Is Free Enterprise Materialistic?

A common objection to the capitalist system is that free enterprise leads to or encourages materialismthe excessive desire to consume and accumulate material goods. This view is often accompanied by the idea that capitalism is based on the pursuit of profits, and thus elevates the accumulation of wealth to a kind of first-order good. However, when compared with its alternatives, the free enterprise system does not especially concern itself with the accumulation or distribution of material goods.

Free enterprise is a system whereby individuals, secured in their property rights by the rule of law, are free to exchange and produce goods in any manner that does not violate the rights of other individuals to life, liberty, and property. Goods acquired by production or exchange are owned by the individual, and cannot be taken or used without his leave. Whether a man chooses to consume his property, give it away, destroy it, or use it to produce more goods is not the concern of the overseeing State: in a system of free enterprise, the State’s role in the economy is to prevent theft and fraud. The focus is on human action: individual liberty to act, and individual responsibility for those actions.

Redistributionist alternatives are guided by whether or not the current distribution of economic goods meets some criteria – without regard to how that distribution came about. Socialist and communist endeavors taxed or confiscated the wealth of the very rich to make all men more equal in outcome, and class- and caste-based societies saw confiscatory taxation of the more successful members of the lower classes as a method of “keeping them in their proper place.” After all, it would not do for a peasant to have more wealth than a nobleman! In redistributionist systems, the State additionally tasks itself with transferring property and wealth between parties to achieve some desired wealth distribution. Here, the focus is on the outcomes of human action: did those endeavors lead to the “proper” distribution of goods and services?

The difference should be clear: free enterprise secures property rights to individuals and allows men the freedom to dispose of their goods and lands as they see fit, and the major alternative family of systems ignore, to some degree or another, the rights to liberty and property of some in order to secure a given distribution of material goods. Why then, is free enterprise maligned with the epithet “materialistic”?

The reason is simple: the system of free enterprise provides both the freedom and produces the wealth to allow people to act in materialistic ways. In some sense, capitalism civilizes materialism: the system produces so much excess wealth that it becomes possible for a man to horde goods without pillaging his neighbor. Nevertheless, the dual guiding lights of free enterprise are individual liberty and individual responsibility, and equality is equality of rights before the law. On the other hand, the more redistributionist systems view equality in different terms: the question is not whether men are equally free to act, but whether their actions lead to materially equal outcomes. The materialism of redistributionist regimes is embedded institutionally, whereas the materialism of free enterprise is not intrinsic to the system, but is engraved upon man’s Fallen and sinful nature.


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