Home / Economy / This Isn’t Capitalism

This Isn’t Capitalism

Capitalism isn’t like pie.

Entire books have been written on just what capitalism is. Adam Smith, Milton Freeman, Ludwig von Mises, and others have written well on economics with a sound understanding of the free market. It’s not my intention to rework their books which are in-depth treatments of how economies operate and under what conditions they do well. I simply want to convey a little meaning behind why capitalism is the system that makes sense and why it is the only truly moral economic philosophy. That idea, I have a feeling may sound a bit odd to some people. They have been conditioned to believe that capitalism is wrong and that it is the cause of poverty in America.

It's capitalism, not pie

To some people this sounds perfectly reasonable and to others, like myself, it’s counter intuitive. This seems to stem from one single false belief about how the economy works. There is an old television show you may have heard of (depending on how old you are) called “The Jeffersons”. It’s about a black family that do well financially and are able to by a luxury apartment on the “east side” and hire a maid. They started out with a dry cleaning business and expanded. The theme song, catchy as can be, sings, “and we finally got our piece of the pie”. That’s the flaw, right there. The economy isn’t like a pie at all. Let us examine that as if it were a literal pie. A nice apple pie. You invite some friends over for diner and there is enough pie for them each to have a nice piece. But, two of your friends bring dates unannounced. My, how rude! Now you have to give them some pie. But you love pie, and it’s your party after all, so you take the normal large piece you always take. Your wife looks at your sideways but you don’t care, it’s pie! Each person takes a piece but because you took a large one, they each get a smaller one and because there are more people there wasn’t enough to go around in the first place. At the last-minute your sister drops by but sadly there isn’t any pie left for her.

That’s the foundational thinking of economics for a lot of people. I certainly think it informed how Marx viewed the world. But it’s all wrong. The economy isn’t like a pie at all. It isn’t what we call a “zero sum game”. You should know that just because there are rich doesn’t mean that their existence is why you are poor. If you are among the people who believe that take just a moment to think it through. What is it that they are doing that is stealing money from you? You may answer that it’s because they are being greedy and not paying you enough. You have to ignore the fact that they are actually paying you though. But that’s not to say what you do have comes from them. Sure, they pay you, but the wealth really comes from your labor. The amount is determined by how much that labor is valued.

Value is incredibly important.

Value is determined individually and not by the market. I will grant you that it is often spoken of that way. But the market in that case is simply a group of individuals that share the same valuation. Meaning they all feel pretty content paying what’s being asked for a product or getting a certain amount for their own product. McDonald’s sets a price for a burger and you pay it. For them the price is worth it. But that doesn’t determine the actual value of that burger, only what they think it should be. You come along and decide you want that burger and $1.00 is a pretty good price so you pay it. They have more expensive burgers and the customer behind you buys one of those because they fit for him. He makes a choice, you make a choice, McDonald’s makes a choice. If someone thinks the price is too high at McDonald’s they are welcome to go to Wendy’s. They are even welcome to voice their displeasure at the price to McDonald’s corporate office. If enough people do this then the McDonald’s will either lower the price or stop making the product. Sometimes a business can’t lower the price because doing so would make the product unprofitable.

It’s interesting how leftists will often talk about prices being too high and how that’s unfair but never talk about how lower prices might be unfair to the business. They left loves to anthropomorphize things but never do when it comes to businesses which they like to make faceless entities when really businesses are owned by actual human beings with rights of their own, families of their own, bills of their own, concerns of their own. Making them faceless is how the left feels comfortable attacking them. They have a right to set value too.

There shouldn’t be a minimum wage.

Again, I realize that sounds harsh. When I was a 15-year-old working I was pleased to have a minimum wage. But of course I was 15 and didn’t understand the ramifications of that. Sadly, there are many adults who don’t either. Setting one is unfair to the business owner. Notice I say owner, as in human being. The left likes to say “the business” as if there’s no human being associated with it. But always remember that there are people involved. Take a small sandwich shop owner for example. He’s in business for himself and is trying to make a go of things. The work isn’t complicated of course but he has to pay his workers a minimum wage even though he makes very little per sandwich and even though there is no special skill needed. That is very unfair to him. Not having a minimum wage, however, would not be unfair to the worker. I anticipate that some reading said that in their mind the moment they read the above.

Just like buying a burger you decide if the price is right. If the work that is expected of you is more than the price you are getting out of it then you can say no and go elsewhere. If there isn’t an elsewhere then you factor that into your choice. That it is the only business that will hire you, or the only one in town, etc. should be factored in by the worker into the value of that job. The fact that a person may not have other employment options is often used by the left to justify the minimum wage but in actuality it does just the opposite it justifies the job having a higher value.

Value doesn’t mean money.

I suppose I should stop and explain value a little. We normally associate that with money. The question, “how valuable is it?” is often answered with a dollar amount, “it’s worth $300!”. Well, no…no it isn’t. It’s worth what someone will actually pay for it. But that’s not really value. Value is that set of thoughts, feeling, circumstances, and opportunities that swirl around a person’s mind and get tallied up as they see fit. Value is individually determined. That is why socialism CANNOT work.

Socialism seeks to set a value for everyone on everything on their behalf. This is done, supposedly, in the name of fairness. But think of just how unfair that is. First and foremost there is no distant government that can ever know what you value without a great deal of input from you. With elections we send out representatives to Washington DC based on how closely they fit our values but even then they clearly don’t know us. This alone should help you understand why limited government is good.

You and your next door neighbor may have a lot of things in common, that’s likely how you ended up in the same neighborhood. But perhaps he has a pool, or a TV on his back patio and you don’t. You like to watch TV inside like a normal person and  you value the peace and quite of your back yard which is shattered when he’s watching football on his outdoor TV. You have a lot in common, but not everything. He places values on things you don’t and you place values on things he doesn’t. Some higher, some lower. How can a distant government decide, when doling out the money, how many TV’s a household should have? What if you don’t want any? Unless you want to dabble in the black market you can’t sell your extra unwanted TV to buy something you do want when you live in a socialist country. That wouldn’t be fair after all. But, forcing you to have a TV isn’t fair either, nor is taking one away from  your neighbor. Forcing your way of life on someone against their will isn’t moral. Doing so because you feel “they should do it anyway” is immoral and arrogant. It isn’t what Jesus taught by the way. if you think that then you either don’t know what socialism is or you don’t know what Jesus taught.

This is not capitalism.

I love it when people decry how capitalism isn’t working and so, they say, we need to try something else. I love this because it gives me a chance to point out that what we have been doing isn’t capitalism.

I especially love this when it’s said in reply to my bashing socialism. What we are doing now is more akin to socialism that it is capitalism. Therefore, if they don’t think it’s working they have defeated their own defense of socialism and their own attack on capitalism.

It is likely you have heard the term “crony capitalism”. That is really a huge part of what we have been doing and what has caused so many problems. Crony capitalism is when business and government have such a relationship that the government is helping the business unfairly. A prime example of this is the automotive industry bailouts. Government officials said the auto industry was “too big to fail” so they took tax payer money and bailed them out. In real capitalism no business is too big to fail. If a business is going to fail, it fails and other businesses benefit by serving the customers that were once served by the now failed business. who knows what automaker would have grown and hired or innovated had they been able to compete. Who can compete with the government though? Tax payer money is propping up a business and it keeps coming or gets printed. No legitimate business can compete with that. This has ramifications on the market.

On top of this government regulations and high taxes mean there isn’t a free market for businesses to operate in. Things like the minimum wage, as discussed above, harm businesses. In the end it’s always the consumer that is left with the higher costs and inflation associated with government interference with the market.

Take the soda tax for example.

When do-gooder politicians decide they want to live your life for you there are consequences to the force they use to achieve that. Some idiot decides that sugar soda is bad for you and therefore you shouldn’t be drinking it. In order to achieve their goal of purifying you in their image (not likely since they are hypocrites) they must use various methods to bend you to their will. Jacking up taxes is one way.

The soda tax was designed for that reason as is the tax on cigarettes. However, they don’t work. People find a way to do what they want. Some will cross state lines to buy what they need in a state that doesn’t have the high tax and others will simply not buy other things they might have otherwise. Perhaps a smoker doesn’t eat out as much anymore which causes the food service industry to suffer. it has nothing to do with tobacco but yet it is affected adversely. whenever your buying dollar doesn’t go as far someone suffers. In true capitalism people are free to decide for themselves and government isn’t bending its will to destroy entire industries that would succeed greatly and prop up others that would fail. No, we don’t practice capitalism, at least not a pure form.

Capitalism is moral.

Allowing people to be free to pick and choose for themselves rather than forcing them to do something is what capitalism does. Socialism on the other hand puts them in the same box even if they don’t want to be in it. It stuns me, honestly stuns me, that anyone would think capitalism was immoral or that socialism is moral.

How can a person think it is moral to create laws that force people into a slavery of the state, deprive them of their liberty, and steal their hard-earned money? I’ve heard them say that it is because they care. They say things like, “I guess I just care more about people than you do.” As if they know how much I care or not but even if they did, that’s beside the point. It isn’t charity when you force someone, it’s theft. There is no charity in government force, there is no love or pureness of heart. You are free without socialism to give all you want. That is righteous and good of you. But once you advocate for a law that forces your neighbor to give then you are a hypocrite. You have advocated for something that is cruel to your neighbor but pat yourself on the back thinking you have done something kind. It’s deluded.

Just let people live their lives and decide for themselves what they want to do with their money, what they value, and what makes them happy. That’s capitalism in a nut shell.

%d bloggers like this: