It is becoming cool to hate capitalism.
A Harvard survey recently found that 51 percent of Americans do not support capitalism, while only 42 percent expressed support. College campuses are covered in Che Guevara shirts and ballot boxes are stuffed with votes for anti-establishment candidates.
Some of this discontent is understandable—wages are stagnating, growth is slowing, and inequality is rising––but throwing out an economic system that produced incredible growth in living standards and reshaped the globe in the last two centuries would be a colossal mistake. While the U.S. faces real challenges, reaching for the levers of government control is not the answer.
Over the last 50 years, due to the baby-boom generation and massive post-World War II investment, the U.S. has seen a massive increase in both working population and worker efficiency. Living standards have skyrocketed. At the end of the 20th century, GDP per capita was more than four times greater than at its pre-World War II peak. Globally, this rapid growth has had a rising tide effect—standards of living in lower-middle class nations now exceed those of 19th century nobles.
This sustained increase in living standards was made possible by capitalism. The Soviet Union, the largest non-capitalist economy during the post-World War II era, was able to match and even exceed the growth of capitalist economies between 1950 and 1973. This growth quickly stagnated, though. Between 1973 and 1984, Soviet economic growth was less than one percent. Between 1984 and 1991, the Soviet economy shrunk as the Soviet elites attempted to mimic the successes of capitalism with limited reforms.
No other economic system has had the same sustained success as capitalism, and its effects on the world have been astounding. In the past 100 years, the global population has skyrocketed. Yet three times more people are killed by obesity than malnutrition––which shows that abundance of food is a problem, not lack of it. Life expectancy has increased from less than 50 years to more than 75 in just one century.
Unsurprisingly, the inequalities caused by capitalism spur people to action in the political sphere, both in the U.S. and abroad. Sen. Bernie Sanders, I-Vt., developed a national following and was the runner-up in the Democratic presidential primary by rallying against the injustices of capitalism. British Labour Party leader Jeremy Corbyn nearly led his party to a surprise victory with his anti-capitalist message in a snap election against the status-quo candidate, Prime Minister Theresa May. Left-leaning Jacobin magazine claimed that Corbyn “revived a vision of social-democratic politics that looks beyond capitalism.”
Westerners have become severely disillusioned with capitalism. These days, criticizing capitalism is simply good politics! But politicians seem to have forgotten that capitalism has increased well-being for those of all incomes, even during tough economic times. Between 1967 and 2015, inflation-adjusted income for the bottom quintile in the U.S. increased seven-fold, yet only a mere one percent each year between 2000 and 2015.
During that same time, though, the percentage of the world defined as middle class by the World Bank rose from 21 percent to 34 percent, while the percentage of those living in poverty dropped from 25.6 percent to 11 percent. Additionally, the global child mortality rate dropped from 75 deaths per thousand to just 42.5. So while America’s poor saw their well-being stagnate after decades of success, those living in poverty around the world were better off.
Over the last 15 years, both the globe’s wealthiest citizens and its poorest citizens saw strong growth, while the incomes of the poor in the U.S. and in parts of Europe began to stagnate. This relative loss in well-being has been a driving factor in the anti-capitalist sentiment and the rise of populism in western democracies.
Of course, any economic and political system must take care of its least well-off. But we shouldn’t forget how we got here––and the dangers of the alternatives. Capitalism spurred a period of unparalleled and unprecedented growth in global living standards. It flies in the face of logic that many are now suggesting we abandon the economic system that’s transformed the world we live in and made us wealthy beyond our ancestors’ wildest dreams.
Jordan Shimer is a student at the University of Chicago’s Center for International Relations where he focuses on institutional development in post-communist societies.
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