Economics, Top Stories

What Has Capitalism Ever Done For Us?

When bemoaning the evils of capitalism, often from the soapbox of internet-connected smartphones or laptops, opponents of the free market are wont to wax lyrical about increasing income inequality. The rich are richer than ever before, because they hog obscene amounts of wealth that could be put to better use by plebs who are slaves to ‘the man,’ oppressed under the obligation that they toil endlessly for their wage. Like Reggie in Monty Python’s The Life of Brian, they demand to know: “What has capitalism ever done for us?”

In the mouth of the anti-capitalist activist, ‘capitalism’ has become a dirty word. It conjures images of bloated, greedy, rich one-percenters reclining behind piles of cash as they exploit their low paid workers, hoarding profits borne of the ethic of consumerism, which manifests itself in millions of brainwashed souls mindlessly handing over their meagre earnings for the instant gratification that comes from buying the next unneeded gizmo.

Anti-Capitalist Twitter

Such a dreary summation sells capitalism short. Capital itself is nothing more than privately owned money or assets used to start or invest in businesses that create products or services that other people may want. Everything that we enjoy on a day-to-day basis from housing, clothing and food, to entertainment, has been produced using capital. Even essential public services are funded by the tax collected from private wealth generated by capital.

In the manorial system of rural economies past, the wealthy and privileged strata of society owned everything and the serfs who worked the land were indentured servants, with no means of escaping from their economic situation. Certain areas of the lands owned by the lord of the manor were available for ‘free peasants’ to farm for rent payable to the lord. Quality of life for peasants was subsistence level. When conditions were good, life was good, but when the crops failed through bad weather or blight, then life was hard. During this period, wealth was a zero sum game: goods and money exchanged hands, but little new wealth was created.

Starting in the 13th century, the common land available to the peasantry began to be ‘enclosed.’ Peasants could no longer freely farm the land and the adoption of better farming practices on the larger enclosed tracts of land meant that not so much manual labour was required and many peasants faced ruin. The new landless working class then sought employment in the new industries being developed during the 18th century. The industrial revolution that followed, with its mass production and factory work enabled this new working class to exchange their labour for a wage and to free themselves from a hand-to-mouth existence on the land. In the era of free enterprise, innovation, and capital investment, it was possible for new wealth to be created on a large scale.

In the Parable of the Talents, Jesus tells the story of a master who went on a trip and left large sums of money with his trusted servants according to their ability. The most able was given five talents, another was given two talents, and the third servant was given one. While the master was away, the servants with five and two talents invested them wisely. By the time the master had returned from his extended journey, they had doubled the value of the talents they had been given. The third servant, fearful of displeasing his master, simply dug a hole and buried his talent. When the master returned, he rewarded the first two servants with extra responsibility, while the third servant was punished for failing to use his single talent productively. In the story, using capital to produce more wealth is beneficial not only to the master but also to the servants who were rewarded for their entrepreneurship. And in producing the wealth through judicial investment, goods and services of value were created that enhanced the lives of the people who were willing to exchange money for them.

When the profit motive is described as ‘greed’ or ‘selfishness,’ it comes very close to what is actually true. The free market is driven by radical self interest. While at first glance this may seem to be a negative, in fact the opposite is true. Businesses are motivated to make money, otherwise what is the point of carrying on a business at all? Consumers are only interested in products or services that have value to them and they will only pay the price that they are willing to pay. In order to satisfy their customers while also making a profit, businesses must therefore compete with each other by making efficient use of resources. In this way the self-interest of the entrepreneur is moderated by the forces of competition.

Anti-capitalist activists focus on the profits made by big business and see them as excessive. But profits represent new wealth created. Successful entrepreneurs don’t get a larger slice of the pie, they make the whole pie bigger; even though they themselves have a big slice, there is more residual pie to go around than before.

*      *      *

Critics of capitalism view employment as exploitation. The worker is the one who generates the value, and yet they are paid a fraction of the profits made by the employer. In this model, the worker is ‘forced’ to sell their labour power for a wage. But this ignores the risk, time, energy directed by the capitalist into his enterprise. It ignores the voluntary nature of employment, and the benefits of being able to exchange a skill set for units of stored value. It also ignores the benefits of being able to exchange wages for increasingly inexpensive and more abundant goods.

But let us for a moment accept the exploitation of labour model as correct; if employment is exploitative, then what is the proposed alternative?

Karl Marx (1818-1883)

The Labor Theory of Value which is central to the economic philosophy of Karl Marx is used to demonstrate that workers are exploited by capitalism. According to this theory, the value of a commodity can be estimated by the number of hours of labour that were required to produce it. However, this fails to fully understand the subjective reasons we desire any given object. This can be illustrated by the words of economist and theologian the Reverend Richard Whately who noted that pearls do not “fetch a high price because men have dived for them; but on the contrary, men dive for them because they fetch a high price.”

If you’ve decided that products are only valued because of the number of hours that have gone into producing them, then the next logical conclusion is that any profits made by the entrepreneur are immoral. The means of production must therefore be better off in the hands of the workers themselves. But if profits are out, then the motivation to produce is gone, the price signal is gone, and production decisions must then be collectively planned. Because consensus by a large and disparate body of people requires representation, it is inevitable that only a small number of people end up at the top of the chain, making decisions that the collective whole must abide by. In other words, in order for such a system to work, coercion is required. It is authoritarian.

Even Friedrich Engels, co-author with Marx of The Communist Manifesto, foresaw that planning under a system based on ‘labor hours’ as opposed to subjective value and the competitive price system would be unworkable:

To desire in a society of producers who exchange their commodities, to establish the determination of value by labour time, by forbidding competition to establish this determination of value through pressure on prices in the only way in which it can be established, is therefore merely to prove that…one has adopted the usual Utopian disdain of economic laws…Only through the undervaluation and overvaluation of products is it forcibly brought home to the individual commodity producers what things and what quantity of them society requires or does not require…If now competition is to be forbidden to make the individual producers aware, by the rise or fall of prices, how the world market stands, then their eyes are completely blinded.

During a state visit to the US in 1989, former Russian president Boris Yeltsin made an unscheduled stop at a Randall’s grocery. When he saw the abundance of produce on offer he was astounded. In his autobiography, Yeltsin wrote:

When I saw those shelves crammed with hundreds, thousands of cans, cartons and goods of every possible sort, for the first time I felt quite frankly sick with despair for the Soviet people. That such a potentially super-rich country as ours has been brought to a state of such poverty! It is terrible to think of it.

Two years later, Yeltsin left the Communist Party and began a reform process that would see him become the first democratically elected Russian leader and preside over the demise of the Soviet Union.

The centrally planned communist Soviet economy based on the Marxist Labour Theory of Value, simply could not compete with the abundance that we take for granted in modern capitalist societies. Without the knowledge that the price signal sends, top down central planning results in inefficiencies and waste, while at the same time denying individuals freedom and choice. Who would you trust more? Human beings driven by self interest who are in the business of providing goods and services that please consumers, or human beings driven by self-interest in positions that grant them enormous bureaucratic power over others?

A collectivist system requires that people change their innate motivations. Instead of striving to improve their individual lot, they must look at the big picture and elevate the collective good above their own self interest. History has demonstrated that this is an unrealistic expectation, no matter how preferable it may seem on paper. A capitalist system, however, does not require that individuals change their very nature, in fact it relies on the motivation of self-interest. That is not to say that in a capitalist system there are no philanthropists or big-picture thinkers and creatives. But a capitalist system does not require that everybody thinks and acts in this way in order for it to succeed.

Critics of capitalism hark back to pre-capitalist societies as exemplars of egalitarianism. But, without exception, people choose to break free of these societies when given the chance. They willingly embrace a capitalist system; they want things, as do we all. Tellingly, most critics of the capitalist system do not willingly remove themselves from it. As they continue to enjoy the benefits of smartphones, supermarkets, and automobiles, and watch Netflix on their MacBooks, they are supporting the very system they claim to oppose. And why wouldn’t they? Any sane person who has the good fortune to benefit from the capitalist system, will.

*     *     *

Private property ownership, the foundation on which capitalism stands, is the principle that allows people to benefit from their own labour. If you make something, you get to keep it. It drives creativity and productivity, and economic systems that deny this right result in perverse effects that kill motivation, and quash personal pride with often catastrophic results.

But no system is perfect. Social and income inequality exist within capitalist societies as they have existed in every other economic system that has been tried. It is true that many people inherit wealth and that this gives them a head start in life. It can be argued that this isn’t fair and that would probably be right; the reality is that life very often isn’t fair. Not everybody is equally talented or skilful. Likewise, not everybody is presented with the same opportunities to succeed. Recall the Parable of the Talents; the servant who buried his capital didn’t have the skills or drive necessary to make the capital work in a way that generated more wealth. That is why, in most capitalist societies, provision is made for people who, for whatever reason, are unable to thrive.

Often this takes the form of social welfare, or the ‘safety net,’ and is complemented by private beneficent societies such as church groups and charities. But the high cost of state-sponsored welfare and the deleterious effects of intergenerational welfare dependency mean that alternatives need to be found. Many ideas have been floated which seek to address social inequality including the Universal Basic Income and work placement subsidies, which are said to be largely self-financed by reductions in welfare and crime. Cutting edge thinkers also see opportunities in blockchain technology, which, through the creation of ‘smart contracts,’ allows people to income swap in a way that does not require central planning or administration. Any solutions that seek to address inequalities must be carefully balanced against individual freedoms. As Milton Friedman so eloquently stated, “The society that puts equality before freedom will end up with neither. The society that puts freedom before equality will end up with a great measure of both.”

Other problems arise within markets when large corporate entities lobby government to manipulate the market in their favour through the use of regulations, subsidies, and labour legislation. This influence then upsets market equilibrium leading to shortages, surpluses, and monopolies. Governments also meddle in the market to protect certain enterprises from collapsing; one well known example is the financial bailouts of banks. This corporatism, or crony-capitalism, results in mis-management and distortion of markets, along with intended and unintended negative effects on the economy. Mega-corporations aided by government regulations monopolise the market-place.

Many of those who rightly critique these unethical practices, wrongly blame capitalism and markets themselves. The trouble is that governments in capitalist societies are generally too large, and all too ready to bow to corporatist pressure, and grant favours in exchange for political donations. Corporations then find themselves in control of the levers of government. The problem isn’t that markets are too free, but that they are not free enough. Corporatism is an argument against government and the corrupting influence of power, not against capitalism and the marketplace. As Thomas Jefferson so wisely said, “A wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned.”

Free market capitalism and individualism grant us levels of freedom unheard of in human history. Wealth creation is not a zero sum game. It is not finite. We can’t cut it up into little pieces and share them out evenly. While building their own personal new wealth, billionaire entrepreneurs are creating more wealth overall through job creation and by providing value to consumers that enriches us all. Income inequality may have increased, but a greater proportion of people than ever before enjoy wealth that only two or three generations ago would have been unfathomable. We need to be honest about the failings of human beings, and to acknowledge that rather than causing these failings, capitalism minimises their negative impact. We need also to remember the often gruesome outcomes of collectivist alternatives. People who seek to redress the inequality and dysfunction that prevails in our modern societies are to be lauded, but vilifying capital and the free market is misguided and attacks the very system that has enabled life to improve for the vast majority of the global population.

 

Nicola Wright writes and edits content for LibertyWorks. She is passionate about liberty and human flourishing, and has a keen interest in free speech advocacy. Read more of her writing here, and follow her on Twitter @zumumma

Filed under: Economics, Top Stories

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Nicola Wright writes and edits content for LibertyWorks. She is passionate about liberty and human flourishing, and has a keen interest in free speech advocacy. Read more of her writing here: https://medium.com/@nicolawright

26 Comments

  1. Kyle Kulinksi is not anti-capitalist or Marxist in any capacity, he is in favor of capitalism plus stronger redistributionist policy. This Marxism or capitalism dynamic is never going to lead anywhere. Obviously private property and capitalism won’t be undone, but conflating Marxism with social democracy just indicates that any attempt whatsoever to correct the excesses of capitalism is labelled as Marxism. As more and more members of the underclass fail to accumulate wealth, this Marxism-or-capitalism false binary will continue to degrade discourse. It’s not the free market or Marx, it’s a market supported by redistribution or a complete stratification of humankind into IQ-conscientiousness selected elites and the rest. Wages have stagnated for over forty years, and college costs are higher than ever. There is such a need for social democracy right now, Marxism lost ages ago, if capitalists keep beating the corpse of Marx instead of admitting the need for redistributionist social policies (universal health care, UBI, higher wages) capitalism will only be an engine for generating non-linear growth at the top and a flatline at the bottom. And resentment will grow, and 35 year olds stuck in 30k a year jobs with 150k of college debt will no longer care about the justifications for their situation. They will only tear it down.

    • The screengrab was added (by me) during the edit. The author included only the second cartoon. The political cartoons are the point not the tweeters.

    • ADM64 says

      This is absurd: we have been trying to equalize capitalism via redistributionist measures for at least 70 years, while also regulating the economy, introducing laws based on “fairness” and the like, and we have the very problems you mention. None of this was Marxist per se – the people who advocated it all were in favor of private property and markets. The results are the opposite of what they predicted and exactly what those of us in favor of actual capitalism predicted. That’s because, whether you realize it or not, the assumptions behind the “social democratic” critique of capitalism are in fact identical to those of socialism and Marxism. And the results, while less severe than full-scale Marxism, are steps along that progression. Check out democratic socialism in the UK circa 1975 and you’ll see the connection.

      A mixed-economy, regulated welfare state is simply slow motion socialism in which the politically connected do well and everyone else gradually gets poor.

    • ga gamba says

      redistributionist social policies (universal health care, UBI, higher wages)

      This leads to the creation of a Ponzi scheme, though one that’s mandatory. With increased services provided, the system requires ever more people to contribute (or higher contributions, or delayed retirement, or a mix of all). For example, because of the improvements in medical treatment we keep chronically ill people living longer, which is what the public demands. Have you checked the cost of cardiac transplantation? Don’t neglect to include all the medical costs prior to surgery and all those after surgery, such as immuno-suppressants and antibiotics, needed for the life of the patient. (Fortunately heart transplants aren’t too common, but a public health issue such as obesity and its related consequences has the scale to bring the health system to its knees.)

      To keep this viable we need ever more workers to pay tax, which means we need more employers with growth. Yet, too many businesses, especially those in the industrial manufactures sector, lack competitive power vice imports. And even service-sector jobs like accountancy, paralegal, and medical transcription, can be off shored to the Philippines and India. As these well-paid skilled jobs disappear we also import workers (legal and not), most of whom are not well educated and therefore ill suited for work in the high value-added sectors with the best growth prospects. What does this do to wages? It suppresses those of whom can least afford it. “But who will pick the avocados then?” Good question. Because we also provide benefits to the unemployed what motivation do they have to harvest crops or paint walls? And let’s not ignore the size of the off-the-book economy; it’s an estimated 8% of GDP, which may not sound like much, but that’s about $2 trillion. The IRS estimates about $500 billion in income taxes were lost because of unreported wages plus another $38.25 billion lost to social security and medicare. What does that mean? Total expenditures for public elementary and secondary schools in the United States in 2013–14 amounted to $634 billion.

      “Let’s increase the minimum wage to make it a living one!” Do you think businesses can afford to absorb the cost? Firms with fewer than 20 workers make up 89.4 percent of businesses in the US. Increasing the minimum wage from $7.25 to $15 is about a 107% increase without a corresponding increase in productivity. (BTW, presently a bit more than 40% of workers in the US earn less than $15 per hour.) An employer of 20 workers each paid $7.25 per hour and working 40 hours per week has a wage cost of $23,200 per month. And let’s not forget the employer contributes to legally required benefits (social security is 6.2%, medicare is 1.45%, and states have their own mandates); these contributions are a percentage of each employee’s earnings taken from both employee and the employer. That’s another $1,775 per month to the feds. At $15 per hour the wage cost increases to $48,000 per month and the mandated benefits grow to $3,672. Our hypothetical small employer has a wage expense of more than $620,000 per annum employing low-skilled workers, which typically is fast food preparation, janitorial, housekeeping and laundry, shelf stocking, and the like. We haven’t even calculated the other fixed and variable costs; appears one needs revenue of a few million dollars per annum to cover it all. Have you ever accepted the financial, strategic, compliance and systemic risks required to sell $3 million in goods or services in a year? That’s a hefty burden.

      Contrary to the notion the capitalists are Mark Zuckerberg and Scrooge McDuck, most small business owners, who are capitalists, are not wealthy. Those with less than one year of experience in running an organization earn an annual salary ranging from $34,392 to $75,076 – they’re also not doing a 40-hour work week. Those with more than 10 years experience earn upwards of $105,757 per year. (BTW, only 8% of US workers earn $100k or more per annum.) Do you think s/he can absorb these new wage and non-wage costs out of pocket? Where possible they will be passed on or employers will replace workers with automation. Those whose competitors are low-wage imports will be hit hard. Great! We’ve put more people out of work and on benefits. And they’re no longer paying into the national health system you created. If UBI is introduced, which requires no productivity whatsoever, what motivation does the employer have to deal with the headaches and hassles that come with customers, workers, and government?

      We have a system of contradictory laws each trying to mitigate the consequences of earlier humane albeit misguided intentions. And to this we add more wants. Where’s my subsidised pre-school? How come we don’t have free psychological counseling? Where are the police to investigate displeasing comments on Twitter? Where’s my affordable public housing in San Francisico or London?

      How did this happen? Because the people pitching these ideas are most often insulated from and furthest removed from the consequences and those who believe they’ll benefit fail to see the long-term. Until those who want ever more services accept the responsibilities that come with them (for starters, how about not being obese?) the growth of the welfare state will adversely affect entrepreneurial activity and with it all the good things we’ve come to expect but fail to appreciate.

      From my perspective, it appears all you want to do is collapse the economy. Are you a Chinese agent or an enthusiast for dystopia?

      • Bill says

        Your minimum wage = living wage argument is flawed. Yes, businesses can absorb the cost, they pass that long in terms of increased price which then results in the “living wage” being insufficient and needing increase — endless circle, economists call it inflation =) Why not just make minimum wage $100/hr as that is just as arbitrary as $15/hour and more easily illustrates the fallacy.

        • ga gamba says

          That’s not my argument; it’s the argument of those activists who agitate for the living wage, and one I don’t subscribe too. You’re right it is inflationary. But, no, not all businesses can pass on the cost. Any business that faces foreign competition possessing wage comparative advantage will face trouble. Of course, not only wages determine the cost of a good; it comes down to the unit cost of production of which labour cost is one factor, usually a large one. Increasing the minimum wage 107% without a commensurate increase in productivity whilst foreign competitors’ labour cost and unit cost of production remain constant will further harm most manufacturers. Coffee shops and burger chains are better insulated from this (because who’s ordering a pizza from Beijing?), though owners can and will replace workers with automation.

      • Michael says

        I think that I read the articles here in order to then read and understand your responses. This and the last one in response to the academic mob have been outstanding.

    • garthdaisy says

      Well said, Alexander. Why do capitalism’s defenders always act like the only alternative to what we have is Marxism? And why do they always brush over big money influence in the political system without pointing out that capitalism as we know it has no method or plan to fix that problem. Corruption of the government by big business money influence is an inevitable side effect of capitalism that no capitalist has any plans to fix. Marxism doesn’t work so forward ho!

      Before anyone defends capitalism, they need to solve the problem of money in politics. And talking about how bad Marxism is will not accomplish that. What will? You tell us oh preachers of capitalism.

      • Nicola Wright says

        Corruption of government is fixed by dramatically reducing it’s size such that the state simply does not have the power to regulate or otherwise manipulate the market. The problem isn’t capitalism and markets, the problem is self interested bureaucrats in government.

  2. johnWH says

    “When the profit motive is described as ‘greed’ or ‘selfishness,’ it comes very close to what is actually true. The free market is driven by radical self interest. While at first glance this may seem to be a negative, in fact the opposite is true. Businesses are motivated to make money, otherwise what is the point of carrying on a business at all?”

    We can actually take this a step further: all systems of political economy ultimately run on self-interest. The bureaucrat is as self-interested as the businessman. But in one case, self-interest leads to rent-seeking and wealth destruction while in the other, self-interest leads to productivity and wealth creation. This the great insight of public choice (which i assume the author probably already knows, but I personally didn’t like the way she articulated the argument here)

    • Hi John, thank you for your comment. I did allude to what you describe in the following:

      “Who would you trust more? Human beings driven by self interest who are in the business of providing goods and services that please consumers, or human beings driven by self-interest in positions that grant them enormous bureaucratic power over others?”

  3. William Ames says

    Capitalism has created the resources to provide for everyone. It is also the major force preventing us from doing doing this.

  4. jason kennedy says

    Badly misjudged tone and a certain amount of straw men being beaten. Also, the passing reference to tax revenues being used to fund government ignores a plethora of monetary theories.

  5. Ginger Hayes says

    Capitalism as a system that rewards creativity and efficiency exists when competition through violence is surrendered to the state and a set of laws. Though people are born into this system in western socialized capitalist democracies, this arrangement is sometimes called the Social Contract– not a literal contract where the agreement is written out and all parties sign, but like a contract where there is an implicit agreement, based on common human conscience and sense of fairness, where individuals sacrifice their freedom to take whatever they can through violence in order to play in a capitalist game, as long as it remains reasonably fair and keeps to the rules. This social contract is why people can park millions of dollars worth of property, in the form of their autos, on city streets reasonably safely. It is why our homes can be protected by fairly flimsy door locks and fragile windows.

    The rules by which we play are not written down, but people intuitively expect a certain threshold of fairness. As a commentator mentioned, if our children go hungry while others eat, or are sick while others are healed with common medicine; this could be cause to take up arms, and then the game of capitalism is (temporarily) up. I think this goes for disparity of wealth, too. If you were to line up all the individuals that work together in a common enterprise– making some thing or service for the general economy– and set them to discussing their relative earnings, they may accept that the ones at the top make 100 times those at the bottom, and compound their earning into saved capital worth 10,000 times those at the bottom. But not 1000 times earnings, and a million times saved… There is a threshold, beyond which our individual intuitive sense of fairness is offended, at which point the rules start to seem fixed, and the game not worth playing, the ‘contract’ broken, and a descent to chaotic, violent, spiteful, each-for-their-own existence a better option.

    • Chester Draws says

      Only the very richest compared to the very poorest make 1,000 times. You are comparing worth with income. I earn a standard Western income. Bill Gates might earn 1,000 times my earnings. Few others will.

      A person earning $50,000 a year can live OK but will have no savings. That’s where the stupid multipliers come in. The “inequality” statistics are not based on what matters — income — but focus on the largely irrelevant “worth”.

      Yearly earnings are mostly within a 10x band. Not so dramatic for bleating though.

      • Bill says

        The “worth” calculation is also inherently flawed. Use Gates as an example, his worth may be billions but it is in major stock positions. Were he to start liquidating in order to get disposable assets those sales lower stock price which then lowers his worth by greater than the amount of his withdrawal. Worth is hypothetical for them no different than a middle-class family “guessing” at the value of their home in order to figure out their worth. Don’t think so? Let your neighbors house get foreclosed on and short-sold then go recalculate your net worth based upon new comps.

    • Andrew Smedley says

      When people are surveyed, they seem to gravitate toward a 3:1 ratio as the ideal gap between top and bottom. Most people don’t want pure equality of outcome, they know that some really do deserve more reward than others. I don’t know why tjis ratio in particular emerges, but it must be something to do with the practical concern of allowing people the chance to better themselves (peacefully) after misfortune, and also the deep intuition we all share that people are fundamentally equal in terms of moral worth.

      • ga gamba says

        When people are surveyed,

        And when people are asked to participate in game theory activities such as the Prisoner’s Dilemma they often make suboptimal choices.

        Option 1
        A’s income increased $100
        Your income increased $10

        Option 2
        A’s income increased $20
        Your income increased $3

        Studies find people keep choosing Option 2 though it puts less money in their own pocket, i.e. they disadvantage themselves. Why should they be concerned about how much A earns? A isn’t taking food off their table. Yet, for some reason this disparity offends them. Is it jealousy/envy? Is it due to their socialisation that all must be equal? Illusory superiority? It’s likely a mix of all three and perhaps a few other reasons.

  6. Rondo says

    “A man who chooses between drinking a glass of milk and a glass of a solution of potassium cyanide does not choose between two beverages; he chooses between life and death. A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings.”
    ― Ludwig von Mises

  7. Caligula says

    I’m reminded of the Churchill quote on democracy, that “Democracy is the worst form of government, except for all those others that have been tried.” Even though he’s also reported to have said, “The best argument against democracy is a five-minute conversation with the average voter.”

    So, yes, it’s true that capitalism often sux. And perhaps the best argument against it is a five-minute conversation with a capitalist.

    But, whatcha got that’s demonstrably better?

    It’s not as if human greed and avarice will just go away. The virtue of capitalism is that can harness these human attributes for the public good. And so many alternatives depend on assumptions that people will (or can be made to) act as one might wish, instead of as people actually do.

  8. I think the most hilarious thing is that the antidote to capitalism is far from socialism. Socialism just wants to take over what capitalism made. I’m not a fan of capitalism. Far from it infact. But I absolutey know that the cure is not maintaining the infrastructure that capitalism built as if socialism could ever have done that.

    Capitalism is responsible for all the worldly comfort and goods that we enjoy and really believe this, that most of the poorer parts of the word also want to enjoy. So pretending that socialism can maintain these spoils is beyond laughable.

    Socialism is just capitalism masquerading as sharing but really it’s nothing more than … We couldn’t have done this so we want to steal it from you.

    The antidote to capitalism is… regression to an agricutlure sustainable environment where humans are not dependent on economic gains to survive but manage on their everyday wits, skills and understanding of the natural world.

    If you think socialism is the solution, then you are still part of the problem.

  9. The piece proceeds predictably enough by creating two straw men and then setting them at each others throats. One, in the form of a hypothetical “anti-capitalist”, spouting marxist anachronisms and pining for the gulags.The other, a mustachioed nineteenth century robber baron,calling for a return to the laissez faire days of slavery and child labour etc.The problem with this level of thinking is that it reduces economics, an extremely complex and continually evolving system of understanding, to a black and white, left versus right argument. As always, when confused by false dichotomy people react irrationally and emotionally, defending one ridiculous extreme, attacking the other. The author lost me completely with trite biblical references, more so in quoting the unrepentant slave owner Thomas Jefferson on the evils of government regulation! Lastly, the author is correct in her pronouncement that wealth creation is not a zero sum game but she fails to mention that many sectors, notably military industrial, finance Insurance and real estate generate a negative sum economically, driving both individuals national economies into perpetual debt.

  10. ccscientist says

    Because zero income is always the bottom, any time the economy gets better and some people get richer, income inequality must increase. But this is meaningless. There will always be people who have had misfortune or have a drug problem who are homeless. Are they harmed by Bill Gates being rich? No.
    One of the problems is that spoiled people think it is “unfair” that they have to work hard to get ahead. They imagine that rich people got rich by some work of magic, and don’t themselves want to work that hard but would still like to be rewarded like that. Lazy people within a business can ruin it if the management isn’t alert.
    As to claims above the redistribution is needed to correct the “excesses of capitalism”: what is needed is 1) less corruption by special favors and 2) more attention to mobility. As Thomas Sowell has pointed out, attempts to “fix” capitalism with things like rent control and raising the min wage end up reducing opportunities for the poor. I have noticed in rural areas that you can open a small restaurant or something with minimal asthetic or safety considerations, and thus a poor person can start a business. I have eaten in many hole-in-the-wall BBQ places in my life. In a city, everything must meet ADA, zoning, parking space limits, greenery codes, etc etc so that only a major company can open a new location. This doesn’t help the poor and reduces upward mobility.

    • “Zero income is always the bottom.” Could you please explain this statement? “Zero income” is an impossibility. Whichever index is used to measure income inequality, the “bottom” is always the lowest average earned by any statistically significant subset of the group in question. The group in question here are Income Earners. Are you suggesting that we include slave labour in the equation? Perhaps we should include the recently deceased? This would certainly strengthen your case that numbers are in fact “meaningless”.

  11. Ginger Hayes says

    I find that libertarian leaning thinkers (like Marxist leaning thinkers), will compare existing government / economic systems to utopias they imagine in their heads… and they find the real world wanting in comparison to what they imagine but have never seen. I’m referring to all these calls for tiny government unleashed capitalism. What we have around us in the 1st world economies (if we include China, which I think we should) are pretty much two types: centrally planned economies like China and Singapore, and democratic socialized capitalist economies like Europe and the US. The one most worthy of the label ‘Socialist’ would be China, because it is an authoritarian state created from a Communist revolution with a tightly state-controlled economy where the state officially owns all the land and much of the major banking and industry. At the same time, of course, the Chinese government no longer tries to directly control the distribution of wealth in the country, so it’s pretty far from a traditional definition of Socialism. Europe and the US vary only in degrees to the extent they apply efforts to control capitalist wealth distribution in their countries– they share most of the same programs. ALL of these efforts are inspired by Marxism, which is not surprising, because Marxism was the most influential economic theory of the last century… It made a big splash.

    The reason the US has so many social programs and regulations is because it’s a democracy… so many individuals concerned for what they think is fair, and it frequently doesn’t agree with how unleashed capitalism distributes things. The advantage of democracy is that it avoids violent revolution. You don’t have capitalism if people are burning down the buildings.

    What makes me dubious of libertarian style thought, which often sounds very cowboy-inspiring freedom-loving good, is my actual real world experience. If you walk down the streets of cities in European countries that practice the same government / economic framework as the US, but with more regulation and larger social programs, it looks better. Just walk down the streets of Buffalo, Cincinnati, St Louis, Detroit, Albany, Syracuse, Chicago, and then walk down the streets of similar European cities– ones that have gone through the transition of major industry economies to new economies, like Stuttgart, Dusseldorf, Dresden, Torino. Life seems better there: better public space, better infrastructure, more peaceful streets, less crime, better quality of life. What you don’t see is the poverty and suffering that Libertarians predict as a result of expanded social programs and more redistribution of wealth. And the America you do see when you walk our cities that have suffered some downturns is desperate and rough. Those are the facts on the ground, regardless of imagined alternatives.

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