Why True Charity Can Only Blossom under Capitalism
September 19, 2023 | Tags: FEE
Progressives and socialists have been able to seize the moral high ground through their use of effective propaganda. These sanctimonious ultracrepidarians posture as champions of charity, because of their support for economic redistribution and for the welfare state. And they condemn capitalism for fostering greed.
Let’s set the record straight. Capitalism is the only economic system (if freedom to own and sell property can truly be called a system) where the virtue of charity blossoms. Moreover, charity cannot even exist in the progressive-socialist paradigm. True charity can only exist within the context of private property.
An essential aspect of charity is self-sacrifice. Charity can take the form of donations and volunteering. In such cases, the giver sacrifices money, goods, or time, all of which could have been used for their own benefit instead.
The opposite is what is proposed by socialists and progressives. Instead of self-sacrifice, these self-righteous pecksniffians “sacrifice” other people’s resources and claim to be charitable for doing so. That would be as if a church were asking for food to help feed the homeless, and I “volunteered” my neighbor’s food by raiding their pantries. As Murray Rothbard explained, “It is easy to be conspicuously compassionate when others are forced to pay the cost.” By forcing taxpayers to help the needy, the socialists and progressives eschew the self-sacrifice that charity requires.
If a pickpocket robs Peter to pay Paul, the pickpocket is not being charitable. And neither is Peter, because he had no choice in the matter. The freedom to choose whether to help or not to help is a prerequisite to genuine charity. “Virtuousness and morality require the freedom to do good and bad,” Rothbard wrote. “If there is no choice but to do good, then there is no morality or virtue.” (Interestingly, if compulsory giving is charitable, wouldn’t progressives and socialists have to admit that the rich (who pay the most taxes) are the most charitable people of all?) Furthermore, the coercive nature of socialist and progressive “charity” destroys the motivation to help others. As Frank Chodorov wrote:
“…we who have no right to own certainly have no right to give, and charity becomes an empty word; in a socialistic order, no one need give thought to an unfortunate neighbor because it is the duty of the government, the only property owner, to take care of him…”
Charity under Capitalism, Progressivism, and Socialism
Because of this, government spending tends to displace private spending and investment. Economists call this phenomenon crowding out. The rise of the welfare state, for instance, has crowded out private charity. A report by Citigroup states: “In countries with higher public spending, there is a sense that any debt to society has been repaid through an individual’s or a corporation’s tax bill. Where there is less public spending, there is a greater sense that something is owed. This distinction drives the trend in Figure 29.”
Some might argue that the countries with more generous welfare states are sufficiently able to accomplish the task of social welfare.
This argument treats private and public expenditure as equivalents, when they are in fact not directly comparable. In a 2007 study, James Rolph Edwards points out that “public income redistribution agencies are estimated to absorb about two-thirds of each dollar budgeted to them in overhead costs, and in some cases as much as three-quarters of each dollar… In contrast, administrative and other operating costs in private charities absorb, on average, only one-third or less of each dollar donated, leaving the other two-thirds (or more) to be delivered to recipients.” (Emphasis added)
Yet the picture is even worse than that. Using an estimate of the cost imposed by taxation, Edwards finds that almost $5.00 must be taxed for every $1.00 of benefits. Not only are those who are subjected to this ridiculously inefficient tax disincentivized from working, saving, and investing, but the recipients of the aid are also discouraged from being productive.
As Edwards poignantly points out:
“In a careful experiment, James Andrioni (1993) estimated that 71 cents of private charitable contribution is crowded out for each dollar taxed and budgeted to government aid… Because of this offset, as well as lower earned income due to reduced work-time by aid recipients, the resource cost of the administrative bureaucracy, and the other costs of compulsory income transfers discussed above, the federal government programs may actually have increased the amount of poverty and generated a dependent class of aid recipients.” (Emphasis added)
While these arguments address the progressive welfare state position, what of the socialist one? China is the obvious example for the socialist countries.
To vividly demonstrate how destructive socialism in China has been for individual virtue, consider how in 2011 a toddler was hit by a van, which paused for a moment before slowly running her over. None of the people around helped her as she writhed in agony. As a result, she was run over again. This time by a truck. For another 7 minutes, no one helped the 2-year-old.
Due to this lack of public morality, the Chinese Communist Party has taken over the role of the parent. The CCP displays billboards with messages such as “a civilized society begins with you and me.” It runs TV ads telling parents that it is their responsibility to teach their children civilized behavior. Leland M. Lazarus explains that “Xi Jinping is trying to use rule of law as the basis for moral principles in China. A frequent TV commercial shows a little girl studying, a young man swimming, and an old couple holding hands. The narrator says in a soothing male voice: I will always be by your side. The young girl looks up at the sky. I will always protect you. The young swimmer looks up. You can always trust in me… at the end the screen goes black and two characters appear: fa lu 法律. The law.”
This is hardly the model for a charitable society. As stressed above, true charity requires freedom of choice. The method of the central planner, in both the socialist and the progressive vision, removes the individual interaction that is central to forming and building the mores of the people.
Charity and Freedom
Charity under capitalism is genuine, because the giver is sacrificing his own wealth voluntarily. The so-called charity sanctified and sought after by socialists and progressives is the opposite. Under a facade of charity, they plead for tyranny and control—as if it were the most obvious solution, and any who oppose them are irredeemably evil—justifying their power with the excuse that they are helping others.
Receiving a check in the mail from some distant bureaucrat you don’t know, with money taken from everyone yet delivered indifferently, is nowhere near the same as interacting with the individuals who are helping you. This helps explain why Meina Cai et al. (2022) find that “the link between individualism, capitalism, and collective well-being is more complicated than critics of capitalism believe. We found that rather than contributing to antisocial behavior, individualism contributes to prosocial behavior and arguably moral improvement.” Consider, for instance, my friend Timmy, who recently finished running across the country to raise money for a cause he believes in. Timmy was able to connect his passion and his drive to do something good in a way that is only possible in a society where the individual feels responsible for making the world a better place.
As previously mentioned, to be charitable, you must be voluntarily sacrificing something of yours, which presupposes private property. Therefore, charity manifests the most in a regime of full private property: i.e., capitalism. This also implies that the more one accumulates, the more one is able to sacrifice for charity. It is a well-known fact that capitalist countries are wealthier than non-capitalist countries, and therefore capable of being far more philanthropic. Logically, then, becoming more capitalistic will result in more philanthropy.
Contra socialists and progressives, capitalism and capitalists are not inherently greedy. As Edwards notes:
“Envy is a powerful human motive that exists as long as there are income differences of any kind among the populace, and would exist even if average income was so high that virtually nobody fell below an absolute, defined level of poverty income (Schoeck 1966).”
As Dan and I have written before, socialism is the gospel of envy. Socialism’s close cousin, progressivism, is afflicted by the same vice. In capitalism, there is no inherent vice. The sins that manifest in capitalism cannot be blamed on the “system,” as they are not unique to capitalism, but rather are the product of the flawed nature of humanity.
The individual cannot forcefully be made into a charitable saint. He can only improve himself and become more charitable in the freedom that is inherent in capitalism.