Capitalism has been raising the worldwide standard of living for years. But governments around the world have responded to the COVID-19 public health crisis with very strict rules. Now a lot of progress toward wealth and freedom have been lost. Still, billions of people are better off now than they were a decade or a century ago.
Capitalism: A Primer
In a capitalist society, private individuals and businesses own capital goods. There are two types of capitalism. The first is the purer form of the economic system, known as laissez-faire capitalism. This type doesn’t put any limits on private businesses and consumers. The second is a mixed capitalist system that includes various government regulations and state ownership of resources and business. Today, most nations have the second type of capitalist system. These are the basic principles of capitalism: private property rights, profits, losses, and free enterprise. Capitalism works because it inspires people to work and create.
Capitalism’s Rival: Socialism
In a socialist economy, the government owns and manages the means of production. Why has it gotten so much support? People who push socialism promise equity, fairness, and employment. However, as eminent economist Milton Friedman wrote in Capitalism and Freedom: “A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.”
The End of Capitalism?
In response to coronavirus, the government implemented sweeping powers that undermined the free-market economy and liberty as politicians shut down businesses, placed millions under house arrest, and printed more money to make sure the economy kept going. Basically, what we got from the state after COVID-19 is a taste of what we could expect under a fully socialist or even communist nation.