Before embarking on what might sound regrettably akin to the panegyrical blatherings of a free-market ideologue, I should provide a couple caveats. First, I probably have presented myself in the previous piece (and may portray myself again here) as a sort of Friedmannian, unreserved capitalist zealot. I am a big fan of the Invisible Hand, but I am also in favor of certain types of government intervention into the market system. For example, I think it's good that firearms cannot be sold to those whose criminal records include certain types of violent felonies; it's good that many types of medication cannot be sold without a prescription; it's good that tobacco and alcohol cannot be purchased by people under the ages of 18 and 21, respectively. It's also good that intellectual property is protected by law, good that binding contracts are enforceable by law, and good that both corporate conflict of interest and insider-trading a proscribed by law. I'm also in favor of taxes to raise capital collectively for projects we could not fund individually: paving roads; building schools; raising a police force; providing for the common defense (maintaining the armed forces); &c. Second, I am not so enamored with capitalism as to be under the delusion that it is without fault. I admit: it is not a perfect system, and continues to require fine-tuning to improve it.
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That being said, I will soon begin an account of the moral achievements enabled by capitalism, after showing the practical benefit (i.e. generation of wealth) in the previous entry. But first, I want to return to one more piece of evidence of a pragmatic nature: Communist (with a capital "C") states. States formerly of a Marxist persuasion include Albania (until 1990), Afghanistan (until 1992), Angola, Bulgaria (until 1989), Cambodia (until 1993), Chile, the Republic of Congo (until 1992), Czechoslovakia (1989), East Germany (until Nov 9, 1989), Ethiopia (1991), Hungary (until 1989) , Moldova (until 1991), Mongolia (until 1990), Mozambique (until 1990ish), Nicaragua (until 1990), Poland (until 1989) , Romania (until 1989), the USSR (until Dec 26, 1991), PDR Yemen (until 1990), and Yugoslavia (until 1991). The theme here, other than the years between 1989 and 1992 inclusive were none too kind to the proletariat, is that all of these places eventually threw off their red hats, either through freely held elections or revolution. Why? Because Marx's promises couldn't deliver the goods they promised.
And take a look at the five remaining avowed Communist (capital C) states: Cuba, DPRK, Laos, the PRC, and Vietnam. The penultimate member of that quintet, having posted double-digit GDP growth for four consecutive years—and an average annual GDP rate of 9.4% for the past 25 years—is blasting ahead at a pace inconceivable. Due to their strict adherence to the tenets of M&M (Marx and Mao)? No, because of the liberalization of their economy and move toward market reforms, as Deng Xiao Ping recommended in his oft-quoted saying, "It doesn't matter if the cat is black or white, as long as it catches mice." Laos and Vietnam? Not looking so hot in the 22nd and 31st percentiles of per capita GDP, respectively.
* As for Cuba and the DPRK? There is a complete IMF data vacuum for both countries, but we can infer with confidence that the figures for both would be somewhere between ghastly and abysmal. (And I will conjecture with less certainty that both nations keep their economic data hidden from the IMF and global community at large, at least in part, to keep themselves and their chosen economic systems from further disgrace.)
In sum: No fewer than 20 states have formally renounced the Party line in as many years; of the five nations still clinging on, three, having all but officially abandoned Communist doctrines, are Communist in name only, and the other two…well, a gentleman ought not speak so ill of anyone's Gross Domestic Problem. So toward what conclusion I am trying to lead you from these fun little romps through history and economics? (I suppose it should be fairly obvious given the title of this posting.) Actually, there are several inferences one can make from the above, so let's take them one one at a time:
1) As already suggested, the promises of Marx simply fail to materialize.
Conclusion: The shortcomings are structural, and the system as a whole is to blame.
2) (Far and away the most popular argument made by Marxists today,) The requisite conditions for the Proletariat Revolution have never been met in any of the states that have attempted to implement Marx's ideas, thus the fiascos in these states cannot be construed as failures of Communism proper. The EU, with its well-developed capitalist economies, is moving toward socialist governance, and may one day well realize the Marxist ideal.
Conclusion: No place has that has experimented with Communism met the preconditions necessary, so we still have no working models yet on which to base the success of this system relative to capitalism. We'll wait and reserve judgement. (And don't hold the EU up as some Marxist Utopia: "approaching" Communism and "at" Communism are two totally distinct states of being.)
3) Despite the absence of the prerequisites, Communism could have worked in some of the 20+ places where it fell apart, but it was plagued with tyrannical leaders, misappropriation of resources, incompetent mismanagement, and woefully ill-conceived experimental programs (think: the Great Leap Backward).
Conclusion: Okay maybe, but the fact that you need an insanely loose definition of "success" to deem any of the aforementioned attempts at Communism as "successful," should alert us that this is probably an inherent problem, not a series of unfortunate coincidences. Uniparty, absolute power-style governance precludes the sort of checks and balances that protect against the very abuses of power and fascist tendencies that plagued those now-fallen regimes. If you accept this premise, you can see that the intense concentration of power necessary to conduct a centrally planned economy frequently (or invariably) results in someone misusing his authority at the expense of the masses he's vowed to protect.
So, in (1) and (3), we see that the system is just fundamentally flawed. In (2), we have no evidence yet to draw clear conclusions, but that leads me to wonder if the conditions will
ever be manifest in a way that results in Marx's prediction. If they do not, then his theories, for all practical purposes, are useless.
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And now, on to today's main event.
Eddie commented on the preceding post that
"you seem to emphasize how capitalism eventually uses self interest for the public good. Others will argue that this is not a goal of capitalism, and others will go so far as to say the good that is enacted is done so out of the realm of a capitalistic society - that people break the tenents of capitalism to do good, and that this is okay." I confessed to him that this was the "fault of my unclear prose. I do not think capitalism 'intends' to do good, nor do I think it is inherently morally superior. My point was that regardless of the intent of Smith, Friedman, et. al, the *effect* of helping improve the quality of life for so many people is good. As to "breaking the tenets" of capitalism (by which I assume you mean things like charity, and giving money to people/causes that will not repay), this is made possible only because the capitalist model generate[s] the excess wealth to be given away. More clearly, I meant to say:
Capitalism produces good results, which in turn can be used for moral ends." So a note to all my assiduous readers: whenever I use the terms the "moral superiority of capitalism," or the "virtue of capitalism" this is just shorthand for "the moral ends that can be achieved with the wealth that capitalism enables us to produce."
In
Money and the erosion of meaning in today’s society, Craig Gay says, “democratic capitalism has been and continues to be an astonishingly good system. No other…economic system in human history has been nearly as productive. No other system has so emancipated so many ordinary people from poverty, political oppression, and the irrationalities and inefficiencies of traditional habits and customs.”
† Here is my own version: The capitalist system has provided more economic, social, and physical benefits to a greater number of people than any other economic system, probably because it rewards hard work, and encourages innovation and invention. The Industrial Revolution, as we all know, was one of the real Great Leaps Forward for Western (than later other) nations. Wikipedia observes, "In the 19th and 20th centuries, capitalism provided the main, but not exclusive, means of
industrialization throughout much of the world." Along with the Agricultural Revolution, it was responsible for the tremendous gains in human life expectancy.
‡As in the previous post, I am trying to move beyond my own ideological allegiance to the capitalist model—although I'm sure on that account, you must consider me a miserable failure—by using empirical data…then twisting it as I see fit to bolster my claims. In other words, I'm not (always) just spouting unsubstantiated poppycock based on arbitrary predispositions; there are real, observable truths that bear out the claims I am making.
If you've made it this far, I have to congratulate you for going through what would seem to most people an egregious amount of drivel. I had a wonderfully serendipitous conversation with Michael (of
Conversation with Michael), in which he sent me a picture of the Berlin Wall he altered through Photoshop. He gave me permission to use it, only asking that I give him credit, and give a
link to his blog, through which you can gain access to his other photos. So, as your reward for trudging through so much text without any images, here's the photo (so apropos, no?):
If you want to see it enlarged, trying clicking on the image at right. When I saw the photo, my first thought was, "how is he offering freedom on the other side of that wall? Isn't this West Germany?" Later Michael explained to me that the picture was actually taken from the (formerly) East German side, but it's a recent photo (after reunification), which explains the trappings of wealth.
Anyway, if you accept the moral of yesterday's tale that capitalism is much more conducive to producing prosperity ex nihilo, then consider the following: Capitalism, for complex reasons I cannot fully appreciate, enables people to generate financial wealth, which can be shared and subsequently exchanged for other types of wealth: health care, education, food and clothing, shelter, peace of mind. As a system, it has proved far superior to making people rich, in all the manifold and nuanced senses of that word. If people are selfish, and choose not to share the money that capitalism has helped to provide, that is the moral failing of nations, societies, and ultimately, of individually selfish people; it is not the fault of capitalism.
In fact, the problem with a socialist system is that it denies people the freedom to choose whether they prefer to contribute to social good. They are forced to, since the government owns all property and the "means of production," and one must completely surrender to government demands. The beauty of democratic-capitalism is that people can (more or less)opt in or out of helping others. We feel good knowing that we are charitable not because it is mandated, but because we genuinely desire to improve the lives of others. Not only this, but capitalism has been the force which has generated the very dizzying volumes of cash that have made philanthropy possible at all.α
Ok, it's getting quite late, so I'm going to wrap this up. I will close with a selection of quotes from some of the world's capitalist gurus, individuals, who by the way, do believe in the inherent moral superiority of capitalism. I found these at eircom.net; click on the link for more of the same. If you still remain in opposition to me after reading these, stare down at your laptop or PC for just a second, consider the monstrous, mega-corporation that produced it, slap yourself silly and then gouge out your eyes à la King Lear for the shameful and repugnant hypocrisy you've displayed in a) even using such a device at a library or a friend's house; or even worse b) actually buying the computer, thereby bankrolling said evil corporation. You're financing a psychopath.
"The vice of capitalism is the unequal share of the blessings; the virtue of socialism is the equal share of the misery." -Sir Winston Churchill
"Certainly it is a great unhappiness to be poor, but it is an even greater unhappiness to be surrounded by people as poor as oneself. Lacking wealth oneself, one must wish wealth for others : an indigent has infinitely greater possibilities for earning his living and becoming well-off if he lives among a rich population, than if he is surrounded by poor people like himself. And note here that the hope of the poor is not founded upon the charity of the rich, but upon the interest of the rich. It is in his own interest that the rich man supplies the poor man with land to cultivate, tools, fertilizer, and seeds, and with food on which to live until the harvest." - Jean-Baptiste Say
"Capitalism has created the highest standard of living ever known on earth. The evidence is incontrovertible. The contrast between West and East Berlin is the latest demonstration, like a laboratory experiment for all to see. Yet those who are loudest in proclaiming their desire to eliminate poverty are loudest in denouncing capitalism. Man's well-being is not their goal." - Ayn Rand
"The man at the top of the intellectual pyramid contributes the most to all those below him, but gets nothing except his material payment, receiving no intellectual bonus from others to add to the value of his time. The man at the bottom who, left to himself, would starve in his hopeless ineptitude, contributes nothing to those above him, but receives the bonus of all of their brains. Such is the nature of the 'competition' between the strong and the weak of the intellect. Such is the pattern of 'exploitation' for which you have damned the strong."- Ayn Rand, "Atlas Shrugged"
"What they have to discover, what all the efforts of capitalism's enemies are frantically aimed at hiding, is the fact that capitalism is not merely the 'practical,' but the only moral system in history." - Ayn Rand, "Capitalism: The Unknown Ideal"
"The plaints and wails of poets and preachers about the sins and errors of the capitalist system screech through intellectual history, while friendly voices are few. Yet no other system has resulted in so many books being published, schools founded, churches built, philantrophies undertaken, and intellectual and religious liberties maintained." - Michael Novak, "The Spirit of Democratic Capitalism"
"Capitalism and communism stand at opposite poles. Their essential difference is this: The communist, seeing the rich man and his fine home, says: 'No man should have so much.' The capitalist, seeing the same thing, says: 'All men should have as much.'" - Phelps Adams
"Capitalism is an art form, an Apollonian fabrication to rival nature. It is hypocritical for feminists and intellectuals to enjoy the pleasures and conveniences of capitalism while sneering at it…Everyone born into capitalism has incurred a debt to it. Give Caesar his due." - Camille Paglia
"Imagine that a genie magically appeared and offered to grant you one wish - and, being a decent sort, you wished that everyone's income would be doubled. That could bring down on you the wrath of the political left, because it would mean that the gap between the rich and the poor had widened. That is basically their complaint against the American economy." - Thomas Sowell
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*Actually, according to the Wikipedia article on the Vietnamese economy, "Vietnam achieved around 8% annual GDP growth from 1990 to 1997 and continued at around 7% from 2000 to 2005, making it the world's second-fastest growing economy." Why? "In 1986, the Sixth Party Congress introduced significant economic reforms with market economy elements as part of a broad economic reform package called "đổi mới" (Renovation). Private ownership was encouraged in industries, commerce and agriculture." The CIA World Factbook similarly notes, "Growth averaged around 9% per year from 1993 to 1997. The 1997 Asian financial crisis highlighted the problems in the Vietnamese economy and temporarily allowed opponents of reform to slow progress toward a market-oriented economy. GDP growth averaged 6.8% per year from 1997 to 2004 even against the background of the Asian financial crisis and a global recession, and growth hit 8% in 2005 and 7.8% in 2006. Since 2001, however, Vietnamese authorities have reaffirmed their commitment to economic liberalization and international integration. They have moved to implement the structural reforms needed to modernize the economy and to produce more competitive, export-driven industries."
Of Laos, the CIA World Factbook also notes "The government of Laos, one of the few remaining official Communist states, began decentralizing control and encouraging private enterprise in 1986. The results, starting from an extremely low base, were striking - growth averaged 6% per year in 1988-2006 except during the short-lived drop caused by the Asian financial crisis beginning in 1997."
†Sorry, I don't have the full bibliographic reference available to me now. When I have access to it, I will add it to this footnote.
‡For example, take a look at my little chart:
Life expectancy (Avg. lifespan, in years)
1. Moses' day: 18
2. Jesus’ day: 28
3. 1800: 37
4. 1900: 50
5. Today: 70-80 (depending on location)
αThink about this for a moment. When and with whom did philanthropy as we know it begin? With the John D. Rockefeller and Standard Oil, J.P. Morgan (whose financial institution still exists as JP Morgan Chase), and Andrew Carnegie of US Steel, all in the days of (an excessively) deregulated market system. Nor are today's philanthropers, like Bill & Melinda Gates, and Google's Sergey Brin and Larry Page, the products of central planning. I don't know all the details of how Warren Buffett's Berkshire Hathaway made its billions, but I'll let you in on a secret: it wouldn't have (and hasn't) happened under any model other than capitalism. Doing Adam Smith proud. ☺
One might conclude from last year's White Christmas, Part II posting (so-named because it centered on Jennifer, a white relation who infested our holiday celebration,) that I was not enrapt by Jennifer's attendance. You might conclude that I had wished her removed from my presense. You might even conclude that I despise Jennifer. You might be right, on all three counts..JPG)
[Where'd my double eyelids go? You can't see them, and neither can I, because my eyes are swollen to the point of being nearly shut. That shiny glaze you see on my skin is not facial oil; it's the ointment I am applying to my epidermis to counteract the eczema.]
I am not unaware, however, that my magnificent coefficient of 0.7252 does not ultimately prove that capitalism is inherently a "better" system. (Maybe the only thing it really does show is that I truly do have too much leisure at my disposal.) Nonetheless, I think it provides weighty evidence that an increase in liberalism is correlated with an increase in personal wealth, which is a good thing.β And in the end, I'm sure both Karl and "Karl" would rather be rich than poor.
