Markets and Morality

Why intellectuals are so upset by the “injustices” of capitalism

At most universities – and above all in their humanities faculties – capitalism is a dirty word. It has very few supporters and many vehement critics. But why are so many intellectuals offended by the idea of free-market capitalism?

Many of them fail to understand the nature of free-market capitalism as an economic order that emerges and grows spontaneously. Unlike socialism, it isn’t a school of thought imposed on reality, but largely evolves, growing from the bottom up rather than decreed from above.

Once we’ve grasped this essential difference, the reasons why many intellectuals have a greater affinity for socialism – in whatever form – suddenly become obvious. After all, devising mental constructs and using their linguistic skills to shape and communicate them, is what intellectuals do for a living. Since their own livelihood depends on their ability to think and communicate ideas that are rational and coherent, they feel more in tune with an artificially planned and constructed economic order than with one that allows for unplanned, spontaneous development. The notion that economies work better without active intervention and planning is alien to many intellectuals.

A competition between elites

In order to understand why so many intellectuals hold anti-capitalist views, it is important to realise that they are an elite, or at any rate a community of practice that defines itself as such. Their anti-capitalism is nurtured by their resentment of and opposition to the business elite. In this sense, the rivalry between the two groups is simply that – a competition between different elites vying for status in contemporary society. If a higher level of education doesn’t automatically guarantee higher incomes and more privileged positions, then the markets that allow this imbalance to happen are seen as unfair from the intellectuals’ perspective. Living in a competitive system that consistently awards the top “economic prizes” to others, a system where even the owners of medium-sized businesses achieve higher incomes and wealth than a typical tenured professor, leads intellectuals to adopt a general scepticism towards an economic order based on competition.

The disdain expressed in this assertion compellingly demonstrates the extent to which intellectuals tend to set their own value standards as absolutes. People are to be judged by their level of education and cultural capital. Accordingly, how deeply unfair is it that someone with little formal education and no interest in high culture should amass a great fortune, while well-educated and well-read academics have to make do with comparatively little? It is hardly surprising that the world seems upside down to such intellectuals. After all, they derive their own sense of superiority from being better educated, more knowledgeable and better able to express themselves.

Overstating the value of book knowledge

Understandably, intellectuals tend to equate knowledge acquisition with academic education and book learning. Educational psychology uses the term “explicit knowledge” to refer to this type of knowledge, which is acquired by means of “explicit learning”. However, there is a different kind of knowledge acquired by “implicit learning”, which is far more primordial and often more powerful, although many intellectuals are unaware of its existence. Since this is the route to knowledge acquisition taken by the majority of entrepreneurs, it’s important to understand the differences between the two forms of learning and knowledge.

Hayek, who first introduced the concept of implicit learning, uses the example of small children who are able to apply the rules of grammar and idiomatic language without consciously knowing them: “The child who speaks grammatically without knowing the rules of grammar not only understands all the shades of meaning expressed by others through following the rules of grammar, but may also be able to correct a grammatical mistake in the speech of others”. Similarly, the skills of a craftsperson or athlete – which involve knowing-how rather than knowing-what – are acquired implicitly rather than explicitly: “It is characteristic of these skills that we are usually not able to state explicitly (discursively) the manner of acting which is involved”.

The term “tacit knowledge” was reintroduced by the Hungarian-born British philosopher Michael Polanyi, who coined the much-quoted phrase “we can know more than we can tell” in his book The Tacit Dimension (1966). For Polanyi, this represents a central problem of communication: “Our message had left something behind that we could not tell, and its reception must rely on it that the person addressed will discover that which we have not been able to communicate”. Polanyi clarifies the difference between implicit and explicit knowledge – between skill on the one hand and theoretical knowledge on the other: “The skill of a driver cannot be replaced by a thorough schooling in the theory of the motorcar; the knowledge I have of my own body differs altogether from the knowledge of its physiology; and the rules of rhyming and prosody do not tell me what a poem told me, without any knowledge of its rules”.

In other words, learning is not necessarily the result of the conscious and systematic acquisition of knowledge, but often the result of unconscious processes. In an experiment, test subjects assumed the role of a factory manager in a computer simulation. They were tasked with maintaining a specific volume of sugar production by making adjustments to factory staffing levels. The system’s underlying functional equation was not revealed to the test subjects. During the learning phase, they didn’t know that they would subsequently be required to take a knowledge test. The test showed that the test subjects were able to regulate production in the sugar factor without being able to explain exactly how they did so.

Formal education only plays a secondary role in the development of entrepreneurial skills. Entrepreneurial success is determined by factors other than academic qualifications. Key among these are sales skills, which, although rarely taught at academic institutions, respondents considered an essential prerequisite for their successful careers as entrepreneurs or investors.

Implicit learning differs from explicit learning in that outcomes are difficult or impossible to demonstrate in the form of certificates or academic qualifications. By an intellectual’s standards, an entrepreneur who may not have read a lot of books or shown much promise at college or university has nothing to show for himself that would compare to a doctorate or a list of publications.

Deeply disappointed with the market economy

Intellectuals are unable to understand why a college dropout with an “inferior intellect”, who has only read a fraction of what they’ve read, should end up making a lot more money, living in a much bigger house and driving a far better car. They feel offended in their sense of what is “fair” and thus vindicated in their belief that the market economy has “malfunctioned”, and that this anomaly needs to be “corrected” by means of redistribution on a massive scale. By divesting the rich of some of their “undeserved wealth”, intellectuals console themselves with the fact that, even if they can’t abolish the system altogether, they can at least “correct” it to some extent.

In a 1998 essay, the libertarian philosopher Robert Nozick tackles the question: “why do intellectuals oppose capitalism?” His explanation is based on the assumption that intellectuals feel superior to other members of society. Ever since the days of Plato and Aristotle, intellectuals have been telling us that their contribution to society is more valuable than that of any other group. Where, Nozick asks, does this sense of entitlement come from?

His answer: it starts at school, where intellectual brilliance is rewarded with praise and good grades. By the time “verbally bright children” graduate from formal education, they have been inculcated with a sense of their greater value in comparison to their less intellectually gifted peers, which then leads them to expect society at large to operate according to the same norms. The subsequent realisation that the market economy doesn’t hold their particular skills in the same regard leads to feelings of frustration and resentment that fuel hostility to the capitalist system as such.

I would argue that the seeds of these beliefs are planted even earlier. Intellectuals are more likely to grow up in a middle-class milieu where a lot of emphasis is placed on education, with parents or other relatives who are academics, than in working-class or entrepreneurial families. From early childhood onwards, the message drummed into them is that education, book learning, and social and/or political engagement are far worthier goals than striving for material riches. The education system, which Nozick holds responsible for instilling these values, emphatically reinforces them, confirming what the child has already learned at home: book learning, verbal skills and intellectual brilliance will earn the highest accolades.

In the world they encounter once outside their universities, intellectuals are deeply disappointed to discover that other skills are more highly prized than their exceptional book knowledge and ability to write with an academic flourish. And when the market decides that there is nothing wrong in someone with an incredible university education and extraordinary book knowledge earning far less than a potentially less well-read entrepreneur, intellectuals have all the justification they need to conclude that an economy based on market principles is nothing short of repugnant and “unjust”.

6 thoughts on “Why intellectuals are so upset by the “injustices” of capitalism”

  1. Posted 21/01/2020 at 15:54 | Permalink

    Many “levelers” (economic egalitarians or collectivists) believe that “Socialism is the total opposite of capitalism/imperialism. It is the rejection of empire and white supremacy. Socialism is the violent overthrow of the bourgeoisie, the establishment of a dictatorship of the proletariat, and the eradication of the social system based on profit. Socialism means control of the productive forces for the good of the whole community instead of the few who live on hilltops and in mansions. Socialism means priorities based on human need instead of human greed. Socialism creates the conditions for a decent and creative quality of life for all.” Of course, the number of admitted adherents to this definition diminishes when these collectivists learn that this rendering of socialism comes from the Weather Underground in its 1974 Prairie Fire Manifesto. [Note: Their chagrin only multiplies when they learn the motto of Vladimir Lenin’s newspaper, “The Left Voice” was “A single spark can start a prairie fire”.]
    Ayn Rand defined collectivism in 1944 magazine article (“The Only Path To Tomorrow”) as “… the subjugation of the individual to the group … Collectivism holds that man must be chained to collective action and collective thought for the sake of what is called ‘the common good'”.
    Currently, there is an almost endless drumbeat of anti-capitalist and pro-socialist articles in almost all newspapers, magazines and on many websites. One goal of these numerous essays is to mislead the American electorate regarding the history of socialism both in the US and around the world. Perhaps several examples will suffice to demonstrate this point. The New York Times on July 6, 2019, in its Sunday Review section printed Sitaraman & Alsort as follows: “The struggle between capitalism and socialism is back.” And that “Americans don’t need to resign themselves to vicious capitalism …” In the Aug. 12, 2019 edition of the Los Angeles Review of Books Prof. Christian Fuchs cited three left-wing authors to his readers to remind them that “… liberalism and capitalism have inherent fascist potential (and) that fascism is a terroristic version of capitalism.”
    Inexplicably, many (most?) redistributionists apparently choose to ignore the clear-cut results of socialism’s many actual historic experiments which can be handily recounted.

    Socialism (millenarian collectivism) traces its roots to 1789 and the French Revolution which is commonly known as “The Terror”. Of course, this led solely to tyranny and ultimately to the guillotine.[One must recognize that the vast majority of those who were beheaded in France were from the middle and lower classes and not from the aristocracy.] (See: “Tyrants” by Waller Newell) Beginning in the 1820s there was a wave of cooperatives (socialist experiments) formed in the US and Europe led by men like Robert Owen but most had failed by 1840. The average life span of these many “co-ops” was only two years. [See: ].

    The Socialist Party of America was formed in 1901 by Eugene Debs and Mr. Debs (from 1904 till 1920) never got more than 6% of the vote in any presidential election. From 1924 through 1948 Debs was replaced by Norman Thomas whose election results were also always in the low single digits. [Note: Interestingly, Mr. Thomas was always (like George Orwell) rabidly anti-communist and some fear that their combined virulence may not have rubbed off on many of today’s left-wing collectivist authors since it is suspected that some of these socialists may actually hold neo-Marxist views.] Since 1948 the Socialist Party in the US has only steadily faded away. [See: ]. In fact, the Democratic Socialists of America today boasts of less than 60,000 members which are a paltry few although their membership has grown from only 6,000 to 56,000 in just two years. [See: ].

    Economic historians cite three face-to-face “experiments” since WW II in which capitalism and socialism can be directly compared and these are West Germany vs. East Germany after 1945; China vs. Taiwan after 1949 and North Korea vs. South Korea after 1952. Suffice it to say that socialism has never measured up very well anywhere. [Note: Some experts in economic history are today examining Venezuela vs. Chile and many are reaching the very same conclusion.] On the other hand, capitalism has lifted over one billion people out of abject poverty in just the last 12 years. [See: ].

    All of this might lead some to ask — What took capitalism so long to work its magic on much of the developing world? And economic history is also quite clear on this point. In 1947 India after its independence from Great Britain opted for socialism. Indeed, socialism is mandated by the Indian Constitution and for more than 40 years India was the world’s largest social democracy. [See: ]. In 1949 China followed suit but of course, selected only collectivism and not democracy. Obviously, capitalism could not work its wonders in a socialist nation.

    In 1978 after Mao’s death China adopted market-based reforms and one need not recount the upward explosion in human economic well-being that followed. India saw the resulting skyrocketing increase in overall living standards in China and instituted market reforms of their own starting in 1991. Since then these two nations have lifted a combined one billion of their citizens out of subsistence poverty. [See: ].
    In 1945 Clement Atlee defeated Winston Churchill in Great Britain and quickly proceeded to nationalize most of that country’s major industries. By the 1970s the whole world was talking about the “British Disease” and the “Sick Man of Europe”. This led to the election in 1979 of Margaret Thatcher who insisted that “No theory of government was ever given a fairer test or a more prolonged experiment than democratic socialism received in Britain. Yet it was a miserable failure in every respect…” [See: ]. Indeed, Mrs. Thatcher insisted that “To cure the British disease with socialism was like trying to cure leukemia with leeches.” [See: ].
    Israel is another instructive example. This new country’s founding principles (Zionism) took a socialist form of communal organization (kibbutzim). In the early 1980s, Israel suffered from hyperinflation (445% In 1984). In 1985 Israel adopted an Economic Stabilization Plan (wage and price controls) which failed. Then Bibi Netanyahu, during his first term (1996 – 1999) began instituting market-based reforms. In 1999 he lost and upon his later return as Prime Minister, he slashed public sector spending, privatized and deregulated industry. He also drastically cut taxes and reformed Israel’s labor laws. Today Israel has risen from a relatively poor country to a growing wealthy nation. [See: ].

    During the 1960s much of sub-Saharan Africa chose collectivism and all of these nations then entered a period of rising abject poverty. A single set of statistics tells the entire story regarding socialism in sub-Saharan Africa. When the British and the other colonizers left Africa the poverty rate stood at 11%. By 1998 under their new indigenous socialist governments this figure had skyrocketed to 66% and now as some of these nations have begun to re-introduce market-based reforms this percentage has fallen to 20% today. Still way too high but currently moving in the right direction. [See: ]

    Next take Sweden, once one of the most socialistic of the Nordic countries, as another case study. Some years ago the Swedes opted for social democracy and since 1981 Sweden’ annual GDP growth rate has averaged only 0.56%. [See: ]. In other words, the growth in human economic well-being in Sweden was virtually stagnant. Then in 1992, a major financial crisis hit Sweden as interest rates soared to a brief high of 500%. [See: ]. As a result, the Swedes became very disenchanted with the results of their collectivism and began converting their economy back to a more market-based system. The Swedes cut their income tax. They also abolished their wealth tax, their inheritance tax, and their property tax. They reduced the corporate tax from 28% to 22% and the new coalition government has recently promised to make further reductions. This one-time social democracy has lowered its tax to GDP ratio from 52% (one of the world’s highest) to 45% and the new government has announced still more cuts for 2020. The overall result is that in 1975 fifty percent of Swedish companies were government-owned and today this figure has been cut in half and Sweden is now the fourth richest country in the world in trems of per capita wealth. [See: ].

    Turning to Denmark, while Lars Lokke Rasmussen was Prime Minister he stated that “I know that some people in the US associate the Nordic model with some sort of socialism. Therefore, I would like to make one thing clear. Denmark is far from a planned economy. Denmark is a market economy.” [See: ]. Indeed, according to the Economic Freedom Index, all of the countries in Scandinavia are far more capitalist than socialist. [See: ]. All Nordic countries have no minimum wage and each offers full school choice. In addition, Denmark and Sweden have greatly reduced unemployment benefits.
    Some redistributionalists still cling to Norway as the final redoubt of Nordic democratic socialism but this tiny country adheres to its mix of capitalism and socialism solely because of that nation’s massive offshore oil and natural gas deposits. In May of 1963 Norway claimed the petroleum reserves off of its coast and in 1969 they struck oil which now produces 1,600,000 barrels per day. As a result, Norway’s GDP rose from $12 billion to $65 billion in only ten years. The government wisely formed a sovereign wealth fund which today is worth $1 trillion the largest in the world. [See: ].
    No socialist in France had won the presidency from the inception of the Fifth Republic in 1958 until 1981 when Francois Mitterrand ascended to that high office. As president, Mr. Mitterrand quickly implemented a program of nationalization coupled with an economic stimulus designed to jump-start France’s flagging economy. His election could not have come at a worse time. The world was suffering from a new phenomenon called “stagflation” and in less than two years after his election, President Mitterrand was forced to sharply curtail his collectivist efforts. [See: ].
    Even the well known Slovenian philosopher, Slavoj Zizek, (who is a self described “political radical”) admits that “Social democracy is of another era” and that “A simple return to old (20th century) social democratic welfare states can not work” due to “digitalization through new forms of science (and) new forms of liberal capitalism.” [See: ].
    From 1998 to 2015 fifteen Latin American countries elected socialist presidents in a trend called the “Pink Tide”. [See: ]. Now, Oxfam reports that Latin America has remained the most unequal region in the world. [See: ]. Also, according to the Igarape Institute, Latin America has persisted in being the most violent place on the planet. [See: ]. The UN asserts that Latin America has had no reduction in poverty and that extreme poverty has increased to its highest level since 2008. [See: ]. Corruption has continued unabated and all of this has led to a counter wave that includes new conservative leaders in Brazi, Argentina, Guatemala, El Salvador, Columbia, Chile, Peru, and Paraguay. [See: ]. Some of the people of Latin America who tried collectivism did not like what they got. This is especially true in Venezuela. 
    Let’s examine Iran. The 1979 revolution promised three things: independence, social justice, and democracy & freedom. After 40 years there has been a 17-fold increase in the number of Iranians living in slums.  Iran’s Gini coefficient has remained high while a growing sense of disillusionment and frustration forcefully erupted in the Green Movement in 2009, as well as, another upheaval in 2017-2018. [See: ].
    Arab socialism (Ba’athism) began in Syria in the 1940s and later spread to Iraq but neither emphasized pure Marxism nor class struggle. In the 1970s neo-Ba’athism evolved and morphed into Assadism and Saddamism with their accompanying fascism and racism. Since then Saddam has been removed while Assad’s son has been fighting a prolonged civil war against rebels who strive for freedom and economic growth. [See: ].

    The book, “Heaven on Earth” (2nd edition 2019) summarizes all of this with “Socialism was man’s most ambitious attempt to supplant religion with a doctrine claiming to ground itself in ‘science’. Each failure to create societies of abundance or give birth to ‘The New Man’ inspired more searching for a path to the promised land: revolution, communes, social democracy, communism, fascism, Arab socialism, African socialism. None worked and some exacted a staggering human toll. Then, after two centuries of wishful thinking and bitter disappointment socialism imploded in a fin de siècle drama of falling walls and collapsing regimes. It was an astonishing denouement but what followed was no less astonishing. After a hiatus of several decades, new voices were raised, as if innocent of all that had come before, proposing to try it all over again.”
    Thus the economic record is clear. Over the last 230 years, socialism has caused only poverty, misery and human suffering. [See” ] While capitalism (in the opinion of many, humankind’s greatest invention since the wheel) has been slashing poverty as the next graph clearly documents.

    In a 2018 article in Foreign Affairs Magazine the esteemed historian, Prof. Walter Russel Mead, offered that over a 35 year period our nation had been plagued by “Ineffective politicians, frequent scandals, racial backsliding, polarized and irresponsible news media, populists spouting quack economic remedies, growing suspicion of elites and experts, frightening outbreaks of violence, major job losses, high profile terrorist attacks, anti-immigrant agitation, rising inequality and the appearance of a new class of super-powered billionaires in finance and technology-heavy industries.” But, Prof. Mead was writing about the period in American history from 1865 till 1901 after the end of the US Civil War. Like the movie “Groundhog Day” history only repeats itself but no one ever seems to notice that human economic improvement and overall well-being only continue to spiral ever upward. Does anyone really want to go back to living in caves eating nuts, berries, and roots, scavenging dead meat and consuming an occasional fresh kill where everyone is mostly equal? Given an informed choice, almost all of us would, one strongly suspects, opt for individualism and capitalism every time.

  2. Posted 22/01/2020 at 05:36 | Permalink

    Capitalism demonstrates that society operates perfectly well without intellectuals.

  3. Posted 26/01/2020 at 19:06 | Permalink

    The most precise summary I have read,many thanks.

  4. Posted 03/04/2020 at 13:52 | Permalink


    This article would be an excellent one had it been more contextual. You see I live in Grenada (Caribbean) before the Grenada Revolution, aka what some U.S. ‘intellects’ called ‘Socialism’. From March 13, 1979-October 19, 1983, the country met strides that were or seemed impossible with the former U.S. government-supported Dictator Sir Eric Matthew Gairy. Infrastructural development, Education (97 % literacy)
    Women’s Empowerment, Self-Determination, Balanced Budget, Free Education up to secondary, Food Security and on an on. The revolution was also a difficult period in the lives of many for human rights abuse and such. But the previous administration was also a difficult one for human rights abuse-again one that the U.S. wholehearted support. My own personal opinion on these matters is not the name of the system but the content and experience of the people. These systems all have advantages and disadvantages. In 2018, “In a U.S, Capitalistic Economy, 40 million people were living in poverty ( For me, that is troubling with a population of 331 million people (2020 est.).

    I personally opposed capitalism because capitalism makes one major assumption: That while everyone is born equal and has equal rights, capitalism falls on it head when it comes to justice or dealing equitably. How come that Amazon, according to Bernie Sanders, can make 11 billion dollars in profit in 2019 and not required to pay any major federal taxes? That obscene to me.
    ULTIMATELY if a system has free or extremely low-cost healthcare for all its citizens, free education, have checks and balances for all people and does not discriminate against any racial or ethnic group, I can work with that. However, it is difficult to work with the wealth gap ( And this paints so=called free economies obscene.

  5. Posted 09/07/2020 at 11:13 | Permalink

    “Capitalism functions perfectly well without intellectuals”? What a truly ignorant statement. Economists are intellectuals. Ever hear of Adam Smith? Wrote the book Wealth of Nations, which is the foundation for our economic system today? Yeah, he is a highly educated intellectual. People should probably stop taking the author’s advice and READ. How’s that working out for everybody now? 40 million unemployed, but the stock market is juiced! And people are quick to yell “Socialism” as if public assistance is just so unamerican. Yet, I doubt any one complained about socialism when they got a $1200 check. You know, that universal basic income Andrew Yang was talking about. And why do we not hear people yell, “socialism” he our tax dollars go to bailout billion dollar banks. They committed illegal acts, destroyed the economy and we have to pay them back? Social Security is socialism, Medicaid is socialism. I hate to break it to you but, but we already live in a mixed market economy. Some socialism, some capitalism. So, instead of spouting off when you completely unformed. Try reading that history the first responder wrote. At least it’s not a book.

    Capitalism is not “spontaneous” it has been researched and written about for years. It is an economic institution and is heavily influenced by politics and other social factors. As a matter of fact, capitalism has been corrupted by politics. How is capitalism spontaneous when all of the communications media and technology is owned by only four corporations. How is it a free market when Amazon is allowed to consume everything in its path?

  6. Posted 12/10/2022 at 20:58 | Permalink

    Having lived abroad in various European countries and seen how it feels like living in various systems, I cannot agree more with the last comment. Thank you. I cannot say the same with this article.

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