[Market Economy Guide] Puritan Experiments and Capitalism

Puritans who settled in America abandoned communal society after a famine...

Once private property was recognized, harvests surged... followed by a transition to a market economy

The United States is unquestionably the world’s most powerful capitalist country today. But even America, the standard-bearer of capitalism, once experienced socialism. It was in 1620, when Puritan settlers first arrived in America.

Abandoning collective production

At the time, the settlers minimized individual choice and lived a community-centered life. They adhered to the principle of collective management of all goods, aiming to share wealth and strictly prohibiting private ownership. But the communal life of the Puritan settlers collapsed in less than three years.

The decisive trigger was famine. Overwhelmed by famine, the Puritan settlers abandoned their communal system and returned to a market economy. But was famine alone enough to bring about such a systemic shift? A very interesting fact can be found in a paper titled Of Plymouth Plantation by William Bradford, one of the settler leaders at the time.

According to the account, the communal society based on the principle of shared wealth became increasingly inefficient over time and caused discontent and confusion among the people. No matter how much time and effort individuals put in, the outcome was the same for everyone, so no one stepped forward with enthusiasm. Naturally, work efficiency declined, and harvests dropped significantly. This led to the calamity of famine. In the end, the settler leaders made a decisive choice to save people who had fallen into hunger and despair. They boldly abandoned the communal way of life they had maintained until then—collective production and collective ownership—and shifted to a system in which each person owned what he produced. Then something remarkable happened. People who had spent their time complaining instead of working rolled up their sleeves and began to work diligently. Productivity naturally rose, and harvests increased sharply. Unsurprisingly, there was no famine that year.

What made America possible

Having experienced firsthand the extraordinary power of a market economy that recognizes private property, the Puritan settlers never again tried to return to communal society. Their communal society can be seen as a kind of experiment in applying socialism. In particular, the social sharing of wealth through the common ownership of the means of production, along with collective production and collective distribution, forms the core of a socialist planned economy. The failure of that socialist experiment led to a transition that strengthened liberalism and capitalism, both of which emphasize individual freedom and choice. As a result, it helped give rise to the United States of today—the world’s richest country and the most powerful capitalist market economy.

Capitalism is an economic system that achieves the efficient allocation of resources. Its essential characteristic is to minimize waste and draw the greatest possible efficiency from limited resources. This is also the very strength that makes capitalism competitive.

Through countless experiences, humanity has come to regard capitalism as “the least bad system,” a lesson of history. From the Puritan settlers’ communal experiment to the socialist planned economies of the 20th century, every socialist experiment in human history ended in failure. Only capitalism has been proven to be a rational and efficient economic system.

This does not mean capitalism is a perfect economic system. Capitalism also has many flaws and problems. Nevertheless, it has remained the most viable economic system to this day.

That is precisely why efforts to find an alternative to capitalism are meaningless today. I say this unequivocally: there is no alternative to capitalism. Rather than tormenting humanity with futile efforts to find a substitute for capitalism, we should now move forward on the path of innovation consistent with capitalist principles.

■ Remember this

The communal society based on the principle of shared wealth became increasingly inefficient over time and caused discontent and confusion among the people.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: [시장경제 길라잡이] 청교도 실험과 자본주의

Author: Sung-no Choi

Date: 2020-02-03

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=10&idx=22339