In her essay "Racism," Ayn Rand argues that racism - which she describes as "The lowest, most crudely primitive form of collectivism" - is incompatible with capitalism and can only be defeated through capitalism.
"There is only one antidote to racism: the philosophy of individualism and its politico-economic corollary, laissez-faire capitalism. ... It is capitalism that gave mankind its first steps toward freedom and a rational way of life. It is capitalism that broke through national and racial barriers, by means of free trade. It is capitalism that abolished serfdom and slavery in all the civilized countries of the world."
Walter Williams adopts a similar view of the role of capitalism in defeating racism.
Williams defends "Free markets and the profit motive" against the charge that they reduce economic opportunities for victims of racism.
In an argument echoed by Thomas Sowell in "The Quest for Cosmic Justice," Williams argues that sound economic policy cannot be derived from a utopian desire to promote fairness for everyone: For example, it may be "Unfair" that anyone works for less than $20 an hour, but it does not follow that working for that sum should be prohibited.
His view is that "Economic theory as such cannot answer questions of fairness. However economic theory can predict the effects of not permitting some people to charge lower prices for what they sell and higher prices for what they buy. ... They will be worse off than otherwise would be the case."
Williams' analysis shows the importance of understanding economic theory as a prerequisite to understanding economic events.
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