Lots of funny statements on the web and elsewhere about capitalism and what it means. Some accuse others of trying to change our country and its economy to a socialist model. Capitalism is variously described in the Ayn Rand terms of the super people knowing what’s best and circling the wagons to shield capitalism from the really dumb and evil people. The main point of that kind of capitalism is that there a chosen few who really know how to do things, while “the others” sit in a corner and suck their thumbs while getting “freebies” from the “Dumb controlled” government.
Others see capitalism in the form of social Darwinism. It is those people who believe that the successful will survive and make the world a better place. These people are all self-made, have no help from anyone else and rise to the top no matter what is put in their way. We look to people like Steve Jobs, Ross Perot, Bill Gates and Paul Allen. You can probably add such old timers as Henry Ford, John D. Rockefeller, Andrew Carnegie and others.
There are a new set of philosophies that center about world trade and international competition. These folks believe that without proper training for our workers, the capitalist system will not work for the United States. Therefore, we must remove our companies to other parts of the world where the workers are better trained and, by the way, get paid so much less than our workers. Yes, international competition is the flavor of the day and those with lower paid workers seem to be winning.
This does not seem to be the Adam Smith way of expressing capitalism. Smith’s long ago view was certainly based on the rise of the middle class and the competitive nature of what would become an economic engine in England (actually Scotland and England). Not sure that he was involved with moving industry away from his country.
Teddy Roosevelt was one of the first in our country, in a position of authority, to see what would happen if capitalism devolved into cartels, price fixing, and Robber Baronism. His “Trust Busting” was more a release of true capitalistic fervor with open markets openly arrived at. Somehow, we are heading back to the pre-Roosevelt era of control of industries by just a few titans.
Adam Smith, the creator of the economics that dragged the world out of mercantilism would have hated monopolies and cartels. Although he did not talk about entrepreneurship, he certainly had faith in humanity. He knew, somehow, that a free market economy would thrive. He was an advocate of John Locke and the goodness of man. Smith wrote the Wealth of Nations in 1776 (quite a coincidence).
Since the profit motive is one of the bases of Smith’s agenda, what does it really mean today?
Since I do live in Pennsylvania, we are having a great debate about taxing natural gas drillers. Without going through the environmental discussion, the companies that drill do not want such a tax. Every other state in the nation that drills has a tax at the well head. We don’t. The answer to the tax question is that the companies will pass it on to the consumer. My question is WHY. Does each company have an iron clad bottom line that they must consistently have to continue business here? Have they not made substantial profits after they came to Pennsylvania? Without us, their companies would not be in such great financial positions. Can they not help us out with some of our financial problems while they maintain a healthy bottom line? Must they always have the percentage profit that they anticipate? Will not more drilling make them more profitable? I guess I just don’t understand.
I believe that we have muddled up capitalism. The great human engine that inspires humans to succeed is sometimes thwarted by those who have already made it big. Some of these people have hereditary advantages over the hoi polio. If you begin your career with a pre-established business because of your parents, you begin your economic life with an advantage. If you have seen those people on TV. or in other media outlets, you should really close them down and turn off the media you are looking at or hearing. That isn’t really capitalism. That is something that was fought about at the beginning of the modern age. I believe it was called primogeniture.