Why Is Capitalism Better Than Communism?

A comparison between the merits of capitalism and free enterprise and those of communism is ongoing in America and has grown more persistent after Zohran Mamdani, a self-identified socialist, was elected to lead New York City as its next mayor. Paul Atkins, Chairman of the Security and Exchange Commission (SEC) spoke on this topic at the New York Stock Exchange on Tuesday morning. Jarrett Stepman reported on the speech – “Revitalizing American Markets” – in his article published at The Daily Signal. 

[Paraphrasing Atkins,] As America turns 250 years old, it’s important to remember that freedom, not top-down communism, created our prosperity….

“In seven months, [the American] story will reach a rare milestone when our Republic marks its 250^th year,” he said, noting that the creation of the U.S. was a special moment because the Founding Father’s stood for the idea that rights were “neither permissions to be earned nor privileges to be revoked.”

The attitudes of the Founders were shaped in part by what came before them in the Old World and the New World, Atkins said. The SEC chairman said that before the U.S. was a nation, it was an “investment.”

“The first English settlements in this hemisphere were financed through joint-stock enterprises that allowed people to pool together and share in the risk and the reward of a very uncertain venture,” he said.

He said that New York, once named “New Amsterdam,” also began as an investment project, foreshadowing its future as the major center of global finance.

Atkins noted that a long English legacy of restrained government power, the preservation of property rights, and predictable rules rather than “royal whim” allowed for market and human flourishing. The Founding Fathers inherited that worldview, he said, then “forged a more perfect union.”

The SEC chairman pointed to Alexander Hamilton … as a man who understood that “markets, structured properly, can unleash the might of American dynamism as no monarch or government ministry possibly could.”

It was the commercial nature of the American people, Atkins sad, quoting Hamilton in Federalist 11, that so greatly defines the country and creates an “inexhaustible mine of national wealth.”

Atkins said freedom and dynamism produced remarkable prosperity for the American people. In the 20^th century, other regimes tried to create a top-down model of growth, he said, but these proved disastrous in comparison to the free system of the United States.

“The Soviet and communist system of central planning, coercion, mass murder, seizing private property, and suppressing private enterprise, for example, collapsed under the weight of its own contradictions,” Atkins said. “While the American approach empowered its citizens to innovate, to invest, and to build wealth within predictable and enforceable frameworks.

The message from this larger set of historical examples is clear, Atkins said.

“Across this long sweep of innovation, a pattern emerges with clarity: The great leaps of American life were always produced by a willingness to tolerate and accept risks within a system that rewards those who take those risks,” he said. “Our prosperity is no accident of history – nor is our primacy assured in the future. The 20^th century was a triumph of economic freedom over doctrines that sought to constrain it.”

Atkins warned that “principles do not preserve themselves.” He said that freedom is not a “relic” that we inherit, but a responsibility we must assume. In recent years, “our regulatory frameworks have veered from the founding ideals that helped the United States to once stand without peer as the world’s destination for public companies,” the SEC chairman said….

“One of my priorities as chairman is to reform the SEC’s disclosure rules with two goals in mind,” he said. “First, the SEC must root its disclosure requirement in the concept of financial materiality. Second, these requirements must scale with a company’s size and maturity.”

With these changes, Atkins said he could set the SEC on a better path to fulfilling its original mission as a benign steward of financial markets.

“So as America’s 250^th anniversary approaches, the question before us is not whether our entrepreneurs have the capacity to reinvigorate our capital markets, but whether we, as regulators, have the will,” he concluded. “In this new day at the SEC, and under President [Donald] Trump’s leadership, I am pleased to report that we do.”