A Review of Michael Moore's "Capitalism: A Love Story"

Michael Moore released a new film to the public on Friday, for the alleged purpose of showing us what is wrong with capitalism and what we should do instead. As an advocate of laissez-faire capitalism, I had to overcome my loathing of giving Michael Moore money in order to see the film on its public opening night. However, see it I did.

Being the good capitalist that I am, I judged that the payoff in first-hand information and analysis would outweigh the value of the precious $8 I parted with. In addition, my efforts may allow others to use the same $8 and two hours of their lives doing something more enjoyable.

That is not to say the experience was totally without entertainment value. Moore does have a sense of humor when he is busy not trying to enslave me for the sake of the public good. There were the typical bits of Moore dubbing the voices from vintage movie soundtracks, resulting in Jesus recommending the profit motive to his disciples, and telling a sick person in need of his healing powers that he cannot treat a pre-existing condition. OK, I chuckled. At one point Moore is standing on Wall Street trying to collar financial workers coming out of a building, and he keeps asking them for advice. Someone shouts: "Don't make any more movies!" Now that's funny!

What Is Capitalism?

Unlike Michael Moore and most critics of capitalism, I am going to define my terms up front. The Ayn Rand Lexicon lists the following definition of capitalism:

Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.

This definition is vintage Rand: concise, deceptively simple, but in fact very powerful. The meaning is nicely distilled into a precise definition by essentials, those of protecting individual rights (implying equal protection for all individuals) and private ownership. Armed with that definition, let us proceed.

Is The Movie Really About Capitalism?

Let me start by giving the ideological punch line from the end of the film, and go from there, because it will properly set the context for the rest of my review. The following quote sums up Moore's viewpoint:

Capitalism is an evil, and you cannot regulate evil. You have to eliminate it and replace it with something that is good for all people and that something is democracy.

The only problem is, very little that is shown in the movie is actually capitalism.

The bulk of the movie consists of enumerating the various unholy alliances between government and business. However that is not capitalism . It is government overstepping its bounds in favor of business, which means a mixed economy, or an emerging form of fascism.

As per the definition above, capitalism entails private ownership, and full ownership requires freedom to do what you choose with your property. Citizens do not truly own their property if the government taxes it, if there are laws telling you how you may use or trade it, if you must influence the government simply to conduct normal business, or if you can buy off the government to crush your competitors. Individual rights means the same rights for all; not rights for some businesses and not others, or rights for business and not individuals.

The degree of government intrusion into the economy that we currently have makes private ownership impossible. Under private ownership, business would not need to become involved in politics, because politics would have no say in the matter, except to enforce contracts, prosecute fraud, and protect us from violent criminals.

The issue of business using government to obtain favors is the one area in which I can agree with Moore; unfortunately, we have radically different solutions.

Rather than perpetuating the government influence, the capitalist solution is to eliminate this connection. Just as it is wrong for business to dominate the individual through law, it is wrong for government to dominate business in the name of the individual or social needs. Moore's solution, however, is to take the same corrupting government influence and try to harness it in the service of different ends. Instead of condemning the principle of government influence in the economy, he merely condemns the current dominators. His people would be better. It does not work that way, Mr. Moore. Government influence will be even more destructive and oppressive in the service of liberal goals than in the service of Wall Street plutocrats. At least pro-business forces ostensibly want to keep economic production going, even if they rig the system in their favor.

Here are some of the examples of "capitalism" provided in the film:

• Former Wall Street executives working at Treasury and influencing the bailouts
• PA Child Care, a corrupt company that influenced local politicians and a judge to channel juvenile offenders into their prison, from which they profited
• Countrywide Financial giving special loans for FOA (Friends of Angelo), referring to Angelo Mozilo, the C.E.O. Recipients included politicians who were in a position to vote on issues important to the industry
• The suggestion that the success of America's postwar was due to eliminating the competition through war
• The nearly constant references to business influence of government through Ronald Reagan, Donald Regan, Dick Cheney, former finance executives, etc.
• The recent housing bubble and consequent collapse, which was caused by government policy, not freedom

None of these things represent -- or are caused by -- capitalism properly understood.

Are The Capitalist Activities Portrayed Really Wrong?

On the other side of the coin, there are examples in the film that are capitalism but should not be condemned, even if they involve the misfortune of some individuals. Examples include:

• Home evictions, provided there was a clear legal contract and the borrower did not live up to its terms
• Companies taking out life insurance on their employees, which is a totally legitimate voluntary activity by the company (one wonders why the individuals in the film did not do this themselves)
• Derivatives, provided these instruments are free arrangements among private parties and do not consist of fraud or violate contracts
• So-called "foreclosure vultures", who buy up foreclosed homes and re-sell them, thus serving a useful purpose of getting people back in the homes and adjusting the prices to a more realistic value

One of the responsibilities of living in a free society is being willing to tolerate things we may not necessarily like (including others having more money) for the sake of the freedom of all. I do not want to see white supremacists marching down main street, but to apply the principle of freedom of speech for all requires that we allow it. The same applies to economic practices that one finds objectionable, but which involve voluntary acts between two parties. We simply have no moral right to interfere, because to do so would violate their individual rights.

Those who want to suppress Nazis in spite of their free speech rights are no different from those who want to suppress certain "unwanted" economic activity; in both case, it results from a lack of thinking in principles. If it is right for one person, it is right for everyone. Hence the term "individual rights" rather than "popular persons' rights". To paraphrase a common Christian refrain: a society ought to be judged by how we treat those who are least popular. Or, more properly, how we treat the smallest minority of all: the individual.

With regard to the morality of capitalism, Moore interviews Catholic priests, and we hear that capitalism is "evil", "radically evil", and contrary to Jesus. However, if I am looking for advice on earthly matters, the Vatican is the last place I would look. It is no secret that the Pope hates capitalism.

To defend rational self-interest and individual rights fully on a factual and moral basis is beyond the scope of this review, but I recommend reading Ayn Rand's Capitalism: The Unknown Ideal and The Virtue Of Selfishness. If you have never read these books, I guarantee that you will find out that capitalism and self-interest are not what you have been told. Pay special attention to the definitions and Rand's usage of them; she weeds out some of the common contradictory meanings in favor of definitions by essentials.

Is Capitalism The Cause Of Our Problems?

On this count, Moore scarcely weighs in. This is partly because, as I pointed out above, he does not analyze capitalism, he analyzes a mixed economy. Therefore, it is not possible to examine whether capitalism is the cause of anything, because he does not seem to know what it is. However, it is also because Moore evaluates the causal forces involved in our economy incorrectly.

An example is his assertion that the financial crisis is the result of too much freedom. As per the link above, this is incorrect. Imagine, if you will, a man who neglects maintenance on his car; he lets the brakes go to seed, lets the windshield become dirty and hard to see through, never wears his seat belt, and then one night he drives home drunk in a rain storm. A deer crosses the road, which the man cannot see, and he skids off the road, cannot brake in time before he hits a tree, and is ejected from the car and dies. Would we say it is the deer's fault?

It is the same with the financial crisis. The Federal Reserve is an arm of the government formed in 1913 (notably, prior to the crash of '29), to replace the free market banking system. The Fed, Fannie Mae, Freddie Mac, the CRA and various regulatory pressures were all wielded in the service of "affordable housing" to keep rates low, resulting in an artificial housing boom that should never have existed. To blame the finance industry, which is merely trying to operate within this warped environment, is the height of injustice, regardless of how much money you see being made. It is the deer that stepped out into the road.

There are other examples of incorrect causal analysis in the film:

• The idea that US prospered after the war because we eliminated our enemies in WW2
• Corporate greed caused late 20th century economic problems
• The idea of the financial industry as a destructive industry
• The idea that business takes from a common "pie" rather than creating value, thus leaving less for the rest of us

All of these premises are false. Most are addressed by a good book on economics or capitalism, but I want to address the issue of "greed", which we hear so often.

Greed is a motive, it does not speak to the means used to satisfy it. For example are we to believe that greed levels magically spiked in the American populace (specifically, those located in the New York City area working on Wall Street) during the housing boom, to give rise to our current problems? Does greed magically wane again, causing a healthy economy? It is trivially obvious that greed cannot be a prime mover in what has happened. What is required is a causal enabler; all the greed in the world means nothing, without a means to put it into action. I would love to have a million dollars right now, but that is meaningless without a means to achieve it.

In the case of the housing boom, the causal enabler was the sum of government influences that I described above. It is the same for everything else one ascribes to greed; it is not the real cause, something else is.

Moore says that democracy is what we need in place of capitalism, but democracy also does not define the content of law; it merely describes how citizens provide input to government, such as by voting for elected officials. Absolute democracy would entail the tyranny of the majority, if individual rights were not also protected.

Conclusion

Similar to Sicko, Capitalism: A Love Story strives to evoke our sympathy to enlist us in the war against capitalism. Moore can be very effective at stirring emotion; we can certainly sympathize with the people he interviews, who are always well chosen for their tales of trouble. I cannot imagine having my home seized by the bank; it must be awful.

However, like in Sicko, Moore also displays no understanding of the underlying causal issues involved, or what it will take to improve society. Ironically, it is his economic and moral principles that are the cause of our troubles.

There is an interesting bit in the movie where one of the Catholic priests defines propaganda as being taught to advocate ideas that are in fact victimizing you. If that is the case, then Moore's movie is anti-propaganda: he rails against the very idea -- capitalism -- that is saving us all from economic devastation.

In the end, the movie fails in its mission to discredit capitalism, because it barely mentions true capitalism, and because it incorrectly identifies the causes of our economic troubles. A better title would be Fascism: A Love Story. This movie does not help to clarify the debate on what economic system we should have; it only obscures it.