It’s fairly common for libertarians to extol capitalism as the ideal economic system. While I don’t consider myself to be anti-capitalist (and there are a few libertarian anti-capitalists…) by any means, I do think capitalists have a limited view of the world and that, ultimately, libertarians’ near-exclusive advocacy of capitalism chains us to one notion of economics or property that fundamentally limits our potential for success as a people.
But before we get to all that, let’s start with the basics. People often don’t know what they’re talking about when they discuss capitalism. They tend to think of it as either (1) the system that we have now or (2) the ideal libertarian economic system in which all people are free to act as they choose.
First of all, the United States currently operates on a mixed economy, one that incorporates free market and controlled market aspects. While it is true that private ownership does constitute much of the foundation of our economy (and capitalism), several key features of capitalism are missing (unhindered competition markets and price systems come to mind…).
Secondly, it is important for libertarians to realize that capitalism isn’t the same thing as freed markets, and I think some libertarians conflate the two incorrectly. Capitalism is a system that is based on private ownership of capital goods and the means of production. Profit is generally the primary motivator. Capitalism gets lots of points with libertarians because it features things that libertarians love like competitive markets and price systems, a respect for private property and, theoretically, individual autonomy.
And all of that is well and good, but for libertarians, whose primary motivator is freedom for all, this can present problems. Capitalism requires particular, specific notions of the way the market should be structured at its foundations: property rights, individual ownership, and profit motivation. When you commit a society to these notions, you then have to then form rules (whether laws or social norms) that structure society to be able to achieve specific goals.
This is limiting of many fundamental freedoms, and, more importantly, stifles innovation. One doesn’t have to look very far in the history of ideas to see ideas on different ways to structure society, property, the way people interact with each other and trade, and what motivates people. Capitalism requires that we pre-emptively oust those ideas as illegitimate. It is a form of “meta” protectionism. Something that libertarians don’t support at all!
Libertarians should be advocating for free markets (some use the term freed markets, but I am hesitant to do so, as it seems to have implications different than what I am advocating here). That is, an economy for which the rules or laws are unrestrictive at especially the most basic levels. This allows for true freedom for individuals, businesses, and other kinds of organizations that people may want to form.
As libertarians, we should avoid committing ourselves to any principle other than freedom. People will always disagree on what the best way is to form society, but as long as we are free to act on those beliefs without forcing or unduly burdening others to do the same, then we have fulfilled our commitment to freedom. Unfortunately, I do not think that chaining ourselves to capitalism fulfills that goal.