Michael Moore ignores capitalism's blessings

Though Michael Moore seems to have missed it, in the past 10 years corporations have made enormous strides in promoting workplace democracy, patent-free innovation, and the financial independence of women in developing nations.

Mr. Moore's new movie, "Capitalism: A Love Story," profiles hardworking Middle American families financially ruined by the brutal tactics of the auto, insurance, and financial industries and sets out to prove his extreme claim that "capitalism is evil." He's wrong.

While capitalism certainly has its faults, the fact that many big corporations went bankrupt shows that the free market did not reward unscrupulous practices. There is, in fact, a large slice of the economy thriving in the recession, and these firms are based on democracy and generosity.

Worker empowerment is profitable

During the past 20 years, team-based work environments have dethroned the Industrial Age hierarchy as the management structure of choice.

One example of the change: Harvard Business Review contributor Ricardo Semler saved his manufacturing plant from bankruptcy by replacing middle management with autonomous, employee-run teams.

Teams at his plant, Semco, set their own salaries, schedule their own hours, and are offered finance classes so they can understand Semco's transparent record books. Mr. Semler found that devolving power to employees made them happier – and happier workers were more productive.

The overwhelmingly positive reaction to this new worker-empowered management style led Fortune magazine to publish an annual list of the "100 Best Companies to Work For."

The Container Store earned a top spot on the list when reports rolled in of employees saying things such as, "[I]t's rare to find a company with the same values, philosophy, and foundation principles. Going to work is like going to a family reunion every day." Research shows that this enthusiasm is a cash cow: Members of the 100 Best routinely outperform their autocratic counterparts. Indeed, American automakers' refusal to adopt team-oriented practices is often cited as the reason they could not outsell their foreign competitors.

Given that American automakers needed a bailout, Moore's movie seems more like a documentary of capitalism's authoritarian losers, rather than its democratic winners.

Self-interest is not always selfish

Business is booming for companies like Tom's Shoes, which donates a pair of shoes to needy children for each pair purchased. Psychological studies reveal a symbiotic relationship between capitalism and charity: Donations to charity increase when matched with the purchase of "luxury" products.

For instance, consumers are more willing to splurge on a $5 cup of Fair-Trade Starbucks coffee, since they can rationalize the cost as a contribution to some third-world coffee bean grower.

Contrary to Moore's view of the free market, recent research confirms that consumers are willing to buy higher-priced organic, environmentally friendly, and socially conscious products. Wanting to feel good about one's own charitableness is certainly self-interested, but is not always selfish.

Additionally, Moore laments that society has yet to learn from the antipatent altruism of Jonas Salk, who donated the intellectual property of his polio vaccine to the public domain. However, research from the Massachusetts Institute of Technology's Eric von Hippel shows that individuals are increasingly sharing their innovations, especially within the medical industry.

So widespread is this movement, that my own father, a small-town Midwestern eye doctor, gives a free annual lecture advising developing nations on a cheap alternative to cataract machines he discovered. Because of the Internet, everyone from medical professionals to gadget enthusiasts have a convenient way to share their passions.

Open source is government-free and self-sustaining

In fact, many public-domain innovations have developed into their own financially sustainable system. Much of the Internet is run by patent-free "open source" software. Open source permits anyone to modify a program, as long as their modifications are made publicly available.

As some open-source projects reach millions of individual contributors, financial assistance is needed to pay for websites and data storage. Technology megacorporations, such as Cisco, happily sponsor open-source software; it not only gives them great publicity, but ensures access to software they find more efficient than commercial products.

As a result of free software, developing nations can afford to purchase more computers, adding to the ever growing user-base of open-source software. A thriving industry of open-source tech support and hardware accessories has developed in response to increasing demand.

Finally, though Moore advocates federal assurances of individual financial security, government assistance can hurt more than it helps.

A chorus of economists have claimed that billions in federal aid to Africa have done little more than enrich corrupt politicians and entrench villages into unsustainable dependence on foreign governments. This is precisely why the 2006 Nobel Prize went to research on a capitalist solution: microloans, low-interest payments to tiny textile and agricultural entrepreneurs.

Kiva, a Clinton Global Initiative microloan organization, has put thousands of communities on their first path to self-sustaining prosperity. Often, Kiva's beneficiaries are women who become financially independent of abusive family relationships.

While capitalism is not perfect, African female entrepreneurs, employees at The Container Store, computer owners in developing nations, and the children wearing Tom's shoes would probably argue that the free market is far from evil.

Gregory Ferenstein is a Peltason fellow at the University of California Center for the Study of Democracy.