PostHeaderIcon Thinking About Capitalism

Despite the best efforts of Ayn Rand that the Society that succeeded her, the economic system commonly called capitalism consistently fails to garner the praise and respect it is due. I think that, in large measure, this is because far too many of us really do not know what the term means and even less so all that it implies. That plus a general misunderstanding the environment required for it to flourish.

The Merriam-Webster Online Dictionary offers this definition for capitalism:

: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.

While I do not disagree with this definition, I find it a bit academic and I also think it falls short in many respects. To supplement this, I offer my own definition for capitalism:

: an economic system in which privately owned assets are leveraged, as determined by private decision, to generate new or additional wealth, subject to competition in a free market.

Please note that in both definitions, the operative words are “private” and “free” (as opposed to state controlled).

However, our definition is still lacking in that it allows to stand unchallenged, the mistaken notion that “capital” equals “money” – a mistaken notion that promoted by the progressive movement as is made obvious by many misleading claims being made in the current presidential contest. Far too many people extend this mistaken notion (capital = money) to mean, by implication, that “capitalism” means “the rule of money” (ergo, the rule of those who have it in abundance).

It is certainly true that money is a form of capital. Indeed, it is a very prominent form. But, it is by no means the only form. I submit that for much of modern history, land was the prominent form of capital. I further submit that, in what we now call “the information age”, information is quickly becoming a prominent form of capital. Indeed, we now commonly use the term “intellectual capital” to describe capital that derives from information and the knowledge that it conveys. Capital can be as simple as the mere willingness to apply one’s self to diligent labor.

This leads me to offer another home-grown definition – this time, of capital:

: any asset which can be leveraged, to generate new or additional value.

I further submit that most of us possess assets that can be leveraged for value generation. That is so say, we all possess forms of capital, whether or not that capital has yet been translated into monetary wealth.

Well, one might challenge – if that be true, then why aren’t we all wealthy? To which I respond that most of us could be — if we were but allowed to. Which brings me slowly toward the point I seek to make. That the power to create general prosperity depends less on the availability of capital, in whatever form, and more on the freedom of the marketplace in which we operate. That is, the closer we can get to a true laissez-faire marketplace, the better off most of us will be. For the benefit of those who might not be familiar with the concept of laissez-faire, I turn again to the Merriam-Webster Online Dictionary:

1: a doctrine opposing governmental interference in economic affairs beyond the minimum necessary for the maintenance of peace and property rights.

2: a philosophy or practice characterized by a usually deliberate abstention from direction or interference especially with individual freedom of choice and action.

In simple terms, a totally free, unfettered, unregulated marketplace. No other human concept has done so much, as our Founders wished, to “promote the General Welfare”.

Think of the trillions our own government wastes in ill advised schemes to “promote the General Welfare” when what it needs most to do is nothing other than maintain domestic peace and enforce contract law.

Of course, there is that nagging problem with a laissez-faire marketplace. It is infamously “unfair” to the incapable and to the unwilling.

I wish to suggest (yet again) that the value-generating capability of a laissez-faire marketplace will produce the surplus needed to administer to the incapable. This leaves only the unwilling to consider.

So, I now ask in all sincerity – precisely what consideration are they due? My own answer is
little to none. Other of you may be more generous of spirit than am I. But, whatever your innate generosity, does it make any rational sense to punish those multitudes for whom the system works in order to bring some false sense of ‘fairness” to those who are unwilling to participate? Especially with the foreknowledge that attempting to do so serves only to swell the ranks of the unwilling?

I think that it does not. This is the main reason I hold out so little hope for the future of our Republic, no matter which of the unfit candidates the people choose in the coming election, because almost none of them understand what I have presented here. Sadder still, of the few that do understand it, very few of them are willing to risk their political prospects in any attempt to restore rational government.

For evidence of this latter claim, please see 2 Debates and No Mention of the Fed: How Is that Possible? at: http://finance.yahoo.com/blogs/daily-ticker/2-debates-no-mention-fed-possible-144439660.html?l=1

In addition, always beware any politician or political group who offer a plan for government to create jobs. Unless the plan in question is the total elimination of regulations and the agencies that promulgate them, the promise of government-assisted employment can only mean more “crony-capitalism” which, despite the name, it not capitalism at all – rather it is a dishonest scheme whereby your hard-earned money is confiscated through taxation or the generate of fiat currency then given to corrupt business people in exchange for political support.

Think about it.

Troy L Robinson

9 Responses to “Thinking About Capitalism”

  • daedalus says:

    Thinking about it.
    Is not Capitalism more than just an economic system? It implies a government concerned with protecting individual rights, to impartially decide, to the best of its ability, on disputes among parties in regard to property and contracts. In other words capitalism cannot exist alone without a system of justice, without a recognition of individual rights. If there was no government at all there would be no capitalism. Everything would decay into anarchy and nihilism.

    • Troy says:

      Dae,
      I agree if (and only if) you take “Capitalism” as being synonymous with “Free Market Economics”.

      I prefer the latter term because the progressives have succeeded in making all forms of “capital” into 4-letter words whereas “Free” is very hard to misinterpret.

      Troy

      • Troy says:

        Having said the above, it it not a shame that we are ceding our very language to a bunch of pathological liars?

        Troy

      • ◄Dave► says:

        Agreed! I have even considered starting to use ‘black market’ instead of ‘free market,’ because everyone knows exactly what that means, it is by its very nature laissez-faire, and only governmental functionaries have the slightest objection to its existence. ◄Dave►

        • Chris says:

          The only objection government has to a “black market” is it’s unverifiable and they can’t extract their cut of your “capital”.

        • ◄Dave► says:

          Not necessarily, Chris. When government is controlled by Politically Correct retrogressives, that is pretty much all they care about; but when it is controlled by Piously Correct conservatives, they are more concerned with a black market in proscribed products and services. 🙂 ◄Dave►

      • daedalus says:

        If I need to make a distinction between Fascism (confused by many with “capitalism”), I will often say “Laissez faire capitalism.”

        What a time to be alive! The market place is turning the US back into an energy surplus state. If we can get the evil socialists off our backs we may see a new era of American dynamism. On the other hand if O’Bama and his minions prevail Western culture could sink into another “Dark Age.”

        Art mirrors the culture.
        This last doesn’t belong here, but I had to share it, since it does dramatize the alternatives

  • Chris says:

    I understand that Dave. I tend to separate the black market for illegal commodities from a more general market such as “under the table workers” or selling Virginia cigarettes out of your basement in NYS where the function of the market is to extract a greater profit from your commodity. The black market for illegal commodities is a black market because it’s illegal. Some of those commodities which I agree should not be illegal, but some that should. I assume you refer a great deal to illegal drugs. Bear in mind that liberals also have little interest in reforming the “war on drugs”. They profit quite handsomely on the cottage industries that these laws feed.

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