Capitalism: Reassessing Through the Lens of Utilitarianism

Capitalism was once thought of to bring a country into a prosperous era, and in many ways it has. However, it is now becoming apparent that this economic system has many negative side-effects. Capitalism significantly rewards business owners and job creators but tends to leave the working class behind, and as such economic inequality has grown in America. The further this inequality grows, the harder it becomes to justify that capitalism is morally good. In this paper I argue that capitalism should be reassessed through a lens of utilitarianism to determine if it still can be considered a moral good.

Capitalism

Capitalism is an economic system in which the means of production are privately owned and operated for profit. This system is common in first-world countries today, most notably the United States of America. By its nature capitalism is selfish. The way capitalism functions best is if a corporation solely cares about its profits as that is the prime directive of any corporation in a capitalistic society. Each quarter, every public company must stand in front of its shareholders and tell them how they made a profit and what they will do to continue making a profit or to begin making a profit again. This incentive to please the shareholders creates the selfishness and provides incentives to take anything and everything that the corporation can and to seize as much power as it can handle and maintain.

Creating Good with Capitalism

In 1992, the top 1% of the population in America held over $5 trillion of wealth. Through this number alone it is clear that capitalism has created good for people. Capitalism doesn't only create wealth, though. It also creates jobs for many people in this country. With medical insurance primarily fed through an employer, having a job also means having health care protection when you get sick. These things – wealth, jobs, medical insurance – could also exist in a social system that does not subscribe to the capitalist philosophy, but one could argue that they would not be as plentiful or effective. In a socialist economy, for example, the citizens typically pay much higher tax rates and may end up with less wealth for themselves.

Creating Inequality with Capitalism

In 1992, the bottom 50% of the population in America held $0.93 trillion of wealth. Compare this to the previously mentioned $5 trillion for the top 1% and you will begin to see the issue of inequality in a capitalistic economy. Since then, the bottom 50% has increased its wealth up to $2.62 trillion, but when compared to the top 1% of the population, the gap has widened. The best way to demonstrate this is using percentage shares. In 1992, the top 1% owned 24.2% of the wealth, while the bottom 50% owned 4.1%. As mentioned, that gap has widened and it now sits at 32.1% and 2.0%, respectively. This is proof that economic inequality is growing. Economic inequality can be harmful and counter-productive to the people, families, and communities that end up on the wrong side of that inequality. It can have negative effects that persist through generations. With these inequalities continuing to expand, I believe it is fair to scrutinize capitalism and work to create a system that helps more people.

Egoism

Egoism, as defined by Tibor Machan, means “exclusive concern with satisfying one's own desires, getting what one wants” Machan goes on to break egoism into different facets. The first facet is psychological egoism, which he says we as humans “are supposed to be instinctively or genetically moved or driven to act selfishly.” His next facet is ethical egoism and that “amounts to the imperative that we ought to benefit ourselves. To do this is to provide oneself with what one requires for flourishing, excelling, developing in positive ways along lines of Aristotelian eudemonism.” Capitalism and egoism are often seen as compatible ideas, as they both reward a selfish mindset.

Objectivism

Objectivism is a philosophical system concocted by Ayn Rand. As described by Rand, “The Objectivist ethics holds man's life as the standard of value – and his own life as the ethical purpose of every individual man.” She goes on to say “that man must live for his own sake, neither sacrificing himself to others nor sacrificing others to himself. To live for his own sake means that the achievement of his own happiness is man's highest moral purpose.” Objectivism builds on the foundation of egoism but adds a stricter requirement of self-interest. Rand and other followers of objectivism believe that the only sufficient social system that can embody this ideal is capitalism, and in particular laissez-faire capitalism. Laissez-faire capitalism allows for the most liberty to its citizens and effectively gives them free reign to make any decision they choose.

Utilitarianism

Utilitarianism, as defined by Henry Sidgwick in The Methods of Ethics is the ethical theory according to which “in any given circumstances the objectively right thing to do is what will produce the greatest amount of happiness on the whole – taking into account all whose happiness is affected by the conduct.” This is in direct conflict with egoism and objectivism, as it suggests that the morally good action is the action that provides the most overall happiness rather than the most happiness to the individual performing said action. Utilitarianism can also conflict with a capitalistic economic system, as most corporations do not base their actions on providing happiness the maximum amount of people.

Personal egoism

I agree that egoism is valuable but argue that its value mostly arises at a personal level, rather than in a societal context. Machan provides the example of waking up each morning. “When folks awake in the morning they process to take good care of themselves before reaching out to help others.” There is an ethical value in using some self-interested energy to ensure one is well before turning that energy and attention to others. However, once a person begins interacting with the rest of society, I argue that their mindset should shift from a base of egoism and into a base of utilitarianism.

Societal utilitarianism

I believe utilitarianism is the correct approach within a society. The ramifications of most of a person's actions are not exclusive to that person and should not be treated as such. While Ayn Rand or someone taking a strictly egoist point of view may argue in favor of acting for oneself first, I argue in return that such a mindset is not sufficient for societal actions or decisions. Striving to provide a moral good to people other than oneself should be the basis of the meaning of life. When a fundamental system such as capitalism is created with clearly selfish intentions, the morality of the society that applies said system should come under scrutiny.

Reassessing Capitalism

Capitalism is a system whose ideals make it acceptable to take money from the underprivileged and distribute it to the ultra-wealthy. That is not a morally sound action to take and should be reconsidered. Capitalism allows the ultra-wealthy to hoard wealth rather than providing communities or society at large with the resources it needs to function at sustainable levels. This hoarding of wealth does not create a net good as it only benefits a select few citizens and should be analyzed and revised until it provides more good than harm to society.

Capitalism has brought much happiness and prosperity to America, but it has also brought pain and suffering through economic inequality. I do not seek to argue that such pain and suffering was intentional, but it is nonetheless present and unremedied. Capitalism is driven by the mindsets set forth through egoism and objectivism, of which I think are improper lenses through which societal actions and decisions should be viewed. A utilitarian perspective would bring a more balanced set of actions that would provide positive outcomes for many more people. Using utilitarianism as its basis, our society should reconsider how our wealth is distributed and find ways to close the economic inequality gap in America. It will be impossible to have a society where each person is truly equal but a society that values a goal such as equality, even if it knows that goal is largely unattainable, is one that has its priorities in the right place. The priorities of a society should always be to protect and help its citizens and I believe a reassessment of capitalism through a utilitarian lens will help create that priority in America.