Capitalism v Socialism: Key debate at FreedomFest

Capitalism v Socialism: Key debate at FreedomFest

Capitalism and socialism are competing systems built on competing values. Whole Foods CEO John Mackey and Yale economist John Roemer debated both at FreedomFest.

John Mackey, Whole Foods CEO, speaking in 2009. (Image via Wikipedia entry on John Mackey, businessman, CC 2.0)

LAS VEGAS, July 14, 2016 — Besides the usual general sessions and break-out session one expects from conferences, FreedomFest also features a number of classic-style debates with opening statements and rebuttals. In one such encounter, Whole Foods CEO John Mackey debated Yale economist and political scientist John Roemer on the relative merits of capitalism and socialism. It was the battle of a successful, libertarian businessman against a successful career academic.

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Mackey opened the debate with the central idea of capitalism, namely, that capitalism is about economic freedom. Most of all, it is about property rights. Using statistics from a variety of sources, he compared the freest capitalist states with the most socialist states in the world. In terms of the prosperity that results from economic freedom, he observed that the differences were dramatic.

Anticipating the argument that the Scandinavian countries are appropriately socialist, Mackey pointed out that since 1993, Sweden—often held up as the model of democratic socialism—has moved away from socialism toward a freer economic system.

Roemer countered that the central tenet of socialism is that wealth should be divided equally among people. This, as Mackey later pointed out, is not the definition of socialism. Marx wrote that the capitalism amasses wealth by exploiting the labor of the working class, asserting that only labor contributed value in production.

Roemer shifted the terms of the debate from what some call utopian socialism to a socialism based on the equal distribution of wealth. He acknowledged that capitalism has produced great wealth, but the issue instead should be how that wealth is distributed. While capitalists claim it belongs to those who produce it, Roemer believes that it should be divided equally among people.

His scheme is simple. Measure “economic surplus” as the money created above a certain minimum consumption level, which he pegs at the median income. The question, then, is what to do with the rest. How do we—the we being society represented by the government—distribute the “surplus”?

For Roemer, equality of opportunity is about creating a level playing field for all people by taking that surplus and redistributing it.

He argued that people are more or less successful because there is not a level playing field. In other words, some people are born “luckier” than others, or some have better genes or are born to wealthier families or get better educations. He admitted that some portion of success is due to ability and effort, yet he still insisted that luck plays the bigger role.

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Roemer claimed to have done studies that demonstrate that in the U.S., 50 percent of success is attributable to luck. In the more socially advanced U.K., the luck factor is only 33 percent.

Roemer doesn’t believe that higher taxes would discourage entrepreneurial creation. During the question- and-answer session after the debate, he said that small business would continue on in any circumstances, and once a company got big enough and successful enough, the government would buy it out and perhaps keep the entrepreneur on as CEO. That’s certainly something to aspire to.

During his rebuttal, Mackey reiterated that capitalism is based on voluntary exchange, while socialism relies on redistribution.

Roemer was concerned about wealth distribution. He was not against capital creation, but advocated that there needs to be some control of distribution.

In the end, it was the professor versus the businessman. Roemer touted his life of academic research, while Mackey cited his own success in creating a successful business

When asked for their definitions of success, Mackey defined success as prosperity and freedom. Roemer , on the other hand, claimed it was “justice.”

In the end, freedom and prosperity can be objectively measured, but justice is in the eye of the beholder. The audience gave the debate to Mackey.

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