Mike Corthell, Editor
These definitions
are very important because some people seek to confuse others with various
terminology on the subject of capitalism:
The
free enterprise economic system, or free market economy.
This is an economy characterized by:
1. Private ownership of most of the means of production and
distribution of goods and services.
These business owners are allowed to set their own prices and compete
for business with each other. This
is sometimes called economic freedom.
2. Voluntary exchanges between citizens in which people
trade goods or services for cash, or for other goods or services (barter), or
any other arrangement that buyers and sellers work out together for their
mutual benefit or profit.
3. Free and open competition to keep prices low and improve
the quality of products and services through innovation, greater efficiency and
other means.
4. Minimal barriers to starting and running a business. For examples, there are few fees,
little paperwork required, and taxes are not excessive.
5. Open markets where people exchange goods and services,
private banking, and other institutions that support a market economy.
6. For best results, it also requires a sense of fairness
and good will, and is somewhat based on Judeo-Christian religious values such
as thou shalt not steal, shalt
not murder, and shalt not bear false witness or lie.
The free enterprise system is by
far the most effective economic system ever devised for lifting people and
nations out of poverty.
The role of the government in a
free enterprise economic system is to:
1. Act as the referee to maintain a level playing field for all
participants.
2. Establish laws against fraud, negligence and
misrepresentation, and to prosecute cheaters and liars
3. Pass laws to validate
contracts and prosecutes those who break their contracts.
4. The government does not own
or control the means of production and distribution of products and services to
any large extent.
There are no truly capitalist
nations on earth at this time.
America was the closest to it, and still is, but the free enterprise
system has been under attack for at least 125 years in America. Special interests just do not like the
lack of total government control it offers. The latest attack on the free enterprise system in the USA
is Obamacare (The Affordable Care Act of 2010). It basically destroys the private
health insurance industry and some of the little that was left of choice in
health care in America. However,
the free market health care system in America was basically destroyed over 100
years ago in America. For more on this
topic, please read the articles on the health care system on this site such as Health Care For The New Millenium,
The Case Against Medical Licensing, Why Double Digit Inflation Of Health Care Costs?,
and others.
Capitalism. This term was coined, I believe, by Karl Marx who used it in
a derogatory sense to describe a free market or free enterprise economic
system.
Laissez
faire. A French term to describe a free market
or free enterprise economic system.
The
Austrian School of Economics. An economic theory proposed by Austrian
economist Ludwig Von Mises and other 20th
century economists such as Frederich Hayek. It supports and explains how and why a
free market or free enterprise economic system operates.
The Chicago
School of Economics. A branch
of economic theory based around the work of Milton Friedman, a 20th century
economist, that is related to the Austrian school of economics.
The
rest of the definitions below are used to describe an opposing economic system
that is popular in the world today:
Command and
control economy. This is a
general term that describes the economies of the world that are tightly
controlled by a powerful central government. This government makes most of the important economic
decisions such as which goods and services will be produced, how they will be
produced and distributed, how much they will cost, how many workers they will
employ, what the wages will be, what the working conditions will be, and other
economic decisions.
This
type of economy was the system used in the former Soviet Union, and still used
to a large extent in Russia and other communist nations. It is very inefficient and does not
work well, at all.
Communist China recognized this
and allows a Western-style capitalist economic system or market economy, but
does not allow Western-style political freedom, so it is a type of hybrid.
Communism. An economic theory proposed by the 19th century
philosopher, Karl Marx, suggesting that a class struggle always occurs between
the owners of businesses and their employees. The theory is that this will continue and worsen until the
employees overthrow their employers.
Communism in the Soviet Union and current Russia and Red China means a
powerful central government that has total control over the nation. A related word is totalitarian rule.
These nations claim they have
skipped the capitalist period or society totally and moved into the “more
advanced” state of “worker control” of the economy and nation. In fact, the workers do not control the
governments of these nations.
However, Marxism or communism is used as a justification for these
autocratic, dictatorial, socialist or totalitarian societies.
Socialism. An economic system characterized by government ownership or
control over most of the means of production of goods and services in a
nation. Socialism also can mean a
powerful central government that rules in a dictatorial way. For example, the word Nazi means
national socialist party.
Liberalism
(in America). Although this once had a different
meaning, it now means those who support socialistic and communistic economic,
political and social policies.
Fascism. A close alliance between a
large, powerful government and major privately-owned businesses. This was the economic system in Hitler
Germany, Italy under Mussolini, and current Russia under Putin.
Progressivism. This is the same as liberalism, basically, and the term was
used at the beginning of the 20th century in America, in particular,
to describe the growth of a large central government and decline in personal
liberty. It is now used by some in
the Democratic Party in America.
Collectivism. This is another Communist buzzword.
The
welfare state or redistributionist state. These terms
also describe an economic system in which there is a large central government
that redistributes wealth and hands out benefits to its citizens, usually
because there are not enough jobs because socialist economies do not produce
enough jobs to sustain the people.
The
regulatory state. This is a more recent term to describe the
growth of government bureaucracies that regulate many areas of human activity
and business activity, supposedly for the safety of the population.
In
the USA, for example, it includes many agencies of the federal and state
governments that regulate communication, transportation, product safety,
advertising, food, drugs, medical care, education, construction, and most other
activities. This has developed
over the past 100 years for the most part. In part, this has made the nation safer. However, it is easy for regulations to
1) favor certain industries or practices that are not helpful, 2) to reward
“friends” of the government and punish enemies, 3) to stifle innovation and
free competition.
Justice definitions:
Equal
justice. This is the condition in which everyone
is treated the same under the law, and all must follow the same laws.
Social
justice. This is a code word for communism,
socialism or Marxism. Under this
system, people are treated differently under the law depending on their social
class or other factors.
It is not justice, but rather law enforcement by the whim of
men.
Economic
justice. This is also a code word for communism,
socialism or Marxism. Under this
doctrine, people are treated differently under the law depending on their
economic class or economic condition.
This is also not justice, but law enforcement depending on the whim of
men.
Environmental
Justice. This is also a codeword for communism,
socialism or Marxism. Under this
doctrine, people, property or businesses may be treated differently under the
law depending on where it is, or its environmental impact. This is also not justice, but law
enforcement based on the whim of men.
THE IMPORTANCE OF FREEDOM
This is a short
philosophical article about the virtues of freedom. The
most important quality needed for development of the human being, or for that
matter any being, is the ability to think and make decisions on one’s own. This is a basic principle of this
article. If you don’t agree, or
are not willing to at least entertain this idea, then you probably will not
like this article. If you believe
that human beings should be coddled to death from cradle to grave by a benign
government bureaucracy, then you will not likely appreciate the rest of this
article.
However, it is true
that if people are told what to do day and night, they do not learn as
much. They do not have the
opportunity to make mistakes and suffer the consequences, and they generally do
not think very much. As a result,
they do not develop as fast mentally or spiritually. The reason is that learning to think clearly and carefully,
and suffering the consequences of one’s actions and behavior, are critical
parts of mental and spiritual development. It is as though the brain is like your muscles. You must use the brain, or lose it, as
the saying goes. The brain must be
trained to think clearly and practically.
When human beings are
treated like animals at the zoo – fed, housed, free health care, free
everything, they tend to languish.
This is unfortunate, but it is the truth. Many parents learn the hard way that coddling and spoiling
their children by giving them everything just does not build character in most
children, for example.
It is the same with
adults. Coddling, protecting,
spoiling, feeling sorry for them at every turn, and providing all of their
needs sounds utopian, and is why socialistic thinking is so appealing. In practice, however, a balance is
needed. It is important to protect
people, but it is also helpful to allow them the freedom to act, and thus to
fail, at times, and to suffer a little here and there.
THIS IS WHY FREEDOM WORKS
The above is why freedom works
in the world. It and it alone
allows people to progress, to think, to make decisions, to fail and then to learn
from their mistakes. Nations such
as Communist Russia, Cuba, North Korea, Iran and many others that deny people
the freedom to think and make decisions usually do not last long.
These nations are very
socialistic, which means a large, powerful government makes most of the
decisions. The people are treated
more like caged animals in a zoo who are given ‘benefits’ by the
government. The benefits are
supposedly doled out equally to all, even though this is never the case, in
reality. In Communist nations, the
Communist party members receive more benefits. In religious dictatorships like Iran, the religious leaders
get the most benefits, and so on.
In reality, those who have
friends in high places get the most benefits, and the society is not egalitarian,
even though that is what is claimed.
If there is any egalitarianism, it is that most are equally poor because
individual initiative is not rewarded or encouraged.
CAPITALISM IS ECONOMIC
FREEDOM
Societies
that are built around giving people choices often give them choices
politically, economically and socially.
These are the three major areas of societal life.
In
the political realm,
freedom of choice means that the people can choose their leaders, usually
through democratic elections. This
means that the candidate who receives the most votes gets the job. Politically, freedom also means that
the government must be restrained in its police power. That is the purpose of a
Constitution. It is a
contract between the people and their government that sets down what the people
may do and what the government may do.
It is like any other contract in that it sets down the agreement between
the people and their government.
Of course, it must be enforced or it is just a stupid piece of
paper.
Sadly, in the United
States of America, and even worse in other nations, the intent of the
Constitution has been twisted and ruined by corruption and self-serving
politicians, but at least the intent is still there in the written words of the
US Constitution.
CONSTITUTIONAL
SAFEGUARDS OF FREEDOM
Some
of the safeguards for freedom are the right to speak freely, to write and
report freely, to worship freely, to assemble freely (to hold meetings and protest
freely), to petition the government for grievances without being arrested, to
own weapons freely to defend one’s property freely, and to be safe against
unreasonable searches and seizures of property by the government.
Others specified in
the US Constitution are to have a trial by jury if accused of a crime, to have
a speedy trial so one does not languish in jail, to have an attorney given to
one to defend one if accused and one cannot afford an attorney, to travel
freely, and to not be forced into a false confession by torture.
Many others, in fact,
are in the US Constitution, such as the right to a Republican form of state and
local government. This is a
critical one. It means free elections
and state constitutions that must abide by and be aligned with and of the same
form as the federal or US Constitution.
Even many more
freedoms were intended by the founders of America and, to some degree, in Great
Britain during her better days of the 18th century, though she has
declined today somewhat in this area of freedom thanks to growing socialism and
the European Union, which is quite socialistic. These are examples of political freedoms.
THE FREEDOM TO
CONTRACT WITH OTHERS
Now let us discuss economic freedoms. In the US Constitution it states that
no state may enact a law abridging the right to contract. This means that people can make all
sorts of agreements or contracts with other people.
This is the main idea
of economic freedom. It means that
if I need a carton of milk, I can contract with the farmer down the street to
pay him or her some money, and in return the farmer will give me some
milk.
If I want an
automobile, I can contract with General Motors or Toyota, or anyone else I wish
who provides automobiles, to purchase a car, lease a car, trade for a car or
any other economic arrangement provided both parties agree to the
contract. Also, this implies that
I can start a car company, or any other type of business I wish.
It means that if the
two participants in the contract agree to it, we can barter, we can trade, we
can pay cash, we can use credit cards, we can pay for things with silver
dollars, or with cigarettes, or any form of money or value can be exchanged to
make the deal or swap of goods or services. This is economic freedom at its best.
CAPITALISM IS THE
SYSTEM OF ECONOMICS BASED UPON PERSONAL FREEDOM AND THE RIGHT TO CONTRACT
VOLUNTARILY
That is all that
capitalism is. The word itself, I
believe, was used by Karl Marx in a derogatory sense. A better term to describe this type of economic activity is the free
enterprise system of economics.
It is a system based upon freedom to contract, and the freedom to garner
and use your resources, whatever they may be, to own, control and improve the
means of production and distribution of goods and services in society.
It is based on the
presumption or idea that individuals and groups of individuals working for
their own selfish gain, called profit in economic theory, can do a better job
of satisfying economic needs of the population than can a centrally-planned
economy.
This is to be
contrasted with socialism, progressivism, fascism or communism. These vary somewhat, but the essential
idea is that most economic resources - including factories, raw materials, land
and more - are largely owned or controlled by a large central government that
also makes most of the decisions how they will be used.
FREE ENTERPRISE ALSO
REQUIRES THE RULE OF LAW, AND IT REQUIRES A VIRTUOUS, JUDEO-CHRISTIAN
POPULATION TO WORK CORRECTLY
Integral parts of the
free enterprise system is a system of laws to enforce contracts, for example,
some willingness by all parties to follow the laws, and a system of equal
justice under the law and due process to promote and carry out the laws.
For example, some
people say that Hong Kong and perhaps Singapore are today the most capitalistic
nations in our world. Indeed, the
areas are wealthy. However, this
is not true free enterprise, I would say, because there is a lot of crime,
rape, filth and other problems in Hong Kong, in particular. Singapore is more of a police state,
politically, so this is not exactly a “free society” by any means. The USA is still the primary free
enterprise nation, if one considers it from the perspective of political, social
and economic freedom to live as one pleases, as long as one does not infringe
on the freedom of others.
FREE ENTERPRISE
DEVELOPS SOULS AND PLANETS
I submit that the
free enterprise system is the system that develops people and entire planets
the fastest. It is also a system,
I am told, that describes the journey of souls as they mature. This is explained in texts such as the
Hebrew and Christian Bibles. This
is important because we all are souls at one level.
The free enterprise
system seems cruel and unfeeling because it offers souls opportunities for
learning, for failing, and for developing itself that can only come with
freedom and with the freedom to fail utterly. This is the part of the equation, both economically and
spiritually, that the liberals either fail to realize or just find repugnant.
Socialism, communism
and progressivism or liberalism are more geared to the body only, not to the
soul. The soul yearns for
experiences, even if it means disease, failure, rape or death of the body. In contrast, the body prefers comfort,
sex, peace, love and dependency on others to do the dirty work, so to
speak. This is a description of
the promise of socialism, though not the reality because at this time, the
earth is not technologically advanced enough to excuse everyone from working.
CAPITALISM OR FREE
ENTERPRISE WORKS WELL
Let us be very clear
about a fact. Capitalism has
helped more people to be lifted out of poverty, slavery and disease than any
other economic system in existence.
This needs to be taught in school, and not the socialistic nonsense that
corporations always abuse poor people, and so on. If abuse occurs, it is because capitalism is not practiced
very often.
CRONY CAPITALISM OR
FASCISM
In most nations,
sadly including the USA these days, true capitalism is gone and it has been
replaced, to some degree, with what is called crony capitalism or fascism. This is a corrupt system of economics
in which the government passes laws that favor some companies or industries
over others, and the government gives special benefits to some, and punishes
others – usually it benefits those who give money to the legislator’s
election campaigns and punishes those who do not.
However, at times
crony capitalism is just a matter of ideology, which is also not
capitalism. For example, the
government may favor “green energy” companies over others, even if it makes no
sense economically and just wastes money.
What the legislators fail to understand is that if someone has a
wonderful “green energy” idea, it will be developed if businessmen are just
allowed to do what they do best - research, invest, and develop new ways to
help society. Usually, if it is
not developed, such as using water to power our automobiles (which works) it is
because the technology is not allowed by someone, such as the energy cartel in
this case. It is not a failure of
capitalism, as some claim. It is
simply that capitalism is not permitted in many areas today.
CAPITALISM IN HEALTH
CARE
Nowhere is crony
capitalism, corruption and socialistic thinking more evident to me than in the
area of health care, for example.
Natural healing works very well for many diseases. However, it is simply not permitted in
the hospitals, and doctors who deviate from the dictates of their medical
boards lose their medical license and cannot even practice medicine, even if
they help people. This is not a
“market failure”. This is a cartel
ruling an industry with an iron fist.
Capitalism is the ability to garner your resources,
use your head, make products that other people want, and to barter them, sell
them, buy them and contract with others any way that two agree to do it by
voluntary means.
Capitalism, by the
way, is not just an economic system.
It applies to your personal life as well. One could say it is also the freedom to contract with others
to get married, have children, learn a career and practice, and so on. The principle is the same. It is the freedom to garner your
resources and use your head to make wise decisions for yourself and hopefully
for everyone else. This is
capitalism, and this needs to be taught in school.
Capitalism works well
when properly understood and when cheating is not allowed. When it is corrupted by bad laws, it
does not work as well. Here are
some ways this happens:
Croney capitalism. This occurs when the government,
usually, picks out winners among companies and gives them generous loans that
they often know will never be repaid.
Usually, the heads of the companies donate money to the president’s or
leader’s campaigns to be elected, and then the leaders turn around and give
public money – money collected from the people – back to their
friends in businesses. This is the
classic type of croney capitalism that has ruined
America, China and other nations to a degree.
This is simply corruption, by the way. It sometimes goes by names such as
fascism, or private-public partnerships, or non-governmental entities like
Fannie Mae and Freddie Mac.
Other corporate problems in capitalism. These include simple stealing, lying,
cheating, murdering your adversaries, and general corruption such as bribing
government officials to pass laws outlawing your competition, forcing them to
subsidize your product or service but not the products of other companies, and
so on.
These are all serious
problems with capitalism, but it is important to note that they are really
problems with human behavior. In
other words, if you get rid of capitalism, you will not get rid of these problems. In fact, they are usually worse under
socialism. Socialism, in its pure
form, is government control of the means of production or factories, farms,
etc. However, what occurred in the
former Soviet Union, and what occurs today in Red China, Russia, and other
socialist or communist nations is that the government bureaucrats and
technocrats who run the factories and farms are extremely corrupt. They siphon off money for themselves
and their friends. They cheat,
they lie, they steal, they bribe and they don’t hesitate to kill anyone who
interferes with their schemes.
Even worse, the
enormous power government bureaucrats and leaders have over the economy and
political power in socialist nations leads them to become militaristic in all
cases. This is occurring in Red
China today. They are becoming the
next Hitler. They love the idea of
ruling the world, as do all very powerful people. The threat to our world is not the corporations like
Monsanto, though I don’t like their genetically modified seeds any more than
anyone else. The real threat is
socialism and communism – very similar ideas, in Red China. Monsanto is not building nuclear
submarines and bombs at an unprecedented pace. Red China is doing this, with help from their North Korean
neighbors. It is important to be
very clear who is the real problem in the world today.
So the left wing
people are mistaken. The college
professors are mistaken. The
people are ignorant, and this article intends to clear this up.
I want to recommend a
book called Conscious
Capitalism co-authored by John Mackey, CEO of Whole Foods Company. It explains the above and a new vision
for capitalism in excellent and readable terms.
LOVE VERSUS CREATING
DEPENDENCY
One
may think that love is giving people “benefits”. Indeed, this is a form of love, or perhaps spoiling. But another kind of love is giving
people choices and opportunities.
This allows them to learn and yes, to fail, at times. It is okay to have private safety nets
if people fail, but it is actually more loving to give people choices and
freedom.
One of the main
problems with Marxism, socialism, communism and fascism is these systems of
economics and politics are based on taking people’s power and making them
dependent. If one loves others,
one allows others to have freedom, individual rights, and the ability to earn
money and keep what they earn.
This
is the basic difference between Marxism and capitalism at the very deepest
level. It is a choice between love
of others and a type of fear of the people that causes the leaders of some
nations to want to make everyone dependent upon them for everything in
life. This is actually a principle
that is spiritual at its roots.
THE ROLE OF THE GOVERNMENT
Governments should help their
people develop themselves, and this is why freedom in any sphere is ultimately
helpful, while slavery, welfare, or servitude in any form is ultimately harmful
to a society.
One of the great secrets of
America, at least in the past, has been the lack of welfare and the development
of the citizen’s own self-reliance.
An important part of this has been the allowing of citizens to own land,
to operate businesses and to fail if conditions or decisions are incorrect. As explained above, this system of
economics is called free enterprise, market capitalism or laissez faire. Our nation was founded upon these
principles, and the people have prospered enormously when the principles were
adhered to. Let us examine this
economic system in more detail.
WHAT IS FREE MARKET CAPITALISM?
Capitalism is the economic
system used today to some degree in many nations of the world. Its qualities consists of three major
tenets:
1. People are free to own property, even if that is a push cart
or a vegetable stand in a marketplace.
2. People are allowed to earn
money by making a “profit”. Profit
is the difference between what you buy something for and what you sell it
for. So if a person has a
vegetable stand and they buy carrots for $1.00 a bundle and sell them for $2.00
a bundle, the profit is one dollar per bundle. With this profit, the person pays all the expenses of
traveling to the market, buying his products, and other expenses, and hopefully
has some leftover with which to buy other goods and services and to live
on. This is the essence of
capitalism and profit.
3. People are allowed to keep
what they earn. They may pay some
taxes, but they are generally allowed to keep most of their money.
4. Information about products
and services is made available freely, and not censored by the government. This is called a marketplace where
people can make rational decisions based on true information.
Other
Qualities. Each
person is also liable for any problems or illegal activities that arise from
their business. Also, all are
required to compete with each other for business on an equal footing. In other words, in free market
capitalism, the government should not fund one over another, or subsidize
anyone, or treat anyone differently than anyone else. Also, the government does not “bail out” anyone, there is no
welfare system and people must find their own way, their own employment and
their own food and lodging.
In other words, the role of the
government in the economic sphere is simply to be a “referee” to maintain a
level playing field for all business activity, to make laws to maintain that
level playing field, and to catch and bring to justice anyone who violates the
basic laws against fraud, misrepresentation, robbery or murder.
The laws are there to protect
the right of each person to do his business as he sees fit, as long as each
person does not violate the economic and political rights of anyone else. This is very important today to
understand that the government can function mainly as a referee and a law
enforcer, NOT as a provider of goods, services, welfare, subsidies, favors and other
things that are subject to political whim and power groups.
THE WEALTH OF NATIONS
This economic system, though it
is more than an economic system, was first elaborated in detail by men such as
Adam Smith in his famous book, The Wealth Of Nations.
Dr. Smith studied the most successful nations and realized that all
shared these basic principles of commerce. He put the whole thing together and coined a lot of the
terms we take for granted today in economics.
One of the most famous of his
ideas was that of the “hidden hand
of the market”. It is actually
quite brilliant. It is the idea
that if there is any good or service that is needed in society, people will pay
more for it and this will attract people he called entrepreneurs into this
business, no matter what it is. It
could be garbage collection or dishwashing, for example. But if it is needed, the price will go
up and more people will begin to offer the service, until the price comes down
and then others will not do this, but will choose another line of work where
the demand is greater.
The concept of the hidden hand
of the marketplace means more than this, however. It is a simple phrase to describe the entire self-regulating
quality of a marketplace and its ability to balance itself and work for the
good of all. It is actually a whole systems
concept in which the whole is greater than the sum of the parts. It means that one cannot predict the
behavior of the marketplace, even if one knows all the players. (This same principle is used in
nutritional balancing science, which is another whole system approach to
living.)
This concept works beautifully,
but some people have trouble trusting it, or simply do not like it because they
cannot control it. Governments, in
particular, often like to meddle in the marketplace by favoring certain
industries or certain companies.
This always causes problems, but governments persist in this because
they, or their friends in industry or academia or elsewhere, want to control
the nation for their own gain, rather than allow the economy to work for the
good of the people.
In
this regard, capitalism is a very complex, self-regulating economic system. Few people understand this, so they are always trying to
meddle and ‘fix’ what seem to by ‘symptoms’ of problems with it, such as how to
care for the poor or ill, or what to do about pollution, for example. Let us discuss these problems with
capitalism.
THE SEEMING HARSHNESS OF CAPITALISM
Seemingly
exploiting the workers. Karl Marx wrote his thesis, Das Capital,
based on what he believed was the “exploitation of the workers” by the
capitalist bosses. They rode
around in fancy carriages, while the workers toiled in the factories for low
wages. This is one aspect of the
harshness of capitalism. Of
course, what Marx did not understand is that the workers had few other
choices. In other words, they
could work just as hard or harder on the farms, perhaps, for even less money,
or they could be beggars and have an even worse life. He did not understand that human progress is slow, and the
factory life, while certainly not ideal, offered the working people more, so
they flocked to it by the millions and are still doing so all over the world
for exactly the same reasons.
The
harshness of allowing a business to fail. It seems so
harsh, so inhuman, some would say, to allow a business to fail. It puts thousands or more out of work,
for example. The resources must be
sold off at auction prices and sometimes the creditors of the business are the
seeming victims as well. They may
not get paid for their services and they might fail as well.
The public seems to lose out,
too, if an important type of business like a bank or General Motors fails. Depositors at the bank may lose their
money, for example. People who
have bought General Motors cars might now be able to have them serviced
properly if the company fails. This is one seeming type of harshness and inhumanity of free market
capitalism.
The response to this criticism
must be understood clearly. It is
that 1) all economic activity has risk.
One cannot simply deny the risk by bailing out every failure. If one does this, failure becomes the
new standard and no one will try very hard to succeed. This is exactly what has happened with
our banks, today, and with General Motors today. They have much less incentive to try hard to do a good job
and earn money because they believe they will be bailed out, also called ‘too
big to fail’. This is, in fact,
nothing but corruption at high levels of government.
In a free enterprise economy, if
banks or anyone cannot act responsibly, they should fail and others would buy
up their assets at bargain prices and do a better job. That is the way things are done in
market economies, and it works well if one leaves the system alone. Only corruption causes bailouts. I am familiar with the arguments that
our national security and all depend on big banks and big car companies. I reject all of this. I think these are lies told to the
public. Once again, the principle
works that if one company fails, others will buy up their assets and continue
their production, if it is economically viable. If it is not viable, then it should fail because why produce
products and services that no one wants?
POLLUTION
Another criticism of capitalism
is that it causes irresponsible pollution of the air, water and everything
else. This is completely
untrue. First, in true capitalism,
companies are totally responsible for their property and any damage they do the
property of others. Thus, if they
pollute the air, water or land, they are totally responsible. They would be sued out of business for
polluting the property of others.
Sadly, environmental laws have been passed that exempt corporations from
this responsibility, in many cases.
As a result, companies are allowed to dump a certain amount of waste
products, for example, without consequence. This is one cause of pollution in
many cases, and is the result of corruption, not capitalism.
Another
aspect of pollution is the fact that in a capitalist nation, new technology
that is cleaner will always win out over older, polluting technology, providing
it is cost effective. This does not
happen enough in America and everywhere else because too many laws protect the
old technologies. For example, the
internal combustion engine probably would be on the scrapheap of history except
for the fact that laws actually protect its use in automobiles, mainly. I know of a man who was running his car
on other fuels and was arrested and told he could not use his alternative
system. These laws, of which there
are many, such as oil depletion allowances and others, are the product of
corruption and the oil cartel, among other groups. This is not capitalism, but corruption and cartel politics.
It is incorrect to blame
capitalism, when the very people who are punished by these laws are often the entepreneurs or capitalists, and the ones who punish them
are the cartel or monopolists, who are basically socialists in disguise because
they are people who want total control of the oil or health or some other
marketplace, so they pass licensing and other restrictive laws that the car
companies and everyone else must abide by or go to jail. There is nothing like this allowed in a
capitalist society.
UNEVEN DISTRIBUTION OF WEALTH
This
is another criticism of free market capitalism. Some become very rich, while others remain or it seems, are
made poor by the system. This is
the main objection of the socialists to capitalism.
On
the surface, this criticism seems valid.
Pure capitalism seems like a totally selfish system in which one looks
out for oneself to get whatever one can financially. However, this is not true. The reason is that in a capitalist system, the only way one
gets paid is to offer a product or service that others want and therefore are
willing to pay for. This is a
great secret of business that is sometimes expressed as “the customer is always
right”. In other words, one must
look out for others, not just for oneself. This fact is overlooked by the socialists.
As a result, in fact, in
socialist nations the people are much worse off because the leaders, who claim
to want to do for the people, do not know and often do not care what the people
really want. Instead, they give
the people what they, the leaders, think the people want or should have, and
not what the people really want.
In other words, free enterprise economies are usually much less
“selfish” and narrow-minded than socialized or command economies in which a
central authority dictates which products and services will exist and their
prices.
Now,
it is true that in capitalist nations, some become much wealthier than
others. However, the reason for
this are important to consider. An
important reason this occurs is that some are willing to work harder. Socialist systems favor laziness, in
contrast. The willingness to work
hard is a great benefit for society, so it would make sense that these people
are paid more for their efforts.
One
must not just work harder to make more money. One must also
work in a way that satisfies people’s needs. In a capitalist system, working hard at building products
that no one wants does not make one money, in other words. One must also use one’s brain and other
abilities in a way that satisfies the needs of the people. This, too, is a benefit, in general, so
it makes sense these people would receive more compensation.
What
occurs today, however, is often due to corruption. For example, certain industries have passed laws that
exclude others or give themselves special tax breaks. These include the oil industry, the real estate industry,
the medical industry and others.
So people who work in these industries often make a lot of money even if
they don’t work hard or satisfy people’s real needs. However, this is not a problem with capitalism, but a
problem with human integrity and not allowing pure capitalism to exist in
America and elsewhere because the government tinkers with it for various
reasons.
CARING FOR THE POOR AND THOSE WHO ARE DISABLED, OLD OR CANNOT
WORK FOR SOME REASON
This
is another criticism of capitalism.
It takes the attitude that if you don’t work, you don’t eat. This is true. Capitalism is about the production of goods and services in
the most efficient manner. It must
be coupled with a moral code, such as that in the bible, that commands people
to love their neighbors as themselves, and to care for others. What occurs in pure capitalist nations,
and used to occur more in America when capitalism was purer, is the development
of private welfare.
Whether organized by churches or
other civic groups and associations, groups spring up everywhere to care for
the poor, the sick, the old, the disabled and other who cannot produce
economically. This fact is not
taught in schools, but is the absolute truth. The idea that the poor will just languish on the streets
without government intervention is a complete lie that is repeated endlessly on
television and in the universities today.
In fact, private welfare,
private hospital care and private old age care tend to assist people to develop
themselves spiritually much more than the entitlement mentality of a so-called
right to health care and welfare that many believe in today. This is discussed
in another article on this website called What is Compassion? What is Charity?
CONCLUSION
The moral and soul dimension of
human beings is the most important one, as stated earlier. Free enterprise or capitalism, for all
its seeming harshness, in fact helps people develop themselves. Thus it is a helpful system, much moreso that the welfare state concept, for example, and far
more than slavery, feudalism and other systems that have been used in the near
and distant past in many civilizations.
The
more that each person’s activities are pre-determined or controlled by laws,
rules, regulations, prohibitions or mandates, the less each person is able to
exercise moral judgment and the less he or she is responsible for
behavior. As a result, freedom is an
absolute requirement for moral behavior and development.
Lawrence Wilson, MD
© March 2014,
The Center For Development
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