economics freedom

Capitalism is evil? Hardly.

A friend just posted this to his facebook profile:

”Capitalism has always required disposable populations in order to function. In our system of global apartheid other people must toil in fields and sweatshops, die in resource wars and watch as their countries are poisoned in order for us to enjoy comfortable, privileged lives.”

Groan, where do I start? How about the beginning… First off, capitalism does not require a “disposable population.” People do not have to toil in “sweatshops” or fields. They really don’t. We could have machines do everything they do. So, would those people suddenly be better off when relieved of their jobs?

The fact that they are able to be employed for less than a machine would cost is their primary attraction. If companies are not allowed to make things in China, Vietnam, India etc. then they will make them domestically on machines or they won’t be made at all. So who is made better off in that situation? There are fewer things made and fewer people employed. By allowing companies to offer jobs in those places, people are employed, and the product is made for whoever wants it. Yes, some people make more than others, some will become rich, but it’s not as though they don’t have to trade for that prosperity. Through cooperation, everyone is made better off. That’s capitalism. You say that one group shouldn’t benefit so much more? Well, maybe (I don’t think so myself) but the fact is that is the only way these things get done at all. Without the potential of making a ton, the venture doesn’t start. Of course, most of those things don’t work out, and the capitalist loses everything while the workers have been paid. Risk vs. reward, it’s the nature of the beast.

Wars are fought for resources, but who wages those? Governments do. Whenever there is violence, you will find politics just under the surface. Whether it is about diamonds, oil, land, or whatever, violence is used to further political ends, and that usually translates to power. Capitalism relies on free trade between free people. Wars are waged by central authorities looking out for their own interests. Remember, countries that trade heavily with each other rarely fight each other.


The environmental impact is a problematic issue. Seemingly every country that industrializes goes through a period of rampant pollution. England, the US, France, Russia, they all had awful environmental track records. Remember Love Canal? How about the Cuyahoga River catching on fire? As these places got richer and richer, there was a lower and lower tolerance for pollution. The same thing is happening in China, give them some time. Where this won’t happen is where the government owns the polluting industry and benefits from it. China is an odd exception, they have walked the line between private and public ownership and they have had mixed results. One thing that has become clear over the years is that it’s almost never too late to clean things up. It isn’t clear how to avoid these problems and allow the areas to develop economically. History has shown us that if people have their say, awful pollution is a temporary situation. Poverty and pollution always go together. Fix the first and it will fix the second automatically.


The bottom line is that capitalism is a wondrous thing when it is allowed to work. It breeds cooperation, higher living standards (including a distaste for pollution), and an endless variety of things that people can choose as a profession. Economic growth takes time. People, and countries, have to start at the beginning, but recent history has shown how, within a few generations, wonderful things can occur. The really important thing to remember is that capitalism is the only way to achieve this. The more you veer away from capitalism, the lower the standard of living and the less progress there is. If you want to better people’s lives, let capitalism take place. All it takes is freedom to let that happen.


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