By Harrison Grigorian '19
America would not be where it is today without its Capitalist tendencies and free markets.
That’s a bold claim to make, but consider this: in the late 1700s, we were a nation of farmers. The American economy relied on selling crops and natural resources to Europe to be manufactured there because we could not even manufacture things ourselves. America’s economy of the late 1700s could have been described as “pre-industrial”.
230 years later, we are the world’s second largest manufacturer (the first, China, is over 4 times larger than us), we have the world’s largest GDP, and we have the most advanced technology companies, defense industries, and infrastructure systems in the world. Our cities are bustling, our middle class is stronger than any other country in the world, and we rarely fear foreign conflicts. Clearly, something clicked, and that something can be traced back to the beginning of the 19th century.
Alexander Hamilton was well ahead of his time in financial thinking. His financial plan proposed a new concept to Americans that would get our economy off the ground in the early Republic: joint ventures between the federal government and the private sector. His First National Bank, regardless of its debated legality and occasional missteps, modernized our economy. It nationalized currency and regulated lending laws nationwide; however, the bank was actually led by the private sector, as the Federal Government only controlled 20%.
This idea of uniting the federal government with the private sector continued as construction companies began to build roads and bridges to modernize the nation. The Erie Canal, for example, was a mostly private project. However, the government did provide small amounts of funding to push the project along. This symbiotic relationship gave private investors some assurance in knowing the government was behind them, even though the private sector was in the lead.
Fast forward to 1945. After seven years of conflict in WWII, the country asked itself whether it would see “peace in our time”? Fortunately, Americans at home fortunately did not see another attack on American soil until 9/11. However, those living in the communist countries of China and Soviet Union were subject to war, oppression, and tyranny. Over the following decades Premier Stalin and Chairman Mao and their communist governments combined to murder sixty-five million of their own people. Many died due to lack of food (often intentionally withheld) and civil war. Meanwhile, the US economy was growing rapidly. No food shortages, no oppressive regimes, low prices, and the top medicine in the world—the sweet smell of capitalism drifted through the air in the land of the free.
Fast forward to 2008. The iron curtain has fallen. While the Russians fell into decline, the Chinese were smart. They realized that this whole communism thing doesn’t really work, so they mostly moved away from it but retained its authoritarian elements. They now have large investment banks and technological advances rivaled only by the United States. The number of impoverished people in rural China numbered 250 million in 1981 and has since decreased to less than 26 million. While still a very high number, it seems as if there is a correlation between bucking communism and a reduction in poverty. Interesting…
Meanwhile, we haven’t changed our system since independence, and we currently have the highest Purchasing Power Parity (essentially the value of a country’s currency) of all countries with more than 6 million people. Quite frankly, I can’t understand why anyone would argue to change this system. We have been the strongest country in the world by just about every metric since WWII. Why would we change a thing?
Now some will argue that a completely free market would allow for monopolies and exploitation of consumers, and they are right. It would. However, that system is not what we have now, and that system is not what I am arguing for. The government should be involved in economic affairs. The 2008 crash happened because investment banks went unregulated. Appropriate legislation was passed, like Dodd-Frank, and now the same problem will hopefully never happen again. Our current system is the perfect balance of governmental regulation coupled with the private sector. There is inarguable correlation between that economic mixture and America’s success on the global stage—success which has kept, and will continue to keep, America as a preeminent superpower.
The best argument for a free market is history. Look at Venezuela now. Look at East Berlin vs. West Berlin. Look at living conditions in the slums of Moscow and the starving villages of China in the 50’s, 60’s, and 70’s. Do we really want to be the next failed experiment? We have reached a tipping point: a “Democratic Socialist,” really just a softer word for “socialist,” came close to securing a major political party’s nomination last year. If we give in to this system now, we may never have a chance to shake it. We have fought for 100 years to keep the socialist system out of our country, and we are now at a decisive point in American history: we can either fight it off, or succumb to it.