Capitalism, Liberty, and the Greatest Gifts

F. A. Hayek once observed that while you can have capitalism without liberty, you cannot have liberty without capitalism. The moral foundations for both are remarkably similar: rule of law, enforceable contracts, the sanctity of private property, and the core virtues of justice, charity, prudence, and courage. For centuries, some have said that liberty and free will are God’s second greatest gift to humanity—Jesus being the first—and that capitalism is mankind’s greatest gift to itself.

Over the past two centuries, capitalism has lifted billions from the yoke of grinding poverty. In 1800, indoor plumbing was a royal privilege, reserved for the King of England and his court—today, it is ubiquitous, enjoyed even by society’s least advantaged members. The principles of “liberty” and “justice for all,” immortalized in America’s founding documents, set the precedent for the abolition of slavery in just eighty-seven years, ending an institution that had defined the previous twelve thousand years of human civilization. For most of history, every political and economic system embraced slavery, indentured servitude, and political bondage as the norm.

Recently, my child argued that modern business competition is “rigged,” citing monopolies as evidence against free markets and in favor of democratic socialism. But nothing is more rigged than a socialist economy, where the state controls production. In totalitarian socialist societies, the state exists to serve the political class, not the common good, resulting in endemic corruption and collusion between politicians and special interests.

Primitive agrarian societies often embraced communal ownership, lacking any concept of private property. With the growth of commerce and trade, the division of labor evolved, ushering in feudalism, where property rights were restricted to the royal and ecclesiastical classes. Mercantilism then emerged, fusing government with wealthy merchants to advance “national” interests. Each stage was a step on the road to true economic liberty.

Economics, at its core, studies the allocation of scarce resources with competing uses. Capitalism developed because society came to recognize that common people—farmers, laborers, tradesmen—are not merely cogs in the machine, but the ultimate source of production and demand. While there were struggles between labor and capital, the everyday person’s quality of life—especially for those of limited means—has reached heights previously unheard of in world history.

True liberty means being guided by your own choices and values, a direct extension of the free will granted by God. Systems that substitute groupthink or command-and-control decision making inevitably reflect the imperfect passions of intellectual elites. These misguided emotions continue to influence political discourse, fueling distrust of capitalism and romanticizing the false promises of “democratic socialism.” Historical attempts to centrally manipulate the economy—whether technocratic or ideological—inevitably collapse under their own contradictions, as we have seen from the failures of the Affordable Care Act to the repeated downfall of centrally planned economies.

The institution of private property and the pursuit of self-interest—rightly understood as distinct from selfishness—were never about imposing the will of the elite on the dispossessed. Rather, they allow decisions about production and allocation to be made by many, each with a general understanding of societal needs and specialized knowledge about their own circumstances. This decentralized system benefits all, especially those without property or capital. Capitalism has never engineered the mass starvation and death seen under Mao’s China or Stalin’s USSR. It has not drained the lifeblood of a people the way communist regimes have in Central and South America. Nor has it impoverished whole nations as socialism has in Europe. Societies in which capitalism and liberty prevail are flourishing; those that reject these principles are, at best, barely surviving. In America, the contrast between states and cities that uphold the rule of law and property rights and those that do not is stark—just look at the prosperity gap between “red” and “blue” states.

The experiment is over. The data is clear. The metrics are incontrovertible. There is no serious argument left.

Liberty—free will—is God’s second greatest gift to humanity. Capitalism is the greatest gift we have given ourselves.