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In 1776, a Scottish philosopher and economist published the seminal work on Capitalism.  Adam Smith sought to offer the world an alternative to Mercantilism, a system where governments increased their wealth and power by maximizing exports and minimizing imports.  In his Wealth of Nations, Smith laid out an economic system where the “unseen hand of God” ensured that the best producers profited and amassed wealth.  This theory focused on the markets and suggested that if one produced the best products at the best cost, they would succeed whereas those whose price or quality were inferior would fail.  You see echoes of this in Darwins Origins of Species where the most fit species thrive and those who cannot compete become extinct.  To Smith, business success and wealth are the byproducts of merit – when governments do not interfere with the markets.  Capitalism requires a FREE MARKET without tariffs or other trade restrictions.

Of course, Adam Smith knew this was not the reality of the global market in 1776.  Trade was dominated by quasigovernment corporations and monopolies.  Hereditary wealth was extreme and merit was generally absent in the markets of 18^th Century England.  Nations waged war to protect trade and government sanctioned theft (AKA piracy) was common.  Capitalism was a THEORY not a fact and the “hand of Providence” was often batted away by the Divine Rights of Kings.  Smith was arguing for reform.  He wanted to introduce a moral set of rules for commerce.

To Smith, capitalism without morals was an enigma.  Capitalism without reform was chaos and corruption.  The system demanded both a free market where success was never ensured and failure was ever present.  The system also demanded government protectionism was removed (ie no tariffs, embargos or trade restrictions).  Under capitalism, if a product could be produced cheaper and better somewhere else, it should be sourced from there (ie globalism) rather than protect local producers.  Capitalism is not a friendly system, it is survival of the fittest.  In the twentieth century, we see a revival version of capitalism appear.   August Lösch expands on Smith with an eye toward the ever-growing empires of Europe.  Lösch argues, in Die Raűmliche Ordung, that when better, cheaper products can be imported, especially from allies or colonies, it is IMMORAL to not do so.  This was the guiding principle for American Capitalism for most of the 20^th
Century.

In 1970, Milton Friedman introduced yet another variation on capitalism – maximizing profit.  According to Friedman, corporations were honor bound to deliver the best profitability they could legally deliver.  In Smith’s world this is not a problem because corporations should also be restricted in their actions by a moral compass (to Smith this was a Presbyterian Christian compass).  Friedman took that morality out of capitalism but still the market determined winners and losers.  The market, in theory, would punish those who failed to live up to Smith’s moral sentiments.  All this works fine so long as governments only regulate to protect disadvantaged people, the long-term assets of the nation (like the environment and security), and common good. 

Today, however, we see a push back to Mercantilism and protectionism.  Certain businesses are deemed “too big to fail” (a non sequitur in Smith’s Capitalism).  Markets are protected.  Trade is restricted.  The “unseen hand of Providence” is again being swatted away in favor of greed and corruption.  Whoever can lobby the Congress most effectively gains regulatory protection and the most inferior production is guarded against failure.  We are no longer Capitalist!  We have become exactly the system that Smith sought to curtail and replace. 

The uber Right fears socialism, that other very vaguely defined economic system where society governs for compassion and balance.  They should fear the backlash of true capitalist who will force the system back into balance.  When people are overcontrolled, they will rebel and rebellions breed chaos.  The mythical communist is no threat, but Madame Guillotine is very real.  America needs to reverse course back to her roots before we fall over the precipice into La Terreur.

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