Capitalism Is Also the Freedom to Choose

A story attributed to Ronald Reagan tells of a little girl who wants to become president so she can provide homes and food for homeless people. Reagan suggests she begin immediately: tidy his garden, earn fifty dollars and give the money to someone who needs it. The girl pauses. Would it not make more sense for that person to do the gardening and receive the payment directly?

“Welcome to the Republican Party,” comes the reply.

Behind the story lies an essential question: should government primarily enable people to create wealth, or increasingly decide how they must create, distribute and use it?

That question concerns freedom as much as money.

Capitalism is an economic system in which individuals and private businesses can own property, invest, employ people, sell goods and compete for customers. Prices generally emerge from exchanges between buyers and sellers. Profit rewards successful decisions; losses signal that resources might be better used elsewhere.

Capital is more than the wealth of billionaires. It includes a shopkeeper’s premises, a family’s savings, a farmer’s machinery and an entrepreneur’s investment. The Global Capitalism Index also recognises human capital: the knowledge, experience and skills people bring to work.

At its most accessible, capitalism means being able to do something productive with what you own and what you know.

Its connection with personal freedom follows naturally. Someone who can choose an employer, establish a business, accumulate savings or support an independent organisation possesses practical independence. Economic freedom creates alternatives to dependence on political authority.

An independently financed newspaper can challenge a minister. A business owner can support an unpopular cause. A worker with several potential employers can leave an environment that demands conformity. Savings can give a family the ability to move, retrain or refuse an unacceptable arrangement.

Freedom from government intervention in economic life helps sustain freedom in other areas of life. When the state gains greater control over livelihoods, investment and opportunity, it also acquires greater potential influence over the people who depend on them.

Two papers from the University of Virginia—the 2025 Global Capitalism Index annual report and its methodological white paper—provide a framework for examining this relationship. They assess eight dimensions, including property rights, competition, labour markets, finance, business formation and the movement of goods and capital.

Their definition explicitly recognises obstacles created by both government and private interests. A monopoly that blocks market entry can restrict economic freedom just as effectively as a ministry that refuses permission to trade.

The papers therefore support an argument for open markets and independent citizens. They do not support the simpler proposition that every reduction in government necessarily produces more capitalism.

The annual report finds a positive association between capitalism and liberal democracy, reporting a correlation of 0.66. Countries with stronger capitalist institutions also tend to perform better in human development and life satisfaction.

These are associations, not proof that capitalism automatically creates political liberty. Some of the measures also share institutional ingredients, such as the rule of law. The report itself recognises that strong capitalist institutions can coexist with limited electoral democracy.

Economic freedom is consequently a foundation on which wider freedom can grow. It still needs constitutional protections, independent courts and political rights.

America offers a particularly important test.

In the report’s 2025 ranking, the United States stands second, with 95.0 points, behind Switzerland at 96.9. In 2009, America ranked sixth. Its relative position has therefore strengthened over the period covered.

Its greatest measured advantage is the sophistication of its capital markets, where it ranks first. It also ranks third for the free flow of goods and capital and sixth for new business formation and growth. This helps explain why so many transformative innovations emerge from, or reach global scale in, the United States: its capital markets can support the expensive journey from an ambitious idea to a functioning industry. That capacity is particularly important for projects such as the pursuit of superintelligence and the development of commercial space technologies, where enormous investment may be required long before a reliable return becomes possible.

America’s advantage therefore extends beyond invention itself. A discovery needs financing to become a product, and a promising product needs further investment to reach millions of customers. Laboratories, computing infrastructure, factories and launch systems cannot be built on ideas alone. Capital markets allow investors to back competing approaches, accept the possibility of failure and provide successful enterprises with the resources to expand. Economic freedom gives innovators room to attempt what established institutions may consider too uncertain; access to capital gives them the means to pursue it.

What would happen if Mamdani’s promises were implemented federally?

An exact future ranking would be invented. The GCI is not a calculator into which one can enter a tax increase and obtain America’s new position. The design, scale and implementation of policies matter, as do their effects on investment, competition and business formation.

There are nevertheless two plausible directions.

An America that expanded childcare while preserving competitive markets, secure ownership and strong incentives to invest could remain near the top. Childcare might even enable more parents to work or establish businesses. The high positions of several European welfare states demonstrate that substantial social provision can coexist with strong capitalist institutions.

A broader federal programme of lasting price controls, politically directed investment, privileged public competitors and restrictions on private enterprise would be different. It would transfer decisions from citizens and businesses towards government. If those measures weakened market entry, investment and property rights, America’s capitalist strength—and plausibly its GCI standing—would deteriorate.

Such a shift could also weaken the mechanism that helps finance American innovation. Investors considering uncertain projects weigh the potential rewards against the risks. Policies that substantially reduce those rewards or make investment conditions less predictable can discourage the commitments needed to develop and expand new technologies. The consequences would extend beyond individual companies to the industries and opportunities that might otherwise emerge.

The danger is cumulative. Each intervention may appear manageable in isolation. Together, they can change the relationship between citizen and state.

Europe shows why the distinction matters.

The following positions come from the annual report’s 2025 ranking:

Europe has several of the world’s strongest capitalist systems. Denmark, Sweden and Norway demonstrate that extensive social protection does not, by itself, abolish capitalism. Their high positions reflect the importance of functioning institutions, property rights and competitive markets.

This finding also places a limit on arguments based exclusively on tax rates. The report does not find that low taxes are a necessary condition for a strong capitalist system. That does not make taxation costless. It means the organisation of markets matters alongside the amount governments collect.

Europe should nevertheless resist complacency. The report records a four-point decline in Western Europe’s average score between 2009 and 2025.

Elsewhere, substantial improvements have occurred. The largest score increases were in Zimbabwe, up 18.5 points; Algeria, up 16.7; and Seychelles, up 16.2. Albania gained 15.3 points, Rwanda 13.7 and Georgia 12.6.

Progress must be distinguished from achievement. Zimbabwe’s improvement began from a very low base. Albania, ranked forty-first, and Georgia, forty-fourth, remain below Belgium. Their gains show that institutional conditions can improve substantially; they do not establish that these countries now offer the strongest overall protections for freedom.

For Belgian readers, nineteenth place should prompt neither despair nor self-congratulation.

Belgium remains a developed capitalist economy, ahead of France and Germany in this particular index. Yet it ranks twenty-fifth for labour-market openness and twenty-eighth for capital-market sophistication. These results identify areas worth examining rather than grounds for declaring the entire system healthy.

The state’s financial footprint is substantial. Eurostat’s April 2026 release puts Belgian general-government expenditure at 54.2% of GDP in 2025, compared with 49.5% across the European Union. Government revenue was 49.0% of GDP, leaving a deficit of 5.2%.

That does not mean government owns 54.2% of Belgium’s economy. Expenditure includes pensions, benefits, public salaries, investment and payments to private suppliers. A pension remains money its recipient can spend in private businesses. Public spending and public ownership measure different things.

The figure nevertheless shows the scale of resources allocated through public budgets.

Direct ownership is another channel of influence. For example, the Belgian state holds 53.51% of Proximus. Such holdings must be examined separately from government spending; neither measure provides a single percentage describing all economic activity “controlled” by government. Regulation, taxation, ownership and public purchasing each operate differently.

For many households, the most immediate expression of government’s economic presence is taxation on work.

The OECD reports that Belgium’s tax wedge for a single person without children earning the average wage reached 52.5% in 2025, the highest among OECD members. This includes income tax and employee and employer social contributions, adjusted for cash benefits. It is a share of total employer labour costs, not simply the deduction shown on a payslip.

Under that measure, out of every €100 an employer spends on employing the worker, approximately €47.50 reaches the worker as net pay.

Those contributions finance services and social insurance. But their scale makes a legitimate question unavoidable: how much space remains for people to benefit directly from additional work, build savings and pursue their own priorities?

Some Belgian political parties want to replicate Mamdani’s electoral successes by moving the Belgian economy more to the left while using antisemitism to stir up the electorate. Economic resentment and hostility towards Jews are a dangerous combination. A political movement should be judged on the opportunities it creates and the rights it protects.

The issue with moving Belgium more to the left will make it fall into the abyss of unbearable taxation which would incite those that can to emigrate and those that cannot to Immigrate.

The economic risk behind that warning is the departure of mobile taxpayers, entrepreneurs and investment. People with internationally transferable skills or businesses have choices about where to live and work. Those who remain can find themselves supporting a public system whose financial commitments have not fallen alongside its tax base. This is a risk to examine seriously, rather than a migration outcome the index itself predicts.

Increasing taxation where the OECD already records its highest tax wedge on the average single worker calls to mind the familiar description of insanity: doing the same over and over again and expecting other results.

A government cannot assume that every higher tax rate will yield the revenue its spreadsheets promise. People adjust their behaviour. They may invest less, postpone expansion, reduce activity or relocate. The extent depends on the tax and the circumstances, but the underlying point remains: the tax base is made up of people making decisions.

This is the deeper issue behind Belgium’s present budget negotiations.

The De Wever coalition has been seeking a package of more than €10 billion amid disagreements over taxes and spending. The European Commission’s May forecast projected public debt rising from 107.9% of GDP in 2025 to 110.5% in 2026 and 112.8% in 2027.

Borrowing postpones the financing question. It does not remove it. Future interest payments absorb resources that could otherwise support services, investment or lower taxation.

A budget discussion concerned with freedom should therefore ask more than where another billion euros can be collected. It should examine whether public spending delivers results, whether administrative responsibilities overlap, whether work and entrepreneurship are sufficiently rewarded, and whether citizens can make more decisions without navigating unnecessary permissions.

Social protection has a legitimate place in a free society. Its durability depends on a productive economy and institutions that respect the people who finance it.

The strongest defence of capitalism begins with that respect: individuals should retain meaningful control over their work, property, savings and ambitions. Government should protect the conditions that make those choices possible and justify the occasions when it restricts them.

Belgium’s budget is consequently a debate about more than balancing accounts. It is a debate about how much room remains for independent citizens.

A society that steadily transfers economic decisions to government should ask how long other freedoms can remain equally independent.