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Capitalism – the System of Evil?

October 16, 2011

Much todo recently regarding capitalism. Apparently, there are those who view capitalism as a form of evil incarnate. From the Occupy Wall Street protestors to socialists, criticisms of capitalism range in flavors from it being the tool of elitists to affect wealth divide, to it being an economic system which relies on oppression of other systems and cultures worldwide. Let’s review capitalism and see how many of the various assertions are true.

First, know that capitalism is simply a type of economic system. It means that businesses are privately owned, as opposed to government run. Private businesses are driven by profit, and thus will try to maximize profits by increasing efficiency. The fact that the business owner profits from the business, seems to be what stems the largest criticism from socialists, who believe that the government should own and run everything. Karl Marx stated that people sell their labor to the business owner, which only augments the business owner’s profit, suggesting that the laborer gets nothing out of it. But is that true?

If you went to apply for a job and they said that they would pay you $1 an hour for your work, and that you would have to work 120 hours a week for them, would you take the job? – of course not. However, if a business offers you competitive wages along with fair labor practices, if you are like most Americans, you will take it. And why would you do so? – because you do get something out of it. You get money that you can use to purchase products that you want, from other businesses. You also hope that the price that you will pay for that product is low, based on that business having done its best to maximize efficiency and thus offer a quality product at an affordable price. If the price is too high, or the quality is too poor, the power of the buyer will effectively tell that business whether or not they can expect to remain in business. That is the true essence of capitalism. The business owner is just as beholding to the customer, (people who work at jobs), as the average person is to working for a living. Thus, Karl Marx is completely off base in his erroneous assertion that the laborer gets nothing in return. Apparently, he was thinking of the old days of kings, where the king’s subjects were at the mercy of their kingdom’s master.

One of the critics of capitalism relates to businesses trying to get as cheap of labor as possible – that is true. However, once again, ultimately the labor pool holds the power. If no one is willing to work for the wages a business is willing to offer, then that business will have to adjust its offering to compete. Laborers have much more power than critics seem to recognize, they just don’t seem to realize it nor exercise it.

But let’s not forget that the majority of businesses are small businesses, in which the owner is the laborer. The small business owner works very hard, often reaches success to the point that they hire others to help them, and rely on the free market for the success of their business. In a capitalist free market, everyone has the right to start a business and benefit from that business. In a purely socialist society, a person is told what job they will do by, and for, the government. In a capitalist society, a person has the right to buy property and a home of their choice. In a socialists society, a person is required to live in a government owned apartment, and told who will be their neighbors. Which of the two sounds more oppressive to you?

In a capitalist society, a person who succeeds, saves, invests well, etc, gain wealth. In a socialist system, a person is not allowed ownership, and thus has no avenue toward wealth. Yet, in a socialist society there are still those who hold power and wealth – iow, a socialist society still has its elitists who make the rules for everyone else. The only difference is, those who live in a socialist society have no avenue toward wealth unless they have an “in” with those who do hold the power, while the remainder of the population remains oppressed.

Capitalism offers incentives that other forms of economies do not. With private ownership and freedom of choice, one tends to take more pride in their work and in the property that they own. One need not look much further than government owned welfare housing to see what happens when a person is given free housing and a free livelihood with no expectation of labor in return. Such housing quickly becomes very shabby and run down. There is no pride in their dwelling, neighborhood, or standard of living. We have these examples because America is not purely a capitalist society, but rather a hybrid of capitalism and socialism. The benefactors of socialism are the welfare recipients and the free K-12 education available to every child.

Finally, to suggest that capitalism is the root of cross cultural problems is quite misinformed. There were wars between nations long before capitalism existed. There are religiously based political systems that conquer other lands for the sake of forcing their theology on other people. There are socialist nations that engage in political jousting with other nations with the intent of furthering their own nation. To blame capitalism for inter-national conflict is like blaming a child born today for the existence of the moon.

Capitalism, like all other forms of economic systems, has its issues. However, it is the only system that maintains a basis in human nature fact, and that is that a person is best encouraged toward achievement when they are able to receive a measurable reward for their efforts. Alternately, one either works for no reward, or the threat of death for not succeeding – and that is as oppressive as an elitist can act toward a non-free laborer.

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From → American Society

10 Comments
  1. vtmawhinney permalink

    Your’s is one of the clearest discussions of the merits of Capitalism that I have read.

    I think the reason that capitalism is so powerful in motivating people to high achievement is that it is a harnessing of psychology’s wonderful Law of Effect (consequences control behavior). But there is much more to it. A monumental value is added when the Law of Effect is harnessed through the application of psychology’s principles of positive reinforcement. By massing positive reinforcers (cash, prestige, and other material benefits, provided contingent upon productivity and the various human behavior patterns that lead to increased productivity, a volcano of productivity explodes within a population. When all of the contingencies of postitive reinforcement are on human productivity, and our natural tendency towards sloth (the Law of Least Effort) is not positively reinforced, the scientifically predicted outcome errupts into astonishing evidence.

    Actually, this should come as no surprise. Principles of human behavioral science drive the powerful economic technology called capitalism.

    If you reverse all of the contingenciesof positive reinforcement, you get socialism and communism and the results are just as predictable…but in the other direction.

    Obviously, and unfortunately, capitalism without moral and ethical constraints will lead to bad outcomes. This is the current fly in the ointment that must be fixed.

    VTM

  2. Thank you Tom for adding your insights as a psychologist. I hadn’t considered the Law of Least Effort in to the equation, but you are absolutely right.
    I wonder if this is where so many individuals become misguided. I hear complaining about those with wealth, and also comments like, “I wish I was the CEO so I could get paid millions just to sit around and do nothing.”
    Clearly such statements demonstrate an utter lack of understanding of what it takes to usher in a successful business. So apparently to some folks, they view everyone was equally unmotivated as they are, but presume that they should be wealthy despite the lack of motivation.
    Hmmm, could explain a lot about those who criticize capitalism.

    • vtmawhinney permalink

      People generally think in a prescientific way about human behavior and what motivates us. Our common ignorance about psychology and the determinants of our own behavior is nothing short of appalling.

      If you or your readers ever have a chance to read B. F. Skinner’s book, Beyond Freedom and Dignity, it may become clear that those who prefer socialism to capitalism simply do not understand that humans and other animals are strongly motivated by elementary principles of operant and respondend conditioning and our basic biological nature. This lack of understanding by those who legislate (or design our socioculture) has led to nearly all of our worsening social and economic problems.

      When it comes to the conduct of human affairs, principles of psychology and ethics must go hand in hand for success. Note that economics (another essential field of understanding) is based upon principles of psychology (deprivation, satiation, punishment, extinction, positive and negative reinforcement, etc.).

      VTM

  3. Great Post Gonzo,

    Capitalism is by far the fairest system available in an unfair world.

  4. People are forced to comply with the parrameters of a ‘greed is good’ mentality in order to keep the collective mentality of the culture. American infrastructure and it’s competitive nature is destoying humanities’ external metabolisim, nature, the thin membrane around the earth that keeps us alive.
    It’s been grossly exploited since the dawn of the industrial revolution and the destruction is gaining in mommentum. Man does not have much longer on this beautiful blue, green ball which is rapidly turning into a ball of brown gaseous shit, so enjoy your wealth now and hand the hell over to your children and your childrens’ children. Your right wing political prophets will tell you there is no such thing as global warming but even the bible which they claim to embrace with such love tell of a world which will be a living hell, the spin doctors at work in a covetous money loving culture, where the false prophets, poleticians, banking cartels, military strongholds(black budget) are robbing the honest hard working people through unfair taxation and civily imposed fines and fees.

    • I beg to differ. People are not forced, that is the point of the article.
      People act in self-interest. People want ‘things’ and they work to make money to get things.
      You believe that a Marxist society is without its elitists? – apparently, you have not read much history where Marxist dictators live in extreme wealth while the average person lives impoverished. Historically, Marxists societies have lived in far more extreme differences between wealth, poverty, and more importantly, social justice.

      Do you really believe that a Marxist society allows for choice? – what choice is there in being told where to live, what job to have, and what level of provision will be your livelihood?

      You blame America for the destruction of the earth, yet mention nothing of other countries and their abominable culturally based destructive forces. America/Europe have had zero, (or even negative), population growth in the past several decades, while communist, socialists, and Marxists countries suffer population explosions. If your concern is with the longevity of the earth, then most certainly your concern is also with too many people, and thus, the breeding grounds of the earth. America would be negative population growth but for immigration. Immigration does nothing but encourages over-population world-wide, but liberals seem to insist upon it – more contradiction from the left.

      I am a centrist, which means I also oppose the far right. I despise so much bailout money went to banks. I also despise that $16 Trillion of AMERICAN taxpayer money secretly went to shore up foreign banks all over the world. Frankly, I think other countries should have been allowed to collapse, fall into anarchy, and see just how far their ideology and hatred for America gets them.

      However, I must concede that much of the taxation that Americans pay does in fact go for the common good. Such as for social programs, foreign aid, retirement security, and yes, even for defense, as any nation has a right to defend itself. Personally, I am more than happy to cut our defense budget, and allow other countries to pony up to defend themselves against their own neighbors.

      • Paul Ruderstaller permalink

        All man made systems will eventually go astray, the nature of the beast. There will never be a perfect system as long as man/woman has anything to do with it. The systems of man from the beginnings of the first cities have always been beasts that kill, covet and eventually destroy themselves; its inevitable. Perhaps a negative outlook, but no matter how ‘advanced’ we become, we will always fall without the intervention or help of a divine source, if there be such a thing. Socialism, capitalism, fascism, communism, monarchies, oligarchies (I% upper rich in America, the ruling elite in communist / socialist systems). All been tried. There have been a few benevolent monarchies, but very far and few between. As Jimmy Hendrix said ‘until
        the power of love overcomes the love of power, there will be no peace’. Corney but true.

  5. The beast is not a man but a system, a system which has humanity and nature in a strangle hold.
    It has not yet coalesced into a new world political system. ‘The number of man’ not ‘a man’, a mistranslation into the old english which fundamentalists in America and England hold so dear. Find out for yourseves in the languages they were written in to begin with. God gave you a brain and a heart, use them and don’t let every well groomed preacher with a gold bound bible tell you what ultimate truth is, they are liars or just extreemly stupid.

    • Jesus did not over-turn the vendor’s tables at the place of worship because they were capitalists. Jesus over-turned the tables because the vendors were selling their wears on a sacred day – the Sabbath. But frankly, I don’t care. I’m not religious.

      The new world system will emerge from the ignorance of the masses, and more importantly from unbalanced nature when apathy overwhelms personal responsibility. Personal responsibility is being sold as an antiquated ideal. An ideal that should give way to a superior force who will do for you what you should not be bothered to do for yourself.

      Personal responsibility not only defines self-sufficiency, but the impact of your actions upon the world and your neighbors – an ideal I would assume you would hold in very high esteem.

      • vtmawhinney permalink

        I loved your blog on capitalism. Very succinct and spot on! I will refer my readers to this one and remind them of your blog…Tom

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