The Myth That Capitalism Only Rewards The Rich

The idea that capitalism goes hand in hand with social marginalisation does not fit reality

Capitalism  is  a  great  system  –  for  filling  the  pockets  of  the  already  rich. But  this  prosperity  comes  at  the expense  of  common  people,  who  struggle hard  to  afford  basic  services  such  as  health  care  in  the  unforgiving market system.  This  is  a  common  critique  against  economic  freedom.  During  the 19th  and  20th  century  leftist intellectuals  would  still  argue  that  socialism and  state  planning  could  create  greater  prosperity  than  markets. Reality proved  these  ideas  wrong  –  big  time.  It  is  today  quite  evident,  even  for those  who  would  ideologically wish  otherwise,  that  free  markets  are  best  at fostering  innovation  and  growth.  So  the  critique  against  markets has changed.  Today  it  is  more  along  the  line:  well,  yes,  capitalism  creates prosperity,  but  only  for  a  small handful.  If  you  are  an  ordinary  guy  who wants  to  live  a  long  and  healthy  life,  avoid  capitalist  countries  which are  all about  the  survival  of  the  fittest.  However,  even  this  theory  struggles  in  the face  of  reality.

To  find  out  if  markets  really  translate  to  poor  social  outcomes,  let’s  look  at the  United  Kingdom.  According  to the  Index  of  Economic  Freedom,  the country  has  the  13th  freest  economy  in  the  world.  Since  the  UK  is amongst the  more  market  oriented  countries  we  should  expect  –  assuming  the socialist  critique  to  be  true  – that  the  country  has  appalling  levels  of human  progress.  To  test  this  theory,  we  can  turn  to  the  Human Development  Index.  This  United  Nations  project  has  for  long  examined  how good  countries  fare  in  terms  of equality,  educational  opportunities,  health and  other  welfare  measures.  A  quick  glance  at  the  latest  data  shows that the  UK  is  a  country  with  a  high  rate  of  human  development  –  more precisely  ranked  at  14th  place  internationally.  This  means  that  the  UK  is  a place  where  the  great  majority  live long  and  prosperous  lives,  with widespread  access  to  health,  education  and  social  services.  Good  social outcomes  and  capitalism  is,  at  the  very  least,  not  an  impossible  mix.