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Enemies of Capitalism

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01/27/2009Briggs Armstrong
"These false prophets of capitalism are the greatest friends that proponents of socialism have."

New Rule: neomercantilists, neoconservatives, and statists are no longer allowed to call themselves "free marketers." People who call themselves free marketers such as Bush, Paulson, Greenspan, and Bernanke are the primary threat capitalism faces. These false prophets of capitalism are the greatest friends that proponents of socialism have.

Many prominent American figures claim to be proponents of free markets but in practice advocate neomercantilist, corporate welfare policies. These policies eventually, and unsurprisingly, lead to disastrous economic and social consequences. These catastrophes are then blamed on capitalism, free markets, and deregulation, at which point, socialists are easily able to convince the distraught public that capitalism is a failed experiment and only massive government intervention in the markets can save them. Such is the way that capitalism dies, eaten away by a cancer from within.

The real mystery is not that some of the loudest proponents of free markets often institute policies that are antithetical to free markets, but that the general public, as well as learned scholars, rarely challenge these claims. In general, the public simply accepts that if a person claims to believe in capitalism and private-property rights then they are truly capitalists. In truth, most politicians who claim to be champions of free-market principles are anything but.

It is unfortunate that all of the scoundrels who make such false professions of faith cannot be brought to justice, at least not in this article. I will however, focus on some of the better known perpetrators of this fraud. George W. Bush, for example, has claimed to believe in free markets so many times that it could fill volumes. In practice, however, the changes he has made consistent with capitalist principles are few and far between. Bush used his position of power to expand the corporate-welfare system throughout his administration, but it was toward the end of his second term that he did the most damage. Under Bush's watch, private businesses have been the recipients of corporate welfare, sometimes leading to nationalization, on a scale never before seen in American history.

The public is familiar enough with the events surrounding the nationalization of AIG, Fannie Mae, and Freddie Mac, as well as the bailing out of various banks and auto manufacturers, as to not warrant recapitulation here. In an interview on CNN, Bush stated, "I've abandoned free-market principles in order to save the free-market system."

Only in the mind of Bush can this claim seem logical.

As the president prepared to attend the G-20 summit, he vowed to defend the free market against calls for global regulation. Yet he also stated, "I'm a market-oriented guy, but not when I'm faced with the prospect of a global meltdown."

It is statements such as these that provide the proverbial fuel to the socialist fire. When one of the nation's most visible proponents of capitalism claims that he has abandoned it, because, without big-government policies, capitalism itself would be destroyed, there remains little work for those who desire socialism. Thus it is easy to see how those who believe Bush to be a true capitalist could be persuaded to accept the propaganda that the free market has failed, and that government must step in to save the day.

Now consider another "free marketer," Ben Bernanke; surely he of all people is a true capitalist. I am sorry to say that even the chairman of the almighty Fed is not a capitalist. The Federal Reserve System is little more than a central-planning organization created in secret in Jekyll Island, Georgia by a group of the nation's most powerful bankers.

If centrally planning the price of corn and other goods is in violation of capitalist principles, then how is centrally planning the price of savings and borrowing (by altering the amount of money in existence) considered part of the free market?

The institution's inherently anticapitalistic nature aside, Bernanke's actions during the "crisis" have shown him to be a nonbeliever in the free market. He, along with Paulson, used the ensuing panic to demand powers never before granted to the Fed. We are all too familiar with what Bernanke used his powers to do, from brokering (and funding) mergers to nationalizing banks. No true proponent of capitalism could ever condone the actions taken by Federal Reserve Chairman Ben Bernanke. Yet even before the "crisis," socialists were holding Bernanke up as the apotheosis of capitalist ideals. The initial reaction to Bernanke's appointment can, quite humorously, be read here at the World Socialist website.

The life of Hank Paulson almost reads like a clichéd tale of the American Dream. Paulson distinguished himself at both Dartmouth and Harvard; he briefly worked in the Nixon administration before climbing to the top of Goldman Sachs. To be sure, anyone capable of running Goldman Sachs must be an exceptional businessman. This does not mean, however, that he must be an exceptional capitalist. During the economic "crisis," Paulson consistently used the powers of his position as Treasury secretary to save big business from the consequences of their poor decisions.

When the powers traditionally held by the secretary of the Treasury were insufficient for him to bail out Wall Street's biggest financial institutions, he used fear to force Congress into granting him unprecedented powers. Language from his initial three-page proposal for the $700 billion bailout is telling: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

The entire three-page bill can be read here. This is an individual, who, along with Bernanke, orchestrated the largest government intervention in capital markets in history — who claims the power to determine which ones will be saved with taxpayer money and which will be allowed to fail. What person even vaguely familiar with the tenets of capitalism could believe Paulson's professions of faith in the free market?

"One of the easiest-to-read accounts of capitalism's profoundly beneficial effect on American history and culture"

Unfortunately, words seem to matter more than deeds. By and large, the public has been unable to recognize the disconnect between the actions and words of the leaders who espouse free-market ideals. This is a dangerous phenomenon. Ad hominem arguments should generally be discouraged, because the message should be more important than the messenger, but I believe this is one scenario in which it would be prudent to "shoot the messenger." In this particular situation, the messenger is, in effect, mistranslating the message. The actions of these individuals, taken in the name of capitalism, are having a profoundly negative effect upon public opinion of capitalism.

Those who profess the virtues of capitalism when it is politically expedient, only to abandon such principles in practice, must be held accountable. Anyone who understands capitalist theory has an obligation to refute the claims made by those who falsely profess free-market principles. All those who are dissembling themselves as capitalists in the public sphere should be confronted at every opportunity by every true capitalist. We must not become subject to the bystander effect and rely on someone else to take up the fight. We must all challenge the false claims, for the enemies of free-market principles are many and vocal.

Note From the Author

If you are interested in reading about how true capitalists have shaped this country (and have often been demonized for it), I strongly recommend picking up a copy of Dr. Thomas DiLorenzo's How Capitalism Saved America. This book is one of the easiest-to-read accounts of capitalism's profoundly beneficial effect on American history and culture.


Briggs Armstrong

Briggs Armstrong holds a degree in accounting from Auburn University.