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Beware of “Common Good Capitalism”

Here’s a letter to a new correspondent:

Mr. A__:

About my criticisms of “common good capitalism,” you charge me with being “too dismissive of efforts which only stress that capitalism should be judged by how well it promotes values outside of maximal materialistic satisfaction.”

Your allegation comes from a fair place, as no reasonable person believes that human flourishing consists exclusively, or even chiefly, in the successful pursuit of ever-greater consumption of material goods and services supplied on commercial markets. But for a variety of reasons I plead innocent to your charge. Here’s the main reason:

To clamor for “common good capitalism” is to imply that the capitalism championed by scholars such as Adam Smith, Ludwig von Mises, F.A. Hayek, Milton Friedman, and my late colleagues James Buchanan and Walter Williams does not promote the common good. Yet I believe this implication to be mistaken. In reality, the best economic system for promoting the common good is what I, in these discussions, call “capitalism unprefixed” – that is, capitalism as understood and championed by people such as Hayek and Friedman. Not only is there no need for government to interfere with capitalism unprefixed in order to ensure that the common good is served, such interference is far too likely to bestow unearned benefits on politically favored groups, or to satisfy the particular ideological preferences of politically influential intellectuals, all at the larger expense – material and nonmaterial – of the people as a whole.

If “common good capitalism” means anything other than capitalism unprefixed, its pursuit necessarily requires government to elevate the particular preferences of some individuals over those of other individuals – a move that mocks the meaning of “common good” as understood by true liberals.

An observation offered by Hayek in his 1960 essay “Why I Am Not A Conservative” is relevant here: “To live and work successfully with others requires more than faithfulness to one’s concrete aims. It requires an intellectual commitment to a type of order in which, even on issues which to one are fundamental, others are allowed to pursue different ends.”* Unlike Hayek and other liberals, “common good capitalists” lack this commitment. They are unwilling to extend to all individuals the freedom to pursue peaceful ends that differ from the ends embraced by “common good capitalists.”

In short, “common good capitalism” implies the ability of “common good capitalists” to determine which particular ends are, and which aren’t, consistent with the common good, and the right of these ‘capitalists’ to commandeer the state to impose their determination on everyone.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

* F.A. Hayek, “Why I Am Not a Conservative,” the postscript to the Definitive Edition (Ronald Hamowy, ed., 2011) of Hayek’s 1960 volume, The Constitution of Liberty, page 524.