2012-10-22

Capitalism Is Peace

Capitalism is synonymous with peace. This point has been neglected for far too long by advocates of market freedom. But they mean well, so today I'd like to explore this idea a little.

When you submerse yourself in libertarian literature, you discover all kinds of points about free markets and their importance to human society. This is so much the case that those of us who have read a great deal of this literature tend to forget about the fact that most people have never heard these arguments before. The most important such argument is the fact that free markets are not merely "more peaceful than the alternative," but rather peace is an inherent attribute of capitalism. An argument against free markets is an argument against peace; an argument for peace is an argument for capitalism. The two go hand-in-hand.

This is the single best case for free markets, so it is a bit frustrating that capitalism's advocates spend so little time making it. It is a topic not directly covered by any libertarian thinkers that I know of, except Ayn Rand and Ludwig von Mises. Rand, in fact, only makes this point convincingly* in Capitalism: The Unknown Ideal. Mises, for his part, makes this point in many works, but as I said, few have taken the kind of deep dive into libertarian writings required to discover Mises' words on this topic.

Capitalism Is The Only Way To Resolve Major Conflicts Peacefully
You have something that I want, but you would rather use it for yourself than give it to me. Among savages, I have few options for procuring it myself. I could steal it from you clandestinely; I could attack you violently until you either relinquish the item or die; I could assemble a posse and coerce you with the mere threat of violence or ostracism. Clearly, these are all acts of aggression; these are evil means by which to forcefully deny you what you have and take it for myself.

Alternatively, I could persuade you to give it to me freely. There is always the possibility that I can make a convincing case for why you should give it to me. Sometimes, that case is an appeal to your sense of generosity, your desire to be nice to me because I "need" the item more than you, and you value me as a person. If we are strangers, though, or if the item is very valuable, such an appeal would seldom win you over.

The more reliable way to persuade you is to offer you something of equal or greater value. This is commerce.

Hence, conflicts over resources end in either force, generosity, or commerce. Here, one could make the case that the good will you receive through an act of generosity is a type of exchange. I won't make that case, but the reader can surely see where it leads: all peaceful resolutions to conflicts over resources are acts of free trade.

Nearly all conflicts among human beings are conflicts of resources, property, and so forth. The remaining conflicts, for the most part, involve violation of social convention. For example, killing another human being is taboo, and for good reason: If it were "okay" to kill others, then there would be no civilization whatsoever. A basic respect for human life is paramount.

A less serious example would be the ostracism felt by minorities within homogeneous communities. Minorities face a kind of ostracism - not always intentional - that can seldom be explained to the majority. For the most part, it is a lack of understanding. It creates a deep wound in the members of the minority that can often build to a profound resentment of the majority. Surely, just sitting down and talking to each other would alleviate the problem, but in order for that to happen, both parties require a good motive.

Well, in a free society, commerce provides exactly that motive. When people are allowed to trade resources freely with each other, they find themselves face-to-face with those they are accustomed to shunning. The shunners need something that the shunned has: commerce proceeds. If the shunners wish to keep the peace, they will have to maintain a good working relationship with the shunned, and vice-versa.

Note that each party could choose to retreat into their respective enclaves and refuse to deal with each other. A refusal to trade is an unofficial rule against trade. The free market no longer exists: a barrier to trade has been erected, either officially or unofficially, but the result is the same. In such a case, two communities live beside each other, competing for the same resources yet refusing to engage in commerce. This is when conflicts arise. Capitalism actually prevents this.

Now let's return to the more serious example of killing each other. A person's motivation for keeping the peace is to maintain his/her place in the community. One who kills others cannot hope to positively interact with the community in any way. He/she has broken the trust he/she shares with fellow human beings. The community cannot trust that the killer will not also kill them next. They will cease all dealing with the killer, and he/she becomes an outcast. Maybe he/she doesn't care, but the fact remains that one who undermines the social order cannot expect to gain anything from it.

Thus, peace in the community is a powerful motivation against breaking the rules. One who goes against the grain can only hope to be a part of the community if one brings something to it in the form of trade. Free trade breaks down social barriers; abstinence from trade puts the barriers in place.

People can only hope to interact peacefully with each other in an environment of free trade.

A Misleading Economic Term
Economists tend to root their advocacy for open markets in concepts like low prices and economic efficiency. These are good arguments, for sure, but the word "efficiency" means something in economic jargon that most laymen don't fully understand. When someone extols the "efficiency" of the market, people have in mind something to the effect of production efficiency, some picture of a well-run factory, churning out products at an "efficient" rate.

Laymen perceive some notion of achieving maximum profit at minimal cost; this to them is "efficiency." That is certainly part of it, but when economists use that word, they are speaking more to the broad social effects of well-run factories in general. To wit, if "efficient production" is the rule within a society, not an exception, then society will enjoy greater production of all things - important things like food, water, housing, health care, etc. - and their abundance will lead to low costs. More stuff at cheaper prices is good for everyone, especially the poor. This is generally what economists are arguing for when they tout "efficiency" as a major benefit of free markets.

Abundance certainly promotes peace, but it does so indirectly. No one steals penny candies, except for very petty children, hence abundance has a tendency to reduce conflicts between people. Clearly, though, this is an indirect benefit of free markets, and market critics could easily attribute that kind of peace to something other than capitalism. So, it is not really a home-run argument for capitalism.

Conclusion
Advocates of free markets owe it to society to do a better job of making the case for capitalism; and, while economic efficiency is a great reason to love capitalism, I think the fact that capitalism is peace is a more important case to make. This is especially true in the world of never-ending war in which we find ourselves today.

So, from today, I commit myself to hammering this point home. Capitalism isn't just good for business, it is the one and only way to maintain peaceful human interaction.

_______________________
* She does make the point elsewhere, but buries beneath obtuse statements like, "Force and mind are opposites; morality ends where a gun begins."