FREEDOM AND CAPITALISM

FREEDOM AND CAPITALISM

By Lawrence Wilson, MD

THE IMPORTANCE OF FREEDOM

This is a short philosophical article about the virtues of freedom. The most important quality needed for development of the human being, or for that matter any being, is the ability to think and make decisions on one’s own. This is a basic principle. If people are cooped up and told what to do day and night, they do not learn as much, they do not have the opportunity to make mistakes and suffer the consequences and they generally do not think very much. As a result, they do not develop spiritually because learning to think clearly and carefully, and suffering the consequences of one’s actions and behavior are critical parts of mental and spiritual development.

This is also why freedom works in the world. It and it alone allows people to progress, to think, to make decisions, to fail and then to learn from their mistakes. Nations such as communist Russia, Cuba, North Korea, Iran and many others that deny people the freedom to think and make decisions usually do not last long. These nations are socialist, which means a large, powerful government makes most of the decisions. The people are treated more like caged animals in a zoo who are given ‘benefits’ by the government that are supposedly doled out equally to all, even though this is never really the case, in practice. In reality, those who have friends in high places get the most benefits, and the society is not egalitarian, even though that is what is claimed.

I begin this article with this premise that people should have the right and freedom to basically do as they please, provided they do not harm others, for the maximum amount of spiritual and mental development. If the reader does not agree with this principle, then don’t read further because the rest of the article is based on this premise.

LOVE AND CAPITALISM

One of the main problems with Marxism, socialism, communism and fascism is these systems of economics and politics are based solely on fear, not on love. If one loves others, one allows others to have freedom, individual rights, and the ability to earn money and keep what they earn. Those who are fearful cannot allow others to have as many individual rights and freedoms because they fear the masses, they fear the power of the people and they fear that somehow things will go wrong if one trusts the people’s instincts instead of their own.

This is the basic difference between Marxism and capitalism at the very deepest level. It is a choice between love and fear, a principle that is spiritual at its very roots.

THE ROLE OF THE GOVERNMENT

Governments should help their people develop themselves, and this is why freedom in any sphere is ultimately helpful, while slavery, welfare, or servitude in any form is ultimately harmful to a society.

One of the great secrets of America, at least in the past, has been the lack of welfare and the development of the citizen’s own self-reliance. An important part of this has been the allowing of citizens to own land, to operate businesses and to fail if conditions or decisions are incorrect. This system of economics is called free market capitalism. Our nation was founded with these principles, and the people have prospered enormously when the principles were adhered to. Let us examine this economic system in more detail.

FREE MARKET CAPITALISM

Capitalism is the economic system used today to some degree in many nations of the world. Its qualities consists of three major tenets:

1. People are free to own property, even if that is a push cart or a vegetable stand in a marketplace.

2. People are allowed to earn money by making a “profit”. Profit is the difference between what you buy something for and what you sell it for. So if a person has a vegetable stand and they buy carrots for $1.00 a bundle and sell them for $2.00 a bundle, the profit is one dollar per bundle. With this profit, the person pays all the expenses of traveling to the market, buying his products, and other expenses, and hopefully has some leftover with which to buy other goods and services. This is the essence of capitalism and profit.

3. People are allowed to keep what they earn. They may pay taxes, but they are generally allowed to keep most of their money.

Other Qualities. Each person is also liable for any problems that arise from their business, and all compete with each other for business on an equal footing. In other words, in free market capitalism, the government should not fund or subsidize or treat anyone differently than anyone else. Also, the government does not “bail out” anyone, there is no welfare system and people must find their own way, their own employment and their own food and lodging.

In other words, the role of the government in the economic sphere is simply to be a “referee” to maintain a level playing field for all business activity, to make laws to maintain that level playing field, and to catch and bring to justice anyone who violates those laws, such as thieves, liars, murderers, those who steal ideas that are trade marked or copyrighted, and so on. The laws are there to protect the right of each person to do his business as he sees fit, as long as each person does not violate the economic and political rights of anyone else. This is very important today to understand that the government can function mainly as a referee and a law enforcer, NOT as a provider of goods, services, welfare, subsidies, favors and other things that are subject to political whim and power groups.

This economic system, though it is more than an economic system, was first elaborated in detail by men such as Adam Smith, in a famous book, The Wealth Of Nations. Dr. Smith studied the most successful nations and realized that all shared these basic principles of commerce. He put the whole thing together and coined a lot of the terms we take for granted today in economics.

One of the most famous was the “hidden hand of the market”. It is actually quite brilliant. It is the idea that if there is any good or service that is needed in society, people will pay more for it and this will attract people he called entrepreneurs into this business, no matter what it is. It could be garbage collection or dishwashing, for example. But if it is needed, the price will go up and more people will begin to offer the service, until the price comes down and then others will not do this, but will choose another line of work where the demand is greater.

This concept works in practice, but most people have trouble trusting it. Government, in particular, often like to meddle in the marketplace by favoring certain industries or certain companies. This always causes problems, but governments persist in this because special interests, as they are called, often influence the congress of all nations to favor or oppose, at times even outlawing, certain industries.

In this regard, capitalism is a very complex, self-regulating economic system. Few people understand this, so they are always trying to meddle and ‘fix’ what seem to by ‘symptoms’ of problems with it, such as how to care for the poor or ill, or what to do about pollution, for example. Let us discuss these problems with capitalism.

THE SEEMING HARSHNESS OF CAPITALISM

Seemingly exploiting the workers. Karl Marx wrote his thesis, Das Capital, based on what he believed was the “exploitation of the workers” by the capitalist bosses. They rode around in fancy carriages, while the workers toiled in the factories for low wages. This is one aspect of the harshness of capitalism. Of course, what Marx did not understand is that the workers had few other choices. In other words, they could work just as hard or harder on the farms, perhaps, for even less money, or they could be beggars and have an even worse life. He did not understand that human progress is slow, and the factory life, while certainly not ideal, offered the working people more, so they flocked to it by the millions and are still doing so all over the world for exactly the same reasons.

The harshness of allowing a business to fail. It seems so harsh, so inhuman, some would say, to allow a business to fail. It puts thousands or more out of work, for example. The resources must be sold off at auction prices and sometimes the creditors of the business are the seeming victims as well. They may not get paid for their services and they might fail as well.

The public seems to lose out, too, if an important type of business like a bank or General Motors fails. Depositors at the bank may lose their money, for example. People who have bought General Motors cars might now be able to have them serviced properly if the company fails. This is one seeming type of harshness and inhumanity of free market capitalism.

The response to this criticism must be understood clearly. It is that 1) all economic activity has risk. One cannot simply deny the risk by bailing out every failure. If one does this, failure becomes the new standard and no one will try very hard to succeed. This is exactly what has happened with our banks, today, and with General Motors today. They have much less incentive to try hard to do a good job and earn money because they believe they will be bailed out, also called ‘too big to fail’. This is, in fact, nothing but corruption at high levels of government. If banks or anyone cannot act responsibly, they should fail and others would buy up their assets at bargain prices and do a better job. That is the way things are done in market economies, and it works well if one leaves the system alone. Only corruption causes bailouts. I am familiar with the arguments that our national security and all depend on big banks and big car companies. I reject all of this. I think these are lies told to the public. Once again, the principle works that if one company fails, others will buy up their assets and continue their production, if it is economically viable. If it is not viable, then it should fail because why produce products and services that no one wants?

POLLUTION

Another criticism of capitalism is that it causes irresponsible pollution of the air, water and everything else. This is completely untrue. First, in true capitalism, companies are totally responsible for their property and any damage they do the property of others. Thus, if they pollute the air, water or land, they are totally responsible. They would be sued out of business for polluting the property of others. Sadly, environmental laws have been passed that exempt corporations from this responsibility in many cases. As a result, companies are allowed to dump a certain amount of waste products, for example, without consequence. This is one cause of pollution in many cases, and is the result of corruption, not capitalism.

Another aspect of pollution is the fact that in a capitalist nation, new technology that is cleaner will always win out over older, polluting technology, providing it is cost effective. This does not happen enough in America and everywhere else because too many laws protect the old technologies. For example, the internal combustion engine probably would be on the scrapheap of history except for the fact that laws actually protect its use in automobiles, mainly. I know of a man who was running his car on other fuels and was arrested and told he could not use his alternative system. These laws, of which there are many, such as oil depletion allowances and others, are the product of corruption and the oil cartel, among other groups. This is not capitalism, but corruption and cartel politics.

It is incorrect to blame capitalism, when the very people who are punished by these laws are often the entepreneurs or capitalists, and the ones who punish them are the cartel or monopolists, who are basically socialists in disguise because they are people who want total control of the oil or health or some other marketplace, so they pass licensing and other restrictive laws that the car companies and everyone else must abide by or go to jail. There is nothing like this allowed in a capitalist society.

UNEVEN DISTRIBUTION OF WEALTH

This is another criticism of free market capitalism. Some become very rich, while others remain or it seems, are made poor by the system. This is the main objection of the socialists to capitalism.

On the surface, this criticism seems valid. Pure capitalism seems like a totally selfish system in which one looks out for oneself to get whatever one can financially. However, this is not true. The reason is that in a capitalist system, the only way one gets paid is to offer a product or service that others want and therefore are willing to pay for. This is a great secret of business that is sometimes expressed as “the customer is always right”. In other words, one must look out for others, not just for oneself. This fact is overlooked by the socialists. As a result, in fact, in socialist nations the people are much worse off because the leaders, who claim to want to do for the people, do not know and often do not care what the people really want. Instead, they give the people what they, the leaders, think the people want or should have, and not what the people really want. In other words, capitalism is usually must less selfish and narrow-minded than socialized or command economies in which a central authority dictates which products and services will exist and their prices.

Now, it is true that in capitalist nations, some become much wealthier than others. However, the reason for this are important to consider. An important reason this occurs is that some are willing to work harder. Socialist systems favor laziness, in contrast. The willingness to work hard is a great benefit for society, so it would make sense that these people are paid more for their efforts.

One must not just work harder to make more money. One must also work in a way that satisfies people’s needs. In a capitalist system, working hard at building products that no one wants does not make one money, in other words. One must also use one’s brain and other abilities in a way that satisfies the needs of the people. This, too, is a benefit, in general, so it makes sense these people would receive more compensation.

What occurs today, however, is often due to corruption. For example, certain industries have passed laws that exclude others or give themselves special tax breaks. These include the oil industry, the real estate industry, the medical industry and others. So people who work in these industries often make a lot of money even if they don’t work hard or satisfy people’s real needs. However, this is not a problem with capitalism, but a problem with human integrity and not allowing pure capitalism to exist in America and elsewhere because the government tinkers with it for various reasons.

WHAT ABOUT CARING FOR THE POOR AND THOSE WHO ARE DISABLED OR OLD OR CANNOT WORK FOR SOME REASON?

This is another criticism of capitalism. It takes the attitude that if you don’t work, you don’t eat. This is true. Capitalism is about the production of goods and services in the most efficient manner. It must be coupled with a moral code, such as that in the bible, that commands people to love their neighbors as themselves, and to care for others. What occurs in pure capitalist nations, and used to occur more in America when capitalism was purer, is the devlopment of private welfare. Whether organized by churches or other civic groups and associations, groups spring up everywhere to care for the poor, the sick, the old, the disabled and other who cannot produce economically. This fact is not taught in schools, but is the absolute truth. The idea that the poor will just languish on the streets without government intervention is a complete lie that is repeated endlessly on television and in the universities today.

In fact, private welfare, private hospital care and private old age care tend to assist people to develop themselves spiritually much more than the entitlement mentality of a so-called right to health care and welfare that many believe in today. This is discussed in another article on this website called What is Compassion? What is Charity?

CONCLUSION

The moral dimension of human beings is the most important one, as stated earlier. Capitalism, for all its seeming harshness, in fact helps people develop themselves. Thus it is a helpful system, much moreso that the welfare state concept, for example, and far more than slavery, feudalism and other systems that have been used in the near and distant past in many civilizations.

The more that each person’s activities are pre-determined or controlled by laws, rules, regulations, prohibitions or mandates, the less each person is able to exercise moral judgment and the less he or she is responsible for behavior. As a result, freedom is an absolute requirement for moral behavior and development.

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