Capitalism is the Greatest Achievement of Human History — Praise It

I am grateful that we have capitalism to the extent that we in fact do have it — and although we certainly don’t have enough capitalism, I am grateful for how much we actually do have. Everything we have in the modern civilized world is only possible due to capitalism and the accumulation of capital. It is the natural expression of free markets whenever there is a sufficient level of civilization. The accumulation of capital is essential for the progress of civilization in all aspects. Technological progress alone is insufficient. While capital accumulation has occurred to various extents throughout history, the system of capitalism is a more recent development allowing for much more efficient capital accumulation and development.

It is actually quite incredible to think of how much prior civilization, technological progress, and accumulated capital are necessary to make something as simple as a screw. Even with the instructions and all relevant knowledge, primitive people wouldn’t be able to make them for at least decades, possibly centuries. When you think about the precise dimensions of something as simple as a screw, you realize it obviously required something very precise to make it (e.g., precise casting). And that thing required something precise to make it, and so-on and so-forth. It is a process of building up more and more sophisticated tools from simpler ones, which requires significant capital accumulation.

It is also doubtful that many people, if any, know the entire production process — from raw earth materials to finished product — for even something as simple as a screw. Its production requires the voluntarily cooperative interactions of numerous people. Furthermore, as my friend Juan Fernando Carpio has argued in a forthcoming paper, the human mind and body are both capital goods, which require development. The entirety of human knowledge, considered in the abstract, is akin to the accumulation of capital goods. To the extent that we have civilization, such is only possible because of the accumulation of different kinds of capital.

This is something ignored by socialists of every variety, be they anarchist or Statist socialists. (I would argue that an anarchist socialist will, when faced with the reality of how free people actually act, either have to at least tacitly endorse private property and capitalism, or will become a Statist). The various systems advocated by socialist anarchists all hinder or make impossible capital accumulation. For example, various flavors of anarchist socialism might attempt to ban — how can they do this while remaining anarchist? — absentee ownership or the separation of ownership and control (i.e., corporations). The banning of either would result in rising time-preferences and thus greatly decrease incentives for saving and capital accumulation.

Some Suggested Readings

Ludwig von Mises, 2008 [1956]. The Anti-Capitalistic Mentality. Ludwig von Mises Institute, Auburn, AL.
Reisman, George. 2002. “Some Fundamental Insights Into the Benevolent Nature of Capitalism“. Mises Daily. October 24.
Rothbard, Murray N. 2009. “Capitalism versus Statism“. Mises Daily. September 29.
Leonard E. Read, “I, Pencil,” The Freeman, December 1958.