Wednesday, July 03, 2019


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  in hardcover and Kindle formats.