Is Capitalism The Enemy? No!

Last week I read a couple of comments on the news and on Facebook that greatly upset me. A couple of songs came to mind. The first was Revolution by the Beatles:

You say you want a revolution

Well, you know

We all want to change the world

You tell me that it’s evolution

Well, you know

We all want to change the world

But when you talk about destruction

Don’t you know you can count me out

Don’t you know it’s gonna be alright

Alright, alright

I used to love that song and it makes so much sense to me. A more current song also came to mind, Shake It Off by Taylor Swift. Not that I am a huge Taylor Swift fan, but the lyrics popped into my mind, and the tune is catchy:

Cause players gonna play, play, play, play, play

And the haters are gonna hate, hate, hate, hate, hate

Baby, I’m just gonna shake, shake, shake, shake

I shake it off, shake it off

Her lyrics are not as poignant as the Beatles, at least to my way of thinking, but I emerged from this funk last week, by concluding I am not going to hate I am going to love. That is what God would have us do.

However, what really set me off was the comment made by a friend who blamed Capitalism for all of our country’s problems. It upset me so much that I sat down and began to think about what exactly is Capitalism? I did some reading, read a lot of wonderful articles about what constitutes Capitalism, and once again emerged from my funk.

I had a boss that told me in order to understand a problem you need to peel back the onion to understand its various layers. Capitalism is just like that. We need to pull back the layers of the onion to understand the issues with this economic system that is central to the prosperity of our nation. By doing this we can understand the systemic nature of poverty in the country, and eventually what to do about it.

Capitalism is first an exchange. It is an exchange that Adam Smith argued made everyone better off. Owners of business provide a product to consumers of said product at an agreed upon price. Though the process of buying and selling, the buyer gets what she wants and the seller makes a buck. Everyone is happy. There are certain givens associated with Capitalism at this point. The consumer of products determine what is produced, and how much, within a particular market. The people who are willing to take the risk to produce said product are free to own the factors of production. However, due to the level of risk they are assuming they receive a higher reward. This market system works well if the players are free to enter and exit as necessary. And, if the playing field is level the number of competitors will grow until the market is efficient. Capitalism is a free market system that rewards innovation and effort, but if rules are created to allow certain players more access than others, it is no longer a free market. This illustrates the second layer of the onion.

This layer involves the institutional foundations of capitalism. There are actually two sides to this coin; the physical logistical elements and social elements including “education, public health, and the law.” In other words, how is each market organized to ensure proper functioning? This includes laws, policies, who is allowed to participate and how they are to participate, and what is the frequency. This is way we call the system of capitalism. It is the system that often times gets a little skewed. What do I mean?

Let’s look at the owners of the means of production. How do they compete within a particular market? How much of a wage do they pay? Who do they hire? How do they hire? Does one company have an advantage over another, and how do they maintain this over time? Who gets to play and who is excluded? The institutional systems associated with capitalism are usually what detractors of capitalism are blaming for the ills of society. I would have to say that they are right. But the question isn’t how evil is this, but what are we going to do about it?

This is where the third layer of the onion needs to be involved. I know some of you will disagree with me, but I think our democratic government is the foundation of our free market. The government establishes the rules required for a healthy market. There are a plethora of rules that have been instrumental in creating the current institutional elements associated with our capitalist system. However, there are several issues that we need to watch. The government needs to resist those with power and money to create law, and/or policies, that give one group of people advantage over others; small local businesses are being destroyed by large chains that have an advantage through large economies of scale; and, entrepreneurism needs to be emphasized in the country once again.

I truly believe the process of Capitalism aligns with Democracy well. Capitalism is an economic system that rewards those who work hard, but it is a system that can be corrupted by allowing the institutions of the system to be corrupted to allow those with power and influence to receive greater rewards at the expense of others. Thus, if the government has been overly influence by the larger players of the institution this will lead to the creation of rules and policies that skew the results in their benefit.

Finally, when you tell me Capitalism is the problem, you need to give me a bit more detail. Also, instead of telling me how bad it is, tell me how you intend to get it fixed. If you want a revolution that leads to socialism, then you can count me out. If you want to throttle my right to free speech because you think your own way is the best, then we have a problem. Remember hate is a two way street. And hate never makes things better; it always makes it worse.

The Apostle Paul does not tell us money is the root of all evil, he tells us the love of money is the root of evil. We have the largest GDP in the world for a reason. However, we are in danger of losing an economic system that supports all due to the corruption of a few. The Horatio Alger stories of the past cannot be denied, but my worry is they will disappear in the future. We can’t let that happen.

And that is my thought for the day!

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