What is Capitalism?

The Common Definition of Capitalism:

An economic system that is based on private ownership of the means of production and the creation of goods or services for profit.

My Definition of Capitalism:

Capitalism is the consistent application of peace to every aspect of life. The result of this ideology is the material success that we see around us - the extended order that arises spontaneously when people are free to own property. This "economy" is the emergent property of the action of free people.

How the Average Layman Defines Capitalism:  

I was quite dismayed to find that the first Google result for "What is capitalism?" was from the website of the World Socialist Movement.  I actually tried Bing as well and got the same result.  This would be like asking the Nazi Party, "Who are the Jews?" - they will likely be capable of pointing them out but poor at honestly understanding them or treating them fairly.  Interestingly, the same site ranks second behind Wikipedia in response to "What is Socialism", and there are no pro-capitalist antipodes on the first page of Google results.  Perhaps this is because there is no World Capitalist Movement, at least as far as I can find.  I doubt that this is the result of any major conspiracy, outside the search engine optimization team at the World Socialist Movement, and is more likely attributable to the fact that socialism just seems like such a warm, fuzzy ideal when placed up against the cold, calculated exploitation  that is commonly associated with capitalism. This sentiment is no doubt the inspiration for the picture included above - capitalism represents the exploitation of the working class by the capitalist class and results from the private ownership of the means of production.  Ugh, what a downer!



Now check out this short video of enthusiastic young Australians describing their Utopian (not pejorative, quoted) ideal of socialism.


How grand!  Socialism sounds awesome.  Here is a list of some of the wonderful descriptors of socialism from the video:

freedom
social justice
liberty
no racism
sustainability
justice
no war
solidarity
emancipation
equality
people before profits
harmony
democracy
fulfillment of human potential
balance between humanity and nature
relating to each other as people not commodities

So we've established what seems so groovy about socialism, now what specifically is wrong with Capitalism?  The article referenced above uses as its primary source the authoritative Communist Manifesto, so let's begin with it.  

The basis of Capitalism according to the article is class division where the working class (those dependent on wages or salary for survival) is exploited by the capitalist class (those who own the "means of production" such as "land, factories, technology, transport system etc").  The author is careful to state that it may be difficult to determine which class some "relatively wealthy"  individuals are in and that there are some other frequently mentioned class distinctions, such as "middle class", but the reader is assured that assuming only these two classes exist statically and exclusively is the key to unlocking the mysteries of Capitalism.  Ignore the man behind the curtain - nothing to see here.

The second pillar of Capitalism, saith the gospel, is the profit motive:

In capitalism, the motive for producing goods and services is to sell them for a profit, not to satisfy people's needs. The products of capitalist production have to find a buyer, of course, but this is only incidental to the main aim of making a profit, of ending up with more money than was originally invested. This is not a theory that we have thought up but a fact you can easily confirm for yourself by reading the financial press. Production is started not by what consumers are prepared to pay for to satisfy their needs but by what the capitalists calculate can be sold at a profit. Those goods may satisfy human needs but those needs will not be met if people do not have sufficient money.

To whom does one sell products if not to consumers?  What better to sell than what they want?  How does one arrive at a sales price if it is not related to what the consumer is willing to pay for to satisfy his or her needs?  It's not clear, but somehow greedy capitalists, driven by competition, arrive at prices and products that are profitable but not in line with the desires of the huddling masses.  The Labor Theory of Value, the theory underlying the price mechanism in this system of "thought", is complete rubbish and has been thoroughly debunked by Austrian Economists and satirized by your's truly.

Skipping on past a section on how China, Cuba and the U.S.S.R. didn't quite get it right because they were foolish enough to allow "commodity production, buying, selling and exchange", the article continues:

It is also possible (at least in theory) to have a free market economy that is not capitalist. Such a 'market economy' would involve farmers, artisans and shopkeepers each producing a particular product that they would exchange via the medium of money. There would be no profit-making and no class division—just independent producers exchanging goods for their mutual benefit. But it is doubtful whether such an economy has ever existed. ... Such a system would almost inevitability lead to capital accumulation and profit making—the definitive features of capitalism.

It is a tragedy that it is not harder to find wishful, Utopian, childlike thinking of the sort on display here.  There is one sentiment I can certainly agree with though; it is absolutely doubtful if any such economy ever existed with merely the casual notion of magical money, farmers, artisans and shopkeepers keeping everyone clothed and fed without the possibility of accidentally making a profit that might hold them through the next drought or cold spell.

You think I'm cherry picking the articles?  The second article is a brief, matter-of-fact post from About.com which is neutral on the subject.  Wikipedia comes third, followed by a longer neutral article from wisegeek.org.  The fifth article is a real gem from "The End of Capitalism" blog and starts off with:

Capitalism is the name of the power structure that currently dominates all human society, and which has done so for the last 500 years. It is a system based on ecological and social exploitation for the profit of the wealthy few. I sometimes refer to it as a “global system of abuse” because our relationship with capitalism is based on violence and submission, even though the system would like us to believe that it has our best interests at heart.

I could go on, but I expect my point is clear.  The first five articles an individual in the United States will encounter if struggling to understand the meaning of Capitalism consist of two absolutely banal pieces from the socialist left and three rather boring, dry, neutral descriptions of Capitalism.  Fortunately, if one is patient enough to scroll to the bottom of the page, he or she will find two items extolling the virtues of Capitalism.  The first is a fantastic piece from the Capitalism Institute.  The second is this video from the venerable Tom Woods:


It is an indelible mark of my character to shift between delusions of grandeur and total lack of self confidence.  I have at times struggled to keep this blog going and justified my apathy by the observation that so much has been written about Capitalism, libertarianism and the ideas of liberty in general that I could not possibly contribute to the body of knowledge.  What could I possibly add to the movement with just my spare time and without any formal expertise?  Since discovering, in my first, brief foray into keyword research, that we have failed so miserably in bringing our message of peace and prosperity to those who may be seeking it, I have been invigorated in my quest to do so.  Remember that Google search rankings are temporary.  I would love few things more than coming back in a year's time and finding that this post is in need of a drastic edit because the cogent work that has already been done to expound the virtues of Capitalism has been optimized to be found by those seeking it.

Learning From My Mistakes - A Tool for Sorting Out Trolls

My recent post was intended to be somewhat provocative as one might have guessed from the title.  However, I unwittingly inserted a device into the title that proved to be an excellent tool in sorting and categorizing my readers.  I foolishly used the word "tenant" in place of the word "tenet".  Contrary to the assumptions of a few, I do know the difference.  I fully admit the mistake and attribute it to the careless proofreading of my own writing, but I don't regret it.  It has led me to the following conclusion which I want to share with writers of all kinds:

Making a mistake in the title of your article is excellent troll bait. 

Allow me to demonstrate by describing the following types of reddit and blog commenters:

• Those who provide anonymous and useful help of the form, "Hey, did you mean 'tenet' not 'tenant'?"
• These are my absolute favorite and the highest form of human being.  
• Those who either don't notice the mistake or look past it for the merits of the actual article.
• These folks are right up there on my list next to the helpful proofreaders.  They are either understanding enough or ignorant enough to read my work, which is cool with me.  
• Those who provide somewhat constructive criticism based solely on the mistake.
• These people are alright.  I can take some criticism, especially when I screw up on a relatively large scale, provided that they are not too scathing or demeaning.  
• Those who make personal attacks without reading the article.
• As far as I am concerned these people can pound salt, good riddance.  These are the trolls.  It is much easier to point out the mistakes of others than it is to create original content, alone, in your spare time without making an error.  A mistake in the title is the epitome of low hanging fruit for the troll; they get to make snide comments without all the pesky legwork of reading.  Besides being a sensitive test for the trolls, it is specific.  No honestly interested reader is going to behave this way.  Only a douche hellbent on destruction would do such a thing.  

Happy fishing.  

How to Argue with Liberals, Progressives and Other Leftists - The Central Tenet of Statism

The key to rhetorically dominating any flawed ideology is in attacking its basis, which is naturally usually mistaken.  The root of leftist, progressive, social democratic and other euphemistic variants of socialist/statist thought is the idea that people basically suck.  It goes like this.

People suck so:

• They will not educate their own children up to our standards.  We must take their money and their children and educate them ourselves.  
• They will not help each other, especially rich people who look down on the helpless poor masses.  We must take a portion of everyone's money, especially the rich because they won't miss it, and give it to people who can't support themselves.  Anyone who considers this thievery doesn't care about the poor.  
• They are unscrupulous and will rampantly profit off of the ignorance of consumers by selling them defective, dangerous products.  We must wield the long arm of the law to regulate the production and marketing of practically every product in every market to protect the poor, stupid masses.  
• They are easily conned and too ignorant and lazy to look out for their own interests.  See above.  
• They will destroy their minds and bodies with drugs, alcohol and unhealthy food if left to their own discretion.  Some drugs are just too dangerous to be in the presence of these poorly programmed automatons; they must be banned.  Other drugs, such as alcohol, must be tightly controlled and highly taxed to prevent the breakdown of society.  The amount of salt, saturated fat, sugar and other nasty ingredients in the commoner's diet must be managed by law if possible.  If we fail in that, we can take their money and educate them on the matter.       

Granted, few people I know would ever justify their world view by bluntly stating that people suck, though I can recall at least one who has.  Somehow the premise for these ideologies is generally given as a love or respect for people, but I fail to see the logic behind loving and respecting humans so much as to advocate for their control, in whole or in part. 

Of course the human condition is more complicated than "people suck" vs. "people don't suck".  I tend to the believe the latter more often than not, though I try to shy away from such banal generalities.  

Individuals have a variety of skills, aptitudes and ambitions.  They interact, exchange, improve and decline in unpredictable and fascinating ways.  People, even at the "lowest" rungs of society, think and act with volition; there is no such mass of poor, starving automatons who need to have their lives planned for them.  There are people like you and me who want to be free from coercion.  Even those who do not recognize this just and moral sentiment of human interaction should be granted the privilege.  If you care so much for your common man but fear that the remainder of society is too evil or inept to help of their own accord, please volunteer your own resources to the cause before advocating codified force against your neighbor.

Stossel: NASA Brought us CAT Scans?

Anyone who knows me could guess that my DVR is full of Stossel episodes.  I think the man and his crew are doing an excellent job distributing the ideas of individual liberty and freedom into the mainstream.  I was surprised this weekend, however, to hear him attribute the invention of the CAT scan to NASA.  This is not in line with the origin story I have heard, so I did a little bit of research.  Now this should not be taken as an attempt to scoop Stossel, as it is one of my favorite shows.  Rather, I am chasing down what I see as a theme of attributing to NASA the full-scale development of any project with which it was associated.

I did a little bit of very superficial research which confirmed what I had heard about the origin of the CAT scanner.  The first commercial machine was developed by Sir Godfrey Hounsfield in the UK, at EMI Central Research Laboratories, the very same company which held the record label for The Beatles.  The popular tale says that it was the success of The Beatles that helped fund the research lab which led to the development of the CT, but of course, this is difficult to confirm.  The invention of the scanner was preceded by a series of advancements and discoveries in x-ray technology, imaging and mathematics dating back to the early 1900's.  In my brief research, I found very little specific attribution to NASA except a few statements on NASA-related websites indicating that image processing technology developed for the Apollo program is used in modern CT imaging.  No doubt the program deserves credit for advancements made under its many programs.  Clearly there have been several that have had considerable, positive impact on human life.  However it is not fair to, as is commonly done, attribute recognition in toto for the development of a technology in which the program played only a bit part.  This only serves the fuel the drumbeat for greater government funding of research and development, a task better left to the market as I have discussed in detail previously.

And so, every time we object to a thing being done by Government, it concludes that we object to its being done at all. We disapprove of education by the State—then we are against education altogether. We object to a State religion—then we would have no religion at all. We object to an equality which is brought about by the State then we are against equality, etc., etc. They might as well accuse us of wishing men not to eat, because we object to the cultivation of corn by the State. -- Frederic Bastiat

Breaking News: Studies Prove Studies Unreliable

I don't generally appeal to a broad audience or allow my profession to leak into my writing, but my following very modest proposal should appeal to most level-headed people.  Further, I think you will find it useful if you fall anywhere in one or more of the following debate categories:

• Skeptics vs. Mystics
• Republicans vs. Democrats vs. Libertarians
• Economists vs. Other Economists vs. Laymen
• Gun Control Advocates vs. Gun Rights Advocates
• Modern Medicine Practitioners vs. Alternative Medicine Gurus

Let's all agree to stop saying phrases of the type, "Studies prove 'X', 'Y', or 'Z'."  (I'm looking at you journalists.)  More than likely the study being cited doesn't "prove" anything, and if history is any guide, the study is more than likely to later be refuted, indicating that either it or the subsequent study(s) is(are) incorrect.  Consider the following intriguing research from the medical field:  

• JAMA Article
• PLoS Article

In the interest of full disclosure, I was introduced to the preceding work by the book Wrong:  Why Experts Keep Failing Us...And How to Know When Not to Trust Them, which I highly recommend.

Bottom Line:
I propose the following alternative phrasing, "Studies provide evidence for 'X', 'Y', or 'Z'."

Inductive arguments can never be proven in the way that deductive arguments are.  Thus we can never have the certainty regarding the efficacy of homeopathic remedies, gun control laws, minimum wage restrictions or the teachings of Zoroastrianism that we can about Euclidean geometry.  So let's stop pretending.  I know it's a small change, but maybe this way fewer middle aged house wives will be sucked into the latest supplement craze (green coffee bean extract?).

Any priest or shaman must be presumed guilty until proved innocent. -- Robert Heinlein, Time Enough for Love  

Heinlein Foreshadowed Cash for Clunkers

In a brilliant scene from Heinlein's classic The Door into Summer, written in 1957, the main character seems to channel Bastiat himself when confronted in a futuristic world with a government program essentially the same as Cash for Clunkers.  The main character goes on a long sleep in 1970 and awakes in 2000.  His first steady job upon waking is crushing new, unsold cars.  This is the conversation he has with a coworker upon his first day of work:

“It’s a simple matter of economics, son. These are surplus cars the government has accepted as security against price-support loans. They’re two years old now and they can never be sold...so the government junks them and sells them back to the steel industry. You can’t run a blast furnace just on ore; you have to have scrap iron as well. You ought to know that even if you are a Sleeper. Matter of fact, with high-grade ore so scarce, there’s more and more demand for scrap. The steel industry needs these cars.”  

“But why build them in the first place if they can’t be sold? It seems wasteful." 

“It just seems wasteful.  You want to throw people out of work? You want to run down the standard of living?” 

“Well, why not ship them abroad? It seems to me they could get more for them on the open market abroad than they are worth as scrap.”  

“What!—and ruin the export market? Besides, if we started dumping cars abroad we’d get everybody sore at us—Japan, France, Germany, Great Asia, everybody. What are you aiming to do? Start a war?” He sighed and went on in a fatherly tone. “You go down to the public library and draw out some books. You don’t have any right to opinions on these things until you know something about them.”

Sound at all like the familiar parable of the broken window?  There truly is nothing new under the sun.