Capitalism is key to protect democratic prosperity

A strong and robust free marketplace provides democratic societies with many important benefits. Some of these benefits are economic: free markets play a crucial and irreplaceable role in making democracies prosperous. Some of these benefits are political: free markets protect us against certain forms of political domination and authoritarianism. And some of these benefits are moral: free markets motivate and reward people who contribute to their society’s welfare. A good way to appreciate the social benefits of markets is to consider the difficulties manifest in societies that try to abandon them in favor of a command economy— that is, an economic system in which a society’s productive efforts and resource allocations are determined and mandated by a governing authority. Karl Marx’s core argument was that free-market capitalism was an effective way to turn an agrarian feudal society into an industrial liberal society but that it suffered from internal structural flaws (or “contradictions”) that made it incapable of managing a successful advanced economy. In retrospect, however, the actual historical trajectory of the world’s largest and most important officially Marxist countries, the Soviet Union and China, suggests that he got it backwards.