In Defense of Capitalism

Why the economic system under attack has lifted more people from poverty – and created more freedom and prosperity – than any alternative in history.

Friday, August 14, 2026

Capitalism has become the economic system everyone enjoys but too few seem willing to defend.

Its critics denounce inequality while carrying smartphones produced through global commerce, ordering inexpensive goods delivered to their doors, investing their retirement savings in private companies, and benefiting from medicines developed through competition and private investment. Capitalism is blamed for every unmet need while receiving little credit for the prosperity modern societies take for granted.

That is not merely unfair. It is historically dishonest.

No economic system has lifted more people from poverty, created more widespread prosperity, encouraged more innovation, or expanded the middle class more effectively than capitalism. The World Bank estimates that the share of the world’s population living in extreme poverty fell from nearly 38 percent in 1990 to less than 9 percent before the pandemic. That historic achievement coincided with the expansion of private enterprise, international trade, investment, industrialization, and market-oriented reforms across much of the developing world.

This did not happen because the world embraced Marxism. It happened because nations increasingly allowed people to produce, trade, invest, own property, start businesses, and participate in expanding markets.

Socialism promises equality by redistributing wealth; while Capitalism creates wealth.

The problem with socialism is that you eventually run out of other people's money. - Prime Minister Margaret Thatcher

That distinction matters. Before wealth can be divided, it must first be produced. Governments do not create lasting prosperity simply by passing laws, printing money, or establishing new bureaucracies. Prosperity is created when people work, save, invent, invest, build businesses, accept risks, and voluntarily exchange goods and services.

Yet socialism is again gaining political momentum. Recent elections have demonstrated that candidates openly identifying as democratic socialists can succeed, particularly among younger and urban voters frustrated by housing costs, inflation, healthcare expenses, and a belief that the existing economy no longer works for them. Zohran Mamdani, a member of the Democratic Socialists of America, was elected mayor of New York City in November 2025, receiving just over half the vote. Socialist-backed candidates have also scored notable victories in municipal and congressional primaries across the country.

Those victories should not be dismissed. They are a warning to capitalism’s defenders. When people believe they cannot afford a home, raise a family, receive medical care, or build financial security, promises of government-provided solutions become increasingly attractive.

But frustration with capitalism’s failures is not proof that socialism will succeed. Too often, the problems blamed on free markets are actually the result of government restrictions, excessive regulation, distorted incentives, crony capitalism, reckless spending, and partnerships between political power and favored corporations.

Socialism transfers economic decisions from individuals to government. Officials increasingly determine what industries deserve support, what businesses may charge, how much income people may retain, and how resources will be distributed. The result is not the elimination of power but its concentration in political hands.

Marxism carries that concentration to its dangerous conclusion. It divides society into oppressors and victims, attacks private ownership, and seeks liberation through class conflict. Marxist governments have repeatedly produced shortages, repression, political privilege, and economic stagnation. They do not abolish elites; they replace entrepreneurs with party officials.  And as they say, the proof is in the pudding:  no one ever tries to flee TO a socialist/Marxist country, in fact, the opposite it true.  People flee socialist/Marxist countries to escape oppression for liberty and freedom.

The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of Socialism is the equal sharing of miseries. - Sir Winston Churchill, House of Commons, October 22, 1945

Capitalism is not perfect. It requires honest competition, the rule of law, moral restraint, sound money, and compassion for those genuinely in need. But its failures call for reform—not surrender.

History’s verdict remains clear: socialism redistributes what others have created. Marxism ultimately destroys both liberty and prosperity. Capitalism, more than any other system ever attempted, gives ordinary people the freedom and opportunity to escape poverty, improve their circumstances, and build a better life.

Jim Pannell Managing Principal

(The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and may not be invested into directly.)