We don’t have capitalism anymore—not in Britain, not in the rest of Europe, not in the United States. What we have instead are massive welfare states. And if the false charge against capitalism is that it allows “the strong” to exploit “the weak,” then the true nature of the welfare state is that it allows “the weak”—i.e., the unproductive—to exploit “the strong”—i.e., the productive.
John Maynard Keynes
John Maynard Keynes — not exactly history’s greatest opponent of government spending — is reported to have said he would be worried if government outlays ever surpassed 25 percent of GDP. Well, in recent years both American and British government expenditures have hovered around 40 percent of GDP. The bulk of that spending, perhaps as much as 70 percent in Britain, goes to feed the ravenous welfare state.
Clearly it’s time to question the welfare state. But such questions are too often viewed as taboo. Anyone who challenges it is viewed as seeking a return to the “dog-eat-dog” world of unfettered capitalism—a world where sellers supposedly exploited buyers, employers exploited workers, the rich exploited the poor.
But capitalism, to say nothing of poor old Fido, has gotten a bad rap.
Capitalism — real capitalism, not the mixed economies that have existed for the past century — is the system based on private property, free production, and voluntary trade. It’s not a zero-sum game where people battle over a fixed pie. Each person is free to create wealth and to trade it with others, such that they all benefit.
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