In Defense of Capitalism 18 comments
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I had to take a decent amount of time off today to get our harp restringed. Beautiful instrument, but it requires a lot of maintenance. While talking with the fellow who travels the East Coast restringing and retensioning/regulating harps, I made the comment, “Capitalism isn’t about greed, it is about service.” He stopped for a moment, and said (something like), “More people need to hear that.”
Well, I’ll say it now, while Capitalism is at low ebb. Capitalism at its best is run by idealists who have great ideas about how to make the world a better place by offering more and better choices to individuals. They love their work, and are passionate about what they do. They are lifelong learners, trying to better themselves and what they offer others.
The value proposition is simple: Capitalism offers more than you previously could have done with your resources. For those willing to make the effort and run their own businesses, the principle can shine. Serve others well. There is no shame in service, as the Protestant Reformation taught, rather, it is the normal life for all people — we must do our duty in all of life, whether because of non-negotiable ties (Family, Church, State), or negotiable ties (Business Agreements).
Capitalism maximizes choice for those who study hard and work hard. By meeting the needs of others, there is a reward. The more people you help, and the greater the help offered, the better you can do.
Capitalism derives its moral legitimacy from service. The idea that greed makes Capitalism legitimate should be discarded. Greed is evil; it places personal well-being ahead of ethics. Service places other people in front of our own interests, and promotes harmony.
I’ve been in the financial world for 22 years — I’ve seen real service. I’ve seen greed. I’ve seen managements that motivate to excellence, and those that cheat the customer (and employees — the two phenomena are correlated). I have also succeeded in serving customers, and sadly, failed them (less often, thankfully).
It does not change my conclusion: Capitalism has moral legitimacy because it causes businessmen to deliver high-quality service to customers, not because it is the best way of channeling the energy of greedy men.
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This article has 18 comments:
From Capitalism.org:
"Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned. Under capitalism the state is separated from economics (production and trade), just like the state is separated from religion. Capitalism is the system of of laissez faire. It is the system of political freedom."
You give what you can to society and you take what you need.
Now a few decades later, we see that the entire US financial sector has done exactly that; they gave what they could and they took what they needed...
Wisdom comes with the years, David only forgets to mention what Wall Street has to do with capitalism.
I too believe that capitalism is alive and well, particularly with service, however, it diminishes the more one moves towards the macroeconomic levels -- illustrated by diminishing "service" -- notably corporations and politics. I would even go as far to say that service is a key component of capitalism.
The latest financial crisis in the US is forcing old economic ideologies to reinvent themselves. We're long past the old socialism versus capitalism dichotomy.
Many on both the left and the right will object that the $700 billion dollar bailout plan really amounts to Socialism for the Rich.
The left favors a traditional, democratic form of socialism. So, they tend to support the approach the Swedes took when their banks needed bailouts (i.e. give taxpayers an equity stake in the banks being bailed out).
Libertarians, however, are having a harder time of it these days.
Just as there are no atheists in fox holes, we're starting to find that there are no die hard Libertarians in times of financial crisis - unless, of course, you count those who are short the market.
True believers in libertarian dogma always want the government to stand aside regardless of the consequences.
But, there are also those "pragmatists" who can espouse either a Libertarian dogma or a Corporate Socialist dogma depending on their financial position.
If you and the corporation you manage would benefit from a government bailout, then opt for corporate socialism.
But, if you don't manage a company in in need of a bailout then short the market and opt for Free Fall Market Nihilism.
Whereas market bubbles are fueled by self-fulfilling optimistic prophecies, market crashes are fueled both by self-fulfilling pessimistic prophecies and naive free market ideology.
So, during times of financial crisis, Free Fall Market Nihilists short the market and then also cynically espouse a naive libertarian ideology that firms, markets, and even entire economic systems should always be allowed to fail.
The Free Fall Market Nihilist's mantra goes as follows:
"Government intervention is always wrong. In the long run, free markets will always correct. So, bring on those waves of creative destruction: The greater the financial destruction the better. The world is coming to an end, I've shorted the market, and so should you!"
So, lets take a poll of journalists at the Seeking Alpha to see where they stand:
a) Corporate Socialist (Socialism for the Rich),
b) Free Fall Market Nihilist (the End is Near, Short Everything),
c) Plain old Democratic Socialist (we need a Swedish style bailout),
d) Other/confused
d) Other/Confused/Bush Cheney Sticker Still on Car
Protect and serve. Eh... close enough for government work.
Communism also has high "ideals" and we know how that turned out.
This isn't the first and it certainly won't be last time that something like this occurs.
~X~
capitalism's moral legitimacy may stem from service, but it's economic legitimacy stems from investment and return, and the institutions responsibility to deliver those returns. this is greed, and it completely undermines the truistic service aspect the author seeks to push to the forefront.
Do you really think that JP Morgan, Bank of America, Goldman Sachs, and Wells Fargo are interested in service? This is the biggest financial power grab in US history.
Do you really think that JP Morgan, Bank of America, Goldman Sachs, and Wells Fargo are interested in service? This is the biggest financial power grab in US history. This crash at the end of Bush's Presidency is his coup de grace.
the moral compass is lacking with greed. a society is only as strong as its weakest component. corporate management is my specialty.
the reason american style capitalism is experiencing difficulty today because wall street has demanded profits over the value of the product being delivered to main street. things will change when the product managers' opinion comes before the bean counters.
Restaurants are a very good example of this model but the fast food corporate giants are not.
The fast food corporate giants represent what is technically called an oligopolistic economic model and they are run on a virtual feudalistic scheme.
Corporate oligopolies such as Fannie Mae and Freddie Mac are easy for governments to take over and, in fact, Karl Marx predicted that socialism would gain victory in advanced capitalist countries by taking over these large corporations (he thought socialism would be a disaster in third world countries like Russia and China, by the way, because they didn't have enough of these large corporations for the socialist government to take over.)
Plutocratic America is becoming more feudalistic every day as small businesses are being elbowed aside by oligopolistic corporations run on a feudalistic model.
Think of the fast food business model:
A CEO and a handful of top executives are paid huge salaries that allow them to live a lifestyle that is reserved for the top 1% of the American population and resembles the life style of the royal houses of the past.
Managers of each fast food franchise are allowed to live like rich peasants or burghers, making a half a million dollars a year, and workers work for minimum wage forcing them to live like serfs.
The rich owners and managers rarely eat the food produced by their own business. They also produce daily propaganda exhorting their workers and other poor people to eat this food which most nutritionists say is bad for them. (To "add insult to injury," the serfs are told that the nutritionists are left wing nutcases and tree huggers.)
The capitalism you are defending has been shrinking for a hundred years but people don't seem to notice.
Oligopolies produce the kind of nightmare economic solutions that are simply waiting for socialists to take over and make permanent.
But the old rhetoric lives on and common sense solutions lie unexamined, in the gutter along with discarded hamburger wrappings and uneaten french fries.
Dave