Freedom – the Law of the Jungle?

It is often asserted that a system of free market capitalism reduces everyone to the level of animals, subject to the "law of the jungle". Similar emotive epithets accuse capitalism of being little more than a "dog eat dog" or "winner takes all" economic system. However, as we shall see now, nothing could be farther from the truth.

Under a capitalist system all property is privately owned, and all legal exchanges must be voluntary, not coerced. However, for a voluntary exchange to occur both parties must expect to benefit from the exchange. If they did not expect to be better off then neither would have made the exchange. The exchange is therefore productive as it is designed to leave each party with something that they deem to be better than what they had before.

Once you extrapolate this to an entire economy, we can see that the very reason why capitalism is able to lift whole populations out of the slum of poverty is because people invest in the production of goods that other people want to buy. They then trade these goods for other goods that they themselves want. Everyone's lives are better off - it is a plus-sum operation that creates more for everybody.

Contrast this, however, with state intervention. Such interventions, such as taxation, are involuntary, i.e. the taxed individual has no choice as to whether the exchange occurs. But if he would not have made the exchange voluntarily then it follows that he does not regard the exchange as being to his benefit compared to an alternative. Instead of having his tax money taken to be spent on the salaries of bureaucrats, he might have preferred instead to buy a new suit or car. Hence, while the state benefits, the forced giver manifestly does not. Further, as it is not possible to measure utilities between individuals we cannot say that the eventual recipient of the funds gains "more" than the tax-payer loses.

In contrast to the productive nature of capitalism, taxation and other forms of coerced exchange are, therefore, fights over existing goods; the state wades into an extant process of production and decides that someone other than the productive party should possess those goods. In contrast to capitalism, this is manifestly a zero-sum game, with one party reaping what another loses.

What could be closer to the law of the jungle than this? Animals in the jungle are not productive; they fight with other animals for the restricted goods that nature has offered them so that they may survive. What one animal gains another animal loses. "Dog eat dog" is therefore a more appropriate description of political fights for taxpayers' money rather than for free exchange.

Finally, "winner takes all" would be a more apt description for democracy than for capitalism. With private property and free exchange, the minority does not have to restrict itself to purchasing the products and services that the majority wants. Most people might decide to shop at the mall, but that does not force others to do so; they are quite free to continue spending their pounds or dollars at a boutique. In a government election, however, the minority – the losers – always has to put up with the successful candidate, even though they may have wanted neither him nor his policies. Such a system benefits only the majority – the winners, who take all – at the expense of the hapless losers.

Criticising capitalism as a “winner takes all” system is usually the effort of those who - on account of their own inability to serve the needs of others - believe that they have failed to benefit sufficiently from free exchange. To remedy this, they want to take what other people have to fulfil their demands for "fairness" or "equality". As we can see, however, it is the resulting squabble over existing resources which would truly reduce human civilisation to the law of the jungle.