International Capitalism: The Rhetoric and Reality

By Sean Cain, BA Honours, Political Science, University of Toronto

Far be it for a big government statist like me to challenge the democratic and libertarian thoughts of that free-market freedom fighter Neil Hrab, but I must take issue with the article he wrote for the September 1998 issue of the Canadian Student Review. What Mr. Hrab fails to realize are the differences between the rhetoric of capitalism (read: free market) and the realities which the system produces for billions of people around the world. The rhetoric tells us that the free market system is one which gives people the incentives to work hard, save, and invest for the benefit of all humanity. At the same time, competition exists to reinforce these incentives through the phenomena of supply and demand. Sounds great. Yet the reality shows us something very different.

The collapse of the stock markets and economies of East Asia brings new light to the realities of “free market” capitalism. Does capitalism “work”? I believe a more appropriate question would be: does capitalism work for us? I will go so far as admitting that yes, capitalism “works” for educated, middle class Canadians such as me and Mr. Hrab. However, for the 51 percent of the world’s population who are officially malnourished, or the 1.1 billion who do not have stable housing, or the 1.2 billion who do not even have decent water to drink (not to mention the millions who are unemployed or living in poverty in the industrial world as well), capitalism can be called nothing else but a spectacular failure.

If people are to live in a truly free and prosperous world, they must take back the property and wealth of the corporate commissars and the landowners, and control it democratically through worker ownership and self-management. This is a truly free economic system that is at the opposite end of both corporate capitalism and state communism. It is a system which most people refer to as democratic or libertarian socialism, although Mr. Hrab probably calls it something else. Frankly, I couldn’t give a damn what people name it, as long as individuals are willing to struggle and carry it out.

Dear Editor,

I want to thank you for publishing Sean Cain’s comments. Mr. Cain’s perspective will be gathering force in the coming months as the economic carnage in places like Indonesia and Russia intensifies. I hope your readers, after reviewing Mr. Cain’s article, will realize that the opposition to globalization is real, that it is growing, and that eventually these forces of opposition will mount a challenge to those policies they object to. The key to deflecting their attack will be to know the arguments of the naysayers and to be aware of where they are wrong.

Mr. Cain blames capitalism for the conditions of billions of people on the planet. This might be persuasive if capitalism was the norm rather than the exception. I refer to The Fraser Institute’s Economic Freedom of the World 1998/1999 Interim Report by James Gwartney and Robert Lawson, which shows remarkable variation in the level of economic freedom or capitalism of countries in the world. Only a tiny number of countries in the world have the institutions that could be regarded as “capitalist.” This empirical research also shows that “without exception, those countries with a persistently high level of economic freedom during the last two decades also achieve high per capita income levels” (Gwartney et al., 1996). Poverty is not a condition of capitalism, rather a condition due to an absence of capitalism.

Forewarned is forearmed and I thank Mr. Cain for warning us all about what will be the great political battle of the 21^st century.

Regards, Neil Hrab

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Last Modified: Wednesday, October 20, 1999.