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“Wanderer Above the Sea of Fog,” c. 1818,
by Caspar David Friedrich, a Romanticist painter
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“I hate capitalism!” the lament often goes. It comes from someone young. She is in her late teens or early twenties. When this gripe is spotted online, too often people who think of themselves as defenders of free enterprise — utilitarian economic libertarians and Objectivists — are too quick to assume that, by capitalism, this young person uses that word with largely the same definition as they. They immediately seek to explain to this young person the error of her anti-capitalism.
The economic libertarian, likely most influenced by Milton Friedman or Ludwig von Mises, says,
So you hate capitalism? What do you have against the allocation of economic resources being organized from the bottom-up? Why is this worse than some central planner presuming omniscience and trying to organize the economy from the top-down? Under capitalism, individuals are free to make their own choices in their business.The Objectivist usually reacts more angrily. “So you hate capitalism?!” he yells.
You as a vendor don’t have to know everything about everyone’s needs. You only need to gain knowledge of your specific customers’ needs and expectations. The same applies to every other vendor. This is the division of labor. The alternative to the market is central planning of the economy by the State. Apparently, that is what you favor. The central planner presumes to know more about everyone else’s needs than do the people themselves.
Yet the central planner is supremely ignorant. He doesn’t even have as a direct a pipeline to learning about his citizens’ needs as a vendor does with her customers. That is why the Soviet Union and other centrally planned economies fail. That is what your hatred for capitalism brings you.
There are only two methods whereby human beings can deal with one another. They are either by rational persuasion or by force. Under capitalism, people interact through rational persuasion. I can’t force you to buy my wares. I have to offer you something of value that appeals to your rational judgment. The alternative to this is socialism or some other system of government force. For socialists to get me to do what they want, they have the State threaten to fine or imprison me if I don’t do as they command. And when you reject capitalism, such force is the one alternative. That is what you want. Why do you want to threaten force on me? Why do you insist on robbing me of my freedom?In both instances, the young person is genuinely baffled by such a response. “I said that it’s capitalism that I hate,” the young person replies sheepishly. “Why are you changing the subject?”
There is a miscommunication. When young people mope about what they hate, what they mean by “capitalism” and even “free enterprise” is often only superficially similar to what avowed ideological free-enterprisers mean by these terms. The upshot is that the usual defenses provided for capitalism — such as the two given above — do not actually address the young American’s primary misgiving about unregulated commerce.
What Do They Mean By “Capitalism”?
For many — possibly most — young Americans, “capitalism” vaguely refers to any activity where both of the following conditions apply.
- Someone is paid money to do something.
- This person probably would not have done it if not having been paid to do it.
The implications of this interpretation are as follows. When we take an action without having been paid to do so, the value in that action must have been intrinsic to the action itself. By contrast, when we are paid to take an action, our motivation in performing it was necessarily extrinsic to the action. Eventually, too many of our actions are those that are not worth taking for their own sake. The introduction of money payments, then, has a corrupting influence over our process of deciding which actions to take.
Suppose someone yearns to be a great guitarist as a career. Yet his parents discourage that. They warn him how irregular it is for an up-and-coming musician to get gigs. He cannot realistically expect this to be a source of steady income. At his parent’s urging, this young man goes to business school and lands an office job. He is terribly bored. His prior dreams of making it big as a guitarist become nothing more than a memory. And when this man reflects on it later years, it triggers in him feelings of regret and shame.
For many young people, this is the image that immediately enters their thoughts when they hear “capitalism” and “free enterprise.”
They also think of it as supremely capitalist if, placed in desperate straits, someone sacrifices her personal morals to acquire the cash she needs. To them, if someone pays a hit man to bump off a spouse, the exchange of cash renders this the prime example of capitalism, free enterprise, and laissez faire. The same applies to the slave trade.
Stigmatization results from the premise that what is integral to “capitalism” is that someone would not have found an activity worthwhile in the absence of monetary payment. If your action is conditional upon having been paid for it, then in most instances it must be tedious at best and reprehensible at worst. In either case, the person being paid did not have his heart in the activity. After all, had his heart been in it, he wouldn’t need to be paid to do it, now would he?
Naturally, we free-enterprisers mean something very different when we say capitalism, free enterprise, free markets, laissez faire, and liberalization. What we want is a society in which people are free to do anything that’s peaceful. Because most efforts at government control over peaceful behaviors are over economic matters and are done with an economic rationale, many of our arguments for freedom overall turn into arguments about commerce. That is how our arguments for freedom in general come to be misconstrued as being narrowly about financial freedom only.
Yes, we vigorously defend the right to profit by peaceful means. There is nothing wrong with that. And we understand that whether or not someone profits is not the central issue over whether an activity should be legal. The issue is over whether an action is violently coercive or not.
Etymologically, then, the expression free enterprise relates more strongly to our political priority than capitalism does. Capitalism alludes to “capital” as in financial capital — the resources that people invest into a business concern. In that respect, though, the term “capitalism” does fit with these young people’s notions about what it means. The “capital” in capitalism usually takes the form of money. “Capital-ism” translates to “money-ism.” And the prospect of human actions becoming primarily driven by the promise of monetary rewards is exactly what these young Americans revile most.
By contrast, “enterprise” simply refers to activity more generally, an endeavor. Free enterprise amounts to the freedom of action, the freedom to endeavor and venture, the freedom to enterprise. This, again, includes anything that is peaceful, regardless of whether financial profit is the stated objective.
I take it that most of my readers are already familiar with how anti-capitalists who object to my definition do so by equivocating the distinction between economic power and political power. I will therefore avoid that discussion in favor of one I think too often goes overlooked by Objectivists and libertarians. What makes it particularly galling that this goes overlooked is that Ayn Rand’s The Fountainhead implicitly addresses it. In fact, a common reaction to this book by a number of its young admirers is what helped me consider the issue.
Besides the equivocations about “economic power” and “political power,” there is something else that prejudices many young people against capitalism. It is that they are hung up on conflating it with actions they consider wholly undesirable — actions that, being unpleasant or unethical, they believe no one would take if not having been paid to take them.
How Ayn Rand’s The Fountainhead Is Interpreted As Anti-Capitalist
Let us say you want to start a charity that is of great priority to you. You judge that, based on the nature of the activity and the circumstances involved, it makes more sense for you and others to think of it as a not-for-profit operation. That is literally free enterprise — it is an enterprise in which you are free to engage in. Yet, to many young people, this is not free enterprise and definitely not capitalism. That you would do this without having been paid precludes it from being such.
Let us imagine something else. Someone wants to be a magnificent guitarist. This is something that this man would do even if no one paid him to do it. In fact, if this young man found very few opportunities to do so otherwise, he might even be willing to pay others to let him serenade them. Yet, on account of a combination of luck and a steadfast commitment to his craft, this man discovers methods whereby he can monetize this obsession. He realizes a great financial windfall doing something he would have done anyway.
The pertinent question is this: isn’t this young man gaining a fortune from his passion an exercise in free enterprise and capitalism? Exactly to the very degree to which they do approve of this guitarist’s financial success, many of our young people who moan “I hate capitalism!” reply that the answer is no. No, this guitarist’s success is not capitalism. The consideration that this man still would have wanted to be a guitarist in the absence of remuneration precludes that possibility. But if this man’s success was not capitalism, then what was it? The answer from young people is that this was an example of the greatest foil to capitalism: it was someone pursuing his dreams.
Even among many young people who get a rebellious thrill out of labeling themselves “socialists” or “Marxists,” very few of them truly believe, on a deep level, that the great conflict of our age is that of “capitalism versus socialism” or “the market’s bottom-up division of labor versus top-down central planning of the economy.” For them, it is:
Capitalism Versus the Pursuit of My DreamsIt can also be phrased as:
The Right to Property Versus the Right to the Pursuit of HappinessUpon my making this point before, some persons sympathetic to Objectivism brushed this off and said, “Well, then those young people should just get their definitions straight.” For them, that was the end of it. But for those of us who would like to enlighten America’s youths, it is not adequate to be so dismissive. Upon understanding why young people interpret capitalism and its opposition as they do, we can be better-equipped in edifying them.
Something that helped me confront this was a startlingly common reaction to The Fountainhead I have heard from many young people who have gushed to me that it was a great inspiration to them. They informed me, without sarcasm or knowing irony on their parts, that they greatly appreciated the authoress’s clear and successful intention on indicting the conformity and corruption of motives that is an inherent byproduct to capitalism. In brief, they cherished this book for its always having meant to be anti-capitalist.
More than that, they fell in love with Howard Roark for being the ultimate rebel against corporate greed. As far as they were concerned, the perfect representation of someone striking a blow against this system was not Che Guevara or Leon Trotsky or Jesus whipping the money changers. It was Howard Roark.
This is how they explained it to me. The two characters whose behavior was most consistent with what they expected of archetypal capitalists were Peter Keating and Gail Wynand. For Keating, the customer is always right and the customer is king. He gave his clients designs that were both popular and sub-par because his heart was not in the work. Architecture, as such, was monotonous to him. He pursued this career to obtain money and prestige and to hold onto his mother’s approval. Consequently, he employed manipulation and office politics to rid himself of potential rivals for promotion within the firm. When free-marketers speak of “competition,” Keating’s sort of intra-company backstabbing inadvertently comes to mind.
But, for the young readers, Wynand even more closely matches what they predict the quintessential capitalist to be like — mostly because he was even richer than Keating. His cynicism was of especial import. Wynand held his own customers in contempt. He promulgated yellow journalism he thought to be beneath him for the sake of money and clout. These actions made him the wealthiest character in the story. Wynand’s worst personality traits are exactly what young Americans imagine of real-life billionaires in the mold of Rupert Murdoch and Jeff Bezos.
By contrast, these young people said, Howard Roark was not a capitalist by any conventional understanding of the term. I naturally agreed with that part, except that my interlocutors meant that if someone was a capitalist by any conventional understanding, that person could not be a capitalist at all. They remember the various instances of Roark foregoing lucrative commissions for the sake of seeing that his buildings be constructed precisely according to his designs. I asked these young readers if this meant, then, that they thought Roark was some sort of socialist or communist. They replied, “Of course not.” Instead, he was the true opposite of a capitalist: someone who pursued his passions and lived his dreams.
And even among young readers reluctant to go as far as calling Roark anti-capitalist, it was still the majority opinion that Wynand was the much more consistent representative of what it means to thrive under free enterprise. Some readers in their thirties added that they surmise that while Roark represents Ayn Rand’s ideal conception of free enterprise, Wynand more accurately represents how it functions in practice.
This is what many young Americans really mean when they say they “hate capitalism.” What they actually mean is that their great fear is of committing the next several decades of their lives to a career that they know will not provide them fulfillment. They lose sleep over the worry that they will do this out of capitulation. They would resort to it to meet their material needs and to cave in to pressure from their elder relatives, à la Peter Keating’s appeasement of his mother. Their idea of what it means to be a capitalist is ultimately influenced by the imagery of Sinclair Lewis’s Babbitt, even if they have never heard of this title directly.
Coming across so many young Americans who admire The Fountainhead as anti-capitalist is far from unique to my own experiences. I know that because Ayn Rand herself encountered such fans. In 1945, she received a letter from one who at least partially agreed with this interpretation. In a reply dated March 4, she explained to him,
You’re completely wrong on Wynand. Wynand is not the symbol of free enterprise — Roark is. (If you wish to call it a symbol.) Free enterprise was not made by those who catered to the masses, as Wynand did, but by the originators and innovators who went against the masses, against all public opinion, against all “trends” and “currents.” Wynand — if you want to look at him in one of his lesser aspects, in the narrow, “journalistic” sense of contemporary events — represents the men who are destroying free enterprise today... [“To O. W. Kracht,” Letters of Ayn Rand, ed. Michael S. Berliner, (New York: Plume, {1995} 1997 trade paperback), 224. Emphases hers.]The anti-capitalist interpretation was also held by Nathaniel Branden upon his first complete reading of it.
The Fountainhead, a novel by Ayn Rand. . . .As a teenager, Branden put The Fountainhead and Jean-Christophe in the same category for an unsurprising reason. The protagonists were both dedicated dreamers who pursued their creative visions being more inspired by the challenges of the craft than the financial rewards of it. That is why Branden, as with so many young readers today, could not fathom that Roark, not Wynand or Keating, was the free-enterpriser of the novel.
There are extraordinary experiences in life that remain permanently engraved in memory. . . . Reading this book was such an experience. . . .
[Cousin] Allan [Blumenthal] introduced me to a novel by Romain Rolland, Jean-Christophe, which deals with the life and struggles of a musical genius. It reinforced a conviction already forming in me, especially after I read The Fountainhead, that a hero is one who perseveres. . . . On an impulse...I decided to write her [Ayn Rand] a letter, care of a publisher, inquiring about her political convictions. What did she believe in? “Certainly not capitalism,” I wrote her confidently. [My Years With Ayn Rand, (New York: Jossey-Bass, 1999 revision), 8, 13, 30.]
Why the Dichotomy Is False
Of course, the sort of success realized by our imaginary guitarist from is far from exclusive to persons who have gotten rich through their art. Such figures in biotechnology as Genentech cofounder Herbert W. Boyer and human insulin inventor David Goeddel were primarily interested in gratifying their scientific curiosity. Yet they found methods of monetizing their own intellectual excursions, earning hundreds of millions of dollars in the process.
The same applies to many great entrepreneurs who’ve monetized their childhood obsessions. William Scholl was a very strange little boy who, upon meeting new neighbors, reportedly insisted on inspecting their feet. Fortunately, his parents let him indulge in this fetish. He carried around the skeletal remains of a human foot everywhere he went and named it George. Consistent with this quirk, he became a podiatrist. Treating his patients, he noticed that many of the bunions and other problems with their feet resulted from their shoes not being very ergonomically designed.
Scholl decided to rectify this. He earned over a hundred patents on his improvements, developing new orthopedic shoes. This was the beginning of Dr. Scholl’s. He made a fortune by inspecting strangers’ feet — something he had done repeatedly as a child when not having been compensated for it and likely would have continued to want to do had he never been compensated.
Scholl here followed a pattern that is actually common to most famous entrepreneurs. They start off as eccentrics who nurture a particular obsession of theirs. Only years later do they discover a means by which they can profit financially from their own obsession.
Richard Branson, for instance, sounds completely sincere when he says that money was always just the secondary motivation for him as he started his music production and airline. His deepest interest was in the challenge itself.
That success as an entrepreneur is seldom ever in opposition to doing what one enjoys is often lost on young people. They are fixated on the cartoonish stereotype of businessmen all looking alike, thinking alike, behaving alike, and being perpetually bored by their jobs. They can more easily recognize examples in arts they admire. They know that only a tiny minority of artist working in any medium become household names and millionaires.
But they do know that such people exist. Examples such as Howard Roark and our hypothetical guitarist remind them of this. But because they know that such artists are often tempted to sacrifice their long-term creative ambitions — that might yield greater financial windfalls in the future — for the sake of more immediate monetary gains, even these successful people are thought not to be examples of capitalism but some subversion of it.
It is for this reason that you can find indie hipster artists who, in the same breath, tell you they despise capitalism and that they rooted for Howard Hughes when they watched The Aviator. It is also why you can find indie musicians on YouTube and Twitch who rail against capitalism soon before professing their love for The Greatest Showman and proclaiming “A Million Dreams” to be among their favorite songs. And it is why the Nation Institute — the foundation behind The Nation magazine, known for its consistent editorial policy against capitalism — co-published an adulatory biography of Dungeons and Dragons co-creator Gary Gygax. This biography even mentioned very approvingly the fact that Gygax got rich from this creativity and built his own business empire.
You can say to these people, “The protagonists of both of these stories were capitalists, were they not?” You will often get the same reply: insofar as these entrepreneurs were doing something that they enjoyed enough to do even if they were not paid, they were not acting in the capacity of capitalists.
Indeed, they are wont to rationalize, as long as our hypothetical great guitarist makes money doing just what he believes in, he has not yet become a capitalist. Rather, he only becomes a true capitalist when, coming to prioritize big bucks instead, he lets the quality of his art decline as he churns out one album after another.
One twentysomething, the up-and-coming YouTube vlogger XanderHal (short for Alexander Haley), articulates that position:
The reality that is glossed over too frequently is that someone can indeed do something she genuinely enjoys while hoping that she is rewarded for it monetarily. There is a very simple reason for this. It is that when someone partakes in her favorite creative activities, it usually requires that she use up a lot of her own material resources.
This is visible with the cottage industry of people video-streaming themselves on Twitch as they paint their pictures. As they will attest, they love their painting, but if they painted full-time and never received any remuneration, they would run out of paints and canvases. Then they would have to stop. Admirers paying money to these artists is the same as restocking these artists’ supplies.
The same principle applies to other creative endeavors. To pay a filmmaker is to cover her costs. That, in turn, helps her make more movies. The same applies to compensating an inventor monetarily. To pay him royalties is to cover his expenses. And to cover his expenses is to restock the supply of the resources he needs to proceed with more R-and-D in the future.
Such psychologists as James Carlsmith and Leon Festinger have noted a phenomenon. If parties A and B perform the same task, with party A being paid and party B going unpaid, party B is likelier to take more pride in the very performance of the task. Psychologists theorize that when members of party B do not receive an extrinsic incentive, they feel more motivated to tell themselves that they must have considered the value in their actions to be intrinsic to the task itself.
In that respect, the introduction of monetary rewards to a long-running project of mine can indeed influence my judgment of the project itself. For years, I have been drawing and not being paid for it. There may come a day when I start to accept payment for my art. When that happens, that may change my motivation. There is a risk that I may feel tempted to take my style in a particular direction more to appease my patrons than to satisfy my own personal tastes.
Should that happen, it does not follow that the money itself had a corrupting influence. Rather, this is a private psychological issue for me to work out on my own. It is up to me to weigh the values of mine that seem to be in competition for the top spot on my list of priorities. Insofar as painting streamers on Twitch can maintain their love for their craft as they obtain payments for more supplies, this is not to be reproached as a form of selling out. It is to be applauded.
The truth is that no specific actions — not even ones we enjoy without having been paid to take them — have value in themselves. Whether or not we are paid — whether or not we find them fun — all of our actions should ultimately be in service to a greater end. That greater end is our overall quality of life and lasting happiness, our eudaemonia. If I peaceably perform an action that bores me for the sake of a large payment, it may still be worth it if it provides a net gain to my happiness overall. And if doing something fun without payment also provides a net gain for my life, it is worthwhile as well.
Why the Conflation Between Free Enterprise and “Grudgingly Doing Something Only Upon Being Paid”?
It is true that if you press these young Americans on specific issues, they will probably start regurgitating clichés about how business owners always exploit their employees and of the need for raising the minimum wage. But I suspect that these clichés are likely rationalizations added on, ex post facto. First, these young Americans come to associate capitalism with the prospect of selling out one’s dreams for the sake of a more “safely” lucrative and conservative career. But that seems too selfish a reason to hold reservations about capitalism. Hence, they pin on these other grievances that sound more altruistic and civic-minded.
As I will mention again later, I doubt that most young persons who declare their revulsion toward capitalism genuinely aspire to toil on communes every hour of the day. But as they associate capitalism with actions being performed for nothing but payment, it is not difficult for them to hold up those commune dwellers as having the moral high ground over CEOs. If people on communes do what they do for reasons other than riches, it is assumed, it must be because their heart is in it. It is for similar reasons that so many young people who started off hating capitalism out of fear of a thankless career eventually give lip service to socialism.
Yet the false dichotomy of “capitalism versus my dreams” is influenced less by Karl Marx than by his contemporaries in the philosophic Romanticist movement. This is a manifestation of the false dichotomy that pits emotion and morality and idealism on one side, and reason and utility and practicality on the other. And for all of the illogic and faults of him and his followers, Marx touted himself as being squarely on the side of cold reason and practicality. By contrast, the general impression by the Romanticists was that human beings were happier in their state of nature, frolicking in the wilderness. This is the sort of happiness a child experiences before having to grow up and go by the humdrum routine of big business.
Then the Romanticists’ equivalent of Original Sin occurred. As Jean-Jacques Rousseau bemoaned, someone thought of considering a patch of land to be private property. The happiness of frolicking was ruined when, through the use of cold reason, human beings adopted stodgy civilization in general and industrialization in particular. Unwittingly applying the old general ideas of philosophic Romanticism to their own lives, young people conclude that they must choose whether they are to surrender to the uptight and proper grind of the corporate machine or if they are to reclaim the wild and unsullied mirth of their childhood aspirations.
Greatly contributing to this attitude is the manner in which parents are woefully inadequate in explaining to their children why “capitalism” is better than “socialism” and “communism.” It starts when a child asks why she should have to go to work one day as an adult and why should she have to pay money for anything instead of just get it free. After all, she got everything free as a baby.
But as stated at the essay’s beginning, I do think it’s the case that, too often, upon coming across someone on the internet who proclaims, “I hate capitalism,” too many Objectivists are too quick to launch some verbose lecture about the superiority of free persuasion over force. They do this under the assumption that the young person already agrees with them on their definitions. And, insofar as they know that the young person holds a different definition for capitalism, too often Objectivists will bossily tell her their own definition and expect her to accept it right then and there.
Upon Asking What Is Meant By This “Capitalism” That One Hates So Much
Although many — probably most — young Americans will, upon being prompted to do so, begin reciting the clichés about capitalism exploiting workers and destroying the Earth that their teachers and popular culture have taught them, I still think that is usually not their most fundamental objection. I say this because very few of them actually want to sacrifice their happiness and material comforts to toil in subsistence agriculture on some commune.
And although most of them cling too strongly in their civic indoctrination to consider how preferable laissez faire would be to their mixed-economy regulatory entitlement state, most of them do nurse some vague desire for fulfillment in a career that is lucrative and where they have a lot of autonomy. They don’t know it consciously, but if they took this vague desire of theirs to its logical conclusion, it would be what many of us recognize as a form of entrepreneurship.
Many will convey that they hate capitalism both because of the usual accusations about it in general, and also because of their personal dread that participating in a commercial economy will result in their sacrificing their risky ambitions in favor of a “safer” vocation. When you converse with someone long enough and regularly enough, however, it becomes easier to detect when the latter reason for professing her hatred for capitalism is also her predominant reason.
Therefore, if they wish to engage the next time they hear a young person mope “I hate capitalism,” I recommend to Objectivists that they start with something other than talking immediately about the superiority of freedom over coercion. Instead, I implore them first to inquire to this young person exactly what she means by capitalism.
She might initially get huffy and say, “How can you even ask that? Everyone older than fourteen already knows what capitalism is.” You can point out that not all adults place the same amount of emphasis on the features that they believe define capitalism. Some believe that all commercial activity, such as contract killings and slave trading, count as capitalism, whereas by this word other people are referring simply to the removal of government controls from economic activity. Perhaps after this clarification is offered, the young person will start to answer.
I concede that the answers initially given will probably be vague and equivocal. The first answers will probably include a recitation of our culture’s litany of grievances about capitalism being exploitative and evil. I also recommend asking the young person, “Regardless of what word is used for the ideal society you would like — ‘capitalism’ or ‘socialism’ or whatever — is there a special passion project you would wish to pursue?”
If the answer to that is yes, and the young person explains that she would pursue this project even if she were not paid for it, she can be asked, “But if you could also gain in material comforts by pursuing this, would you? Would that be bad? Would it be good if, in our ideal social system, you could pursue this passion while simultaneously be paid in resources for it?”
Even upon being amenable to our asking them about the pursuit of their ambitions, the young American will still probably be equivocal. The young American may concede that someone getting rich from doing the art that he enjoy is not contrary to capitalism, but still insist someone being paid to do something he hates is still a much purer expression of it. But when that happens, the conversation is going in a better direction than it otherwise would have.
When every member of the conversation is in agreement that it is valid for people to follow their dreams peaceably, we have reached a milestone. Here we can start to show young Americans that the freedom of enterprise is actually the perquisite to their pursuing and realizing their dreams. We can help them confront what we know. Free enterprise is the pursuit of one’s dreams.
Sure, it is common for many aspiring artists and scientists to believe that the prerequisite to realizing their dream is not their own freedom to act but a governmental intrusion upon others. Namely, they feel helpless unless they can secure taxpayer funding for their projects. Yet this is contrary to having a social system that maximizes everyone’s freedom to pursue her own dreams peaceably. For the government to confiscate resources from other people in order to provide those resources for my own project in art or science is to make victims of others. The taxpayers from whom those resources were confiscated now have fewer resources at their own disposal with which they can pursue their own dreams.
This is the moment in the conversation where it becomes productive to point out that the crucial distinction of free enterprise is not whether or not someone enjoys what she is paid to do, but whether people cooperate with one another through peaceful consent or instead call upon government power to impose their own wills upon others. Here, they will probably concede that the taxpayer funding that they want comes at other people’s forcible expense, but defend that by saying that wealth is a zero-sum game no matter the type of political system. They presume that this applies in both capitalism and socialism, in both the night watchman state and the regulatory-entitlement state.
That misapprehension adds another wrinkle to how they interpret what the ramifications would be if they indeed achieved their dreams through entirely consensual means. Their happiness about this would be tainted by some remorse over their belief that their attainment of their dreams deprived of other people of theirs. Here we can then educate these young people about how freedom of enterprise is a positive-sum game.
We can inform them that the incentive is to create more economic value for everyone. Insofar as people are free from force, the entrepreneur incurs the cost of every input of labor or natural resources. For that reason, the entrepreneur downsizes her costs and upsizes her profits insofar as she can employ new and improved methods of producing greater economic value from ever-smaller and ever-fewer inputs of labor and natural resources. That is in large part the explanation for gains in energy efficiency. In the year 1900, it took ten pounds of coal to power a 100-watt light bulb for an hour. By 2002, it took less than a pound of coal to accomplish that same task.
Clearly, even after we have shown America’s youth that freedom of enterprise is the precondition to their realizing their dreams to the utmost, our work will be far from finished. There will still be thousands more misconceptions of which we can disabuse them. But as so much anti-capitalism stems from the false premise that capitalism stands in opposition to their dreams, helping young people see that the freedom of enterprise is what they need to fulfill their dreams is a major victory.
For this reason, the next time any of us observes a young person proclaiming her hatred for capitalism, any effort to enlighten her on the matter should begin with asking her for clarity on what she means by this word.
Indeed, they are wont to rationalize, as long as our hypothetical great guitarist makes money doing just what he believes in, he has not yet become a capitalist. Rather, he only becomes a true capitalist when, coming to prioritize big bucks instead, he lets the quality of his art decline as he churns out one album after another.
One twentysomething, the up-and-coming YouTube vlogger XanderHal (short for Alexander Haley), articulates that position:
As a leftist — as an anti-capitalist — I do have to acknowledge that there are times where capitalism does benefit the Progressive cause. . . . For example, when corporations market to LGBT people in order to make money. It may be insincere, and that’s obvious. But, regardless, when they do that, they contribute to normalizing LGBT people in society. . . . So while capitalism is shit, there are times where it gets stuff right — where some good comes out of it. Now, funnily enough, conservatives will only ever criticize capitalism...in those small instances where it ends up doing some good for some particular marginalized group like LGBT people.Why is it “obvious” to XanderHal that corporate executives are “insincere” in professing concern for the well-being of LGBT people? It is that, as they do so, these corporations “make money.” If these executives were sincere about wishing to improve the lives of LGBT customers, they would not be charging them money, would they?
The reality that is glossed over too frequently is that someone can indeed do something she genuinely enjoys while hoping that she is rewarded for it monetarily. There is a very simple reason for this. It is that when someone partakes in her favorite creative activities, it usually requires that she use up a lot of her own material resources.
This is visible with the cottage industry of people video-streaming themselves on Twitch as they paint their pictures. As they will attest, they love their painting, but if they painted full-time and never received any remuneration, they would run out of paints and canvases. Then they would have to stop. Admirers paying money to these artists is the same as restocking these artists’ supplies.
The same principle applies to other creative endeavors. To pay a filmmaker is to cover her costs. That, in turn, helps her make more movies. The same applies to compensating an inventor monetarily. To pay him royalties is to cover his expenses. And to cover his expenses is to restock the supply of the resources he needs to proceed with more R-and-D in the future.
Such psychologists as James Carlsmith and Leon Festinger have noted a phenomenon. If parties A and B perform the same task, with party A being paid and party B going unpaid, party B is likelier to take more pride in the very performance of the task. Psychologists theorize that when members of party B do not receive an extrinsic incentive, they feel more motivated to tell themselves that they must have considered the value in their actions to be intrinsic to the task itself.
In that respect, the introduction of monetary rewards to a long-running project of mine can indeed influence my judgment of the project itself. For years, I have been drawing and not being paid for it. There may come a day when I start to accept payment for my art. When that happens, that may change my motivation. There is a risk that I may feel tempted to take my style in a particular direction more to appease my patrons than to satisfy my own personal tastes.
Should that happen, it does not follow that the money itself had a corrupting influence. Rather, this is a private psychological issue for me to work out on my own. It is up to me to weigh the values of mine that seem to be in competition for the top spot on my list of priorities. Insofar as painting streamers on Twitch can maintain their love for their craft as they obtain payments for more supplies, this is not to be reproached as a form of selling out. It is to be applauded.
The truth is that no specific actions — not even ones we enjoy without having been paid to take them — have value in themselves. Whether or not we are paid — whether or not we find them fun — all of our actions should ultimately be in service to a greater end. That greater end is our overall quality of life and lasting happiness, our eudaemonia. If I peaceably perform an action that bores me for the sake of a large payment, it may still be worth it if it provides a net gain to my happiness overall. And if doing something fun without payment also provides a net gain for my life, it is worthwhile as well.
Why the Conflation Between Free Enterprise and “Grudgingly Doing Something Only Upon Being Paid”?
It is true that if you press these young Americans on specific issues, they will probably start regurgitating clichés about how business owners always exploit their employees and of the need for raising the minimum wage. But I suspect that these clichés are likely rationalizations added on, ex post facto. First, these young Americans come to associate capitalism with the prospect of selling out one’s dreams for the sake of a more “safely” lucrative and conservative career. But that seems too selfish a reason to hold reservations about capitalism. Hence, they pin on these other grievances that sound more altruistic and civic-minded.
As I will mention again later, I doubt that most young persons who declare their revulsion toward capitalism genuinely aspire to toil on communes every hour of the day. But as they associate capitalism with actions being performed for nothing but payment, it is not difficult for them to hold up those commune dwellers as having the moral high ground over CEOs. If people on communes do what they do for reasons other than riches, it is assumed, it must be because their heart is in it. It is for similar reasons that so many young people who started off hating capitalism out of fear of a thankless career eventually give lip service to socialism.
Yet the false dichotomy of “capitalism versus my dreams” is influenced less by Karl Marx than by his contemporaries in the philosophic Romanticist movement. This is a manifestation of the false dichotomy that pits emotion and morality and idealism on one side, and reason and utility and practicality on the other. And for all of the illogic and faults of him and his followers, Marx touted himself as being squarely on the side of cold reason and practicality. By contrast, the general impression by the Romanticists was that human beings were happier in their state of nature, frolicking in the wilderness. This is the sort of happiness a child experiences before having to grow up and go by the humdrum routine of big business.
Then the Romanticists’ equivalent of Original Sin occurred. As Jean-Jacques Rousseau bemoaned, someone thought of considering a patch of land to be private property. The happiness of frolicking was ruined when, through the use of cold reason, human beings adopted stodgy civilization in general and industrialization in particular. Unwittingly applying the old general ideas of philosophic Romanticism to their own lives, young people conclude that they must choose whether they are to surrender to the uptight and proper grind of the corporate machine or if they are to reclaim the wild and unsullied mirth of their childhood aspirations.
Greatly contributing to this attitude is the manner in which parents are woefully inadequate in explaining to their children why “capitalism” is better than “socialism” and “communism.” It starts when a child asks why she should have to go to work one day as an adult and why should she have to pay money for anything instead of just get it free. After all, she got everything free as a baby.
Child: “When you go to the store, why did you have to give them money? Why doesn’t the store just give us what we need?”
Parent: “Everyone would rather just get everything free. But we can’t all just go around demanding free stuff from everyone else, can we? We wouldn’t get anywhere. We would all be telling everyone else what we want from them. And no one would get what he wants. That’s why the best that we can do is trade. I go to work to get money. Then I use the money to get what I want from the store. Then the people at the store use that money the same way. And one day when you’re old enough, you too will have to go to work to get money.”
Child: “I don’t wanna to go to work. You told me it’s boring. It sure looks boring. I’d rather just play all day.”
Parent: “Well, that’s not how life is! So too bad! What we have is capitalism. Some people would rather be like you and just demand that they get stuff. That’s called socialism or the welfare state. But it does not work in the end. It doesn’t work because we’re all too selfish. You can see that because we all wish we could just have free stuff.”
Child: “But I don’t wanna go to work and be bored. I wanna play!”
Parent: “Too bad! What we have is capitalism. I wish we could have something better, but everything else is worse. We’re stuck with it. That’s reality, and reality is harsh.”The attitude of the parent in the hypothetical conversation above is hardly going to enthuse our young Americans about capitalism. I wish I could say that our conservative Republicans provide defenses that are more sophisticated. But they don’t. Thomas Sowell’s writings on the topic are more erudite in their phrasings and case studies, but the underlying meaning of what he says is actually the same.
If everyone were sweetness and light, socialism would be the way to go. . . . Maybe some day we will discover creatures in some other galaxy who can operate a whole society that way. But the history of human beings shows that a nation with millions of people cannot operate like one big family. . . .Now, I do think that the Objectivist case for capitalism is more sophisticated and correct. I don’t have any qualms about the argument itself. And the Objectivist defense of the profit motive, so distinct from Adam Smith’s, is of especial importance.
The rhetoric of socialism may be inspiring, but its actual record is dismal. . . .
While my desires for a better life for ordinary people have not changed from the days of my youthful Marxism, experience has taught the bitter lesson that the way to get there is the opposite of what I once thought.
But as stated at the essay’s beginning, I do think it’s the case that, too often, upon coming across someone on the internet who proclaims, “I hate capitalism,” too many Objectivists are too quick to launch some verbose lecture about the superiority of free persuasion over force. They do this under the assumption that the young person already agrees with them on their definitions. And, insofar as they know that the young person holds a different definition for capitalism, too often Objectivists will bossily tell her their own definition and expect her to accept it right then and there.
Upon Asking What Is Meant By This “Capitalism” That One Hates So Much
Although many — probably most — young Americans will, upon being prompted to do so, begin reciting the clichés about capitalism exploiting workers and destroying the Earth that their teachers and popular culture have taught them, I still think that is usually not their most fundamental objection. I say this because very few of them actually want to sacrifice their happiness and material comforts to toil in subsistence agriculture on some commune.
And although most of them cling too strongly in their civic indoctrination to consider how preferable laissez faire would be to their mixed-economy regulatory entitlement state, most of them do nurse some vague desire for fulfillment in a career that is lucrative and where they have a lot of autonomy. They don’t know it consciously, but if they took this vague desire of theirs to its logical conclusion, it would be what many of us recognize as a form of entrepreneurship.
Many will convey that they hate capitalism both because of the usual accusations about it in general, and also because of their personal dread that participating in a commercial economy will result in their sacrificing their risky ambitions in favor of a “safer” vocation. When you converse with someone long enough and regularly enough, however, it becomes easier to detect when the latter reason for professing her hatred for capitalism is also her predominant reason.
Therefore, if they wish to engage the next time they hear a young person mope “I hate capitalism,” I recommend to Objectivists that they start with something other than talking immediately about the superiority of freedom over coercion. Instead, I implore them first to inquire to this young person exactly what she means by capitalism.
She might initially get huffy and say, “How can you even ask that? Everyone older than fourteen already knows what capitalism is.” You can point out that not all adults place the same amount of emphasis on the features that they believe define capitalism. Some believe that all commercial activity, such as contract killings and slave trading, count as capitalism, whereas by this word other people are referring simply to the removal of government controls from economic activity. Perhaps after this clarification is offered, the young person will start to answer.
I concede that the answers initially given will probably be vague and equivocal. The first answers will probably include a recitation of our culture’s litany of grievances about capitalism being exploitative and evil. I also recommend asking the young person, “Regardless of what word is used for the ideal society you would like — ‘capitalism’ or ‘socialism’ or whatever — is there a special passion project you would wish to pursue?”
If the answer to that is yes, and the young person explains that she would pursue this project even if she were not paid for it, she can be asked, “But if you could also gain in material comforts by pursuing this, would you? Would that be bad? Would it be good if, in our ideal social system, you could pursue this passion while simultaneously be paid in resources for it?”
Even upon being amenable to our asking them about the pursuit of their ambitions, the young American will still probably be equivocal. The young American may concede that someone getting rich from doing the art that he enjoy is not contrary to capitalism, but still insist someone being paid to do something he hates is still a much purer expression of it. But when that happens, the conversation is going in a better direction than it otherwise would have.
When every member of the conversation is in agreement that it is valid for people to follow their dreams peaceably, we have reached a milestone. Here we can start to show young Americans that the freedom of enterprise is actually the perquisite to their pursuing and realizing their dreams. We can help them confront what we know. Free enterprise is the pursuit of one’s dreams.
Sure, it is common for many aspiring artists and scientists to believe that the prerequisite to realizing their dream is not their own freedom to act but a governmental intrusion upon others. Namely, they feel helpless unless they can secure taxpayer funding for their projects. Yet this is contrary to having a social system that maximizes everyone’s freedom to pursue her own dreams peaceably. For the government to confiscate resources from other people in order to provide those resources for my own project in art or science is to make victims of others. The taxpayers from whom those resources were confiscated now have fewer resources at their own disposal with which they can pursue their own dreams.
This is the moment in the conversation where it becomes productive to point out that the crucial distinction of free enterprise is not whether or not someone enjoys what she is paid to do, but whether people cooperate with one another through peaceful consent or instead call upon government power to impose their own wills upon others. Here, they will probably concede that the taxpayer funding that they want comes at other people’s forcible expense, but defend that by saying that wealth is a zero-sum game no matter the type of political system. They presume that this applies in both capitalism and socialism, in both the night watchman state and the regulatory-entitlement state.
That misapprehension adds another wrinkle to how they interpret what the ramifications would be if they indeed achieved their dreams through entirely consensual means. Their happiness about this would be tainted by some remorse over their belief that their attainment of their dreams deprived of other people of theirs. Here we can then educate these young people about how freedom of enterprise is a positive-sum game.
We can inform them that the incentive is to create more economic value for everyone. Insofar as people are free from force, the entrepreneur incurs the cost of every input of labor or natural resources. For that reason, the entrepreneur downsizes her costs and upsizes her profits insofar as she can employ new and improved methods of producing greater economic value from ever-smaller and ever-fewer inputs of labor and natural resources. That is in large part the explanation for gains in energy efficiency. In the year 1900, it took ten pounds of coal to power a 100-watt light bulb for an hour. By 2002, it took less than a pound of coal to accomplish that same task.
Clearly, even after we have shown America’s youth that freedom of enterprise is the precondition to their realizing their dreams to the utmost, our work will be far from finished. There will still be thousands more misconceptions of which we can disabuse them. But as so much anti-capitalism stems from the false premise that capitalism stands in opposition to their dreams, helping young people see that the freedom of enterprise is what they need to fulfill their dreams is a major victory.
For this reason, the next time any of us observes a young person proclaiming her hatred for capitalism, any effort to enlighten her on the matter should begin with asking her for clarity on what she means by this word.
On Monday, November 9, 2020, I added the point about Dungeons and Dragons co-creator Gary Gygax.
