Anything Evil about Capitalism? Part III

So, About the Morality of Capitalism

We defined wealth as the accumulated results of labor (Part I). Capital is the accumulation of work above and beyond what is essential followed by careful use of it toward a good idea intended to result in even more surplus. Capitalism is a system for using capital (accumulated surplus wealth) to invest it in more wealth creation (Part II). With that understanding I think we’re ready to make a value judgment about capitalism.

I assert that capital in and of itself is simply never evil. Capital might be considered always good. It represents work above and beyond what is essential followed by careful use of it toward a good idea, resulting in even more surplus.

What about capitalism? It’s the system that allows for those who have developed capital to invest it in projects that they hope will produce additional wealth (i.e., additional results of labor). There is some risk involved in the investment of capital and the borrowing of capital, but that is agreed to by both parties.

No one takes advantage of someone else’s work for free (*extra commentary on this below). Everyone is free to decide how they will use their time and energies to produce wealth for themselves. So, by definition I think we can say capitalism is purely moral. In Spherical Model language, capitalism, or in other words free enterprise, is above the 45^th parallel in the northern hemisphere—which means it aligns with, synergetically reinforcing, political freedom and civilization.

So why do so many people refer to it as evil immoral capitalism? Because the outcome is unequal. The outcome is strictly and impartially fair, based on actual work and effort resulting in something society values. But it is unequal. The question, then, is whether it is a bad thing for there to be unequal outcomes. Those who believe capitalism—also referred to as free enterprise or free market economics—is evil are those who believe people should be guaranteed outcomes regardless of efforts toward those outcomes. This point of view is based, not on fairness, but on fear. Fear and jealousy.

Their assumption is, some people have lesser abilities than others, or fewer opportunities, so they will work just as hard and be unable to get the same results; this is unfair. But is it?

Look at a doctor, for example. The doctor must have studied during high school to assure he could go to a good college. Then he spends four years, at his own expense, studying pre-med courses, and he must study hard enough to earn not just mid-range grades but excellent grades. Only top performers are accepted into med schools. So this has required hours and hours of studying that someone not preparing to be a doctor might not have had to do; others can go to parties and ball games, and take time reading for enjoyment and attending music concerts for entertainment—not that these are bad things; but they are good things that the med student may have had to forgo for many years. Following med school, there’s residency, followed quite possibly by more years of specialization. A non-med student might go out into the workplace at 22 and start repaying a relatively small school debt, and get on with enjoying life. But the med student might be studying—and accruing school debt in the range of $150-$200 thousand—well into his 30s. So, yes, there is an expectation that his sacrifice to gain this expertise will be repaid with sufficient to repay as well as to have a comfortable lifestyle. It isn’t guaranteed that he will make sufficient, but it is expected, if he indeed becomes a valued physician following his decade of preparation.

Is it unfair for the doctor to receive a reward commensurate with how much a willing public values his expertise? No. Even when his expertise gives him a greater reward than a car repairman gets for his expertise? If the public so values it, then it is fair.

Those who hate capitalism tend to be those who don’t produce it. They don’t have either the discipline or the drive to produce more than is necessary, and then to find ways to have that wealth work for them. They are jealous of those who have produced capital and use it. They insist it’s unfair that some have advantages that they don’t.

Alternatively, they are despots who covet control of the capital others have produced. I suspect they don’t actually believe they should receive less for their labors so that nonproducers can have equal outcomes with them; they believe you and I should receive less so that our outcomes will be equal to that of nonproducers, while they reward themselves for attempting to bring about this obviously unfair equality of outcomes. That is something I would call evil.

* About the extra commentary: My son Economic Sphere is detail oriented and precise, and he suggests that, when I talked about ways to get capital, I left out inheritance. I purposely simplify, to get to the root definition (economics without math). But I think he’s right that there is a misperception that those with capital got it by some unfair, arbitrary-advantage kind of way. So let’s at least address inheritance. However, today’s post is long enough, so the extra commentary on inherited capital will be part IV tomorrow.