The Problem Is Inequality, Not Private Property and Markets

Capitalism has always had vociferous critics, none of whom was more insightful than Marx. He recognized that although capitalism produced unprecedented wealth, behind its ideological patina of freedom, it was an exploitative social system wherein capitalists extracted workers’ surplus. Marx and other critics also held capitalism’s institutions of private property and markets to be corrupting. This has been a mistake. The problem is not these institutions but the inequality that co-evolved with them, providing elites with the political power to structure private property and markets to exploit producers. Marx believed that capitalism’s evolution would eventually empower producers to take political power, and that they would abandon these institutions. But these institutions are essential for economic dynamism and freedom. Blaming capitalism’s institutions of private property and markets for the injustices and social irrationality that accompanied them is a mistake that hinders evolution of a non-exploitative future that makes use of them.