Capitalism leads to social benefit, not just individual wealth.
Say what you will about Rep. Alexandria Ocasio-Cortez, but she’s never shy to share her beliefs. The far-left Democratic congresswoman has been especially open with her dislike for billionaires, attacking them many times in the past. AOC’s latest viral Instagram video renews her campaign against the rich, this time, with a twist—she essentially says only billionaires support capitalism because they’re the only ones who benefit.
“Let me tell you a secret,” the congresswoman said. “Most people don’t really know what capitalism is. Most people don’t even know what socialism is.”
“But most people are not capitalists, because they don’t have capitalist money—they’re not billionaires,” she concluded.
Despite AOC’s claims, support for capitalism should in no way depend on whether one is a billionaire or has “capitalist money.” (Whatever that means.) In reality, the spread of capitalism and free trade around the globe has helped uplift the world’s poorest more than anything else in human history:
FEE’s Hannah Cox recently ran the numbers on this in an episode of RIGGED: “The number of people who are living in extreme poverty has collapsed by every possible metric available to us. It has done so while population growth has exploded.”
AOC’s rant misses a very fundamental truth.
Yes, successful entrepreneurs get rich under capitalism. Very rich, in fact. But, in order to get rich and become “billionaires,” they must create enormous value for others—millions of people, in many cases. (That is, unless they collude with Big Government to get corporate welfare or the system rigged in their favor, which, erm, ain’t capitalism.)
Just think of how much Amazon CEO Jeff Bezos has done to bring an enormous variety of affordable goods to people’s doorsteps in order to make his “obscene” billions. Or consider how much the late Apple founder Steve Jobs did to bring innovative iPhone and music technology to so many of our lives in order to make his fortune. And think of how many jobs Bezos and Jobs created in the process!
Prosperity under free-market capitalism isn’t a zero-sum game. The rich do get rich, but they do so by improving the lives of those around them.
As the late economist Walter E. Williams noted, “Prior to capitalism, the way people amassed great wealth was by looting, plundering and enslaving their fellow man. With the rise of capitalism, it became possible to amass great wealth by serving and pleasing your fellow man.”
Examples of this abound in modern American life.
“Business owners from John D. Rockefeller and Henry Ford to Jeff Bezos and the Walton family all have pursued their own interests and corporate goals while simultaneously building successful companies which survived because they satisfied customers and were profitable,” Tim Nash and his co-writers explain in a 2021 FEE.org article. “In doing so, as Adam Smith wrote more than 200 years ago, by pursuing their own interests they are frequently promoting the interests of society at large.”
“Practically every item we engage with daily (our car, cell phone, food, clothes, toothbrush, etc.) was produced by people seeking profit,” it concludes.
Ample empirical analysis confirms the reality that capitalism leads to social benefit, not just individual wealth.
Nobel-Prize-winning economist William D. Nordhaus published a study in 2004 estimating that while they may get rich, innovators ultimately reap only about 2 percent of the benefits of their inventions. That’s right: 98 percent of the benefits were gained by consumers and society overall.
This might sound hard to believe, but again, just think of the iPhone.
It has benefitted so many hundreds of millions of people all around the world in ways we can’t even imagine, let alone list. It’s not unreasonable at all to suggest that the billions made by Apple on its technology are actually only a small percentage of the net benefits for mankind.
All of this explains why AOC is so wrong to suggest that only those with so-called “capitalist money” and billions in the bank ought to support free-market capitalism. Voluntary trade and free markets uplift the poor and benefit us all. While Americans could indeed use more economic education, if anything, the public understands capitalism better than AOC does.
This article originally published in Fee.
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