I am reading The Morality of Capitalism, and I am completely intrigued by every essay.
The first section discusses the “virtues of entrepreneurial capitalism,” which clarifies the false myths about capitalism. First of all, capitalism is often equated with “survival of the fittest” competition. This is half true, because businesses that prosper are headed by creative and innovative individuals, which I suppose can be considered to be the “fittest.” It is true that “competition” is a component of capitalism, but competition is not necessarily always bad.
I have a personal experience with competition that I would like to share. I took a challenging class my senior year of college called Psychobiology. In this class, there were two students that were biology graduate students. These students had an obvious advantage over the rest of the students, which were primarily psychology undergraduates (including myself), because they had an undergraduate degree in biology and were biology graduate students. This class dealt with the chemistry, anatomy, and biology of the brain.
It just so happened that the graduate students scored 110 out of 100 on our first exam. And according to the professor, if a few individuals were able to pass and score higher than 100 on the exam, then it was not his teaching that was flawed but rather the effort put forth by the students.
This angered the majority of the students taking the class because the majority failed the first exam, including myself. I was bothered by this because I knew I had to put in more effort. Still, I refused to get anything less than a B. I was motivated to do better when my professor decided to make a deal with us and replace our first exam with the second exam grade if, and only if, we received a B or higher on the second exam.
So I did what any determined student would do — I read my textbook, recorded the lectures and listened to each twice, took diligent notes, and recited the information I was learning to anyone who cared to listen. All of these techniques helped me retain the information better for the next exam. I ended up getting an 96 on the next exam. Most of the other students still failed though. In a class that started out with 60 students, only 15 did not drop. I am proud to say that I ended up getting an A in the class, but what I value most about that experience is the knowledge and lesson I took from it.
Those girls, by virtue of pursuing their own self-interest (i.e., maintaining the required 4.0 GPA for graduate school), unknowingly motivated me to push myself and excel in, what I considered to be, a difficult course. In addition, since my professor chose not to water down his class and hand out undeserved good grades, he too motivated me to do better than I would have otherwise. Isn’t it amazing how a pure environment, unencumbered by a higher “force” can generate better results for those willing to earn them by means of competition?
So, my understanding of capitalism is that a true free market does not contain government interference. Nowadays, the government interferes with the free market, which is not true capitalism. Bailouts are inconsistent with capitalism and are actually crony capitalism, or corporatism. In a free market, you cannot bail out those who fail because the free market works off of the choices made my consumers, investors, entrepreneurs, and workers.
Choice is a very important part of life, which is why the next aspect of capitalism, cooperation, is extremely relevant. In order for a free market to work, individuals have to cooperate. The consumer must cooperate with the entrepreneur in order for a transaction to take place.
For example, Steve Jobs (R.I.P.) has created products that many people consider to be of value and worth paying a lofty amount to acquire. The consumers have determined the price that Apple can charge for its products because people are willing to pay that price. This is cooperation. No one is forcing anyone to purchase Apple products. If people were not willing to purchase Apple products at the current price, then Apple would either have to lower its prices to a price people are willing to pay or go out of business (or export jobs to China because there are too many government regulations on businesses that do not allow Apple to pay high wages and maintain affordable prices for consumers… but that’s a whole other problem!). That’s the way the free market works.
So, if entrepreneurs become wealthy, it is through their ability to create products of value to the consumers, not because they are evil and greedy (well, not all of them), which is a common stereotype of wealthy people. Not only did Apple create a product that is valuable to our society, it created competition. Apple put out the first smart phone, which caused other manufacturers to create smart phones, which essentially lowered the average price of smart phones. Sounds like a win-win situation to me.
What’s my point? Let’s give true capitalism a chance.Published in