Many people rail against “the evils of capitalism”, but I find their complaints to be against "crony capitalism", not "true capitalism". I would like
to challenge those ideas and PROVE that capitalism truly is moral and all outcomes
are positive provided you participate in the system (i.e. if you don’t work,
you don’t eat).
The biggest complaint I see is that capitalism breeds greed,
always ends in monopolies, and the wealthy prey on the poor. My premise has
always been that none of those things can happen without the helping hand of the
government.
I believe the following:
1) ALL monopolies have had a hand from government to become a monopoly, with only one exception.
2) Greed (as the sole motivation) cannot survive in a capitalistic economy.
3) Because the consumer always has the upper hand, the wealthy are at their mercy, not the other way around.
In other words, if we remove government intervention from the economy, unbridled
capitalism will fix the problems that arise within it.
So here is the premise we will be working with:
Government has only 2 functions.
1) provide national security, both internal and
external (i.e. police/military)
2) protect the rights of its citizens, meaning it
will prevent anyone from trampling on someone else’s rights as a citizen. "Rights" is defined as those things outlined in the Constitution.
All other functions of society operate within capitalism.
It is IMPORTANT to keep the above premise in mind for the discussion. We have been
trained to think that the government is there to provide EVERYTHING for us, so we may tend to keep assigning responsibilities to it. I
want to go back to the roots of limited government and see where we end up.
So tell me about your position on capitalism. Where do you have an issue with it. What is wrong with it. What is right about it? Why doesn't it work, etc.
Author's note - I am aware that I may regret this challenge based on the
time required to answer any questions or statements made, but I think it is
important that this sort of dialog occur. We need to block out what the media, politicians,
and special interest groups are feeding us and just discuss (with an open mind)
what capitalism truly is. I will welcome ALL comments and questions, provided
it is done in a respectful manner. I will delete all vulgar/slanderous/hateful comments. I hope for this to be a learning experience for all who participate, including myself. I do not have any formal education in economics. All my knowledge (and ideas) come from my pursuit of entrepreneurship and reading of many leading economists.
Thanks for the interesting discussion topic. I agree with all of your points on this, and I would add four points to the discussion.
ReplyDeleteFirst, a common concern with capitalism is the idea of "cut-throat competition". But people forget that capitalism is a mix of competition and cooperation, and the fundamental unit of activity in capitalism is the act of trading. This is a voluntary, cooperative, act where both parties believe that they are made better by participating. In effect, people are competing for the opportunity to cooperate. On the other hand, with its elections, lobbying, back-room dealings, and even wars, the political process is easily as competitive as the market place, but it has no intrinsic element that creates the same sort of mutual improvement through voluntary cooperation.
Second, it has been shown that no matter how good their intentions, government planners simply don't have access to the information that they would need in order to plan the economy for the benefit of all. Free market prices convey information about demand and scarcity throughout the economy that enables a plethora of decision-makers to effectively balance supply and demand. When government tampers with prices, or worse, if you replace prices with government planners, all that information is lost and it becomes impossible to avoid persistent shortages and wasteful surpluses. This is widely known as "the knowledge problem", and it can be seen in Venezuela's empty grocery stores and our own traffic clogged streets during rush hour.
Third, you noted the limited role of government. I would extend this by pointing out that government and governance should also be decentralized as much as possible. For example, as you noted there is a role for government in providing police services, but I would say that in America that role should mostly be performed by the states and local municipalities. The more centralized and monopolistic a power becomes, the more likely it is to be used in a corrupt way, and the harder it is to correct corruption when it happens.
And finally, another objection to capitalism is the idea of the "social safety net". People object that there are some people who need society's help in order to survive, but this makes the mistake of conflating society with government. It is possible to help people without the use of government coercion through social technologies like churches, mutual aid societies, crowdfunding web sites, and emerging block chain platforms. Every dollar that is seized by government is a dollar that cannot be used to help the people who need it in our own lives. And because of the knowledge problem, government planners are certain to direct that charitable money in worse ways than we, ourselves, would have directed it.
I agree with all 4 points. I would add to point #3 that when I speak of "government", I am not meaning exclusively "federal". So decentralized is definitely a good thing. When we avoid the idea of "one size fits all", it may go down to local government, as opposed to state or federal.
DeleteI was having an offline conversation with a friend on this topic and he brought up the idea of education. The idea that wealthy areas will have better schools because they have the money to be just that. So how do we spread the money around in a capitalistic society without the government participating. It raises an interesting quandary. My question here is "why are there poor areas vs wealthy? Is it distribution of natural resources? Or is something else at play? Is it simply hard to imagine distribution of wealth as being different, because our current system created the dynamics to create wealthy and poor areas? Any ideas on how privatizing education can be equitable? Does it HAVE to be equitable?
ReplyDelete