Capitalism creates inequality.
Nature creates inequality. Different socio-economic systems reward different natural inequalities – intelligence, physical health, strength and beauty – by the incentives they create. Capitalism rewards the “bourgeois values” that the Left mocks: success, honesty, perseverance, hard work, prudence, tolerance and civility. Socialism repays cruelty.
Material inequality is the inevitable consequence of material progress. If a new product is created, it probably will not be delivered immediately and simultaneously to every person on earth. So, the first time someone invented something – a hammer of stone, perhaps – inequality immediately appeared in the world.
To demand complete material equality is to demand an end to material progress.
As a result of capitalism, wealth is concentrated in the hands of a few.
Wealth is more concentrated in many socialist and socialist-leaning countries (e.g., South Africa, Zimbabwe and Nicaragua) than in free market countries. Furthermore, the free market automatically provides resources to those who use them most efficiently to improve the lives of consumers worldwide. In contrast, socialism and communism have historically sent resources to the most ruthless and murderous: Lenin, Stalin, Mao Zedong, Castro, Pol Pot, Mugabe, Ortega, Chavez, Maduro.
Trade refers to the literal exchange of a product or service for another product or service. Today, it often refers to the exchange of goods or services for paper IOUs which we call “money”. In a free market, money means documentary evidence that the carrier has provided goods and services that others value as proof that they have voluntarily exchanged their own labor goods for them.
In other words, those who have money in their pockets have benefited others but have not yet received anything of comparable value in return. The idea that such people “hate society” or “society should be given back” is right behind it. They are not indebted, they are indebted.
Uncontrolled markets result in wealth inequality.
The regulated market results in more inequality. In fact, many regulations have been designed to enable “have” to retain and enhance their material advantages. The problem of “regulatory capture”, where regulatory agencies work to benefit industries that were intended to control, is very real.
First, when an agency is initially created, it needs its experts to oversee the industry. Where can it go without art? Second, there is no greater interest in lobbying agencies than in controlling companies Third, if the industry disappears, the reason for the agency’s existence will also disappear, so agency employees have an inherent interest in keeping “their” industry alive, even at the expense of consumers.
After all, there is no such thing as “uncontrolled” market or “uninterrupted” capitalism. The heaviest shackles of a company are forged by its customers and its competitors. In a free market, a company, no matter how big, cannot survive long if it does not satisfy its customers with products and services that are at least offered by its competitors.
Capitalism is a winner-take-all game.
Free market countries have the largest middle-class and upper-class tendencies, which means that most people who “play the game” do quite well.
Yes, 1% own the lion’s share of “symbolic” or “paper” wealth, but they do not own most physical wealth and they certainly do not own more than a small portion of the country’s human capital (e.g., knowledge and experience). Jeff Bezos is a multi-billionaire, but most of his assets are in the form of Amazon stock. He does not own a significant portion of the country’s homes, cars, aircraft, computers, TVs, microwaves, dishwashers, washing machines, etc. Confiscating his assets means he has to sell his stock on Amazon, which will tank his value, causing most of the “assets” to disappear.
Most of us are not talented or innovators, but the free market enables us to benefit from the talents and innovations of others. When someone “wins” and becomes rich by creating a good or service that improves our lives, we also win.
Capitalism enslaves the wages of the workers.
Slavery is an economic system where people can arbitrarily demand the time, labor and production of others. Socialism is an economic system where politically privileged individuals can arbitrarily demand the time, labor and production of others.
In the capitalist system no one can force me to be a slave or to work. But by the same token, I cannot enslave others; I can’t force them to give me food, clothing and shelter. If I want these things, I either have to make them myself – in this case I will probably live in extreme poverty – or I must make products and services that I can exchange them for.
Capitalism rewards merit and rewarding people on the basis of merit is inequality.
Yes, that’s right. Selecting people on the basis of merit is discriminatory – that is, it is “recognition and understanding of the difference between one thing and another.”
But if I have to choose between candidates – whether for a job, for promotion, or for university or club admission – I’m forced to choose, well … And if there is a basis for my choice, then I am looking for the difference between one person and another.
For my responsibility to my organization, I must discriminate against the “qualifications” defined by the characteristics that my organization thinks will best serve the organization’s goals.
Capitalism drives corruption.
After the Civil War, corporations repeatedly tried and failed to form cartels so that prices were high and competitors could not enter the market. Every attempt failed because no one in the cartel could use force to protect the cartel members from deception. Incentives for low prices and market share were very good.
The problem was “solved” in the progressive era, when the government created cartels to prevent “destructive” competition and created bodies such as the International Trade Commission, the Federal Trade Commission and the Federal Reserve Bank to enforce the rules.
FDR’s New Deal has expanded its cartels into agriculture and the automotive and airline industries, while LBJ’s Great Society Medicare and Medicaid programs have expanded their healthcare programs.
In short, the progressives have created government-backed cartels and monopolies and now blame capitalism for the unfortunate results.
Read Part 1 here.
Richard Fulmer has worked in the industry as a mechanical engineer and systems analyst. He is now retired and a freelance writer. He has published about fifty articles and book reviews in free market magazines and blogs. Robert L. With Bradley Jr., Richard wrote the book, Energy: The Master Resource.