Moral foundations of capitalism: philosophical perspectives and analysis

Capitalism Is Moral

Questioning the Morality of Capitalism: Moral, Immoral, or Amoral?

"To trade by means of money is the code of the men of good will. Money rests on the axiom that every man is the owner of his mind and his effort. Money allows no power to prescribe the value of your effort except by the voluntary choice of the man who willing to trade you his effort in return. Money permits you to obtain for your goods and your labor that which they are worth to the men who buy them, but no more. Money permits no deals except to those to mutual benefit by the unforced judgment of the traders. Money demands of you the recognition that men must work for their own benefit, not for their own injury, for their gain, not their loss -- the recognition that they are not beasts of burden, born to carry the weight of your misery -- that you must offer them values, not wounds -- that the common bond among men is not the exchange of suffering, but the exchanges of goods. Money demands that you sell, not your weakness to men's stupidity, but your talent to their reason; it demands that you buy not the shoddiest they offer, but the best your money can find. And when live by trade -- with reason, not force, as their final arbiter -- it is the best product that wins, the best performance, then man of best judgment and highest ability -- and the degree of a man's productiveness is the degree of his reward. This is the code of existence whose tool and symbol is money. Is that what you consider evil?" (Rand, 1957)

Capitalism is an economic system that is responsible for a great deal of the industrialization in the 21st century world. With the downfall of feudalism came the epic rise of capitalism over the western world. Primary elements of capitalism include wage labor, competitive markets, the ownership and privatization of means of production, accumulating capital, and producing goods or services as means for income and/or profit. Capitalism may be referred to by several other names, some of which include a market economy, a self-regulating market, or a free market. These and other terms may be synonymous for capitalism. Over the centuries, there has been great protest and great support for capitalism and its effects. This paper will provide a comprehensive understanding of capitalism and question the morality of capitalism -- is capitalism amoral, immoral, moral, or something else altogether? The paper will endeavor to answer this question and justify a moral critique of capitalism.

Arguments:

"Money will not purchase happiness for the man who has no concept of what he wants; money will not give him a code of values, if he's evaded the knowledge of what to value, and it will not provide him with a purpose, if he's evaded the choice of what to seek. Money will not buy intelligence for the fool, or admission for the coward, or respect for the incompetent. The man who attempts to purchase the brains of his superiors to serve him, with his money replacing his judgment, ends up by becoming the victim of his inferiors. The men of intelligence desert him, but the cheats and the frauds come flocking to him, drawn by a law which he has not discovered: that no man may be smaller than his money. Is this the reason why you call it evil?" (Rand, 1957)

What is morality and what is its place in business practice? The focus of morality is upon people's actions, intentions, and decisions. Morality differentiation what, among those, are good and which are bad. Moral codes provide cultures and societies contexts within which to interpret and predictive characteristics and behaviors. Moral codes are systemic; they are systems of structured beliefs in service to instruct those who abide by the code the constitution for good life. Morality is related to values, which vary a great deal by culture and throughout human history. Lal describes how an economist would perceive the function of morality in business practices:

"From an economist's perspective morality is best looked upon as part of the institutional infrastructure of a society. This institutional infrastructure, broadly defined, consists of informal constraints like cultural norms (which encompass morality) and the more formal ones which are embodied in particular and more purposeful organizational structures." (Lal, 2002)

Lal is aware of the direct link between what the norms and values are in a culture and the culture's sense of morality. Therefore, morality is somewhat flexible, bending to a new shape that is appropriate for the times. Lal wonders if morality matters when it comes to economy: "Given the multiplicity of ethical traditions, does it matter for the economy if there is no common agreement about the content of morality, as long as each society has its own morality to constrain immoral behaviour?" (Lal, 2002) Amorality is indifferent to morality; it is neither moral, nor immoral. Amorality exists without awareness of moral standards or issues of right and wrong. What is immoral goes against what is accepted as moral. Thus, morality, like time, is relative. What is moral in one place is immoral in another. What is immoral in one time period becomes moral fifty years later. If the human sense of morality shifts, then it is possible capitalism at some point, in some part of the world was moral, amoral, and immoral. Lal questions humanity and morality as he asks the reader

"In the ensuing plethora of moral beliefs -- particularly in a cross-cultural context -- it is a brave soul who would be able to find any basis for a universal ethic. But if Reason or a universally acceptable God cannot provide us with a common basis for morality, and if -- as we have seen -- morality is needed to reduce the 'policing' type of transactions costs for economic efficiency, on what basis are we to found this morality?" (Lal, 2002)

If morality is a sort of shape-shifter, cannot we argue the morality for any economic system? Where can we seek answer? We can turn to economic systems such as capitalism to find a sense of morality. Younkins articulates how capitalism and morality are situated in a succinct description as follows:

"An economic system such as capitalism is a system of relationships and cannot be moral or immoral in the sense that an individual can be -- only persons are genuine moral agents. However, an economic system can be moral in its effects if it fosters the possibility of moral behavior among individuals who act within it. Since the formation of such a system is a human act, it follows that there is a moral imperative to create the kind of political and economic system that permits the greatest possibility for self-determination and moral agency." (Younkins, 2001)

Capitalism is moral because it has moral affects. Furthermore, capitalism is moral because it is a human construction; the morality of the author permeates throughout the construction. Capitalism is a system that fosters, requires, and perpetuates moral attitudes and behaviors.

Capitalism stimulates a sense of competition and stimulates a state of peace. Collaborative social interaction is a by-product of capitalism. Theorist and scholars across many schools and areas of thought argue that the effects of capitalism are evident I many aspects of the cultures that are capitalist. Capitalism is an economic system that organizes types of relationships and facilitates specific types of experiences for the participants. Therefore, it is apparent that capitalism affects the behaviors and emotions of participants. Fourcade and Healy write:

"Markets, then, not only produce economic harmony (the satisfaction of individuals' desires and needs), they also create social harmony. McCloskey (2006) is today perhaps the most prominent defender of the view that markets encourage not only public but also personal virtue. Like other virtue ethicists, she seeks to identify both the virtues that comprise good moral character and the individual habits and social institutions that cultivate such virtues in people. In broad outline, we may contrast this approach with the Kantian and consequentialist traditions, which offer competing theories for judging the morality of actions (whether through the application of deontological principles of moral duty or a utilitarian calculation of the good and bad consequences of one's choices). For McCloskey, markets nurture a long list of "bourgeois virtues," including integrity, honesty, trustworthiness, enterprise, respect, modesty, and responsibility. Commerce teaches ethics mainly through its communicative dimension, that is, by promoting conversation among equals and exchange between strangers." (Fourcade & Healy, 2007)

The capitalist market forces people to interact with others that they may never normally encounter. In order for a successful capitalist atmosphere, the participants in the transactions must get along and cooperate. In this way, readers may perceive capitalism a moral. Cooperation and trust is necessary for a society to run. Harmony brings ease into the world. When people conduct business harmoniously and cooperatively, all parties receive what they desire, which can bring upon a peaceful, satisfied feeling. These feelings are conducive to happiness and socially accepted, moral behaviors.

Because capitalism involves cooperation, capitalism furthermore involves socialization. Socialization is a key skill in human development and participation in capitalism can bolster healthy socialization practices and behavior. Certain patterns of experiences and behaviors emerge with extensive use of a capitalist system. Social relations are established and repeated. After long practice engaging with capitalism, a certain affect or sense for business may emerge. Capitalism can be on the side of the participant to nurture positive development and business skills. Fourcade & Healy continue:

"In practice, many exchanges defined as formally market-like fall somewhere on a continuum between the paradigmatic poles of direct bargaining and serial reciprocity. The pure, abstract, and anonymous common sense of the market situation is routinely transformed into an actual social relation as people seek to reduce the problems posed by information asymmetries and opportunism. Anthropologists studying local markets have long established that people overcome information problems in practice by personalizing exchange." (Fourcade & Healy, 2007)

Moral codes are developed and refined through several processes such as socialization. Younkins agrees:

"When commerce is conducted within a capitalistic society, virtue is promoted. The pursuit of profit reflects the presence of many of the virtues. The free market rewards polite, accommodating, tolerant, open, honest, realistic, trustworthy, discerning, creative, fair-dealing businessmen. In the long run, profitable businesses tend to be populated by good people (i.e., people of character), who, at a minimum, conduct business in accord with basic ethical principles calling for honesty, respect for persons and property, fidelity to commitments, justice, and fairness. At the very least, a businessman is required to refrain from any rights-infringing activity. He should be honest and just in his dealings with others." (Younkins, 2001)

Many of the most brutal and successful groups conducting organized crime abide by their own moral codes. Meaning, even criminals, to some degree, must exercise virtuous and honorable behaviors in order to be successful. In morality is a necessity in the criminal realm of capitalism, it is certainly evident and practiced in the legal realm. Even if a personal is heavily prejudiced, if this person wishes to maximize his/her success within a capitalist system, he/she must put aside or temporarily suppress at least some of his/her prejudices so as to conduct successful and profitable transactions through virtuous and honorable business practices and behaviors. By promoting healthy socialization practices, capitalism further demonstrates its moral quality.

How can one defend the position that capitalism is moral? Fourcade & Healy present the idea that capitalism enables happiness. Capitalism makes people happy. They explain:

"…free markets allow needs and desires to be satisfied and therefore help make people happy. Economists have found some empirical support for this assertion. Frey & Stutzer (2001), for instance, show that doing well in the market (in terms of income and employment) does make people happier (although not as much as the ability to participate meaningfully in the political process). A natural corollary is the idea that empowering markets empowers people. Market protection, whether by states or by producers eager to preserve their profit margin, is not only inefficient but antidemocratic as well. Fettering the market prevents people from choosing what they really want. Consumer sovereignty is thus political freedom in another guise." (Fourcade & Healy, 2007)

Capitalism mandates choice. For capitalism to work, the participants must have the right to choose and exercise this right abundantly. The concept of choice is central to many constructions for morality. Typically, moral codes are immoral if the participants do not have many or any choices. It is important for citizens to feel empowered. This helps people develop self-esteem on an individual level, and on a societal level, empowered citizens effectively organize and mobilize for action. Empowered citizens feel free and act accordingly. Citizens within capitalism have the freedom to choose, the freedom to exchange, and the freedom to create. Capitalism creates an atmosphere within which creativity is a natural occurrence as

"…markets make a staggering variety of work in art, literature, and music available to a wide variety of consumers cheaply. As a consequence, the market exchange of cultural goods (especially in large, globalizing markets) feeds back into the process of cultural production, encouraging the hybridization of genres and the emergence of new forms. In other words, whereas sociologists of culture have emphasized the proliferation of identities and the techniques by which consumption choices act as status differentiators (Bourdieu 1984, Bryson 1996), economists point out that it is the market." (Fourcade & Healy, 2007)

Capitalism keeps citizens and the market alert and innovative. There is no room for boredom in capitalism. If a product becomes boring, people move on and that product disappears. It may reappear in a modified and hopefully improved form, but if it lacks appeal, it is gone with the wind. Economists have located yet another space within culture that capitalism positively influences, and that is the diversity of products available as well as the creative ingenuity to come up with and execute ideas.

Capitalism, then, has the power to empower citizens subsequently making them more independent and self-reliant, while at the same time, because exchange is central to capitalism it additionally produces interdependence among participants. In the 21st century, this interdependence could be categorized as globalization. Capitalism, in a way, is a precursor or predictor of globalization and explains the diversity and expansion of access that consumers now have around the world. Fourcade and Healy contend that

"…freeing financial markets by opening borders, establishing strong standards of transparency and accountability, and even maintaining a social safety net so that powerful actors cannot exploit economic downturns to restrict competition. Writing for the developing world, they argue that access to finance will empower the poor, allow them to take advantage of opportunities, and thereby keep vested interests in check through the existence of countervailing political power. As for the rich, they will only stay rich if they are able to remain productive and prove their competence time and again." (Fourcade & Healy, 2007)

Capitalism frees people. Younkins agrees as he writes:

"Capitalism is a system in which individuals are free to decide which goals to pursue. Within a capitalist system, government's proper role is to enable people to pursue happiness. The pursuit of happiness may be viewed as voluntary, purposive action. Happiness is the positive, conscious, and emotional experience associated with the use of a person's individual human potentialities including one's talents, abilities, and virtues. Happiness cannot be given to people; it must be attained through one's own exertions. Dignity and self-esteem (including self-efficacy and self-respect) must be acquired through one's own efforts -- government cannot supply more than the prerequisite conditions." (Younkins, 2001)

Capitalism is a system in which the power of the society is dispersed between both the government and the citizens. Capitalism allows citizens to freely pursue happiness in various forms and conduct this pursuit in a manner that suits the individual citizen best.

Happiness comes from choice, variety, creativity of expression, and productivity. Capitalism is an environment in which all those aspects may flourish. Younkins explains the relationship among work, happiness, and capitalism:

"Work is integral to human flourishing and happiness. Each worker is a rational being who is naturally motivated to pursue his own happiness, able to discern opportunities and barriers to his happiness, and is cognizant that happiness is, for the most part, dependent upon his own efforts. There is an inextricable link between reason, self-interest, productive work, goal achievement, human flourishing, and happiness. Work is a concrete expression of rationality. Every productive human activity originates with mental effort and involves the translation of thought into a definite form. Every creative work and discovery contributes to human existence by increasing one's understanding of reality or by making human life longer, more secure, or more pleasurable." (Younkins, 2002)

Younkins' ideas support the widely known ideal of "the American dream" in that happiness comes to those who word hard and make it for themselves. This is a credo of capitalism; hard work pays off. Younkins above assertion also falls in line with trains of thought by Fourcade & Healy in regards to the positive affect on personality and behavior capitalism produces. Fourcade & Healy clearly implicate capitalism as factor contributing to the hybridization of techniques and commodities. This is the state of globalization in which the world occupies today. Because of various technologies including the Internet, consumers and producers have a great deal more variety of products, people, and processes of production than they ever had access to before, at least in recent history.

Capitalism allows for some power over production to out of the hands of the government, which dictates many of the numerous regulations of daily life and society. Within capitalism, "competitive economic arrangements are the best defense not only against arbitrary interference by the state, but also against the concentration of economic power in the hands of a few." (Fourcade & Healy, 2007) Capitalism acts as a safeguard protecting the people and the culture from economic overthrow by either the government or a group of private citizens.

Capitalism helps eradicate poverty, a condition from which billions of people on Earth suffer. The United States of America is often a country that is the stereotype for the efficacy of capitalism. Many people are aware of the phrase "the American dream." It is what draws many people to the United States. The American dream, in a phrase, is essentially the story of "rags to riches." A materially impoverished person comes to America with a dream, idea, and/or goal. With persistence and ingenuity, this person becomes a success and is no longer impoverished. In this example, capitalism facilitates the transition between poverty and material stability or comfort. Capitalism liberates people from terrible conditions and can contribute to an improved quality of life. Capitalism liberates people from a materially bereft life as well as spiritually or morally bereft life. Younkins declares:

"People can act morally or immorally in a capitalistic system just as they can in any other economic system. However, capitalism does possess a number of positive and morality-promoting characteristics that are absent or weak in other economic systems. Capitalism provides freedom of choice, fosters cooperation and mutual adjustment, respects the dignity and individuality of each person, provides accountability, limits and disperses." (Younkins, 2001)

Again, capitalism necessitates choice. Within any society or economic system, the citizens have the power to choose how they will behave. The citizens have the power to engage in or challenge codes of morality with their decisions, intentions, and actions. Capitalism simply provides a system within which the existence of choice exists; yet there is a predisposal to morally acceptable behavior.

The points above are not intended to lead the reader to believe that capitalism makes for a perfect society. There are numerous examples of capitalism at work where there is a distinct and noticeable lack of perfection. What the paper aims to do is make a moral argument for capitalism. Capitalism does not ensure a perfect society, yet capitalism can heavily contribute to a cultural atmosphere that is conducive to a general moral affect and characterization of the citizens and the culture. Younkins expounds: