Interesting piece. I would argue that there's a foundational element missing though - a common understanding of what capitalism means, and what its perceived opposite, socialism, means (after all, our society is based on elements of both). Pure capitalism, for instance, relies on the premise that our business ecosystem is "frictionless" - something I think most of us would agree is false. We throw these words around like the political axes you describe boiling a complex, interactive, ecosystem into a faulty and simplistic "black and white" dichotomy.
The other thought I had is that consumerism isn't just about purchasing things - but purchasing advantages and a freedom that unintentionally heighten inequality. Two examples spring to mind: first, public schools must provide accommodations to children with disabilities - but in order to prove those disabilities parents must often buy expensive, private evaluations and work their way painfully through a complicated, bureaucratic system. As a result, the children most likely to benefit from school services and support are more likely to be from privileged, well-educated families, creating further disparity in the public education system from the "haves and have-nots".
Second, after law school many of us felt forced to work in large corporate law firms to pay off our extensive law school loans. Those without those debts due to their backgrounds were often the ones most "free" to go into public interest or non-profit jobs. My concern with this is similar to what you discussed with philanthropy. What is the long-term impact on public interest sectors if they are disproportionally represented by those who don't come from the backgrounds or communities they represent?
When I read the opening paragraph, I was tempted to stop and write a comment saying that I think capitalism is neither moral nor immoral. It is a tool. Morality comes into play when we made choices about how to use capitalism. Having read the whole piece, I stand by my first thought. A knife can be used for murder or, in the hands of a skilled surgeon, to save a life. It is but a tool.
What I think government can do, should do and, to some degree, does, is encourage our use of capital for good things. A tax deduction to encourage philanthropy is, I believe, a good thing. Now, is some giving done for self-serving purposes? Sure. So? Is the giving therefore not a good thing? No. I'd argue that government should find other ways to encourage private capital being put to good use.
In non-capitalist countries, how do things get done? Someone makes a profit, even if it is illicit. No one voluntarily works for nothing. If a dam needs to be built in the land of some dictator, is everyone involved in the project doing it for nothing? I rather doubt that. Are the incentives smaller than here? Probably so, except for a few, but surely there is some pay involved, even if it only takes the form of subsistence food. In such places, capitalism is not the free market we have here, but is it not still capitalism in the sense that people work for the hope of some reward?
David, it is interesting you are writing this column within 24 hours of yesterday's announcement that Monday was the hottest day in recorded history, and that scientists are "scared" at the unexpected and increasing number of heat records being broken at quicker rates than previously anticipated. Is Citizen's United a direct consequence of capitalism allowing the wealthiest people to have undue influence by perpetrating self serving laws that advantage them? I would argue that capitalism is a tool for allocating resources efficiently, and that capitalism's greatest contribution can only be achieved with proper guard rails that prevent the types of abuses that we see all too often in today's world. We cant yell fire in a theater because we understood there are limits beyond which the advantages of free speech will be occluded. As an example, if we enacted a carbon tax, it would be the single most effective tool to fight climate change and save the possibility of a bright future for future generations. By putting a price on carbon, the capitalist system would reallocate resources quicker and more efficiently than by any other means, so in that sense, capitalism is uniquely positioned to help save the future for our children, but unfettered capitalism like unfettered speech will doom our future- which will be upon us sooner than you think. Citizen's united and Social media (like Musk's twitter) that remove any reasonable safeguards will destroy all the good that Capitalism (and free speech) can have. The morals are in the establishment and policing of those guardrails. Without those guardrails that reflect the values of a society, unfettered capitalism will quite possibly drive us to distinction far more efficiently than any other organizing principle precisely because of its efficiency, without regard to morality. Thanks for exploring this critically important issue. Best Michael
In school, I was taught that the US runs on a combination of capitalist and socialist mechanisms. But the far right point of view: "if you're not capitalist, you're communist and unAmerican" has upset the balance of the humanitarian and moral perspective and its services we used to have. But as you pointed out, pure unadulterated capitalism requires constant growth. That's unsustainable both because we have finite resources, and, with stagnant wages and runaway inflation, dwindling means to fuel economy. I think that as a country, we have installed profit as the ultimate goal rather than any humanitarian or moral good that those profits could be used for (such as raising the floor of our standard of living, or overall health or happiness of our population). I increasingly read and hear that people who want to affect some humanitarian or ecological practices on a large-scale can't "afford" to because of a lack of economic incentive: they're not priced in to do good. I'm not saying that good people or programs should be run at a loss, but that without a national push (whether grassroots, corporate, or state), to put humanitarian goals above profit, our country will crush the middle class and deplete the planet in its worship of capitalism.
If the end product of capitalism is just money.. accumulation of wealth without purpose and just for privilege, we will have a quickly dying planet. The average household out east consumes approximately 800,000 galons of water a year. The privileged are consuming 13 million gallons.
Really interesting post. I wonder whether there are parallels with solving more “economic problems” with growth, and solving more “scientific problems” with knowledge.
David Deutsch mentions we are at the beginning of infinity in that there is an infinite amount of knowledge ahead of us that we will uncover. Whilst I often agree with his take, I sometimes step back and think; and what is the motivation of wanting to know more in the first place?”
Is that curiosity for “more” knowledge inherent in us? And by extension, if we see money/economic productivity as a narrow way of knowing “more”, then can that explain our propensity for economic growth somewhat?
Without any statistics to back me up, I would still posit that Communism in China since Mao has lifted more people out of poverty in a shorter period of time than any government/system in human history. But aren’t they just trying to do the thing you rail against - grow their economy to allow their citizens to consume more? If the end result is the same, how does the economic model matter? In the end, everyone wants to consume more whether communist or capitalist. And I can’t think of a truly socialist system that works beyond the scale of a kibbutz. In the end, you’re arguing against human nature (easier to do once you’ve already ”made it”) and good luck with that!
I'm not railing against capitalism/free enterprise or advocating socialism.
I'm questioning, without concluding, whether we have taken our system too far. I think it's healthy and mind expanding to question my "priors," especially, if I've held them for so long.
I like the comparison you make between knowledge and wealth accumulation and the urge to keep going in both realms even when the returns diminish or even become harmful to enjoyment of life. We compare the living standards of prior, long ago eras to our own and conclude, rationally, that we would never want those standards for ourselves. But how do we know that people were not happier then, living in a world that was not "disenchanted" by so much progress.
Lifting people above $2 a day is depressingly meager, and yet also much better than not doing it. My understanding is that various higher benchmarks also show progress, although I’m not familiar with the $7 one.
Could we and should we be doing better? Yes!
Having said that, humanity has never before made more progress, and I believe the global gini coefficient is actually falling.
So it’s very confusing. I’m optimistic that progress on global wellbeing will continue to accelerate, and I think capitalism and the growth it generates are vital aspects of that. At the same time, I’m extremely disappointed in people’s lack of generosity.
Interesting piece. I would argue that there's a foundational element missing though - a common understanding of what capitalism means, and what its perceived opposite, socialism, means (after all, our society is based on elements of both). Pure capitalism, for instance, relies on the premise that our business ecosystem is "frictionless" - something I think most of us would agree is false. We throw these words around like the political axes you describe boiling a complex, interactive, ecosystem into a faulty and simplistic "black and white" dichotomy.
The other thought I had is that consumerism isn't just about purchasing things - but purchasing advantages and a freedom that unintentionally heighten inequality. Two examples spring to mind: first, public schools must provide accommodations to children with disabilities - but in order to prove those disabilities parents must often buy expensive, private evaluations and work their way painfully through a complicated, bureaucratic system. As a result, the children most likely to benefit from school services and support are more likely to be from privileged, well-educated families, creating further disparity in the public education system from the "haves and have-nots".
Second, after law school many of us felt forced to work in large corporate law firms to pay off our extensive law school loans. Those without those debts due to their backgrounds were often the ones most "free" to go into public interest or non-profit jobs. My concern with this is similar to what you discussed with philanthropy. What is the long-term impact on public interest sectors if they are disproportionally represented by those who don't come from the backgrounds or communities they represent?
When I read the opening paragraph, I was tempted to stop and write a comment saying that I think capitalism is neither moral nor immoral. It is a tool. Morality comes into play when we made choices about how to use capitalism. Having read the whole piece, I stand by my first thought. A knife can be used for murder or, in the hands of a skilled surgeon, to save a life. It is but a tool.
What I think government can do, should do and, to some degree, does, is encourage our use of capital for good things. A tax deduction to encourage philanthropy is, I believe, a good thing. Now, is some giving done for self-serving purposes? Sure. So? Is the giving therefore not a good thing? No. I'd argue that government should find other ways to encourage private capital being put to good use.
In non-capitalist countries, how do things get done? Someone makes a profit, even if it is illicit. No one voluntarily works for nothing. If a dam needs to be built in the land of some dictator, is everyone involved in the project doing it for nothing? I rather doubt that. Are the incentives smaller than here? Probably so, except for a few, but surely there is some pay involved, even if it only takes the form of subsistence food. In such places, capitalism is not the free market we have here, but is it not still capitalism in the sense that people work for the hope of some reward?
The question must always be: compared to what? What alternative is demonstrably superior?
David, it is interesting you are writing this column within 24 hours of yesterday's announcement that Monday was the hottest day in recorded history, and that scientists are "scared" at the unexpected and increasing number of heat records being broken at quicker rates than previously anticipated. Is Citizen's United a direct consequence of capitalism allowing the wealthiest people to have undue influence by perpetrating self serving laws that advantage them? I would argue that capitalism is a tool for allocating resources efficiently, and that capitalism's greatest contribution can only be achieved with proper guard rails that prevent the types of abuses that we see all too often in today's world. We cant yell fire in a theater because we understood there are limits beyond which the advantages of free speech will be occluded. As an example, if we enacted a carbon tax, it would be the single most effective tool to fight climate change and save the possibility of a bright future for future generations. By putting a price on carbon, the capitalist system would reallocate resources quicker and more efficiently than by any other means, so in that sense, capitalism is uniquely positioned to help save the future for our children, but unfettered capitalism like unfettered speech will doom our future- which will be upon us sooner than you think. Citizen's united and Social media (like Musk's twitter) that remove any reasonable safeguards will destroy all the good that Capitalism (and free speech) can have. The morals are in the establishment and policing of those guardrails. Without those guardrails that reflect the values of a society, unfettered capitalism will quite possibly drive us to distinction far more efficiently than any other organizing principle precisely because of its efficiency, without regard to morality. Thanks for exploring this critically important issue. Best Michael
In school, I was taught that the US runs on a combination of capitalist and socialist mechanisms. But the far right point of view: "if you're not capitalist, you're communist and unAmerican" has upset the balance of the humanitarian and moral perspective and its services we used to have. But as you pointed out, pure unadulterated capitalism requires constant growth. That's unsustainable both because we have finite resources, and, with stagnant wages and runaway inflation, dwindling means to fuel economy. I think that as a country, we have installed profit as the ultimate goal rather than any humanitarian or moral good that those profits could be used for (such as raising the floor of our standard of living, or overall health or happiness of our population). I increasingly read and hear that people who want to affect some humanitarian or ecological practices on a large-scale can't "afford" to because of a lack of economic incentive: they're not priced in to do good. I'm not saying that good people or programs should be run at a loss, but that without a national push (whether grassroots, corporate, or state), to put humanitarian goals above profit, our country will crush the middle class and deplete the planet in its worship of capitalism.
If the end product of capitalism is just money.. accumulation of wealth without purpose and just for privilege, we will have a quickly dying planet. The average household out east consumes approximately 800,000 galons of water a year. The privileged are consuming 13 million gallons.
Really interesting post. I wonder whether there are parallels with solving more “economic problems” with growth, and solving more “scientific problems” with knowledge.
David Deutsch mentions we are at the beginning of infinity in that there is an infinite amount of knowledge ahead of us that we will uncover. Whilst I often agree with his take, I sometimes step back and think; and what is the motivation of wanting to know more in the first place?”
Is that curiosity for “more” knowledge inherent in us? And by extension, if we see money/economic productivity as a narrow way of knowing “more”, then can that explain our propensity for economic growth somewhat?
Without any statistics to back me up, I would still posit that Communism in China since Mao has lifted more people out of poverty in a shorter period of time than any government/system in human history. But aren’t they just trying to do the thing you rail against - grow their economy to allow their citizens to consume more? If the end result is the same, how does the economic model matter? In the end, everyone wants to consume more whether communist or capitalist. And I can’t think of a truly socialist system that works beyond the scale of a kibbutz. In the end, you’re arguing against human nature (easier to do once you’ve already ”made it”) and good luck with that!
I'm not railing against capitalism/free enterprise or advocating socialism.
I'm questioning, without concluding, whether we have taken our system too far. I think it's healthy and mind expanding to question my "priors," especially, if I've held them for so long.
I like the comparison you make between knowledge and wealth accumulation and the urge to keep going in both realms even when the returns diminish or even become harmful to enjoyment of life. We compare the living standards of prior, long ago eras to our own and conclude, rationally, that we would never want those standards for ourselves. But how do we know that people were not happier then, living in a world that was not "disenchanted" by so much progress.
Lifting people above $2 a day is depressingly meager, and yet also much better than not doing it. My understanding is that various higher benchmarks also show progress, although I’m not familiar with the $7 one.
Could we and should we be doing better? Yes!
Having said that, humanity has never before made more progress, and I believe the global gini coefficient is actually falling.
So it’s very confusing. I’m optimistic that progress on global wellbeing will continue to accelerate, and I think capitalism and the growth it generates are vital aspects of that. At the same time, I’m extremely disappointed in people’s lack of generosity.