Reply To: Capitalism


Excellent analysis!

What is often missing in critiques and defenses of capitalism or more aptly named the “free market”, is the choice provided to the consumer. Most defenses focus on the entrepreneur or capitalist and his behaviour -often portrayed as rapacious.

The behaviour of the consumer, which is often equal to the rapaciousness of the capitalist or entrepreneur, illicits less attention.

In a Marxist or feudal system choices are limited because there are no entrepreneurs competing for the economics affections of consumers.

In such a system the consumer is not free to make economic choices and such a right would be of no effect as these systems do not produce choices.

Thankfully, for consistency purposes, Marxist and feudal systems also restrict the personal freedom of consumers to make economic choices along with the right of entrepreneurs to compete for consumers’ economic affections.

As such Marxist and feudal systems are consistent-no one makes other than the state or a designated producer and no one gets to choose anything other than what the state or its designated producers can produce.

In a vibrant free market, entrepreneurs produce a wide array of products at different quality and price points. Both entrepreneurs are free to produce and consumers are free to choose.

This type of abundant market is missing in a Marxist or feudal system.

In an economy such as our own which has elements of a free market (where entrepreneurs produce a wide array of products at difference price points) and also elements of state control where government can favor one competitor over another through tax breaks, subsidies, bailouts etc, the consumer while free to make economic choices is limited by the choices that the government allows.

If consumers are against the greedy capitalists, they can very easily take that frustration out in the market place.

Don’t like Steve Jobs-don’t go see his Pixar movies or buy his apple products.
Capitalists only get rich by serving the masses and providing them with things they want. If enough “vote with their dollars” Pixar and Apple will lose their dominant market positions

A problem arises however when a company becomes through political bribery under the wing of the government.

For example, don’t like Goldman Sachs? There isn’t much you can do. You can not bank there. But that is not where they make their money-they are going to make their money as a result of their favored position in acting as a dealer in US Treasuries, or in the underwriting of municipal bonds or proprietary trading.

Ditto for GE. Don’t like their power? You can try not buying their light bulbs, but that won’t work as their light bulbs are mandated by an act of congress-so you have to buy them.

In a true free market the excesses of the entrepreneur or “greedy capitalists” are kept in check by the choices that free consumers have. If prices are raised or quality suffers consumers will vote with their feet and either not buy form the offending company or buy from a competitor.

True free market capitalism is self correcting and sustaining.

The mess we are in is because “greedy capitalists” have formed unholy alliances with government to protect their money making positions or to grant them new ones.

In a true free market the survival of the fittest mentality only applies to the producers, not the consumers. Producers must do what ever they can to please consumers or THEY shall persish.

Unfortunately, producers have learned to use government to protect themselves against the ravages of competition and consumers suffer.