capitalism, treating human interactions just like commodity trading. As always, Marx was too busy being clever to be correct. Capitalism was not the first principle, it was a subprinciple. It was useful for Englishmen to arrange their economic affairs a certain way because that way was consistent with their ethics (individualism, materialism, etc.). Among the Continentals who were not culturally predisposed to capitalism, those who adopted it in their economic lives prospered, and, as even Marx must have realized, the successful would survive and define future generations. The political unrest that plagued the Continent proves that Rousseau had more influence than Adam Smith across the Channel, a fact that should have pleased Marx but certainly did no good for the prospects of European peace.

Capitalism is a tool; the purpose has to exist beforehand, and the tool has to be fit for that purpose. Capitalism cannot make a people adopt an ethical viewpoint; if, however, a people's ethics values prosperity and material goods, then capitalism will allocate human and other resources in an efficient way for that people. Because capitalism substitutes market forces for central planning, a people with individualist politics will find it conducive to an enjoyable life free from undue interference. That's why capitalism seems to be such a dominant ideology - it gives some people what they wanted with minimal effort. It works. It can't fulfill every need, but it is designed to fulfill the material needs efficiently so that there is little waste; whatever else a person is disposed to seek, he can devote more resources to seek it under capitalism than under a more wasteful system. If he is a mere consumer, then capitalism will dominate his life - not because of capitalism, but because of his constitution. Marx essentially blamed a theory for the failings of individuals.

There is also some projecting evident in Marxism. Marxism is totalitarian. It imposes its principles on every aspect of life. If it accuses capitalism of doing the same (only in a different way), it just projects its humanity-crushing absolutism onto a rival ideology. The Marxist criticism of capitalism only makes sense if capitalism is totalitarian as well - but then, the choice is between rival totalitarian ideologies, and the sensible person would choose neither.

In short, capitalism is not ethics. Randians and Marxists seem to believe otherwise (a rare point of agreement?); they are wrong. Don't be like them.