The beliefs about the alleged horrors of capitalism are
disastrous errors. They confuse the terrible conditions inherited by capitalism
from feudalism, and which capitalism overcame, with capitalism itself, leading people
to believe capitalism created the conditions it overcame.
Capitalism represents the release of unfettered
individual human intelligence into the process of production and exchange,
which intelligence is propelled by self-interest and the profit motive.
Under capitalism, these driving forces operate within a
framework of individual freedom.
Freedom means the absence of the initiation of physical
force. It requires that you deal with others to their advantage as well as your
own, because that’s the only way to get them to buy from you or sell to you,
since you are prohibited from using force against them.
To gain workers, a capitalist employer must offer them
better terms than they could obtain working on their own or from any other
employer. Similarly, to gain customers, he must offer them the best use
available to them for the money he asks from them.
In this way, even today’s billionaires work for the
average person. If they want a sum of money he possesses, they have to offer
him goods or services that represent a better use for that money than any of
the alternatives on which he might spend it.
If you want to make money under capitalism, the way to do
it is not like a gangster robbing gas stations, but to ask yourself what can
you do, or what could you learn to do, that other people want and are willing
to pay for, and then do it. You gain, and your customers gain.
Exceptionally intelligent and hard-working individuals
come up with ideas, and arrange to put them into practice, that make possible
important improvements in products or more efficient ways of producing existing
products. In doing so they raise the productivity of labor.
These individuals are businessmen and capitalists.
A rising productivity of labor, brought about by these businessmen
and capitalists, serves steadily to increase the supply of products relative to
the supply of labor and thus to reduce prices relative to wages, which means a
growing buying power of wages—higher “real wages.”
As this process continues, and the real earnings of people
rise, they can afford to accept the comparatively lower wages of jobs with
shorter hours.
For example, if in 1775, people were working 80 hours a
week just to survive, and 50-75 years later, they can make 3-4 times
subsistence in 80 hours, many of them will choose to work 60 hours, say, and
still earn vastly more than they did initially.
In just the same way, as the productivity of labor and
real wages rise, thanks to the efforts of the businessmen and capitalists, workers
can afford to accept the lower take-home wages that accompany jobs with
improved working conditions that don’t pay for themselves.
This same process of rising real wages enables parents to
afford to keep their children home longer, with the result that child labor
begins at a later and later age and finally disappears.
The process of businessmen and capitalists achieving a
rising productivity of labor and real wages has by now increased real wages to
the point that the average worker in an industrial country enjoys a higher standard
of living than kings and emperors of the past.
In addition, the work week is now 35-40 hours, working
conditions have enormously improved, and child labor has been reduced to the
point where it now often begins only in the mid-twenties of the children.
The socialist Bernie Sanders keeps saying that he wants a
system that “works for all of us.” Capitalism is that system. The capital of
the capitalists is accumulated out of profits earned by the introduction of new
and improved products and more efficient methods of production.
Those profits are then typically saved and reinvested in the
production of those very same products, to the point of providing them for
virtually all.
The capital of the capitalists not only produces the
cornucopia of products that everyone is able to buy but also pays the wages that
enable them to buy it.
The fact that Sen. Sanders has shoes, indoor plumbing, a
car, a TV, a house or apartment, and much, much more, is how capitalism works
for him and for everyone else.
The greater wealth of a rich capitalist compared with
that of the average person, does not mean that the capitalist’s consumption is
anywhere near to being correspondingly higher. The manufacturer of a million TV
sets, for example, does not have a million TV sets in his home.
He may have 5 or 6. His
greater wealth is in the capital—the factories, machinery, materials and
components, and the funds required to pay wages—required to produce a million
TV sets, 6 of which go to him and 999, 994 to other people, the great majority
of whom are wage earners.
For more, buy and read CAPITALISM: A TREATISE ON
ECONOMICS. Available at http://amzn.to/2PM19ut in hardcover and Kindle formats.
