I recommend the entire interview. Go to 17:00~23:00 for Peterson’s opinion of the US free market system vs China.
Be seeing you
Posted by M. C. on May 13, 2022
I recommend the entire interview. Go to 17:00~23:00 for Peterson’s opinion of the US free market system vs China.
Be seeing you
Posted in Uncategorized | Tagged: capitalism, MIT | Leave a Comment »
Posted by M. C. on July 18, 2021
To everything I have said, some might retort that the state sector can effectuate the construction and development of a green energy economy better than the private sector can. History has repeatedly demonstrated that this is not the case—the Wright brothers beat the US government to the invention of the aircraft by a long shot, and much of America’s most basic infrastructure was built by competing private sector entities, after the state had made disastrous attempts
https://mises.org/wire/industrialization-antidote-global-poverty-global-warming-activists-dont-care
Having long ago lost the argument that capitalism can’t deliver a higher standard of living, the Left’s current anti-capitalist strategy is to claim capitalism requires environmental destruction. Yet even if one were to assume carbon emissions are the driving factor behind climate change, we must acknowledge the moral and economic necessity of industrialization. Between 1250 and 1800, world GDP per capita barely budged; in 1800, global life expectancy was a mere thirty years, infant mortality was commonplace, and eight in ten humans lived below the poverty line. Since the advent of the Industrial Revolution, that has all changed: despite the environmental impacts, global per capita income has risen fourteenfold and billions have risen from poverty—a phenomenon the economist Deidre McCloskey describes as “the Great Enrichment.” Industry and the establishment of national industrial infrastructure are and have been the keys to economic growth and poverty alleviation. Data indicate that GDP per capita—the amount of goods and services produced per person—is the single best predictor against extreme poverty (graph displayed below):
Moreover, although GDP growth can signal government increases in the money supply rather than true increases in production, poverty reduction has tightly tracked GDP per capita growth in the developing world. A 2010 paper produced a very clear correlation between GDP growth and the poverty rate in Sub-Saharan Africa (graph displayed below):
It is unfair to use climate change to indict neoliberalism. Industrialization, albeit posing long-term environmental consequences, has lifted the human standard of living by extraordinary amounts. More importantly, the charge makes no sense, considering that the solution to climate change lies in the free market, as recent emissions trends and developments in the energy sector show. The central advantage of capitalism is its capacity for self-rectification and alleviation of the problems it initially creates. That is the miracle of innovation.
See the rest here
Author:
Eben Macdonald is a 16-year-old student, a keen free-marketeer, and he wants a society which is predicated on liberty.
Be seeing you
Posted in Uncategorized | Tagged: capitalism, Global Poverty, Global warming, industrialization | Leave a Comment »
Posted by M. C. on January 23, 2021
Gary Becker pointed this out years ago in his frequently cited book The Economics of Discrimination. Becker posited that competition in the free market made it costly for companies to discriminate against individuals due to group identity. By refusing to hire qualified applicants because of race or sex, businesses would lose market share.
https://mises.org/wire/myths-behind-capitalism-racist-claim
Though numerous studies prove the contrary, it is still widely assumed that capitalism perpetuates racism. Celebrities and academics incessantly broadcast the message that capitalism engenders racism. For example, recently on Twitter, superstar athlete Andre Iguodala informed his followers that capitalism cannot be divorced from racism: “Capitalism and racism go hand in hand. And you can’t have one without the other.” Equally scathing is the blistering declaration of sociologist Edna Bonacich in an academic review: “Capitalism and racism are closely connected….The huge wealth of America’s white-owned corporations rests on the backs of the hard labor of workers, many of whom are people of color.”
Despite the popularity of anticapitalist rhetoric, it is woefully mistaken. Some entrepreneurs will express racist tendencies, but if they are determined to succeed in business, they have no alternative but to jettison such beliefs. Gary Becker pointed this out years ago in his frequently cited book The Economics of Discrimination. Becker posited that competition in the free market made it costly for companies to discriminate against individuals due to group identity. By refusing to hire qualified applicants because of race or sex, businesses would lose market share. Racists may object to employing people outside of their race, however, the crux of the matter is that self-interest trumps the collectivism of racism. Although racists may abhor minorities, the urge to accumulate wealth is far more potent than the desire to discriminate.
Similarly, recent research corroborates Becker’s thesis that firms engaging in discrimination are less likely to remain competitive. Devah Pager in an innovative 2016 study testing the relationship between observed discrimination and firm longevity concludes that these firms show a greater propensity to fail:
This study builds on the findings of an experimental audit study of racial discrimination in employment conducted in New York City in 2004….We see that 17 percent of nondiscriminatory establishments had failed by 2010, relative to 36 percent of those that did discriminate. The likelihood of going out of business for an employer who discriminated thus appears more than twice that of its nondiscriminating counterpart.
Under capitalism the allure of profit serves as a deterrent to discrimination. For instance, the strident resistance of streetcar companies in the Jim Crow South to laws mandating them to segregate black customers poignantly demonstrates the market’s hostility to unjust discrimination. Economist Jennifer Roback in an article titled “Racism as Rent-Seeking” lucidly illustrates that these laws were a result of political entrepreneurship:
Race relations in the U.S. South were in a state of flux in the period immediately after the Civil War and remained so until the turn of the century, when the “Jim Crow” system of rigid segregation was put into place….Municipal streetcars were segregated by law in many Southern cities….Prior to legislation, streetcar passengers in many cities sat wherever they wished, and next to anyone they wished. There is little to indicate that segregation was introduced in response to the demands of passengers, and in some cases, passengers of both races were dissatisfied with the new rule. Moreover, some of the streetcar companies themselves actively resisted segregation, on the grounds that segregation would be too expensive….White passengers seemed to be indifferent about segregation; streetcar companies resisted segregation; certainly, black passengers resisted segregation. Who then wanted it badly enough to work for its introduction? The most likely candidates are politicians who believed that there existed latent sentiment in favor of segregation among whites. Political entrepreneurs could offer white voters something they valued enough to vote for, but not enough to bear the costs privately. Through collective action, the costs of segregation could be imposed on the (disenfranchised) black passengers and the (regulated) streetcar companies.
Roback refers to such tactics as “psychic rent seeking,’’ indicating that people leverage the force of government to acquire psychological benefits for themselves, despite incurring expenses for others.
Notwithstanding the propaganda of leftists, rhetoric is no substitute for facts. History reveals that discrimination is primarily inspired by the corrupt agenda of rent seekers in cahoots with the government. South African leading economist Thomas Hazlett notes that this is usually the case:
The South African gold rush made the natural synergy between white-owned capital and abundant black labor overpowering….White workers feared the large supply of African labor as the low-priced competition that it was. Hence, white tradesmen and government officials, including police, regularly harassed African workers to discourage them from traveling to the mines and competing for permanent positions. Beginning in the 1890s, the Chamber of Mines, a group of employers, complained regularly of this systematic discrimination and attempted to secure better treatment of black workers. Their gesture was not altruistic, nor founded on liberal beliefs….But here they had a clear economic incentive: labor costs were minimized where rules were color-blind. This self-interest was so powerful that it led the chamber to finance the first lawsuits and political campaigns against segregationist legislation.
Likewise, South Africa during Apartheid is an excellent case study of the power of the market to eviscerate racism. To protect whites from competition, blacks were prevented by law from taking white-collar jobs. This not only limited their productivity, but also reduced the number of black employees able to take industrial jobs, thus creating artificial manpower shortages. As such the South African Employers Consultative Committee on Labour Affairs in 1977 lobbied for the elimination of discrimination based on race or color from all aspects of employment practices. Therefore, motivated by the goal to gain wealth, even vile racists will eschew racist policies.
Certainly, some owners and entrepreneurs will find niches in which they can cater to racist clients. But for those who wish to attain high levels of growth and success, the data is clear that serving all customers and workers indiscriminately is the way to wealth. Essentially, the power of the free market is the best antidote to racism. Entrepreneurs seek to win in business, and engaging in discrimination hinged on race is the surest way to lose. Of note is also the fact that people who migrate from other countries irrespective of race become wealthier after relocating to America. Yet, ironically, many who lament the racist nature of American capitalism also insist that immigrants improve their lives by immigrating to the United States.
Both theory and the empirical research show that a truly competitive marketplace is incongruous with racism, but, clearly, saying otherwise confers leftists with the benefits of expressing the “luxury beliefs” of elites. Author:
Lipton Matthews is a researcher, business analyst, and contributor to mises.org, The Federalist, and the Jamaica Gleaner. He may be contacted at lo_matthews@yahoo.com or on Twitter (@matthewslipton).
Be seeing you
Posted in Uncategorized | Tagged: capitalism, market share, racist | Leave a Comment »
Posted by M. C. on December 23, 2020
Mises saw it differently. “The riches of the rich are not the cause of the poverty of anybody; the process that makes some people rich is, on the contrary, the corollary of the process that improves many peoples’ want satisfaction. The entrepreneurs, the capitalists and the technologists prosper as far as they succeed in best supplying the consumers,” he wrote in The Anti-Capitalistic Mentality.
Where do these ideas come from? University faculty, of course. Richard D. Wolff, a Marxist and an emeritus economics professor at the University of Massachusetts Amherst said he has been professionally arguing against capitalism’s selling points since his teaching career began, in 1967, but that his millennial students “are more open to hearing that message than their parents ever were.”
https://mises.org/wire/rich-millennials-plot-end-civilization
The New York Times managed to find some young people whose silver spoons provide a sour taste in their mouths. To hear them talk, their good fortune is making them sick.
“I want to build a world where someone like me, a young person who controls tens of millions of dollars, is impossible,” Sam Jacobs, 25, told the Times. Jacobs went off to college a normal young man and came back a socialist. Suddenly his family’s “extreme, plutocratic wealth” became too much of a burden for him.
“He wants to put his inheritance toward ending capitalism,” Zoë Beery wrote for the NYT, “and by that he means using his money to undo systems that accumulate money for those at the top, and that have played a large role in widening economic and racial inequality.”
Wow, that is some self-loathing. If only Ludwig von Mises were able to counsel young Jacobs, whose grandfather founded Qualcomm and who is set to inherit $100 million. In his book Epistemological Problems of Economics, Mises wrote, “Through all the changes in the prevailing system of social stratification, moral philosophers continued to hold fast to the fundamental idea of Cicero’s doctrine that making money is degrading.”
Beery writes that wealth is concentrated in the upper brackets and “Millennials will be the recipients of the largest generational shift of assets in American history.”
That doesn’t seem like a worrying thought; however, it is for Rachel Gelman, a thirty-year-old in Oakland, California, who described her politics to Beery as “anticapitalist, anti-imperialist and abolitionist.”
“My money is mostly stocks, which means it comes from underpaying and undervaluing working-class people, and that’s impossible to disconnect from the economic legacies of Indigenous genocide and slavery,” the guilty Gelman said. “Once I realized that, I couldn’t imagine doing anything with my wealth besides redistribute it to these communities.”
Mises saw it differently. “The riches of the rich are not the cause of the poverty of anybody; the process that makes some people rich is, on the contrary, the corollary of the process that improves many peoples’ want satisfaction. The entrepreneurs, the capitalists and the technologists prosper as far as they succeed in best supplying the consumers,” he wrote in The Anti-Capitalistic Mentality.
Elizabeth Baldwin is a thirty-four-year-old democratic socialist in Cambridge, Massachusetts, who was adopted from India by a white family when she was a baby. Now, thanks to her adoptive parents, she is wealthy, with a stock portfolio containing shares in Coca-Cola and Exxon-Mobil.
But, she hates the thought of having her wealth tied up in multinational corporation shares and instead “would rather put my money into a community that has been denied economic resources and disrupts the system.”
She’s directing her funds toward what she and other wealthy millennials describe as the “solidarity economy.” Fellow traveler and democratic socialist, Emma Thomas, a twenty-nine-year-old, described what she’s now investing in as “an economy that is about exchange and taking care of needs, that is cooperative and sustainable, and that doesn’t demand unfettered growth.”
“At some point, these numbers on a screen are imaginary,” Thomas told the Times. “But what’s not imaginary is whether you have shelter, food and a community. Those are true returns.”
Where do these ideas come from? University faculty, of course. Richard D. Wolff, a Marxist and an emeritus economics professor at the University of Massachusetts Amherst said he has been professionally arguing against capitalism’s selling points since his teaching career began, in 1967, but that his millennial students “are more open to hearing that message than their parents ever were.”
We can only thank goodness the parents of these young people believed in serving customers and saving their wealth. This wealth was not created nefariously. As Murray Rothbard explained, “On the free market, it is a happy fact that the maximization of the wealth of one person or group redounds to the benefit of all.”
What these millennials are up to is not to be ignored. As Mises wrote in his book Liberalism, “Modern civilization will not perish unless it does so by its own act of self-destruction.” Author:
Douglas French is former president of the Mises Institute, author of Early Speculative Bubbles & Increases in the Money Supply, and author of Walk Away: The Rise and Fall of the Home-Ownership Myth. He received his master’s degree in economics from UNLV, studying under both Professor Murray Rothbard and Professor Hans-Hermann Hoppe.
Be seeing you
Posted in Uncategorized | Tagged: capitalism, Ludwig von Mises, Millennials, solidarity economy | Leave a Comment »
Posted by M. C. on December 16, 2020
This is the fundamental principle of capitalism as it exists today in all of those countries in which there is a highly developed system of mass production: Big business, the target of the most fanatic attacks by the so-called leftists, produces almost exclusively to satisfy the wants of the masses. Enterprises producing luxury goods solely for the well-to-do can never attain the magnitude of big businesses. And today, it is the people who work in large factories who are the main consumers of the products made in those factories. This is the fundamental difference between the capitalistic principles of production and the feudalistic principles of the preceding ages.
https://mises.org/library/what-capitalism-really-means
Descriptive terms which people use are often quite misleading. In talking about modern captains of industry and leaders of big business, for instance, they call a man a “chocolate king” or a “cotton king” or an “automobile king.” Their use of such terminology implies that they see practically no difference between the modern heads of industry and those feudal kings, dukes or lords of earlier days. But the difference is in fact very great, for a chocolate king does not rule at all; he serves. He does not reign over conquered territory, independent of the market, independent of his customers. The chocolate king—or the steel king or the automobile king or any other king of modern industry—depends on the industry he operates and on the customers he serves. This “king” must stay in the good graces of his subjects, the consumers; he loses his “kingdom” as soon as he is no longer in a position to give his customers better service and provide it at lower cost than others with whom he must compete.
Two hundred years ago, before the advent of capitalism, a man’s social status was fixed from the beginning to the end of his life; he inherited it from his ancestors, and it never changed. If he was born poor, he always remained poor, and if he was born rich—a lord or a duke—he kept his dukedom and the property that went with it for the rest of his life.
As for manufacturing, the primitive processing industries of those days existed almost exclusively for the benefit of the wealthy. Most of the people (90 percent or more of the European population) worked the land and did not come in contact with the city-oriented processing industries. This rigid system of feudal society prevailed in the most developed areas of Europe for many hundreds of years.
However, as the rural population expanded, there developed a surplus of people on the land. For this surplus of population without inherited land or estates, there was not enough to do, nor was it possible for them to work in the processing industries; the kings of the cities denied them access. The numbers of these “outcasts” continued to grow, and still no one knew what to do with them. They were, in the full sense of the word, “proletarians,” outcasts whom the government could only put into the workhouse or the poorhouse. In some sections of Europe, especially in the Netherlands and in England, they became so numerous that, by the 18th century, they were a real menace to the preservation of the prevailing social system.
Today, in discussing similar conditions in places like India or other developing countries, we must not forget that, in 18th-century England, conditions were much worse. At that time, England had a population of 6 or 7 million people, but of those 6 or 7 million people, more than 1 million, probably 2 million, were simply poor outcasts for whom the existing social system made no provision. What to do with these outcasts was one of the great problems of 18th-century England.
Another great problem was the lack of raw materials. The British, very seriously, had to ask themselves this question: What are we going to do in the future, when our forests will no longer give us the wood we need for our industries and for heating our houses? For the ruling classes it was a desperate situation. The statesmen did not know what to do, and the ruling gentry were absolutely without any ideas on how to improve conditions.
Out of this serious social situation emerged the beginnings of modern capitalism. There were some persons among those outcasts, among those poor people, who tried to organize others to set up small shops which could produce something. This was an innovation. These innovators did not produce expensive goods suitable only for the upper classes; they produced cheaper products for everyone’s needs. And this was the origin of capitalism as it operates today. It was the beginning of mass production, the fundamental principle of capitalistic industry. Whereas the old processing industries serving the rich people in the cities had existed almost exclusively for the demands of the upper classes, the new capitalist industries began to produce things that could be purchased by the general population. It was mass production to satisfy the needs of the masses.
This is the fundamental principle of capitalism as it exists today in all of those countries in which there is a highly developed system of mass production: Big business, the target of the most fanatic attacks by the so-called leftists, produces almost exclusively to satisfy the wants of the masses. Enterprises producing luxury goods solely for the well-to-do can never attain the magnitude of big businesses. And today, it is the people who work in large factories who are the main consumers of the products made in those factories. This is the fundamental difference between the capitalistic principles of production and the feudalistic principles of the preceding ages.
When people assume, or claim, that there is a difference between the producers and the consumers of the products of big businesses, they are badly mistaken. In American department stores you hear the slogan, “the customer is always right.” And this customer is the same man who produces in the factory those things which are sold in the department stores. The people who think that the power of big business is enormous are mistaken also, since big business depends entirely on the patronage of those who buy its products: the biggest enterprise loses its power and its influence when it loses its customers.
Fifty or 60 years ago it was said in almost all capitalist countries that the railroad companies were too big and too powerful; they had a monopoly; it was impossible to compete with them. It was alleged that, in the field of transportation, capitalism had already reached a stage at which it had destroyed itself, for it had eliminated competition. What people overlooked was the fact that the power of the railroads depended on their ability to serve people better than any other method of transportation. Of course it would have been ridiculous to compete with one of these big railroad companies by building another railroad parallel to the old line, since the old line was sufficient to serve existing needs. But very soon there came other competitors. Freedom of competition does not mean that you can succeed simply by imitating or copying precisely what someone else has done. Freedom of the press does not mean that you have the right to copy what another man has written and thus to acquire the success which this other man has duly merited on account of his achievements. It means that you have the right to write something different. Freedom of competition concerning railroads, for example, means that you are free to invent something, to do something, which will challenge the railroads and place them in a very precarious competitive situation.
In the United States the competition to the railroads—in the form of buses, automobiles, trucks, and airplanes—has caused the railroads to suffer and to be almost completely defeated, as far as passenger transportation is concerned.
The development of capitalism consists in everyone’s having the right to serve the customer better and/or more cheaply. And this method, this principle, has, within a comparatively short time, transformed the whole world. It has made possible an unprecedented increase in world population.
In 18th-century England, the land could support only 6 million people at a very low standard of living. Today more than 50 million people enjoy a much higher standard of living than even the rich enjoyed during the 18th-century. And today’s standard of living in England would probably be still higher, had not a great deal of the energy of the British been wasted in what were, from various points of view, avoidable political and military “adventures.”
These are the facts about capitalism. Thus, if an Englishman—or, for that matter, any other man in any country of the world—says today to his friends that he is opposed to capitalism, there is a wonderful way to answer him: “You know that the population of this planet is now ten times greater than it was in the ages preceding capitalism; you know that all men today enjoy a higher standard of living than your ancestors did before the age of capitalism. But how do you know that you are the one out of ten who would have lived in the absence of capitalism? The mere fact that you are living today is proof that capitalism has succeeded, whether or not you consider your own life very valuable.”
In spite of all its benefits, capitalism has been furiously attacked and criticized. It is necessary that we understand the origin of this antipathy. It is a fact that the hatred of capitalism originated not with the masses, not among the workers themselves, but among the landed aristocracy—the gentry, the nobility, of England and the European continent. They blamed capitalism for something that was not very pleasant for them: at the beginning of the 19th century, the higher wages paid by industry to its workers forced the landed gentry to pay equally higher wages to their agricultural workers. The aristocracy attacked the industries by criticizing the standard of living of the masses of the workers.
Of course, from our viewpoint, the workers’ standard of living was extremely low; conditions under early capitalism were absolutely shocking, but not because the newly developed capitalistic industries had harmed the workers. The people hired to work in factories had already been existing at a virtually subhuman level.
The famous old story, repeated hundreds of times, that the factories employed women and children and that these women and children, before they were working in factories, had lived under satisfactory conditions, is one of the greatest falsehoods of history. The mothers who worked in the factories had nothing to cook with; they did not leave their homes and their kitchens to go into the factories, they went into factories because they had no kitchens, and if they had a kitchen they had no food to cook in those kitchens. And the children did not come from comfortable nurseries. They were starving and dying. And all the talk about the so-called unspeakable horror of early capitalism can be refuted by a single statistic: precisely in these years in which British capitalism developed, precisely in the age called the Industrial Revolution in England, in the years from 1760 to 1830, precisely in those years the population of England doubled, which means that hundreds or thousands of children—who would have died in preceding times—survived and grew to become men and women.
There is no doubt that the conditions of the preceding times were very unsatisfactory. It was capitalist business that improved them. It was precisely those early factories that provided for the needs of their workers, either directly or indirectly by exporting products and importing food and raw materials from other countries. Again and again, the early historians of capitalism have—one can hardly use a milder word—falsified history.
One anecdote they used to tell, quite possibly invented, involved Benjamin Franklin. According to the story, Ben Franklin visited a cotton mill in England, and the owner of the mill told him, full of pride: “Look, here are cotton goods for Hungary.” Benjamin Franklin, looking around, seeing that the workers were shabbily dressed, said: “Why don’t you produce also for your own workers?”
But those exports of which the owner of the mill spoke really meant that he did produce for his own workers, because England had to import all its raw materials. There was no cotton either in England or in continental Europe. There was a shortage of food in England, and food had to be imported from Poland, from Russia, from Hungary. These exports were the payment for the imports of the food which made the survival of the British population possible. Many examples from the history of those ages will show the attitude of the gentry and aristocracy toward the workers. I want to cite only two examples. One is the famous British “Speenhamland” system. By this system, the British government paid all workers who did not get the minimum wage (determined by the government) the difference between the wages they received and this minimum wage. This saved the landed aristocracy the trouble of paying higher wages. The gentry would pay the traditionally low agricultural wage, and the government would supplement it, thus keeping workers from leaving rural occupations to seek urban factory employment.
Eighty years later, after capitalism’s expansion from England to continental Europe, the landed aristocracy again reacted against the new production system. In Germany the Prussian Junkers, having lost many workers to the higher-paying capitalistic industries, invented a special term for the problem: “flight from the countryside”—Landflucht. And in the German Parliament, they discussed what might be done against this evil, as it was seen from the point of view of the landed aristocracy.
Prince Bismarck, the famous chancellor of the German Reich, in a speech one day said, “I met a man in Berlin who once had worked on my estate, and I asked this man, ‘Why did you leave the estate; why did you go away from the country; why are you now living in Berlin?'” And according to Bismarck, this man answered, “You don’t have such a nice Biergarten in the village as we have here in Berlin, where you can sit, drink beer, and listen to music.” This is, of course, a story told from the point of view of Prince Bismarck, the employer. It was not the point of view of all his employees. They went into industry because industry paid them higher wages and raised their standard of living to an unprecedented degree.
Today, in the capitalist countries, there is relatively little difference between the basic life of the so-called higher and lower classes; both have food, clothing, and shelter. But in the 18th century and earlier, the difference between the man of the middle class and the man of the lower class was that the man of the middle class had shoes and the man of the lower class did not have shoes. In the United States today the difference between a rich man and a poor man means very often only the difference between a Cadillac and a Chevrolet. The Chevrolet may be bought secondhand, but basically it renders the same services to its owner: he, too, can drive from one point to another. More than 50 percent of the people in the United States are living in houses and apartments they own themselves.
The attacks against capitalism—especially with respect to the higher wage rates—start from the false assumption that wages are ultimately paid by people who are different from those who are employed in the factories. Now it is all right for economists and for students of economic theories to distinguish between the worker and the consumer and to make a distinction between them. But the fact is that every consumer must, in some way or the other, earn the money he spends, and the immense majority of the consumers are precisely the same people who work as employees in the enterprises that produce the things which they consume. Wage rates under capitalism are not set by a class of people different from the class of people who earn the wages; they are the same people. It is not the Hollywood film corporation that pays the wages of a movie star; it is the people who pay admission to the movies. And it is not the entrepreneur of a boxing match who pays the enormous demands of the prize fighters; it is the people who pay admission to the fight. Through the distinction between the employer and the employee, a distinction is drawn in economic theory, but it is not a distinction in real life; here, the employer and the employee ultimately are one and the same person.
There are people in many countries who consider it very unjust that a man who has to support a family with several children will receive the same salary as a man who has only himself to take care of. But the question is not whether the employer should bear greater responsibility for the size of a worker’s family.
The question we must ask in this case is, Are you, as an individual, prepared to pay more for something, let us say, a loaf of bread, if you are told that the man who produced this loaf of bread has six children? The honest man will certainly answer in the negative and say, “In principle I would, but in fact if it costs less I would rather buy the bread produced by a man without any children.” The fact is that, if the buyers do not pay the employer enough to enable him to pay his workers, it becomes impossible for the employer to remain in business.
The capitalist system was termed “capitalism” not by a friend of the system, but by an individual who considered it to be the worst of all historical systems, the greatest evil that had ever befallen mankind. That man was Karl Marx. Nevertheless, there is no reason to reject Marx’s term, because it describes clearly the source of the great social improvements brought about by capitalism. Those improvements are the result of capital accumulation; they are based on the fact that people, as a rule, do not consume everything they have produced, that they save—and invest—a part of it. There is a great deal of misunderstanding about this problem and—in the course of these lectures—I will have the opportunity to deal with the most fundamental misapprehensions which people have concerning the accumulation of capital, the use of capital, and the universal advantages to be gained from such use. I will deal with capitalism particularly in my lectures about foreign investment and about that most critical problem of present-day politics, inflation. You know, of course, that inflation exists not only in this country. It is a problem all over the world today.
An often-unrealized fact about capitalism is this: savings mean benefits for all those who are anxious to produce or to earn wages. When a man has accrued a certain amount of money—let us say, $1,000—and, instead of spending it, entrusts these dollars to a savings bank or an insurance company, the money goes into the hands of an entrepreneur, a businessman, enabling him to go out and embark on a project which could not have been embarked on yesterday, because the required capital was unavailable.
What will the businessman do now with the additional capital? The first thing he must do, the first use he will make of this additional capital, is to go out and hire workers and buy raw materials—in turn causing a further demand for workers and raw materials to develop, as well as a tendency toward higher wages and higher prices for raw materials. Long before the saver or the entrepreneur obtains any profit from all of this, the unemployed worker, the producer of raw materials, the farmer, and the wage earner are all sharing in the benefits of the additional savings.
When the entrepreneur will get something out of the project depends on the future state of the market and on his ability to anticipate correctly the future state of the market. But the workers as well as the producers of raw materials get the benefits immediately. Much was said, 30 or 40 years ago, about the “wage policy,” as they called it, of Henry Ford. One of Mr. Ford’s great accomplishments was that he paid higher wages than did other industrialists or factories. His wage policy was described as an “invention,” yet it is not enough to say that this new “invented” policy was the result of the liberality of Mr. Ford. A new branch of business, or a new factory in an already existing branch of business, has to attract workers from other employments, from other parts of the country, even from other countries. And the only way to do this is to offer the workers higher wages for their work. This is what took place in the early days of capitalism, and it is still taking place today.
When the manufacturers in Great Britain first began to produce cotton goods, they paid their workers more than they had earned before. Of course, a great percentage of these new workers had earned nothing at all before that and were prepared to take anything they were offered. But after a short time—when more and more capital was accumulated and more and more new enterprises were developed—wage rates went up, and the result was the unprecedented increase in British population which I spoke of earlier.
See then rest here
Author:
Ludwig von Mises was the acknowledged leader of the Austrian school of economic thought, a prodigious originator in economic theory, and a prolific author. Mises’s writings and lectures encompassed economic theory, history, epistemology, government, and political philosophy. His contributions to economic theory include important clarifications on the quantity theory of money, the theory of the trade cycle, the integration of monetary theory with economic theory in general, and a demonstration that socialism must fail because it cannot solve the problem of economic calculation. Mises was the first scholar to recognize that economics is part of a larger science in human action, a science that he called praxeology.
Be seeing you
Posted in Uncategorized | Tagged: capitalism, feudal, leftists | Leave a Comment »