Capitalism and Freedom: Rethinking the Political and Economic System

I chose this title on purpose because our times are going to engender a big re-think of our political and economic system and “Capitalism and Freedom”, Milton Friedman’s seminal book, arrived during a time of great cross currents as well, those of a generation ago.

Believers in a small, non-existent government may be right in theory but, given power, they never delivered a smaller government. Abdication of responsibility, naïve but self-serving beliefs in systems which we all know go to extremes, and despising fairness have led to the banking heart of the private sector begging bucks from Big Brother.

What is the essence of capitalism as generally understood?

• The private ownership of property rights protected by law
• The belief in private enterprise and ingenuity
• Utilizing the market mechanism to arrive at price and to leave economic participants free to use price to plan their production, consumption, and other activities
• A free information system encouraging communication and the expression of opinion
• Democracy
• Individual empowerment
• Trust busting and the distribution of wealth

The way modern western society holds to these beliefs can be seen if one compares our capitalism (alias “free market economy”, etc) with feudalism, communism and fascism. The contrasts readily become apparent.

Feudalism, communism and fascism have much in common and – shockingly – often differ from capitalism only in emphasis rather than substance.

There is first an ethical dimension, perhaps best summarized as “don’t do unto others what you don’t want others to do unto you.” (See my Two Lessons from the Last Century.) Ethics tend to be forgotten as we race gung ho for more and more.

Importantly, though, the feature which best distinguishes free market capitalism from all the others is that it managed to deliver John Stewart Mill’s “the greatest good for the greatest number”.

Our system is powered by a thriving middle class, the great generator of wealth. The erosion or the alienation of the middle class dooms the system and transforms it, ever so gently, and sometimes not so gently, into oblivion.

The middle class is the centerpiece of the masterpiece.

Comments

[EMS News:]

There is no such thing as a 'free market'. It is a fiction. Instead, you have social systems which have varying degrees of integration and sharing. The anti-socialistic beliefs of 'free market' people show through all the time. For example, they don't seem to care a whit about the US running immense trade deficits due to the outsourcing of both jobs and manufacturing. Even much of our banking has been off-shored!

And our present system encourages cartels. For example, a number of cross-integrated financial systems like Goldman Sachs, just for one glaring example, controls many other businesses of all varieties. When you go shopping in a grocery store, looking at the labels, you would think there is a great variety. But if you look BEHIND the labels, you find that 90% of what you see are really all owned by two or three mega-corporations.

We get interlocking cartels and monopolies when the government allows people with excessive access to credit, to buy up all systems and turn them into profit centers by eliminating competition. This is why a fully-free market system always degrades into a locked-market system run by despotic owners seeking maximum personal profit with minimal service.

This is why the US is now very deep in debt and is doubling our national debt to bail out a bunch of cartel financial houses that took on too much debt, trying to buy up and control all financial systems!

Mar 22 11:27 AM

[H. T. Love:]

All the comments above ring true. I decided to post links here to another SA article I just finished reading. It seems appropriate in that it seems to indicate changes underway that, in my opinion, are typical of misunderstandings of the differences others have noted.

seekingalpha.com/artic...

And a post I made there that would have probably (maybe not) been more suitably posted here.

seekingalpha.com/user/...

HardToLove

Mar 22 12:27 PM

[Alphameister:]

The success of our system is driven not by a prosperous middle class but rather by the unfettered human mind (prometheus unbound) and by good-old human greed (to use the most pejorative possible word for ambition to succeed).

The failure of small-government Republicans to live up to their alleged principles is just one more proof of Lord Acton's dictum that "power tends to corrupt and absolute power corrupts absolutely."

The further we get from free markets, the lower our potential for economic growth. The road to hell is indeed paved with the very best intentions of socialists unable to learn from history.

Mar 22 03:11 PM

[Rumpole:]

Well it's abundantly clear that everyone who commented here is deeply dissatisfied with what's gone on. It begs the question of how do we change things? If central government is the problem by virtue of its degradation of constitutional or political ideals, then doesn't it follow that the citizenry has no choice but to withhold funds from the government so that it cannot operate and so the base on which it has assumed so much debt can no longer be assumed?

Mar 22 03:50 PM

[henarl:]

It depends on whether you consider Capitalism to be a moral system or a purely economic system. Your altered Golden Rule: “don’t do unto others what you don’t want others to do unto you.” is basically a moral imperative and needs further alteration to fit the more purely economic definition of Capitalism: "Don't do unto others what you don't want others to do to you unless you profit thereby and believe you can get away with it". A more pragmatic definition of Capitalism.

Mar 22 05:30 PM

[EMS News:]

Freedom of thought is a wonderful thing. But we are trapped in the illusion of free thinking. Since people digest a lifetime of first, state-sponsored, in addition to individual family indoctrination, the ability to 'think' in any form is greatly stunted by adulthood. Watching people struggle to change even one small idea planted in their brains, years earlier, is interesting. It is physically painful to process a new idea!

The engine of idea change is generational. This is why most new ideas come with young people. And any new idea is attacked and is 'revolutionary'.

The Middle Class is the hatching ground for 'new ideas.' Not the ruling elites or the very rich. Indeed, the richer a person becomes, the more enslaved to the status quo they grow. When a status quo collapses...like we are seeing today, their ability to think of new changes perishes along with everything else. They are helpless, trapped in old ideas, old habits.

When the Middle Class is crushed, the engine of revolutionary change slows to a crawl or even vanishes entirely. History is quite clear about this.

Mar 22 07:18 PM

[SeekingTruth:]

To those who acknowledge that we have a Republic, and not a Democracy, I must agree with them based on the facts at hand.
What is NOT acknowledged is that a Republic is and remains on an ongoing basis , a mere one half step from a Dictatorship.
This is how and why the Roman Empire shifted so easily between a Dictator/Emperor and a Republic throughout its history.
Since we are a Republic and not a Democracy we should stop telling our soldiers that they are fighting for our "Democracy" (or anyone else's either for that matter)and tell them the truth, which is that they are fighting for our Republic, and for Republicanism.
It is interesting that we have the Republic of China, the Republic of Russia, the Republic of Libya, and many other totalitarian/Republican governments all over the world.
How about the Republic of America? Has a nice ring to it , doesn't it?
When we start to see this happen , and start telling the truth to our nation, our youth and our military maybe we can begin to straighten out this point of confusion in many peoples minds.

Mar 23 11:30 AM

[Paul V. Azz...:]

oh dear


On Mar 22 01:32 PM WAKEUP wrote:

> Paul V Azzopardi: Did you steal dear old Miz Whatzername's Citizenship
> 101 lecture notes? Shame on you! She'll be seeking you out, now,
> with her heavy wooden paddle in her hand, and her wire-rimmed eyeglasses
> riding precariously on the pointed tip of her patrician nose.

Apr 04 10:31 AM

[Paul V. Azz...:]

Thanks for your comments. But every enterprise involves capital, in some form.


On Mar 21 04:42 PM User 380426 wrote:

> Not sure what you've been smoking. Many of "generally understood"
> essences of capitalism are not those of *capitalism* but, rather,
> of how we like to think of American culture. Capitalism, on the other
> hand, is actually just a special flavor of free-enterprise wherein
> the profits go to the people supplying the capital (which not everybody
> is born with an equal amount of) instead of going to the people supplying
> the labor (which, for the most part, everybody *is* born with an
> equal amount of).
>
> Addressing each of your list items in turn:
> - Private ownership. Mmmm, okay.
> - Belief in enterprise and ingenuity: More of a component of the
> broader free-enterprise, not just capitalism.
> - Utilizing market mechanisms: Again, free-enterprise.. not just
> capitalism.
> - Free information system: You're thinking of the 1st Ammendment.
> This is a political characteristic, not an economic one.
> - Indiviidual empowerment: Again, free-enterprise.
> - Trust-busting: Pure nonsense. Trust-busting is political intervention
> into (what would otherwise be) a free market. If the market were
> truly free, then the big fish would be able assimilate as many little
> fish as possibly and use their economies of scale to prevent further
> entrants into their market sector. Granted, I think that trust-busting
> keeps our market healthy and competitive, but keep in mind that it's
> a pollution of "pure" capitalism in that it takes us away from a
> completely "free" enterprise system.

Apr 04 10:51 AM

[Paul V. Azz...:]

Thanks for your comments. But every enterprise has capital - physical, human, etc. The characteristics I noted are not exclusively American.


On Mar 21 04:42 PM User 380426 wrote:

> Not sure what you've been smoking. Many of "generally understood"
> essences of capitalism are not those of *capitalism* but, rather,
> of how we like to think of American culture. Capitalism, on the other
> hand, is actually just a special flavor of free-enterprise wherein
> the profits go to the people supplying the capital (which not everybody
> is born with an equal amount of) instead of going to the people supplying
> the labor (which, for the most part, everybody *is* born with an
> equal amount of).
>
> Addressing each of your list items in turn:
> - Private ownership. Mmmm, okay.
> - Belief in enterprise and ingenuity: More of a component of the
> broader free-enterprise, not just capitalism.
> - Utilizing market mechanisms: Again, free-enterprise.. not just
> capitalism.
> - Free information system: You're thinking of the 1st Ammendment.
> This is a political characteristic, not an economic one.
> - Indiviidual empowerment: Again, free-enterprise.
> - Trust-busting: Pure nonsense. Trust-busting is political intervention
> into (what would otherwise be) a free market. If the market were
> truly free, then the big fish would be able assimilate as many little
> fish as possibly and use their economies of scale to prevent further
> entrants into their market sector. Granted, I think that trust-busting
> keeps our market healthy and competitive, but keep in mind that it's
> a pollution of "pure" capitalism in that it takes us away from a
> completely "free" enterprise system.

Apr 04 10:56 AM

[Paul V. Azz...:]

Thanks. I am basically in agreement with Ed and yourself. Only that capital has to be widely defined. Trump's brand and showmanship are part of his capital.


On Mar 21 07:05 PM EMS News wrote:

> Hi, Ed M! Good to see you here! Yes, you are right, heh!
>
> People constantly mix up debt accumulation with capital. Capital
> is the basis of lending, not the lending, itself. This is why I always
> differentiate between what people actually own and what is in hock
> to someone else.
>
> Donald Trump, for example, was always a bankrupt. People might foolishly
> lend him money or join him in his ventures but he always was deliberately
> poorly capitalized and thus, tends to go bankrupt, over and over
> again.
>
> Capital, when invested, becomes profitable above and beyond its basic
> value except in fiat economies. Then, there is this race to stay
> ahead of inflation. And what is inflation?
>
> Lending above and beyond the ability to repay. Our government, for
> example, creates massive amounts of inflation which we export to
> Japan and China. But this can rebound back to the US and cause a
> micro-burst of inflation, thus, wiping out any 'capital' anyone accumulates.
>
>
> This is why capitalists have to fight the deadbeats like Trump and
> prevent them, VIA LAWS AND REGULATIONS, from borrowing wildly and
> then going bankrupt! This is why common-sense balancing is very important.
> The job of accountants used to be this: TO BALANCE THE BOOKS at the
> end of a year.
>
> Instead, everyone is looking to kick the debt can further down the
> road! And this road has gone off a cliff.

Apr 04 11:01 AM

[Paul V. Azz...:]

America is not a democracy, you say, and now not even a republic. OK, you win, I am really confused now. All the four systems I mentioned share some of the characteristics I listed but in a capitalistic system there is a greater emphasis on individual rights and freedoms. Good quote from Rogers.


On Mar 21 11:40 PM mikesa69 wrote:

> Wow. Your article is neither factually accurate nor overtly manipulative,
> so the only logical conclusion I can reach is that you've chosen
> a topic that you're utterly confused about. What's more, you've done
> so while purporting to be an expert (based on the forum and the fact
> that your work was published here, it carries the implied guise of
> expertise).
>
> First off, your list of capitalist traits includes democracy, but
> true democracies always end in mob rule, which leads to oligarchy.
> Which is government ownership and control. Which is NOT capitalism.
> America is NOT a democracy and never was intended to be one. We have
> a republic. At least we used to at one time.
>
> Then you go and include wealth distribution on your list of capatilistic
> qualities! Now I must ask the question user 380426 alluded to...
> what have you been smoking?? Wealth distribution is a basic tenet
> of socialism my Canadian friend, which is the antithesis to private
> ownership and capitalism.
>
> Also, feudalism, communism and fascism do NOT have much in common
> with true capitalism. The basic definitions are polar opposites.
> The socialistic systems can all be recognized by their high levels
> of government ownership, with various levels of government control
> left as the remaining distinguishing factor between each of them.
> Capitalism promotes the exact opposite; private and secure ownership
> in both business and personal property. And to think I had such high
> hopes for your article based on the title.... Oh well.
>
> I'll leave you with a quote that might help enlighten you:
>
> The late Dr. Adrian Rogers (1931-2005) offered the following observation
> several years ago and it bears poignant significance today: "You
> cannot legislate the poor into freedom by legislating the rich out
> of freedom. What one person receives without working for, another
> person must work for without receiving. The government cannot give
> to anybody anything the government does not first take from somebody
> else. When half of the people get the idea that they do not have
> to work because the other half is going to take care of them, and
> when the other half gets the idea that it does no good to work because
> somebody else is going to get what they work for, that my dear friend
> is about the end of any nation. You cannot multiply the wealth by
> dividing it."

Apr 04 11:24 AM

[Paul V. Azz...:]

I agree fully. Everyone just let the amount of credit mushroom out of all proportion with the excuse that it was not his or her job to halt the mad rush - indeed, people who abdicated their responsibilities were seen as heroes.


On Mar 22 12:57 AM EMS News wrote:

> The only wealth the very rich have been 'multiplying' lately has
> been DEBT. The huge stock market rises we had this last 20 years,
> the huge real estate bubbles, etc, were all debt-built systems, not
> capitalism.
>
>
> Now that it is collapsing due to too much debt driving up the value
> of assets to unrealistic levels, we see SOCIALISM FOR BANKERS as
> they pile on even more debt on top of all of us by having our governments
> bankroll the entire mess!
>
> I want this to stop. If these clowns are all 'capitalists' then they
> can capitalize themselves the old-fashioned way: adding labor to
> commodities to produce goods that can be traded. Then, if their costs
> are less than their sales price, they have this magical thing called
> 'profits' which is CAPITAL.
>
> Banks get capital via making deals for people to share money with
> them via 'savings'. Then, they get to make 'loans'. What we had this
> last 20 years has been banks making loans with little to no 'savings'
> as its basis. And when people defaulted, the banks were not capitalized
> so they are now collapsing.
>
> Socialism only for the very rich is the most disgusting form of socialism.
> So why aren't all the 'libertarians' going nuts, screaming to stop
> this sort of socialism? All the welfare mothers in America for the
> last 100 years can't equal one year's worth of banking bail outs
> for the richest people on earth! I want them all arrested.

Apr 04 11:29 AM

[Paul V. Azz...:]

Thanks. It proves my point that the systems differ only in emphasis.


On Mar 22 11:17 AM fireball wrote:

> it seems you focus on the abuses of power and call these the weaknesses
> of the free market/ free society system of the republic formed by
> our founders. the system we now have is a mutated/ corrupted degenerative
> form of socialism under a facade, democratic socialism. from a laymans
> view i might guess it is moving into corporate fascism, another form
> of socialism. which ever convoluted route it takes the end result
> of the failure socialism is tyranny. relabel it and try it again
> so we can prove one more time that centralised power is oppresive.
>
> the legal form of the constitutional republic looks to me like the
> most ingenius form ever devised by man. if we had insisted that our
> public servants abide by its' limitations we would not be in this
> quagmire of socialism and the welfare state.
> the only acceptable remedy is restoration and adherence to our founding
> documents. freedom requires vigilance. this course would be painful
> as there is so much to be undone. the alternative is opression which
> in time will be much more painful.

Apr 04 11:31 AM

[Paul V. Azz...:]

Your points perhaps best illustrated by the recent speculative activity in oil, generating a price spikes.


On Mar 22 11:27 AM EMS News wrote:

> There is no such thing as a 'free market'. It is a fiction. Instead,
> you have social systems which have varying degrees of integration
> and sharing. The anti-socialistic beliefs of 'free market' people
> show through all the time. For example, they don't seem to care a
> whit about the US running immense trade deficits due to the outsourcing
> of both jobs and manufacturing. Even much of our banking has been
> off-shored!
>
> And our present system encourages cartels. For example, a number
> of cross-integrated financial systems like Goldman Sachs, just for
> one glaring example, controls many other businesses of all varieties.
> When you go shopping in a grocery store, looking at the labels, you
> would think there is a great variety. But if you look BEHIND the
> labels, you find that 90% of what you see are really all owned by
> two or three mega-corporations.
>
> We get interlocking cartels and monopolies when the government allows
> people with excessive access to credit, to buy up all systems and
> turn them into profit centers by eliminating competition. This is
> why a fully-free market system always degrades into a locked-market
> system run by despotic owners seeking maximum personal profit with
> minimal service.
>
> This is why the US is now very deep in debt and is doubling our national
> debt to bail out a bunch of cartel financial houses that took on
> too much debt, trying to buy up and control all financial systems!

Apr 04 11:34 AM

[Paul V. Azz...:]

I like this comment.


On Mar 22 05:30 PM henarl wrote:

> It depends on whether you consider Capitalism to be a moral system
> or a purely economic system. Your altered Golden Rule: “don’t do
> unto others what you don’t want others to do unto you.” is basically
> a moral imperative and needs further alteration to fit the more purely
> economic definition of Capitalism: "Don't do unto others what you
> don't want others to do to you unless you profit thereby and believe
> you can get away with it". A more pragmatic definition of Capitalism.

Apr 04 11:38 AM

[Paul V. Azz...:]

Definitely, the middle class.


On Mar 22 07:18 PM EMS News wrote:

> Freedom of thought is a wonderful thing. But we are trapped in the
> illusion of free thinking. Since people digest a lifetime of first,
> state-sponsored, in addition to individual family indoctrination,
> the ability to 'think' in any form is greatly stunted by adulthood.
> Watching people struggle to change even one small idea planted in
> their brains, years earlier, is interesting. It is physically painful
> to process a new idea!
>
> The engine of idea change is generational. This is why most new ideas
> come with young people. And any new idea is attacked and is 'revolutionary'.
>
>
> The Middle Class is the hatching ground for 'new ideas.' Not the
> ruling elites or the very rich. Indeed, the richer a person becomes,
> the more enslaved to the status quo they grow. When a status quo
> collapses...like we are seeing today, their ability to think of new
> changes perishes along with everything else. They are helpless, trapped
> in old ideas, old habits.
>
> When the Middle Class is crushed, the engine of revolutionary change
> slows to a crawl or even vanishes entirely. History is quite clear
> about this.

Apr 04 11:40 AM

[Paul V. Azz...:]

Again, thanks for this, because it illustrates that the different systems have many things in common and that freedom and individual rights are what distinguishes the West's contribution and what we need protect above all.


On Mar 23 11:30 AM SeekingTruth wrote:

> To those who acknowledge that we have a Republic, and not a Democracy,
> I must agree with them based on the facts at hand.
> What is NOT acknowledged is that a Republic is and remains on an
> ongoing basis , a mere one half step from a Dictatorship.
> This is how and why the Roman Empire shifted so easily between a
> Dictator/Emperor and a Republic throughout its history.
> Since we are a Republic and not a Democracy we should stop telling
> our soldiers that they are fighting for our "Democracy" (or anyone
> else's either for that matter)and tell them the truth, which is that
> they are fighting for our Republic, and for Republicanism.
> It is interesting that we have the Republic of China, the Republic
> of Russia, the Republic of Libya, and many other totalitarian/Republican
> governments all over the world.
> How about the Republic of America? Has a nice ring to it , doesn't
> it?
> When we start to see this happen , and start telling the truth to
> our nation, our youth and our military maybe we can begin to straighten
> out this point of confusion in many peoples minds.

Apr 04 11:42 AM

[Jamesofthec...:]

I believe it is fair to say that commercialism is the bedrock of capitalism.Since commercialism involves buying ,selling,trading and earning ,I hardly see any way in which capitalism promotes freedom,which is the expression of rights not purchased or somehow earnd. By the way,I am smoking tobbaco, so do not bother to ask me what I am smoking !

James

Dec 18 01:35 PM

[Jamesofthec...:]

Capitalism is a great way to preserve freedom ! Capitalism is indeed a means of preserving freedom for ceartain classes of people,particularly the wealthy ruling class.Actualy capitalism only makes a kind of conditional freedom possible.Even the most ardent capitalist would agree that money allows those who have more of it, a greater degree of freedom than those with less capital.

We would do well to remember that even a slave during the slavery era could earn his freedom as long as they could accumulate enough capital.

Dec 18 01:46 PM