What are the advantages of capitalism

Capitalism is on trial. It has been for a long time, and the allegations are becoming more and more violent. "Is capitalism breaking us?" was the research assignment of Süddeutsche Zeitung, which was at the beginning of this week's posts on the topic. "This economy is killing," said Pope Francis in his famous letter Evangelii Gaudium about capitalism. The indictment is so extensive that one can think of the economist Joseph Schumpeter, who once said: "Capitalism is fighting its trial before judges who already have the death sentence under their belt." So it's high time for a defense speech. No, capitalism is not to blame for the existential problems of this world. It is not the problem, it is not the solution either, but it is the only known system that can provide solutions to these problems.

It is already misleading to speak of "the" capitalism. There are many of them, the American, the German, the Japanese, the Chinese. And each of these capitalisms is constantly changing because the μhumans have the opportunity to learn from their mistakes - one of the decisive advantages of the system. The financial crisis has provided many good reasons for reform. But not every reform is good. There is imminent danger as soon as the system's ability to learn and change is questioned. The complaint about the "unleashed" markets must make one suspicious. That would imply that tied, i.e. immobile, markets are a good thing. A fatal error.

Three theses

The accusation: Unleashed markets endanger the environment and cohesion

The fact: Strong regulation prevents innovation

The solution: Shaping markets and learning from mistakes

For example in terms of the environment. Many people agree that capitalism is destroying the environment and that it is responsible if global warming continues inexorably. In fact, however, it is the people who exhaust the planet's resources with their needs. This of course also includes capitalists and other rich people who have high, sometimes obscenely high consumption. Still, it was capitalism, and not socialism, in which environmental protection was invented. The western industrialized countries have banned lead from gasoline and the climate-damaging CFC from the air. Lake Constance was saved after its near collapse in the 1970s, but the Aral Sea in the former Soviet Union is about to disappear entirely. Venezuela, which is as poor as it is socialist, has a grotesque amount of waste of energy with gasoline prices equivalent to two cents per liter.

Environmental protection does not come by itself, not even in capitalist states

The superiority of capitalism in environmental protection has two reasons: First, the free market, on which affluent demand for a clean environment can develop. And second, the fact that almost all capitalist states - with the important exception of China - are democracies and free societies in which citizens can get involved in environmental policy. In China, which is capitalist but at the same time still a communist dictatorship, things are different. Here environmental activists are fighting an arduous struggle to be heard.

Environmental protection does not come by itself, not even in capitalist states. For this, laws and state rules are necessary. Nevertheless, markets are indispensable as "discovery processes", as the great liberal economist Friedrich August von Hayek called them. The market, he wrote, provides information that "if it did not exist, it would either remain unknown or at least not be used," so markets ensure that the future remains open. Nobody knows what the electric car will ultimately bring for the climate, but the market gives it the chance to try it out. It is therefore important for the future not to stop innovations too early because of possible risks. Yes, fracking, the unconventional method of extracting natural gas, involves risks. But is it justifiable, without careful examination, to simply discard a technology with which millions and millions of tons of extremely climate-damaging coal can be replaced? Is it so easy to discard genetic engineering in agriculture?

Capitalism is also accused because it generates economic growth and - allegedly - needs it for its survival. The planet earth can no longer stand growth, so the argument goes. The growth critics are making a double mistake, writes the Magdeburg economics professor Karl-Heinz Paqué. They overlook the fact that growth often consists of better and not necessarily more products. In addition, "economic growth as the mainspring of civilizational refinement" does not even appear in their calculation. Education, art, science and also environmental protection - all of this needs growth. And finally: the world population will grow from seven billion today to nine billion by 2050. How are those without growth supposed to lead a dignified life?