Capitalism

REALISTICALLY, the phrase “conservative capitalism” is an oxymoron because, as defined separately, the two terms operate under opposite rules. Capitalism, concerned with the dynamic forces of the market must, by its very nature, continually move forward. Conservatism, on the other hand, concentrates on holding on to remnants of the tried and proven past. In an economic sense, capitalism from the perspective of the right is oriented toward a completely free market that furthers the interests of capitalists over the rights of the working class. The fact that the system results in inherent inequalities is taken for granted. The pure conservative believes in the “trickle down” theory of economics that, in the 1980s, formed the basis of Ronald Reagan's economic policy in the United States, as well as that of Margaret Thatcher in Great Britain.

Put simply, the theory stated that as rich capitalists amassed greater wealth, the profits would “trickle down” to those who were lower on the economic scale. Critics of the theory point out that rather than trickling down, money remained in the hands of a select few, while the poor became measurably poorer under conservative economic policies.

The rise of capitalism occurred during the early days of the Industrial Revolution as the wealthy learned that enormous profits were to be made from investing in new technologies and from offering goods to consumers both domestically and internationally. It immediately became clear that profits increased drastically when capitalists were able to control the costs of production, including workers' wages. It was this desire for increased profits that led to the rise of mercantilism in Europe. The mercantilists manipulated governments into developing policies that protected their interests, including monopolies and restrictions on foreign imports.

In the late 17th century, the rise of classical liberalism with its emphasis on individualism and limited government swept away the remnants of mercantilism. John Locke presented the novel ideas that each individual was given an inherent right to life, liberty, and property ownership and that individuals owned the result of their own labors. In 1776, Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations completed what Locke and his fellow social contract theorists had begun by announcing that the governments could best serve the interests of the nation as a whole by leaving the market alone to seek its own equilibrium. Smith's ideas influenced new government policies around the world, particularly in the United States.

Ideological divisions occurred, with those on the left favoring the rights of workers and government interference, while those on the right promoted the interests of capitalists and limited government. As industrialization flourished, along with a rising interest in socialism, governments became increasingly concerned with providing a basic standard of living to citizens. This concern for the masses reached its height with the Great Depression during the 1930s, resulting in the introduction of the social welfare state in which governments initiated wage and price controls and offered public assistance, healthcare, unemployment subsidies, and disability and retirement pensions for the first time. Conservative economists reacted to the rise of the social welfare state, as personified by the theories of John Maynard Keynes and the policies of President Franklin Roosevelt, by turning to conservative economics.

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