The Eloquent Defense of Capitalism

This piece was first published in Helen's Substack newsletter. For more similar posts, please check out Confucius Never Said.

The recent debate between Jemele Hill from The Atlantic and podcaster Kmele Foster on CNN has become viral. Hill states that capitalism is oppressive and is linked with white supremacy.

Foster disagrees. It is one thing to admit that markets function imperfectly; it is quite another to assert that the system is oppressive and that private property and free exchange are in themselves racial initiatives. He favors Adam Smith’s concept of a “natural system of liberty” in which people are allowed to own property, trade it with the consent of the other party, put resources to use and reap gains that leave both sides better off. This set of rules has generated more wealth than any other system in recorded history. That is what capitalism amounts to. It is not white supremacy.

What is most noticeable in this discussion is not only the fact that their views on capitalism are opposite but also the difference in the substance of what they say. Foster does not provide brief answers; instead, he clearly, calmly, and thoughtfully explains his points and shows that he is convinced, intelligent, and quick-thinking.

The exchange with Hill didn't seem to be a genuine debate since her replies were generally short, composed mostly of ideological jargon, and didn't show any depth. She also failed to answer Foster's question about "the white supremacy dynamic of private property".

It's worth watching in full.

Hill didn't post her reply on X.com until the day after. As she stated, America was founded upon slavery; it was because people were bought and sold that the country became an economic power; afterwards housing and employment rules prevented Black people from taking part; the existing racial wealth gap is therefore evidence that capitalism is linked to white supremacy.

The post met with a great deal of opposition, which can be summarized in three main points. Firstly, slavery predates both writing and capitalism; it is a system based on unfree labor and the seizure of people, the very opposite of the right to own oneself and to trade with one's consent. To regard the two concepts as identical is to bring disgrace upon both terms.

Second, the assertion that “America was built on slavery” exaggerates the role of slavery in the nation's economic output. Around 1860, the labor of the enslaved contributed approximately 10 to 13 per cent of the U.S. GNP, which is about equal to the proportion of the enslaved in the population. Although cotton was a major export and formed a key part of the Southern staple economy, it made up only about 5 to 6 per cent of the national product.

The United States' dominant position after the Civil War resulted from industrialization in the North, the accumulation of capital, and the development of a continental market—something that occurred long after slavery had been abolished. Slavery was a serious wrong and a significant economic institution in the South; it was not the driving force of the later American economy.

Third, it is true that there were later rules which excluded black people from markets for a period: housing restrictions, barriers to employment, and other policies based on race. These were real and they increased the harm caused. Since such policies go against the fundamental principles of capitalism by restricting private property ownership and voluntary exchange, the fair criticism is that America often failed to meet its own standards, while the dishonest criticism is to say that the standard itself is white supremacy.

The same week, the Wall Street Journal published an essay drawn from Owen Zidar and Eric Zwick’s work on who actually gets rich in America. Their point is not that a few coastal founders explain the country. It is that we are living through an age of “everywhere millionaires”: owners of ordinary firms in unglamorous trades—restaurants, trades, local services—who built wealth slowly, often without elite degrees or inherited wealth.

The journal states, “Most come from poor or middle-class families, simply because there are 99 times as many people in the bottom 99% as in the top 1%. Among star founders, there are 2.5 times as many from poor backgrounds as from the top 1%. Only about a quarter of business owners worth $5 million or more inherited their companies.”

Dick Portillo is a case in point of a self-made millionaire. In 1963 he opened a hot-dog stand even though at the time he had no knowledge of how to make the buns or cook the hot dogs. Many years later he sold his business for one billion dollars, and Portillo's situation is by no means unusual since there are a great many others similar to him.

The journal says that there are roughly three million millionaires similar to Portillo in America, their total wealth amounting to more than $65 trillion. It also points out that "the number of people who are owners of businesses with a fortune of $100 million or more has, when adjusted for inflation, more than quadrupled since 2001; far more significant than a small number of well-known billionaires on the coast, these are indeed the real rich in America."

They conclude their essay with a strong endorsement of the American Dream, “The typical path to $10 million and up comes from owning a company. That path is open in every town, in unglamorous industries, to people without top test scores, fancy degrees or rich parents.”

It saddens me that many people on the left, along with a number on the right, no longer have faith in the American Dream or in America's capitalist system. The majority of the media and our education system lead us to believe that capitalism is all about exploitation, racial oppression, and inequality.  Bernie Sanders even declared, “For many, the American Dream has become a nightmare”.

However, I still believe that the American Dream is alive and well. Let me end by quoting Chamath Palihapitiya, who lives his American dream every day.  On his 50th birthday, he wrote a post on X.com:

“I was born in Sri Lanka in 1976 in a country that, at the time, was about to enter a decades-long civil war. My father was able to get stationed at the Sri Lankan High Commission in Canada for four years in the early 80s - when some of the fighting was most severe - and which, from our vantage point in Canada, gave us some respite from an otherwise omnipresent conflict…

I worked at Burger King starting at 14, giving my paycheck to my mom and dad to support our family in the role that I was assigned - earn enough to pay for our bus passes because we couldn’t afford a car.

I was a loser growing up. Some friends, some good memories but mostly forgettable and lonely. I wasn’t very studious but did get my act together in my final year and got into a great university.

I immigrated to the US soon after graduating and found an opportunity. Things clicked and I have been traveling a path to find myself ever since. Only in America is this possible… I worked hard, followed the rules, paid my taxes and stayed in California out of loyalty for the opportunities it has given me despite its dysfunction.

I found my wife here. Had my kids here. Found my tribe here.

There have been some very hard times as well - deaths, divorce, financial pain, mistakes of omission and mistakes of commission. You can’t dwell on these things - they are weights that will pull you down if you’re not careful. Learn from them. Respect them. BUT MOVE ON.

To think 50 years ago I could have ever gotten a chance to meet the people I’ve met and have had the experiences I’ve had would have been mind boggling to my parents. It’s mind boggling to me now.

We forget often and try to convince others it’s not true but America truly is the best country in the world. Everything and anything is possible here. I can testify. Be grateful to be here. This is the only place that gives EVERYONE a chance to live a great adventure. The first 50 years have been that for me - an incredible adventure.”

I entirely agree with him; America has been an adventure for me too, and I am very thankful for it.

It is commonly believed that good things happen in threes, and the debate by Foster, the article in the WSJ on the millionaires who are everywhere, and Chamath Palihapitiya’s account of his story along with his gratitude towards America all provide a powerful and encouraging argument in favour of capitalism, don't you think?

Keep believing in the American Dream and in capitalism.