What Does the World Think of Capitalism?

The Legatum Institute in the U.K. has an important new international poll out about public attitudes towards capitalism and the business world. They hired YouGov to survey opinions from people in the UK, U.S., and Germany, but also from people in the up-and-coming economies of Brazil, India, Indonesia, and Thailand. The short summary is that there’s bad news and there’s good news.

First, the top-line bad news: large majorities in both the developed and rapidly developing countries believed that, in a capitalist economy, “the rich get richer and the poor get poorer.” As Legatum’s write-up of the results suggest, these impressions are “at odds with reality.”

The rich are getting rich but so, too, are the poorest. They are getting richer in two ways. Incomes across the world are rising – as World Bank data proves. But there is also the huge spread of medical innovation, access to technology and improved diet. Although some income statistics are contested we only need to look at increased rates of life expectancy to realise that capitalism's gains are widely shared.

The next bit of bad news, while disappointing, may have more to do with poor phrasing than the existence of a deep-seated bias against capitalism. Respondents were asked whether they agreed with the phrase “Most of the biggest businesses in the world have dodged taxes, damaged the environment or bought special favours from politicians.” Large majorities, from 65 percent in the U.S. to 77 percent in Thailand, responded in the affirmative.

But with this question, I wonder about the assumptions regarding timespans and the severity of the actions named. Suppose one of the “biggest businesses” in the world has been around for over 100 years and operates in 50 different countries. Are we able to answer the question in the negative only if we believe that that company has never dodged any tax, never caused any negative environmental consequences and never engaged in a single instance of cronyism, even once, over the course of a century? If that’s the case, then even I would probably answer yes, given that few companies are perfect.

And that’s before getting into the question of whether having “dodged” taxes means illegal tax evasion or perfectly legal (though perhaps still unpopular) tax avoidance. Suppose that a company operates a manufacturing facility that accidentally develops a small fuel leak, but cleans up and remediates the mess. Does that mean they’ve “damaged the environment” for the purposes of the question, or are most respondents envisioning massive disasters that make international headlines?

There is fraud, deception, and double-dealing in every area of human endeavor—from nonprofit groups, religious institutions, the military, law enforcement, and, of course, federal regulators. The real question is whether large business enterprises are largely law-abiding and generally a good force in society. I certainly think there are, and a more precisely-phrased question on this issue would have told us a lot more about what the respondents really think.

Now for the good news: free enterprise was considered to be better than government at lifting people out of poverty. Among those polled in Brazil, markets won out over government programs by a 56-point margin. On a more personal level, respondents also judged “successful business people and inventors” to be just as important to society as “doctors, teachers and charity workers” by extremely wide margins. Among Indonesians, for example, only 4 percent disagreed with that statement of vocational equality.

So what we seem to have is a public that acknowledges at least some of the instrumental good that a free enterprise system makes possible, but still has reservations about the ethics of profit-motivated players. This result is not entirely surprising, but reinforces that advocates of free economies and small governments still have a lot of work to do.