OPINION: We Have Never Seen True Capitalism

Capitalism is praised and hated by the world. It's a tough thing to hate outright because it has lifted entire countries out of poverty, but it's an easy thing to pick at because accentuates the gap between the rich and the poor among individuals. Whether you love it or hate it, the interesting fact is that we have never seen it in its entirety.


Raw capitalism rejects government intervention. During recessions and depressions, the government does not issue bailouts or stimulus packages under traditional capitalism. The "invisible hand" will [in theory] guide the markets to equilibrium under any circumstances. Thus, even during the most radical economic depressions the markets do not need a bailout or stimulus under capitalism.


In almost every market turmoil since the Great Depression in 1933 the United States has issued a bailout. There are smaller bailouts directly made to individual companies that were documented in the 1800s, but since the S&P 500 was created in 1926 there has been a bailout for every recession the US markets have seen. Which is a crystal clear indication that this economic system is capitalist-based, but not pure capitalism.


If anything, the United States is a prime example of how traditional capitalism doesn't work. It may [in theory] work as sellers will eventually find buyers in a free market, but it is not at all a stable system. The bailouts issued by the US government as used to ensure that assets don't fall beyond a specific, arbitrary point of value; in traditional capitalism the assets would fall indefinitely until a seller and buyer agreed on a price, then the falling stops.


The truth seems to be that in the US, we have capitalism until capitalism doesn't work, and then those with wealth receive a bailout. People without assets feel the weight of a recession/depression either equally or more painfully than those with assets. So, if only those with assets receive a bailout to prevent the value of the assets from freefalling, then we don't live in a fair system.

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