THE MORALITY OF CAPITALISM

This is one of my longest posts, though if you read at 900 words a minute, it’s only a two minute read. I’ve discussed my views on capitalism briefly in another post, and I’ll be expounding those views here. My greatest enjoyment has always been exposing my ideas to different ones, and seeing whether my views can withstand the rationale behind others’ arguments. I read a bit about socialism and communism, but after about half an hour worth of effort, gave up on attempting to understand the jargon.

As one of simple logic, I’ll talk about what I consider wrong with any ideology that attempts to force human equality. And I’d like to begin with the following controversial statement: All humans are not equal.

No two humans are equal. I might be better than you in some aspects and inferior in others. To claim that we’re both equal is false. What I do believe is that despite not being equal, both of us should be treated equally. I do not believe equality to reside in absence of all discrimination. I believe that it is warranted to discriminate the distribution of resources in society on the basis of the value you offer to the society. The value of the product or service you provide determines the proportion of resources you receive. But how do you decide the value of something?

If you are bald, a comb does not hold much value for you. For someone extremely conscious about their hair, it would be a necessity. A starving farmer would not care much about a Gucci suit, whereas a board member would require it during a meeting. With such varying wants among people, it seems difficult to decide what they would consider to be of value. And there comes in the old and trusty system of determining value: demand and supply.

“The most basic question is not what is best, but who shall decide what is best.” Thomas Sowell

And the free market system lets the consumers decide. The value of something is determined by demand supply relation. If the society demands what you are producing, then there will be value for it. And here’s where most people claim to spot the immorality of the capitalist system. That although the free market system values certain commodities the distribution of profits is unjust.

The hard working laborer is poor. The person who works nine hours a day at factories is poor. The claim is that his work is valuable, yet the people at the top steal all the profits. They steal a disproportionate share from those who work.

What must be considered is that in pragmatic terms, those employed are also a resource. And their value too is determined by demand supply. When workers are plentiful the wages tend to drop.

To maximize profits is the obligation of any business to its shareholders. If you’re offering a service better than what is otherwise available in the market, then you will be paid for it. But the more replaceable you are, the lesser you are likely to be paid. And I do believe that in this sense capitalism urges one to deviate from the trodden path, to be different, to be unique. Capitalism creates an environment which encourages distinctiveness, and it is only through its uneven distribution of profits that people are inclined to undertake risks required for establishing enterprises.

I confess I have not looked into the actual evidence, but I will boldly claim that the most innovative changes have taken place in capitalistic economies. In these economies you may not seize the means of production, only earn them.

The problem people often raise is that there are poor people living extremely difficult lives. The poor will always live a difficult life. Perhaps they should. The goal isn’t to make a poor life comfortable. The goal is to ensure that there is always a road, one leading out of the poor life and into the rich. And maybe the road isn’t the easiest to tread upon, but it’s a road. If you put your resources into making life comfortable for poor, you’re reducing incentives for them to cross the obstacle ridden road and uplift themselves. I believe that’s where my opinions differ with those of socialists and communists. I don’t think the destination should come to you, but that you must tread upon the road. Those born in better off families may have fewer miles to travel, but in a free market, all can access the road. All you need is a vision, a dream, a goal to achieve.

Why should the poor travel longer? Surely, the fact that poor have to put in more effort to reach the same destination is in its very core, unfair. Perhaps it is.

I don’t study seriously the entire semester, but I scored more than quite a few of the people who did actually study. This is because I’m a fast learner. I used acronyms and semantic understanding to improve my grasp over the concepts. I used method of loci rather than rote memorization. Now assume that instead of simply scoring better, I scored the most marks in the entire school. Barely any work, and I scored the most. What would you do?

Certainly, it cannot be fair that I got more marks than the ones who worked hard. Isn’t that one of the socialist arguments? That rich people didn’t work hard and are better off than the hard workers.

Would you demand that in examinations the marks should be distributed equally? The moment you do that, you’ll diminish incentives for students to study in the exams.

This problem rose from your presumption that all people are equal, and this is why I had made a note to highlight my views that they are not. Yes, my learning techniques did help me, but even without them, I might score better than others simply because I born a faster learner. And the other people would have to work harder to score as much as me.

Is that fair? Perhaps not. Is it an unfairness which can be righted in a fair manner? I do not think so. There are certain inequalities we are born with. Our genetic makeup is one of them. Our social-economic circumstance is also one of them. I believe that we should attempt to provide a minimum starting line for everyone, but that we don’t have a right to force the better off to adhere to that line.

There should be knowledge and guidance provided free of cost in order to allow everyone to exploit their own potential to the fullest. In a capitalist economy there should be optimum utilization of resources, and I feel that human resource is being wasted in profusion. This is admittedly the only fault I can spot.

If means are provided to utilize one’s own self then we have inched as close to equality as I believe we can. On that road to richness, natural intelligence will help some, and some will be helped by rich parents. Adults must learn to be responsible for their own extent of success. Give them the opportunity, and let it be up to them to use as they will.

“Underlying most arguments against the free market is a lack of belief in freedom itself.” Milton Friedman

Most socialists and communists love to hate on rich people. “Oh, the rich guy. He is so greedy and terrible and evil. Completely apathetic. He doesn’t deserve that much money, so he shouldn’t have it. He can’t spend that much money, so he shouldn’t have it.”

And in my defense of the morality of capitalism, the strongest point would be that it does not demand other people’s money; it provides commodities in exchange of it. It preserves an individual’s economic liberty, and the first people who come to mind when I think of those denied it are slaves.

Unless the capitalist robbed people at gunpoint or scammed though through illegal means, he is entitled to the money he earns. No, it is not immoral for him to be rich while others are poor. You know why? Because the society deemed it fit. The society considered the product or service he offered to be valuable and paid him for it. Maybe you don’t consider it valuable. Don’t buy it then. Tell others why that product is not worth their money. Don’t just steal it from the rich guy.

And what if he can’t spend it. Maybe he’ll pass it on to his children. And that’s the thing, isn’t it? People say that rich children are given unfair advantage. I disagree. I don’t see the advantage as that of children, but of the parent. The parent has the advantage of seeing his child have a better start in life, having better odds to succeed. It’s one of the incentives that drove him to work. And he worked hard or he worked smart and perhaps he did both, and he managed to get into a position where can provide his children a better chance at life.

There are also multiple accusations of self interest at capitalists, which is ridiculous because there is no one exempted from that particular ‘crime’.

The predominant factor, perhaps the only one, behind our actions is self interest. Many might take offense at such a suggestion, yet I believe few could reasonably challenge it. For is it not true, that every action we take is meant to benefit us in some form or the other? And though our actions may be guided by self interests, self isn’t necessarily the only beneficiary.

Suppose you were to donate your money to a charity. You may feel morally satisfied, you may feel that you have done a good deed, and thus, it would be you that feels good. If helping others did not provide you moral satisfaction you would not have donated. The only selfless acts are those of indifference.

Speaking of charities, have you seen the any? The ones which ask for donations so that they can help poor people in some forlorn country, or provide some transplant or something? I don’t really think it’s the working class that goes and donates millions of dollars. I think it’s the rich guys who do that. It’s them who act as angel investors and help start ups flourish and become enterprises. The thing is some people try to paint all rich as devils, complete with the horn and the tail. I’m not going to say the rich are angels though. I think the rich lie in the zone between demons and angels, that zone called humans. Just the same as everyone else. At the risk of repeating Sowell again:

“The reason so many people misunderstand so many issues is not that these issues are so complex, but that the people do not want a factual or analytical explanation that leaves them emotionally unsatisfied. They want villains to hate and heroes to cheer- and they don’t want explanations that don’t give them that.”

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7 Comments Add yours

  1. Brilliant post!! I agree with you so much!! Also your comment about grades being distributed equally really reminded me a lot about what a particular psychologist Haidt says about how pursuing equality of outcome can lead to an abomination of justice.

    Liked by 1 person

    1. Never heard of him, but I’ll look him up.

      Liked by 1 person

  2. Well written, thought-provoking post, as usual, Aayush! I like that you think about these things.

    There are about a dozen or so points on which you and I disagree, of course. Twenty years ago, we would have been in substantial agreement, but my views have changed significantly since then.

    I usually refuse to indulge in debates these days because they seem to me fruitless. Scientific studies back me up on that: Debates seldom change anyone’s mind, according to several studies. Instead, they tend to cause people to dig in, and hold their opinions all the more firmly. Even when their opinions are factually wrong.

    Glad to see you’re reading Thomas Sowell. He’s brilliant. His book, Ethnic America had a tremendous impact on my political thinking, among other things. I do disagree with certain of his conclusions, but I think he was right about many other things, and I admire his scholarship and intellectual honesty. Some of his other books are pretty good, too.

    Although I don’t debate, I would like to mention one thing. Whether you take it to heart or not is up to you. I have found that the times in my life when I was most wrong about some idea, and furthest from knowing the truth, was when I held my idea in reaction to some other person’s nonsense.

    What I mean by that is this: Suppose someone says, “I’m a feminist, I believe that men and women should have equal rights, and I hate men.” Now maybe I think hating men is nonsense, so I decide to oppose feminism because she says she hates men. But hating men isn’t what feminism is about. Feminism is about equal rights for men and women. So it is actually foolish of me to oppose feminism just because some self-described feminists hate men.

    I’ve found that the times I’ve been most wrong in life, are the times I thought some idea was wrong because of stuff like that. When I evaluate capitalism and socialism these days, I try very hard to pay no attention to the nonsense some capitalists say about socialists, or to the nonsense some socialists say about capitalists, and to instead evaluate the systems based on what they are really all about.

    Glad I read your post! It got me thinking. Thank you for sharing it!

    Liked by 1 person

    1. What’s this I see? You pressed the like button on my post? You’ve commented on a lot of my posts, though this has to be the first time you pressed like. You just ruined your special quality.
      There are several things I disagree with in your comment, and I’d like to address them.
      First, I’d like to draw a line, a sharp one, between debates and discussions. There is a fundamental difference between the two. In debates you have a stance and construct arguments around it. In discussions you simply have arguments, and follow them to whichever stance they lead you to. Arguments can be defeated by stronger arguments. In a discussion, when stronger arguments replace the weaker ones, they forge a new path, which you tread upon to reach a different stance. This does not happen in a debate. If I had to draw an analogy, I’d say this:
      A person is faced with different bridges leading to different destinations. In discussions, a person examines features of each bridge to determine which one is the strongest. If he wants to go on Bridge A but someone tells, no, convinces him Bridge B is stronger, then he’ll take Bridge B.
      In debates, the person is concerned with the destination Bridge A leads to rather than whether Bridge A is strong enough or not.
      The aim of discussions is curiosity to understand other people’s opinions as opposed to the purpose of debates which is to make other change their opinions. I enter discussions because I want the opponent to destroy every single argument and prove me wrong, so that I may find a stronger bridge.

      Secondly, I’d like to address your remark that feminism is about equal right for men and women? What do you base this claim upon? I have asked many people why they think so, and many fall back upon the dictionary, Emma Watson being the most recent addition to that list. ‘Feminism is by definition equality between men and women’
      But what gives you that definition? Is it the dictionary that defines something or is it the actions that do the task of outlining a definition? If we go by first and second wave feminism it is understandable that though they’re women empowerment actions, they are indeed creating a more equal society. Yet the third wave feminism is based upon the assumption of patriarchy, which I reject wholeheartedly. If men are oppressors then we suck at it. I mean, come on, we have three times higher suicide rate, hoard all the dirty jobs like sewage cleaning, grab an unfair 90% of all workplace deaths, lose majority of custody battles, are more likely to be murdered, give 63% longer sentences to our own sex despite similar criminal background and crime. I don’t see these represented by feminism. In India, there was an introduction of gender neutral rape laws which feminists cohesively protested against and it was withdrawn. Not my version of equality. In my own country I can be raped and I don’t even have laws to protect me from it. I don’t see feminists addressing that. Western countries, which from afar I had once considered ‘modern’ have legalised circumcision, which is same as female genital mutilation type 1 A and I don’t see feminists stopping it. No female genital mutilation law would ever be passed, and if passed, would be easily repealed. It’s not that feminists can’t do it, they merely don’t want to. And while some may run behind the dictionary, even the people don’t consider feminism as equality. 93% of people from UK belive in equality between sexes and 7% identify as feminists. I’ve heard feminists say that they care about the issues I mention, but I don’t give a damn about that. I don’t care what you care about. I care what you act upon and the issues I mentioned aren’t even in the top 10 list.
      In the end, feminism is a political movement. If a political party doesn’t do what it claims, we don’t vote for it. Even if it may have claimed development in its party agenda, we’d not vote for it if we have seen that it doesn’t deliver on that promise. Similarly, since feminism doesn’t deliver on my particular notions of equality, which involve taking away priveleges of females (special programs by government only for women, reservations in government jobs for women, reserved coaches on the metro, etc.) I’m not going to consider the movement to be of any use and not identify as it’s member.

      I do hope I might succeed in dragging you back into the world of arguments and that we may together forge a stronger bridge towards the ever elusive Truth.

      Like

  3. jpsoreff says:

    Thank you for your well written perspective, but I must take a moment just to point out one basic missing factor in your analysis. Wealth does not accrue to individuals because a product or service which they produce has a high value. That is true only for those high-wealth inidviduals who are recent entrants into the roles of successful capitalists – only true for the high wage earners, and recently financed entrepreneurs. However, most of the accrued wealth in the world is transmitted down long lines of inheritance and vast newtorks of rent-collection. The richest families have been rich for generations, their wealth often stemming from ancient land grabs hundreds of years ago. Their wealth is a consequence, not of their industriousness, but of the happenstance of their birth in relation to the political successes of their forebears. In pondering the reasons why this should be, many of us find the roots of the injustice and unfairness of capitalism, as it has been practiced for the past few hundred years. Capital creaes capital, rent accrues rent, and those who have will continue to consolidate their individual family empires to the detriment of all those many, many folks whose forebears were not so fortunate.

    Liked by 1 person

    1. I must say that you are grossly mistaken. One does require wealth to create wealth, but that is what banking system is for. There have been staggering cases of poor people making it to the upper echelons. Benjamin Franklin, Henry Ford, among many others. A vast amount of celebrities have poor backgrounds. My own idol, Shah Rukh Khan, is one of the richest film actors with a net worth of about 600 million dollars and has a low economic background. Wealth does not continue for generations. I would challenge to find a statistically relevant percentage of population which has, in a free market economy, passed down wealth for over a century. And even if wealth is passed, what is the harm? That wealth was created by satisfying wants of others. I see no problem in wealth being passed down generation. It is not wealth that anyone else has a legitimate claim on anyhow. Not allowing wealth to pass down is the best way to halt capital formation and impede the growth of an economy. When you don’t allow wealth to be passed down, the person will dissipate it within his lifetime, rather than investing it in aims of increasing it.
      “ancient land grabs hundreds of years ago” does not seem adequately reliable information to be. I’d prefer instances, cases and numbers I can look into to determine the validity.

      Like

  4. jpsoreff says:

    You might begin with some of the more obvious names; Rockefeller, Rothschild, Warburg, DuPont, Pratt, Carnegie, Pew, Orange, Romanov to name but a few. The smartest of these will not leave their wealth open to cursory research, preferring to have their assets and corporate control obscured, shielded from inquiry with a liberal use of privacy-preserving techniques including the use of foreign enterprises which preserve anonymity, off shore accounts, ownership by proxy, multiple generation foundations, etc… Certainly people like Nathaniel Rothschild and his father are searchable examples, but there are many more who are not susceptible to casual inquiry. Few, if any, will appear on such mundane lists as the Fortune 500.

    The stance you take regarding dynastic family wealth is the conventional one broadcast by mass media to keep out those with idle curiosity. The uber wealthy go through great time and expense to safeguard their privacy. Wouldn’t you?

    Like

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