Capitalism vs. Social Democracy – An Academic Debate

The Israeli Freedom Movement recently organized a debate entitled: “Capitalism vs. Social Democracy– A free market or enhanced governmental control?”

Dr. Yaron Brook, the executive director of the Ayn Rand Institute, argued in favour of the capitalist economy, while Prof.Yossi Yonah, a member of the department of education in Ben Gurion University in Israel, presented the need for enhanced governmental control, which is said to be the basis of the social democratic ideology in the West.

The debate was inspired by the social protest which took place in Israel last summer, and in anticipation of its renewal in the coming months.

Rothschild Boulevard, one of the busiest streets in Tel Aviv, became a huge tent camp last summer, as people demonstrated against soaring housing prices.

In Israel, and especially in Tel Aviv, housing prices have risen dramatically during the past few years, and many people now find it impossible to pay the rent, never mind purchase an apartment.

The passion felt by people about this debate was evident both on stage and in the audience hall, which was filled with applause for each expert who spoke.

The theory of capitalism – absolute adherence to free market principles

Dr. Brook, who resides in the US, opened the debate with the assertion that the dispute between capitalism and social democracy isn’t economical but philosophical: “Who owns your life and who owns mine?” Brook explained that historically speaking, until the 18th century the life of the individual was in the possession of the king or the church, and the role of the individual was to serve something external to himself. The shift occurred when philosophers started asking ‘why should my life belong to someone else?’

Brook quoted Ayn Rand, who presented a pure capitalistic approach: “Morally speaking, your life is your possession, and your moral obligation is to live your life to its fullest as a Flourishing Life”.

Rand wrote several best-selling books, including The Fountainhead.

Brook argued that what prevents a free market from existing is governmental control, which he describes as invasive. “The individual has the right to live his life as he pleases, as long as he doesn’t harm anyone else. The sole responsibility of the government should be to protect the rights of the individual”.

He continued by saying that the government should prevent people from murdering, stealing and harming others, and therefore it should be in charge of the military, the police and the judicial system. “All other services, including education and infrastructure, should be provided in the frame of a free market”.

Brook noted that there isn’t a single country in the world today that lives according to pure capitalism as he describes it “Not the USA, not in Europe and certainly not Israel”.

When asked about the poor and the handicapped, he replied: “This is what charity is for”.

He maintained that in a free market people are far more generous: “In the days of Rockefeller, the rich people gave fortunes to charity. But when the government takes 50 percent off income tax, who wants to give away to charity?”

The stance of social democracy

Prof. Yonah also began with the philosophical realm: “The human nature is obscure, and philosophers were unable to describe it precisely”. He continued: “The SELF contains the community in which I live, the idea of pure individualism does not exist in Israel”. Yonah argued that the commitment to the community has a long history in Israel: “We are all part of our existing community, and view ourselves as inseparable from it”.

In opposing Rand, Yonah brought forth the approach of the French philosopher Voltaire in his book Candide.“The model of a rational person with abundant access to information and seemingly in equality with others does not exist”.

He explained that citizens do not have equal opportunities, and thus if the government does not act accordingly, the strong shall overcome the weak.

Yonah mainly addressed the situation in Israel and the failure of capitalism in the country, highlighted by the mass protest which took place last summer, in which many people from the middle class participated. “The middle class in Israel, which greatly endorsed capitalism, realized that it doesn’t work”. He was careful to add that the failure might stem from “a distortion in applying the method or because it simply cannot work”.

Yonah stands for “equal opportunities”. He called the situation in current society “a paradox”: people need to be empowered in order to conduct themselves rationally, which requires governmental control.

The audience responds

When given the opportunity to participate, the audience members also showed a clear division between the supporters of capitalism and those of social democracy.

A person who worked for a governmental company that was later privatized, told how since his dismissal he was unable to find a new job, and was unable to support his family with the compensation he received.

On the other hand, a woman born to a poor family described how she had studied and worked intensively, only to discover that most of her income goes straight to taxes.

It seems that the lecturers were unable to convince each other. Judging by the reactions in the audience, the crowd stuck to their attitudes as well.

In his conclusion Yona said: “I am not dogmatic towards social democracy. Wherever capitalism works its fine, and wherever it doesn’t work it should not be enforced”.

Brook chose to compliment the hosting city: “Tel Aviv is an amazing city, considering how badly the government is trying to spoil things. Everything here was created and constructed rationally by someone. The regulations followed afterwards”.

Reporter: Aviva Grunpeter