There has been an intensifying swell of voices to condemn the forces of capitalism and globalization. It has gone beyond the normal complaints of professors, journalists and politicians who criticize capitalism and markets and, if not the wealth they create, the way it is distributed. Demonstrations at the WTO meeting in Seattle and Genoa have been followed by similar outbursts during the World Bank and IMF meetings in Washington on an annual basis.

When times are good, such outbursts may seem harmless even though they may lead to increased inefficiencies arising out of new regulations or enforced redistribution. However, when times are bad these complaints may help legitimate attacks on certain groups that tend to be identified as being part of the problem. Arguments that blame capitalism and markets for our woes fail to see that we ourselves are to blame. This is because markets are merely a summation of the results of actions arising from the myriad of decisions made by each of us every day. A full understanding of market processes indicates that if there is an enemy, it is us.

It is useful to understand what the market is and what it is not. Unfortunately it is difficult to make sense of the market in the context of an ongoing political debate that demonizes the market. Despite having weathered the withering criticisms and surviving real world experiments with communism, the capitalism and the market economy remain under assault.

If markets reflect human choice of actions, then competition is at its heart. When competition is understood to be the logical outcome of choices that drive economic behaviour, then markets can be seen as a pure, if crude, form of democracy. And the outcomes can be crude indeed. However, contempt and condemnation for market outcomes reflects an elitist view of the choices of the unwashed and ill-tutored. Those who accept such nonsense have taken the notion of “fallen man” a bit too far while being equipped with too little knowledge. It might be said that the market, like democracy, is the worst economic system available except all the others.

In the first instance, economics is best understood to be a study of exchange arising out of choices guided by the life purposes of individuals. Second, it is these choices made in the face of competition that constitute the market. Finally, exchanges generate mutual advantage for trading partners and leads to a “positive-sum game” where all trading partners gain. Too often, anti-market forces portray international trade as a “negative-sum game” where gains to one country come at the uncompensated expenses of some or all the others. Markets require a set of certain supporting institutions such as property rights and extensive individual freedoms protected by an independent judiciary under a rule of law. Under these arrangements, free people can pursue their life purposes within the context of the market.

Attacking capitalism and markets is more that an intellectual exercise. Condemning markets ignores the human content that lies behind them. Experiments with communism show that attempts to legislate against self-interest can have disastrous results. The most compelling lesson of this century is that establishing institutions that reward entrepreneurial actions allow the overall community to benefit through wealth and job creation effects of market outcomes.

<B>Nitish BENIMADHU

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