This book I am reading, “The Morality of Capitalism,” contains essays from various defenders of capitalism around the world. I am completely intrigued by every essay because it adds to my ever-growing foundation as a classic liberal (a.k.a. libertarian). The first section discusses the ‘virtues of entrepreneurial capitalism,’ which clarifies the false myths about capitalism. First of all, capitalism is often equated with the “survival of the fittest” type of competition. This is half true because businesses that prosper are headed by creative and innovative individuals, which, I suppose, can be considered to be the ‘fittest.’ It is very true that ‘competition’ is a component of capitalism, but competition is not necessarily always bad.
I have a personal experience with competition that I would like to share. I took a challenging class my senior year of undergrad in psychology called ‘psychobiology.’ In this class, there were two girls that were biology graduate students. These girls had an obvious advantage over the other students, which were primarily psychology, because they had an undergraduate degree in biology and were working at the graduate level in advanced biological courses. This class dealt with the chemistry, anatomy, and biology of the brain, and those girls had a stronger foundation, to say the least. To my horror, these advanced students would never score lower than 100 on all the exams. My professor explicitly said that if a few individuals were able to pass and score higher than 100 on the test, then it was not his teaching that was flawed, but rather the effort put forth by the students. This clearly angered the majority of the students taking the class because the majority failed the first exam, including myself.
Obviously this bothered me because I knew that if those girls had not decided to take the class “as a fun elective,” I would not be required to work so hard. So, even though I wanted to be lazy and get an A with the minimal amount of effort possible (which was an unfortunate bad habit I acquired in high school), I refused to get anything less than a B (I was sure I would not be capable of doing anything better). So, when my professor said he would replace our first exam grade with the second exam grade if, and only if, we received a B or higher on the second exam. Thus, I did what any determined student would do: read my textbook, recorded the lectures (listened to each lecture twice), took diligent notes, and recited everything to anyone who cared to listen. All of this helped me retain the information better for the next exam. To my surprise, I ended up getting an A on the next exam. Most of the other students still failed though. Needless to say, in a class that started out with 60 students, only 15 remained past the drop deadline.
I am proud to say that I ended up getting an A in the class. Cool. But what I value most about that experience is the knowledge and lesson I took from it. Those girls, by virtue of pursuing their own self-interest (i.e., earning high grades to maintain the necessary 4.0/4.0 GPA required in graduate school), unknowingly motivated me to push myself beyond my limits and achieve something I thought I would not be able to. In addition, by my professor refusing to hand out unearned good grades, also motivated me to discover my capacity. Isn’t it amazing how a free, pure environment, unencumbered by a higher “force” can generate better results for those willing to earn them by means of competition?
So, let me give you my understanding of capitalism. A true free market does not contain government interference. Therefore, the negative evaluation of the free market nowadays is based on a false image of the capitalism. The bailouts we’ve seen in the past decade are inconsistent with capitalism. What that is called is “crony capitalism” or “corporatism” because it involves interference. In a free market, you cannot bail out those who “fail” (no matter how buddy-buddy he/she may be with Washington insiders) because the free market works off of the choices made my consumers, investors, entrepreneurs, and workers. Choice is a very important aspect of life. So, that is where the other component of capitalism comes into play, which is cooperation. In order for a free market to work, individuals have to cooperate. The consumer must cooperate with the entrepreneur in order for a transaction to be made. For example, Steve Jobs (R.I.P.) has created products that many people consider to be of value and worth paying a lofty amount to acquire. The consumers have determined the price that Apple can charge for its products because people are willing to pay that price. This is cooperation, is it not? No one is forcing anyone to purchase Apple products. If people were not willing to purchase Apple products at the current price, then Apple would either have to lower its prices to a price people are willing to pay or go out of business (or export jobs to China because there are too many government regulations on businesses that do not allow Apple to pay high wages and maintain affordable prices for consumers… but that’s a whole other problem!). That’s the way the free market works. So, if entrepreneurs become wealthy, it is through their ability to create products of value to the consumers, not because they are evil and greedy (well, not all of them), which is a common stereotype of wealthy people. Not only did Apple create a product that is valuable to our society, it created competition. Apple put out the first smart phone, which caused other manufacturers to create smart phones, which essentially lowered the average price of smart phones. Sounds like a win win situation to me.
Another common misconception is that most wealthy people nowadays have inherited their wealth. That may be the case but who is to say that is the majority? One could say that people born into wealthy families have an advantage over those who are not born into wealthy families. This shouldn’t matter. Based on my own experience, it is possible to push yourself to try harder and accomplish a lot more than you think. For example, I was not born into a wealthy family. I was born into a middle class family and my parents were both from poor families in Mexico. I am essentially learning American culture on my own without helpful caution or suggestions from my parents. I come from a family-oriented culture that tells me to put my family before my career. This could be considered a disadvantage. That’s just the way life works. At the end of the day though, I have the freedom to make the choices I want to make. I can discern what I want and prioritize. Anyway, I could take the mindset that the government should help me out because I am at a disadvantage since English is my second language, my culture conflicts with American work culture, etc. But I have chosen not to.
Sure, some individuals have a relatively easier life than others. Life is not perfect. Capitalism is the most moral system mankind has ever seen though. Other systems, such as communism and socialism, take from one individual to give to another and in the end those in government just gain more power and wealth. Oh yeah, that’s a great deal! What’s that thing Obama says? “Fair share” or something similarly vague. That, my friends, is not a free society. Yes, there will always be a wealth gap. But did you know that the average poor person is many times wealthier than the average poor person 100 years ago? And, no, it’s not as a result of welfare or social security benefits.
People, all I am saying is give true capitalism a chance. I am going to leave you with quote by Senator Rand Paul:
"Most of the modern medicine, technology and innovation that has made life easier for us than it was our forefathers is due to profit incentives. Those who would get rid of or cap profits don't understand the importance of free markets, or, quite frankly, human nature."
Here are some things I recommend for you to look at if you are interested in looking into this yourself.
“The Morality of Capitalism: What Your Professors Won’t Tell You” (Edited by Tom G. Palmer)
“After the Welfare State: Politicians Stole Your Future… You Can Get It Back” (Edited by Tom G. Palmer)
“Basic Economics” – Thomas Sowell
Does Capitalism Exploit Workers? http://www.youtube.
Who Exploits You More: Capitalists or Cronies? http://www.youtube.
Is Capitalism “Pro-Business”? http://www.
Who Needs Economic Freedom When You Can Vote? http://www.youtube.com/