Socialism vs. Capitalism: a false dichotomy

A good friend of mine recently posted a link to this old clip of the economist Milton Friedman lecturing Phil Donahue on the (lack of) merits of socialism vs. those of capitalism. The problem with Friedman’s explanation is the problem I hear all the time. Socialism and capitalism are nearly always presented as mutually exclusive alternatives–one good; one bad. This is not only empirically false but maddeningly narrow-minded.

I agree with Friedman that self-interest is a very powerful force for good. In fact, what we consider “good” is largely defined in terms of self-interest of sentient beings. So striving for self-interest is, at least in some sense, striving for good.

However, what many people–hardcore capitalists, hardcore libertarians–overlook is that we, the self-interested sentient beings, do not live in isolation. We can not completely separate our own self-interests from those of others who inhabit this same, closed, biosphere. Our various interests are hopelessly entangled such that if we wish to truly optimize our own self-interests, we must consider the self-interests of others.

To some degree, we already know this. We realize (some more than others), for example, that society is a better place if most people have at least fundamental levels of education, that most people have access to roads, to water, and to medical care. And so we, collectively, invest in these things. We don’t only pay to send our own kids to school, for example, we try to send everyone’s kids.

There are aspects of capitalism that are good. That are essential. The same can be said for socialism. Neither is the ultimate solution on its own. To some degree, we long ago recognized this, even if many of us refuse to admit it.

We are struggling to find the right mix of socialism and capitalism. And, I’m afraid, we have a long way to go.

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