Have you ever noticed how collectivist intellectuals judge capitalism by its imperfections and collectivism by its aspirations? This is a rhetorical trick, worthy of Houdini, which magically disappears the failures of collectivist ideologies, and hides, deep in the magician’s hat, the social progress resulting from capitalism.
Both capitalism and collectivism have been extensively tried and should be equally judged by their performance and outcomes. But that is not the case. The Black Book of Communism offers a conservative estimate of one hundred million innocent individuals murdered by Marxist socialists in the 20th century. To this we can add the approximate twenty million victims of Hitler’s National Socialists.
The landscape is always the same, whether it depicts the China of Chairman Mao, Kim Il Sung’s Korea, Vietnam under Uncle Ho, Cuba under the Castros, Ethiopia under Mengistu, Angola under Neto, Afghanistan under Najibullah, and others. But the horrific images of this collectivist landscape are painted over with tortured brushstrokes of exculpation where the blame resides not with collectivism, but with those opposing it.
Artists use the term pentimenti when detecting the presence of images in a painting that have been changed and painted over. The word is Italian for repentance. But when collectivist intellectuals paint over the horrors of collectivist history, they do not repent. They misdirect attention to the failures of capitalism.
Hidden in the magician’s hat of collectivism is the wealth generating capacity of genuine free-market capitalism based on the rule of law, equality of rights, and the right to enjoy the results of one’s labors, savings and investments. This is unmatched by any collectivist ideology.
Harvard’s professor of economic development Ricardo Haussmann and others explain that differences in income are mainly differences in productivity. It is the differences in productivity that make productive places rich and unproductive places poor. Common characteristics of poor countries are: the absence of capitalist firms, and conditions where self-employment predominates.
Efficient capitalist production systems require access to many inputs. But the most critical input is economic freedom. That is, environments where entrepreneurs can take risks and innovate free from asphyxiating government controls and interventions.
Scholars of human behavior have also noticed that commercial activities play an important role in the development of civil behavior. Command economy countries, such as Cuba, experience a sharp decline in civil behavior. Simply put, government bureaucrats or commissars are not likely to be as polite or helpful as someone who earns a living selling his skills.
People in poor countries are not being exploited by greedy capitalists. They are being excluded from activities of higher productivity by their collectivist political systems.
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Consider the case of Cuba, where the only 205 economic pursuits permitted by the government are occupations such as umbrella repairs, and refilling disposable cigarette lighters. Even these activities require specific government permission; a reminder that permission is not freedom. And for good measure, General Castro has decreed that no one will be allowed to get rich.
The fact, unacknowledged by collectivists, is that, thanks to free market activities, nearly one billion people were taken out of poverty in the 20 year period from 1990 to 2010. As a share of the total population, the number of poor in developing countries fell from 43 percent to 21 percent.
The most effective poverty reduction measures we can undertake are to liberalize markets and economic activities so that the poor can get richer. This is the opposite of what collectivism prescribes.
Karl Marx defined capitalism as a mode of production where a selfish minority owned the means of production and the majority of the workers were exploited and only able to work for the miserable wages paid by the capitalists. If this is the case, consider the wealth implications. Capitalism in the United States employs 8 out of 9 workers, and the United States GDP per capita income is $57,436. In India, only 1 of 19 workers is employed by capitalists. India’s GDP per capita is $1,723.
Hidden in the collectivists’ magician’s hat is the factual saying that: “The only thing worse than being oppressed by a capitalist is not being oppressed by a capitalist.”