Green Room

For the Love of Capitalism

posted at 6:47 pm on April 6, 2010 by

Socialism always seems to have a marketing advantage over capitalism.  This is not surprising, because socialism is a deeply romantic notion: a dangerously seductive dream of prosperity as a function of justice, where the wise redistribute the profits of the wicked to care for the needy.  Socialism’s promises are so alluring that questions about its poor performance are dismissed as rude.  It is a childish philosophy, and like any errant child, it receives a limitless supply of forgiveness and second chances.

Capitalism rarely enjoys such wonderful advertising.  To the academic, it seems vulgar, while the politician flatters his constituents by promising they can rise above crass materialism… by placing material concerns in the hands of politicians.  In truth, capitalism is the chisel free people use to carve their dreams from the stone of history.  Without it, we are “free” only to beg for the bounty of the State, and complain when it fails to deliver.  Freedom is only a theory, when it lacks a practical means of expression.  Freedom of speech without property leaves us doodling in the sand, instead of carving our will into stone.

We should be more forceful in declaring our love for capitalism.  It should be a mature love, born of respect for its power and virtue, not a starry-eyed romance.  For example, we should be thankful that capitalism is merciless. That might seem like a strange thing to celebrate, but it’s the reason we haven’t been subsidizing buggy-whip and vacuum tube production for decades.  Left to its own devices, the free market doesn’t waste energy propping up the production of unwanted goods for sentimental reasons… or because the manufacturers of those goods are politically powerful enough to extract subsidies from the public.

We should also be grateful that capitalism is heartless. Sentimentality is expensive, especially when other people are taxed to pay for it.  The lawful governance of a vast nation requires cold logic, and iron obedience to Constitutional discipline.  The unsustainable programs bleeding us into fiscal ruin were sold to voters with emotional appeals.  The architects of the entitlement state do not use children as props because they want you to think carefully about their proposals.

Emotion is a terrible basis for allocating resources.  The essential tool for addressing disaster and poverty is wealth, which is created by transactions between citizens.  Money is the tool that makes our time valuable to one another.  A rich nation can afford to provide for the unfortunate, and develop goods that make everyone’s life better.  The “heartless” efficiency of capitalism is the best way to coordinate our skills and resources, producing the fountain of value that nourishes us all.

Capitalism deserves praise for being ruthless. One of the fundamental delusions of the Left is that wealth creation is easy. Many politicians have never run a private-sector business.  They don’t appreciate how much savage effort it takes to build a profitable enterprise, or how many tough decisions must be made along the way.  The ability to insulate themselves from accountability is one of the primary skills of the political class.  The ability to strip away such insulation is a key attribute of successful business management.  The difficult battles of enterprise leave some broken competitors on the field, but they produce countless victories for consumers.

Capitalism should be honored for its chaos. The markets are illuminated with the random genius of competitors free to gamble on thousands of solutions.  The stale ideology of the statist is no match for this wild power.  A politicized economy cannot be brilliant, because it finds too many alternatives unthinkable.  It cannot inspire progress, because it works backward from the conclusions of ideology.  When the State nationalizes an industry, it declares a product to be “above” the petty business of trade… and something which cannot be traded loses its value.  The socialist destroys value by declaring something to be “free.”  There’s no reason to expect growth amid the fiery destruction of value.

Finally, capitalism should be appreciated for its ambition, which the socialist falsely classifies as “greed.”  Greed involves taking wealth from others.  That’s what socialists do… and it should not escape your notice that the top dogs in a socialist government live extremely rich lifestyles, even when they preside over nations trapped in desperate poverty.

Ambition is the electric hunger for possibility, shared by entry-level workers and titans of industry alike.  We are rich when a banquet of possibility is placed before us.  The total State represents the dissolution of possibility.  It is defined by what it tells the populace they must do, or cannot do.  Compulsory taxes, extracted to fund mandatory benefits, reduce your options for investing the profit of your labor.  The all-consuming government that forced ObamaCare upon you is destroying the value of your time. Our children will find little possibility in a future of crushing debt and decaying entitlements, where they are told what they must purchase… and what they must settle for.

The spirit of freedom inhabits the tough, messy, glorious body of capitalism.  We never should have allowed ourselves to be tricked into feeling guilty about it, apologizing for it, or measuring it against the dashing illusion cast over the shabby reality of socialism.  Prosperity is a destination reached only by free men and women, acting in concert.  The only thing we can compel each other to be is poor.

Cross-posted at www.doczero.org.

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well said

joe_doufu on April 6, 2010 at 6:56 PM

It is inherently flawed when broken down to it’s foundation; it’s reality, and not viewed “romantically”.

“Distribution of Income” is either voluntary through personal charitable giving or forced. When it is forced, it is confiscation pure and simple. If such confiscation reaches certain percentage levels over 50%, you become a minority owner of your labor. When that happens, you are a subject. You are in servitude to the confiscator (the State).

That is Tyranny.

Opposite Day on April 6, 2010 at 6:59 PM

Socialism is the philosophy of envy–of the concern that someone else has more than you. It gives this corrosive Deadly Sin the status of a virtue. Capitalism–more properly, freedom and property rights in a free market–requires ambition to be harnessed to the good of others through voluntary exchange of goods and services. Greed must work to the Good of Others, as those Others define that Good.

Nothing else has ever increased the true prosperiy of a society.

Always remember, there is no prosperity without profit.

njcommuter on April 6, 2010 at 7:19 PM

Capitalism without a conscience is the corner drug dealer selling crack cocaine to high schools kids.

Which is why Christian values or any other religion that preaches tolerance, compassion, responsibility, charity, forgiveness, and love for your neighbor is a necessary requirement for a capitalist system.

By including a democratic form of government the interaction of the three systems produces freedom and prosperity. Undermine any one of the three and everything is weakened.

Skandia Recluse on April 6, 2010 at 7:35 PM

Capitalism rarely enjoys such wonderful advertising.

Yes, but it WORKS.

Another great column Dr. Z

Chip on April 6, 2010 at 8:04 PM

socialism …. is a childish philosophy

capitalism is the chisel free people use to carve their dreams from the stone of history. Without it, we are “free” only to beg for the bounty of the State, and complain when it fails to deliver.

A rich nation can afford to provide for the unfortunate, and develop goods that make everyone’s life better. The “heartless” efficiency of capitalism is the best way to coordinate our skills and resources, producing the fountain of value that nourishes us all.

capitalism should be appreciated for its ambition, which the socialist falsely classifies as “greed.” Greed involves taking wealth from others. That’s what socialists do… and it should not escape your notice that the top dogs in a socialist government live extremely rich lifestyles, even when they preside over nations trapped in desperate poverty.

Excellent, as always.

beachgirlusa on April 6, 2010 at 9:57 PM

This needs to be promoted to the main page.

beachgirlusa on April 6, 2010 at 10:00 PM

where the wise redistribute the profits of the wicked to care for the needy.

And right there is where it all breaks down: the total amount of wisdom in our government could fit on the head of a pin with room to spare.

I despair of many good things coming to pass because our leadership is unfit to run so much as a burger stand, nevermind a nation.

Dark-Star on April 6, 2010 at 11:09 PM

Capitalism without a conscience is the corner drug dealer selling crack cocaine to high schools kids.

Skandia Recluse on April 6, 2010 at 7:35 PM

Careful – I’ve said similar things and gotten reamed for doing so.

Dark-Star on April 6, 2010 at 11:10 PM

I think Skandia Recluse will find that most businesses like rules and regulations up to a point. Rules level the playing field and protect the company from lawsuits. I don’t think anyone here is for unfettered Capitalism. You don’t want to wonder whether or not your food has lead in it or your blender may burn down the house. Rules, up to a point, protect businesses from themselves.

gordo on April 6, 2010 at 11:25 PM

That might seem like a strange thing to celebrate, but it’s the reason we haven’t been subsidizing buggy-whip and vacuum tube production for decades

Hey now, us guitarists still use those tubes! :D

Anyway,

The post is excellent as usual. It avoids any reasonable criticism of ‘capitalism’ in the idyllic sense, but at this point I’m used to the fact that you’re not writing to be even keeled; you’re writing to bludgeon the opposition. In this capacity, your writing is basically 2nd to none.

People still pay for columns you know.

ernesto on April 6, 2010 at 11:30 PM

Great column Doc.

I’m waiting for the book.

aquaviva on April 7, 2010 at 3:56 AM

Sorry Doctor Z, but this is a purely academic exercise.

You love your metaphors, so let me suggest that our resident Doctor has prescribed vigorous exercise and healthy eating to a morbidly obese, disease infested, drug addled patient.

America is that pathetic man. He can’t get out of his bed without the help of heavy construction equipment. There are ungodly fungi growing in the folds of his fat.

You’re telling the patient to buck up and run a marathon.

This fat man might have a dim intuition of what health is, but as a doctor, you ought not to be squeezing him into a spandex running suit. You ought to be looking at him with pity and rebuilding him at his spiritual core.

The whole capitalism prescription will come many years from now. Our immediate need is to change the patient’s soul. He needs to want to live, and to live for something beyond his appetites. Right now, he wants to die in the loving crane that government has to provide to lift him out of bed.

jeff_from_mpls on April 7, 2010 at 11:08 AM

Hey now, us guitarists still use those tubes!

ernesto on April 6, 2010 at 11:30 PM

And there are no small number of nightclubs who still use the buggy whips, apparently.

TheUnrepentantGeek on April 7, 2010 at 3:57 PM

Socialism is the excuse for envy, covetousness, greed and theft.

fourdeucer on April 7, 2010 at 5:20 PM

Socialism is the excuse for envy, covetousness, greed and theft.

fourdeucer on April 7, 2010 at 5:20 PM

+a trillion

Disturb the Universe on April 7, 2010 at 5:22 PM

Some people commenting here really should read Ayn Rand.

Disturb the Universe on April 7, 2010 at 5:24 PM

I so look forward to Dr. Zero’s essays. Thank you. This should be required reading in Econ 101 and Political Science.

duggersd on April 7, 2010 at 5:24 PM

And Capitalism is realistic. It accepts that the vast majority of people are usually motivated by concrete self-interest rather than a generalized, romantic altruism. The reason that Capitalism works is that it accepts self-interest as a motivation and puts it to use. That’s why Capitalism works.

Socialism, in contrast, is based on a flawed concept. People are not ants. We are not designed to sacrifice ourseld for the good of the hive; our loyalties are those of pack animals, to families and individuals. This false view of human motivation is why Socialism never works well and, to the extent that it works at all, it does so in extremely homogenous societies.

Socialism or diversity: Take your pick.

Venusian Visitor on April 7, 2010 at 5:24 PM

the total amount of wisdom in our government could fit on the head of a pin with room to spare.

Dark-Star on April 6, 2010 at 11:09 PM

I think a better analogy would be, you could put all the wisdom of our government in a match box and it would like putting a BB in a boxcar.

belad on April 7, 2010 at 5:34 PM

jeff_from_mpls on April 7, 2010 at 11:08 AM

Very well stated.

belad on April 7, 2010 at 5:39 PM

Awesome again as always. Ultimately, a compassionate person should choose capitalism over socialism. Handouts don’t create any good feelings in the recipient, while earning that first dollar bill creates a pride and sense of self-worth that many people never forget.

Liberalism is all about creating false choices. The truth is clear if you look at history, though.

Does anyone oppose education? The evidence would say that liberals do.

Does anyone oppose peace? If anyone does, it’s liberals.

Who could stand against prosperity? Liberals.

If the GOP would stop apologizing and start telling people how liberalism is a lie, we could repair the decades of damage caused to this country.

hawksruleva on April 7, 2010 at 5:40 PM

As a four-time venture entrepreneur, I’m heartily pro-capitalism. But I bogged down in your piece here. Pressed for time, I can only offer some top-of-the-head thoughts.

* Don’t forget that ultimately “capitalism” is a socialist label. It’s a piece of propaganda meant to describe the condition that obtains when individuals have the right of property, of contract and of incorporation. You might say that capitalism is nothing more than a by-product of those social facts.

* When you go on to anthropomorphosize a by-product, describing it as merciless, et al (and what is the dif between lacking heart, lacking mercy and lacking ruth, anyway?) with overtones of savage effort, it becomes as detached as detailing a vibe you got from the sense you had of a feeling. And what about the flip side, that companies survive and profits flow when needs are well served?

The juvenile basis for the continuing lure of socialism struck me as wrong also. To believe in capitalism, you have to believe that human industry and human ingenuity can be put in harness for the good of all. Despite endless humdrum examples all around, our pessimistic (read: lefty) friends cannot be brought to accept that. In their scheme of the world, people that clever are up to no good by definition.

Chaz on April 7, 2010 at 6:02 PM

Try Capitalism and Freedom by Friedman or The Road to Serfdom by Hayek. Both engage this is a veru profound way.

Irish

Dr_Irish on April 7, 2010 at 6:13 PM

Monkey wrench time.

And Capitalism is realistic. It accepts that the vast majority of people are usually motivated by concrete self-interest rather than a generalized, romantic altruism.

Venusian Visitor on April 7, 2010 at 5:24 PM

Let’s assume that this is true, and I think it is. Does this necessarily mean that people make logical decisions?

What happens when markets behavior in irrational ways? What happens when large actors in markets decide to make a quick, huge short term gain and leave the rest of the market to deal with the resulting fallout and potential ruin?

Now, the system will self-correct … but at what cost? Is there a reasonable tradeoff between the highest heights attained by pure laissez faire capitalism and something a bit more stable?

TheUnrepentantGeek on April 7, 2010 at 6:15 PM

*behave, not behavior. Sheesh. Proofreading fail.

TheUnrepentantGeek on April 7, 2010 at 6:17 PM

There is no such thing as ‘capitalism.’ It is merely a word coined by Marx. Think ‘freedom’, rather.

ahem on April 7, 2010 at 6:35 PM

What happens when markets behavior in irrational ways? What happens when large actors in markets decide to make a quick, huge short term gain and leave the rest of the market to deal with the resulting fallout and potential ruin?

What heights of arrogance allow someone to think that he alone can perceive that the market is “acting irrationally”, and that if we’d just give him the power to rationalize a few things, we’d be better off!

If people can behave irrationally when acting in the market, where irrationality costs them dearly, those same people can also behave irrationally in the political “market”, in which casting an irrational vote directly costs them nothing; they still have another vote to cast in the next election, and the one after that, regardless of how often they vote for policies that have been demonstrated to be irrational over, and over again.

If irrational actions are the problem, what proposed cure can be immunized from irrationality itself?

The Monster on April 7, 2010 at 7:17 PM

Reminds me of a story I heard one time, Something about giving a man a fish to eat or teaching to fish instead. Or somthing like that, I guess the details arnt important, Im too busy waiting for my free health care!

Koa on April 7, 2010 at 7:29 PM

I just found L.Neil Smith’s “Rosewll, Texas” and “Probability Broach” over at Buckheadpress.com. A couple of excellent illustrated novels that make the case for capitalism and self reliance.

JimK on April 7, 2010 at 7:56 PM

Way to go Dr Z

AH_C on April 7, 2010 at 8:12 PM

TheUnrepentantGeek on April 7, 2010 at 6:15 PM

Suppose three hundred miliion people make decisions. Even if most of them make an irrational decision, some of the people won’t. Many in the foolish majority will learn they were wrong because their self-interest has been adversly affected, and are thus likely to make a wiser choice next time. The system is not perfectly stable, but it is self-correcting. Think of it as a thermostat.

On the other hand, a hypothetical Platonic philosopher king makes a decision by fiat. Even if he is motivated by nothing but altruism, he will make mistakes that will have an adverse effect on the majority of his people. Unless he eschews the privileges of royalty and lives under the same conditions as the commoners, he will not feel the impact of his poor decision in the same manner and degree as the commoners do. He may ultimately take corrective action but, because he is insulated from the adverse effects, his corrective actions will be neither as rapid nor as effective as would be those of the people who are actually suffering the consequences of his mistakes. The thermostat is faulty and the system is likely to break down as a consequence.

All this, of course, is posited on the supposition that there exist altruistic wise men of great ability who wish only to serve mankind, and that the policies designed by these wise men are implimented by civil functionaries that are likewise incorruptable. Otherwise, the benefits of the wise policies of the philosopher-king will stick to the hands of hundreds of corrupt administrators, and those benefits that get past the administrators will be in the charge of clerical workers who serve their own self-interest perfectly by working at a more leisurely pace than they would were they employed by a businessman who needed to make a profit to pay their salaries.

The philosopher-king would eventually recognize that these problems exist, and take corrective steps that would involve the creation of a new agency to oversee the operations of the distribution agency….

This system would not be “a bit more stable” than the free market. It would be the epitome of instability, doomed to collapse under the weight of its inefficiencies.

Venusian Visitor on April 8, 2010 at 2:46 AM

Many in the foolish majority will learn they were wrong because their self-interest has been adversly affected, and are thus likely to make a wiser choice next time.

Venusian Visitor on April 8, 2010 at 2:46 AM

History would appear to demonstrate multitude counterexamples to this statement. People are not purely rational. On the contrary, much of our decision making appears to happen somewhere other than the temporal lobes.

The system is not perfectly stable, but it is self-correcting. Think of it as a thermostat.

Venusian Visitor on April 8, 2010 at 2:46 AM

The system is indeed self correcting, and I acknowledge that. The issue is not whether or not the system will correct, but what happens in the process of that correction.

On the other hand, a hypothetical Platonic philosopher king makes a decision by fiat.

Venusian Visitor on April 8, 2010 at 2:46 AM

I’m not suggesting a philosopher king. I’m suggesting certain rules which would reduce some of the higher risks, thus curtailing some of the heights of capitalism (but also the lowest lows).

All this, of course, is posited on the supposition that there exist altruistic wise men of great ability who wish only to serve mankind, and that the policies designed by these wise men are implimented by civil functionaries that are likewise incorruptable.

I don’t think that it IS posited on that supposition. There are reasons to work in government beyond pure altruism. People who value stability over opportunity or those with a particular calling may find the environment cultivated by the public sector more appealing. Someone who find investigative work compelling might be better served as a police detective than working as a PI, for example.

This system would not be “a bit more stable” than the free market. It would be the epitome of instability, doomed to collapse under the weight of its inefficiencies.

Venusian Visitor on April 8, 2010 at 2:46 AM

Again, what I’m discussing is not a wholesale replacement of the free market. It’s essentially what we have – a market that is limited but still presents substantial opportunity for risk and reward. An essentially pragmatic approach.

Are you arguing that Sweden, for example, represents an extremely unstable country?

TheUnrepentantGeek on April 8, 2010 at 2:28 PM

Loved it, Doc. You all will enjoy this – I sent this essay to a liberal friend (Obama voter) who called it “exquisite” and “brilliant” and said he would pass it along to others. Maybe we are winning hearts and minds…..

4Freedom on April 8, 2010 at 9:03 PM