I watched a debate last night between two economists on the topic of “is socialism better than capitalism?” It was a spirited, but civil, debate that argued the pros and cons of the two competing economic ideologies. What was fascinating was the reaction from the audience and who they thought won the debate.

At the end of the debate, the video showed a pre-debate vs post-debate opinion on the topic.  I was surprised by the pre-debate numbers that showed on 50% of the audience seemed to support capitalism.  Socialism garnered 25% of the vote, and 25% of the audience was undecided.  I suppose they needed more information.  It is worth noting that we don’t know the make up of the audience, their age, experience in life, socioeconomic status, etc.  That information is important, but we just don’t know.

At the end of the arguments for and against, the audience was polled again.  Interestingly, the support for capitalism rose to 71%.  The socialist were unwavering and still polled around 25%, although that number declined slightly.  The true pick up for capitalism came from the undecideds.  Why?

The answer, to me, is simple.  Freedom is the reason.  Capitalism is simply a flow of capital throughout an economy.  That flow is what powers commerce, creates more opportunity, and allows any individual to reach for the stars.  First, let’s define capital.  That’s easy, right?  It’s money to most people but capital also involves people.  Just like money is an asset that has an agreed upon value, we are also valuable in our own right.  My labor may be worth something to someone.  Your labor may be worth something to me.  That capital, that value, when it’s allowed to flow unimpeded throughout the economy is the key to unlocking human potential and creating opportunity.

The foundational pillar that makes capitalism far superior than any other economic system is FREEDOM.  The ability of two parties to enter into an agreement for mutual benefit is the driving factor behind its success.  No one forces anyone else to do anything.  Whether you are an employee or employer, you are free to choose.

Now the socialist would argue that capitalism is a system of haves and have nots.  The employers are the haves.  The employees are the have nots.  And private enterprise, carried out by employers with a profit motive, is unfair, unstable, and undemocratic.  That’s their claim.  It’s not true, but that’s their claim.

Regardless of which economic system you think is better, I hope you’ll join the conversation.  I’ll expand on why I think capitalism is the best economic system the world has ever seen in a series of articles over the next several weeks.  Come on back and enjoy the fun.

Until then, be sure to catch our show, Freedom with Steve Nichols, that airs Monday through Friday between 6-9am.