Capitalism is ‘Based’- Here’s Why

Disclaimer: This article reflects the author’s opinion, not the Bugle’s.

What first comes to mind when you think of capitalism? For me, the words innovation and competition come to my mind. Although some may think these two words might be basic descriptions, it is actually the beauty that unlocks the real truth about capitalism.

Although capitalism is known to be the main cause of ‘economic inequality’ and ‘poverty’ in America, most people forget the fact that these impacts are inevitable in society and alt causes exist to these issues. Believe it or not, poverty exists in every country. Life is never a utopian world where everything is fair. Some people will inevitably have an advantage over others which also means inequality is also inevitable. Some will be born into poverty and Some will be born into riches. In addition, there are several causes of inequality and poverty. Several unique causes you might know are the COVID pandemic effects on the economy, soaring inflation, and the unemployment rate. At the end of the day, we have to realize that just because poverty and inequality exist in the US, it doesn’t mean capitalism is the main cause of them.

Capitalism drives innovation and competition. First, let’s start with the fact that humans are inherently greedy and selfish. It isn’t capitalism that causes this selfish nature. Capitalism just helps use this human nature to benefit themselves and others. Due to the basic nature of capitalism, there is always competition between companies – competing to be cheaper, faster, and better than others. This competition obviously benefits the winner, but it also benefits others as the overall economy and GDP expand as more innovation is created. Capitalism makes us innovate new ideas to be ahead of the game which independently leads to more innovation and growth.

Capitalism is comparatively better than any other economic system and outweighs it. Many critics of capitalism say socialist utopia is better than capitalism as inequality wouldn’t exist; however, this is simply not true. Inequality inherently exists in our society. In fact, in a communist society, Inequality is worsened by the system as all things are controlled by the government creating a tyrannical government. Even worse, since the government is the highest authority of the state, there are no checks and balances that prevent the government from becoming a tyranny. Historical precedent proves this. The Soviet Union was a communist state that dominated the Euroasian region during the 1900s. The Soviet Union is known for not only its tyrannical government but also the mass physical and cultural genocide they have caused throughout the century. No one can deny or justify their deaths – it was simply communism that led to the deprivation of human necessities including food, water, and lives. Many proponents of communism have said inequality wouldn’t exist as everyone will get equal wages and equal treatment, but again, this is not true as inequality will always exist. In fact, everyone will be poorer as no one will have the incentive to innovate or compete to be better.

Don’t get me wrong – Capitalism still has its problems including the huge disparity between the rich and the poor. However, at the end of the day, the benefits of capitalism heavily outweigh its harms and thus it is declared as a ‘based’ economic system.