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The Declaration of Independence, the Constitution, and the Bill of Rights confirm — not establish — that we are born with individual freedoms and liberties. That means ‘God-given’ or natural rights (whichever you prefer).
This is important. If God-given or natural, then a government didn’t give them, a king did not award them, a tribunal did not make them for you. Conversely, government can’t take them, which is what the socialists, communists and Marxists hate. Our Constitution provides the basic instructions for preventing the processes necessary for government taking natural rights (criminal acts and so forth).
Capitalism is the natural outgrowth of individual freedom and liberty — free people exchange freely. As an example, the American Indians traded freely. So it goes that only governments and criminals can interfere with it. From free trade we get companies, corporations, patents and copyrights. These are the by-products that protect ideas, activities and output.
So as free people trade freely, the government lovers and control freaks, those with nothing to trade and other ne’er-do-well types, try to shut down free trade and their by-products. We know them by other names, ones that they used to run from.
When my nephew asked me what the difference between capitalism and socialism is (which comes up a lot these days), I say something like, “Capitalism comes from natural, individual freedom where free people trade freely. Socialism is a man-created system that tells individuals what to do. Government gives and takes what it wants.”
It is the individual freedom part that distinguishes the United States and makes us better. It’s why our 250 years of Independence is something to celebrate. And why we are often envied and even sometimes hated by the rest of the world. Hated by the dictators because of our freedoms and envied by those countries that value freedom but aren’t ready to release their subjects from government ownership.
Discussion (20)
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You got it mostly right. The problem in capitalism emerges when players get so enthralled with the next dollar of profit (increasing wealth) that they corrupt the existing free market. One approach to this process is reducing prices of existing products in the market so that competition is reduced as players remove themselves because of unprofitability. This then tends toward consolidation in that business line, reductions in the number of players and reduction in competition, enabling increasing prices and profits. This apparently first really manifested in America after our Civil War and the expansion of the railroads and the introduction of fossil fuels for energy sources. This might have been the main entry point for federal regulation when a need to curtail this consolidation process resulted in our anti-trust laws to control business mergers. It doesn't appear to have worked very well, absent success both in pricing competition and product quality.
Actually, government itself enters this same mode as its functions are consolidated into big monopolies. We've seen that effect clearly now when the federal government became the prime player in public education and in medical care insurance.
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I didn’t want to get into the weeds on this subject. Just to point out the key difference. I’ve been listening to podcasts and X posts that hit on many points about socialism, etc but not exactly how our freedom works. Even this comment is getting too long.
Free people trade freely.
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I can't argue with that. If asked for a very short explanation, I would put it like this. Capitalism is the freely agreed-upon exchange of goods, services, or money without any government interference. Socialism is what you get when an uninvolved third party with political authority decides it knows better than the exchangers and imposes restrictions on the trade.
Some criminals speak as if capitalism means acquiring wealth by any means possible. That is incorrect. If someone is being robbed, coerced, or threatened, that is not a capitalistic exchange.
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The federal reserve interferes with the price of money which is stealing. Then everybody complains about socialism and populism. Then it collapses.
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