Capitalism has indeed failed – failed to have a goal.
One of the most condescending and high-horsed “rebuttals” of free market economics by socialists and progressives has been to declare that “capitalism has failed [us/the poor/this country]!” My first response has always been to ask “but how can capitalism fail something it never set out to do in the first place?” Capitalism has never been about alleviating masses of paupers out of their unfortunate circumstances (but it does, nonetheless). Capitalism has never been about enriching states or making them more productive (but it does, nonetheless). Capitalism has never been utopian. It promises no results. Capitalism (or free market economics), in fact, has never been about any substantive outcomes. It does not set out to do anything, quite unlike socialism which claims to aspire to an equal society.
It is largely my fault, and the fault of many other proponents of liberty, for this popular misconception. We often talk about “free markets” and “capitalism” as if it is some kind of system. It is not a system. It is simply the default setting – an already-existing state of nature. It is individuals, all over the world, competing and cooperating: exchanging value, creating value and sometimes, destroying value. The free market has no goals or aspirations or functionaries. It cannot “succeed” nor can it “fail”. I made this mistake again above when I said capitalism alleviates masses out of poverty and increases productivity. “It” doesn’t do anything. The poverty alleviation and increased production are as a result of ordinary human beings going about their business, relatively undisturbed.
So it is clear, as many have described, that the opponents of capitalism simply do not know or understand what it is. They cannot define it but oppose it nonetheless, because “under” capitalism, the workers and the poor are allegedly “exploited”. It is because of this that capitalism is immoral. It is an unethical system which operates exclusively to the detriment of the poorest among us, because they are unable to come to the negotiating table on an “equal” basis to those with more wealth.
But it is simply like the human hand: arguably our most valuable natural tool. At its most moral, we use it to help ourselves and those around us, to caress and to hold hands. At its most immoral, we crunch it up into a fist and initiate violence against others. It is an amoral, natural, tool, which, regardless of its potential uses for evil, is something we cannot go without. Much more prosperity and value has been created for humanity by way of hands, than a lack of them.
The same is true for the market. It is not immoral. Nor is it moral. It is amoral. It exists naturally. By our nature, we will always prioritize our own self-interest, regardless of the form in which it is manifested (helping others, too, is self-interest, for that warm and fuzzy feeling inside). To give effect to our self-interest, we must cooperate with each other in some cases, and compete with each other in other cases. Violence, too, is in our nature. But being conscious beings, we understand that violence leads to retaliation and adverse consequences. It is thus also in our own interest to avoid danger. We do this by not associating with the violent among us (when we have that choice and legitimate alternatives) and not being violent ourselves while we are rationally minded. We are only exploitative when the manipulated system around us encourages us to be.
But the manipulation of the market through price control, printing money, minimum wages, tenancy laws, advertising regulations, and so forth, is like amputating a perfectly good hand and replacing it with a synthetic. The natural hand may have been used for evil, but that was never its purpose or its defining feature. The socialist synthetic hand is a perversion. It cannot feel and cannot adapt as well as the natural, free market hand. It does not respond to the touch and only does what we consciously, sometimes forcibly, tell it to do; and even then, it does not give us the result we wanted. It also packs a harder punch when we crunch it up into a fist and use it for evil. The free market is a hand. It has nerves and sensations. It can feel and adapt. The market allows us to use it for evil. We need to consciously use it for good. State control is not a conscious use for good, but a partial or full amputation.