One of the questions that I spend a lot of time talking with IPA Members about is why it is that despite all the evidence of modern history so many people continue to be hostile to the idea of capitalism and free markets. Between 1990 and 2010 the number of people living in extreme poverty in the world fell by one billion. In China alone in the three decades to 2010, 680 million people escaped extreme poverty. Those are huge numbers and they are all the result of the expansion of capitalism and free markets. Of the 7 billion people on the planet, 1 billion still live in poverty. And the way to get those 1 billion out of poverty is by using the methods that have been proved to have worked in the past.
Yet somehow for all of this, in the media, in our schools and universities, and in the public discourse, the image of capitalism and free markets is often overwhelmingly negative. Why? I think that part of the reason is that capitalism and free market ideas are believed to be selfish and self-centred. Too often we lose the moral case for capitalism and free markets.
When I taught politics at the University of Melbourne I’d often be told by 19 year-old, first year students that ‘capitalism is for rich people and socialism is for poor people’. In response I’d try and explain that if anything it was the other way around! And then I’d turn their world view upside down by pointing out that in the United States more billionaires donate to left-wing causes than to free market ones.
Nothing could be further from the truth than the claim that free markets are all about being selfish. After all a market needs two people to trade. You can’t trade with yourself. A free exchange in a free market produces a win-win situation. The individuals on each side of the exchange each believe they will get something better than they are giving up. David Ricardo wrote about this two hundred years ago.
I was prompted to these thoughts on Tuesday evening as I watched a video of the commencement speech at Hamilton College in the United States delivered by Peter Thiel a few days ago. We included the link to the speech in Hey…What did I miss? yesterday. If there’s such a thing as a hard-core libertarian capitalist it’s Thiel. According to Wikipedia he’s worth $2.8 billion. Thiel is 48 years old and was the co-founder of PayPal. He was also one of the early investors in Facebook. In 2004 he bought 10% of the company for $500,000. Within less than 10 years that initial investment was worth $1 billion.
Thiel is also a big supporter of Donald Trump! In fact he’s on the ballot in California on 7 June to be a delegate to the Republican convention to vote for Trump. How exactly Thiel’s support for Trump squares with his libertarianism we’ll presumably find out in in the months ahead. In 2009 in an essay entitled ‘The Education of a Libertarian’, Thiel wrote – ‘I remain committed to the faith of my teenage years, to authentic human freedom as a precondition for the highest good. I stand against confiscatory taxes, totalitarian collectives, and the ideology of the inevitability of the death of every individual. For all these reasons, I still call myself ‘libertarian’. ‘
And yet. For all of this Thiel put his belief in the central importance of friendships and relationships at the front and centre of his speech to the graduating class of Hamilton College. He recognised that the philosophies of liberalism, and even libertarianism, are philosophies about how we live with each other. Thiel told the class that they should always questions clichés – and identified two in particular. The first was ‘To thine own self be true’. He pointed out that knowing exactly what your own ‘true’ self is can be problematic. And then he said this:
The other cliché goes like this: ‘Live each day as if it were your last.’ The best way to take this as advice is to do exactly the opposite. Live each day as if you will live forever. That means, first and foremost, that you should treat the people around you as if they too will be around for a very long time to come. The choices that you make today matter, because their consequences will grow greater and greater.
That is what Einstein was getting at when he supposedly said that compound interest is the most powerful force in the universe. This isn’t just about finance or money, but it’s about the idea that you’ll get the best returns in life from investing your time in building durable friendships and long-lasting relationships.
If there was one way I could have improved what Thiel said, I would have added something to the fourth sentence so that it would have read like this – ‘That means, first and foremost, that you should treat the people around you as if they too will be around for a very long time to come – and they will be treating you as you treat them.’
Treating someone as you yourself would like to be treated is the foundation of a humane society – and is the essence of all the varieties of liberalism. And it is the exact opposite of selfishness.
Thank you for your support.
John RoskamExecutive Director
A graphic addendum: