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Why Capitalism?
Before we exchange the proven benefits of free markets for the Democrats’ promises of socialist utopia, it might be worth considering the things we’ll be giving up. My list follows. With what do you disagree? What would you add?
- Free markets have pulled billions of people out of extreme poverty. In just the last few decades, the lives of hundreds of millions of Asians – mostly in China and India – were significantly improved when their countries free up their economies.
- The environment in the capitalist west has improved significantly. Air and water quality are higher, and millions of acres of land have been reforested. The profit motive provides a strong incentive to use scarce resources to their best effect. Inefficiency is waste and waste is pollution.
- Water and sewage treatment technology, largely invented in the west, has significantly extended people’s lives – not just in the west but globally.
- Western medical breakthroughs, such as antibiotics, have also extended human lifespans globally.
- The Green Revolution – heavily backed by the Ford and Rockefeller foundations and led by American agronomist Norman Borlaug – eliminated food shortages throughout the world. Today, famines are no longer caused by natural disasters but are almost exclusively man-made (see, for example, North Korea and Venezuela).
- Foreign trade has eliminated any excuse for imperialism. As Adam Smith observed in The Wealth of Nations, conquering and maintaining control over foreign territory cost far more than can ever be extracted from that territory. During Japan’s conquest of Southeast Asia, for example, the Japanese found that they received fewer goods from the conquered areas than they had previously gotten through trade. People don’t produce as much at the point of a bayonet as they do when they benefit by their production.
- Capitalism has raised women’s status to that of equality with men. In capitalist societies, brains are far more important than brawn, and women are more than capable of competing with men in that realm.
- Capitalism has largely eliminated the need for child labor. Child labor was a fact of life throughout most of human history. One man using a stick for a plow simply couldn’t produce enough food to feed a family. Children worked or they, and perhaps their families, starved. In the west, laws against child labor were passed only after the practice had all but ended.
- Children were exploited terribly in countries that tried to outlaw child labor before their people were productive enough to support so many idle hands (and mouths). Children still had to work to eat, but they had to do so surreptitiously without any protection from the law.
- Free markets have so increased human productivity that, in western countries, mere day-to-day survival is no longer the central focus of life.
- Innovation sparked by the profit motive has placed the world’s knowledge at our fingertips.
But we are incapable of being grateful.
It’s the “the-world-isn’t-perfect-burn-it-all-down” mindset.
Freedom and capitalism, individualism and relatively small centralized government, as extolled in our founding document, our Constitution, have been such successful concepts that Americans now have all the wealth and free time they need to demonstrate against the very same country that has allowed those concepts to be our way of life.
Nice list @richardfulmer. It made me feel proud to be a part of a society that is so accomplished and positive.
Agree with all of it – key word – freedom. Is it true that Trump wants to eliminate the Clean Air Act and do away with the EPA, and bring back coal mining as it once was? I can see revising, but easing restrictions is a good thing? I don’t think so.
Adam Smith also pointed out that, under capitalism, free labor is far more cost effective than is slavery. Again, people produce more when they benefit by their production than they do under threat of punishment.
Free markets allow people to benefit far more from peaceful, voluntary cooperation and exchange than they can from theft, war, slavery, or the subjugation of one class by another. Socialism replaces voluntary cooperation with coercion by the state, and this in the name of “progress” and “equality.”
Heck yes he does! He also wants to put us all back in chains. Ain’t he great. I love me my tyrants!
Republican candidates might be able to nationalize the 2020 elections if they were to explain to voters what free enterprise has meant to America and to the world, and what we stand to lose if the Democrats get the chance to tax, regulate, and redistribute it out of existence.
Anyone who begins telling me about “free markets” raising the Chinese out of poverty loses me. I’m supposed to be grateful American companies have abandoned the towns that helped build their companies and their reputations in favor of cheaper labor?
Free markets in China would have lifted Chinese people out of poverty even if American companies had not relocated there.
If only they could…
American companies stopped “helping” the Chinese several decades ago. Since then the Chinese have been helping themselves…to huge chunks of the U.S. economy. None of our leaders had the guts to yell, “STOP” to the Chinese, until now. But I think this is another subject.
Agreed.
Disagree.
Agree to disagree?
Nope. Disagree. In addition to its benefits, a proper discussion of any topic should include it limitations and potential pitfalls.
http://ricochet.com/553308/archives/nothing-to-see-here-folks-3/
I agree with Hazony that libertarians too often neglect national defense. I’m all for free trade as long as it doesn’t threaten American security, and our trade with China has certainly been problematic.
On the other hand, there are also security risks stemming from the trade war. Here’s a link to an article about China’s threat to cut off our supply of rare-earth metals, which are needed for military jets and missiles.
Everything is simple until you know something about it. I don’t believe Trump knew anything about trade in general, or our trade with China in particular, when he started his “good and easy-to-win” trade war.
I think that Hazony was referring to a little more than just national defense.
Capitalism / free markets is the only inherently moral economic system, as it is the only economic system that is consistent with the free will that God gave us. All other economic systems depend on some humans forcing other humans to do things (or refrain from doing things) that are inconsistent with what the other humans believe God wants them to be.
I noticed that. I chose to riff on Harzony’s national defense comment because that seemed the most relevant to @cdor ‘s comment.
I was intrigued by Harzony’s discussion of Locke’s three “axioms”:
1. Human beings can access universal, eternal truths for all times and places through individual reason alone
2. All human beings are intrinsically, perfectly free and perfectly equal
3. It’s only by the consent of the individual that they become members of any kind of political society and thereby incur moral obligations
He stated that none are true. I agree that the last two aren’t but I would argue that the first is.
I also disagree with his statements that “all of economic theory is constructed around” them. Economic theory is not at all based on items 2 or 3, but it does rely on fundamental axioms to which logic leads, such as:
– Individuals respond to incentives
– Nothing is without cost
– Individuals, not collectives, choose and act
– Value is subjective
– Complex economic orders emerge without design or intention
I also believe that the idea that people should be treated equally under the law is fundamental to classical liberalism. But classical liberalism does not depend on the assertion that people are by nature free and equal.
Richard, I’m not persuaded the free market system per se gets the credit for all of this.
There are other influences as well. For example, do you really think that Rockefeller and his successors would have done clean up their act absent external pressures? Or Carnegie the steel industry? Sorry, the efficiency argument sounds good but I question that was the sole cause.
And women in the workplace? Someone had to educate the men at the top to even consider that a woman could do the job and I don’t think that educational process was driven by free enterprise.
Rockefeller did clean up the oil industry in the face of competition – arguably an external pressure. His operations were so efficient that other refiners simply couldn’t match his low prices. Moreover, it was Rockefeller who found ways of using “waste products” such as naphtha and gasoline.
One of the big meatpackers, Gustavus Swift, made a habit of donning rubber boots and standing in his factory’s wastewater looking for any fats or oils that were going unused. He bragged that his slaughterhouses were so efficient that they used “everything but the squeal.”
Women entered the workplace – not because of men’s good graces – but out of necessity; women have to eat too. Many of the early factory workers were women. The first telephone operators were men, but they were quickly replaced by women who didn’t swear at the customers nearly as much. The two world wars sped up women’s move into the marketplace.
Much of the industry-generated air and water pollution of the Industrial Era could have been avoided if it weren’t for the courts. In the 18th Century, people sued factories for polluting the air and water around their homes, and farmers sued the railroads when sparks from the engines set their crops on fire. But judges found against the plaintiffs on the grounds of “utilitarian” considerations.
Had the law supported private property rights, mutually agreeable solutions and technical fixes would almost certainly have evolved. Company owners, had they been required to compensate homeowners and farmers, would have had incentives to find solutions. Settling ponds, for example, are hardly high-tech means of removing impurities from wastewater.
Good discussion. Not easy is it? I suspect that what we’re calling capitalism and market economics has always existed and always ended in the same way. It took a new direction a couple hundred years ago as technology allowed those efficiencies to explode forth in new industrialized forms. It’s a guess about Babylonia and Egypt, they weren’t literate until it was over but it’s hard to imagine them reaching such wealth and power without first having flourished under market economies until, like all other places, centralization killed them. By the way we’re doing the same. Does Washington DC and its millions of bureaucrats have real connection to ordinary folks who produce? Is it a net plus or is it mostly parasitical? Is it reversible?
Look, I’m not dissing free enterprise. I’m just saying there are, on occasion, other forces at work as well. I remember incidents with hazardous materials including mercury and asbestos and certain toxics that I know for a fact were only handled as they were because of the law. And if you think that, to this day, drilling mud and clippings wouldn’t disappear from offshore rigs right into the Gulf absent laws you are dreaming. A corporation may be a legal entity but it has no soul, it is not a living person, it seeks to maximize profits in the short term and the devil take the hindmost. Oftentimes that results in positive consequences, but sometimes other influences than the profit motive come into play and that’s all that I’m saying.
On the other side, the bad side, I would bring up the current anti-vacc foolishness but that would simply hijack this conversation so I won’t.
Laissez-faire capitalism? I tend to support it completely, but every so often I have to put thinking how Sherman antitrust might be appropriate in this or that particular circumstance out of my head.
Would free enterprise solve the “energy crisis”? Undoubtedly. And we would surely have more nuclear power. But absent other influences we’d have more unpleasant incidents, and more three-headed dogs.
What causes me to think like this? Because when it comes to human nature, “There is nothing new under the sun.”
We probably wouldn’t have nuclear power without government subsidies. Nuclear power has never been able to compete on a cost basis with coal, oil, or natural gas.
Most people on the Left will not agree that these accomplishments were due to capitalism: they will assert that they were due to the work of scientists and engineers, which could equally well have been done under some form of socialism, and done with less waste motion and bad side effects. That’s the position that has to be argued against: a simple assertion that capitalism was the cause will not be sufficient to convince them.
OTOH, there are also quite a few people on the Left who will argue that many of these benefits are actually *bad* things…that they detach us from nature and harm The Planet.
It doesn’t take American companies relocating in China in order for Chinese-made products to be sold in the US and undercut American manufacturing of those products: Chinese-owned and European-owned companies are perfectly capable of arranging distribution for their products in the US. The effects on both the US economy and the Chinese economy would have been the same as for the case of US companies directly moving production to China.
But what if there had been a strong tariff wall in place all along, such that *all* China-sourced products faced significant economic barriers? I think that in that case, China’s economic takeoff would still have happened, though on a less-accelerated timeframe.
True. However, often the problem is ill-defined or unenforced property rights. Government intervention should be the last resort, not the first. Government regulations dictate the winners and losers and forestall any win-win market solutions.
When regulation is required, the rules should specify the goals not the means. Dictating the goals (e.g., use this technology) is prone to corruption. Also, technology changes.
https://www.youtube.com/watch?v=vIGViDZvNx4
Don’t agree.
Edit: need to explain. When the feds mandate the design and construction criteria in ways that blow the cost through the roof; when they mandate all the operating and maintenance procedures to the n’th degree, when they mandate extreme supervision and obscene levels of federal oversight and approval of the most minor of revisions – even when those revisions have nothing (nothing!) to do with the nuclear process itself – when their policies mean the manpower requirements are quadrupled, of course they cannot compete on a unit cost basis with other fuel sources. You need to replace a process valve and follow detailed procedures (that were written by a department that does nothing but write procedures to, say, tell mechanics how to tighten a bolt) that have been reviewed and approved by all sorts of people including the Feds, that require two to do the work and one to guide the work and post installation testing to a similar level before operation can proceed, the entire process to be documented with the documented work an certification it was as per official procedures sent to the Feds for their acceptance. What are the chances that the nuke and the fossil fuel plant can be competitive with one another? You say they can’t compete absent subsidies? You are right: In fact, even with subsidies they can’t really compete. And they get hidden subsidies to make up for operating costs: When despatching power, the operating cost of the nuclear plant may be disregarded so that only the fuel cost is considered.
Then there is the spent fuel issue: Feds say “We’ll take care of that for you – “Nyah, nyah, nyah, fooled you, we were only kidding.” By the way, industry, spent fuels can’t be reprocessed.
On and on, and on.
Nuclear vs. fossil fuel plants is, I think, beyone any simple comparison due to the extensive involvement of government.
You think free enterprise would never compete with nukes? I think you are wrong but the reality is that we will never, ever know for sure.
Humans, By Their Nature, are Capitalist. Humans, all the time and everywhere, develop markets in their interactions with other humans. Whenever some humans attempt to fiddle with the markets, this most always fails. Whenever collectivists have tried to capture or control markets, the failure is demonstrated by the rise of Black Markets.