Dan McLaughlin

Voices For Freedom Read Columns Daniel McLaughlin
To Home Page Latest Newsletter Column Archives Click to get these columns for your local paper	© 2007 Daniel J. McLaughlin Big Business Versus Capitalism Many people equate capitalism with business, especially big business. Everything bad with the economy is seen as due to “unrestricted capitalism”, “unbridled laissez faire”, and the greed of the businessmen. Capitalism, however, is not necessarily about business. Capitalism is about ownership of property and the rights to the benefits of that property. In a free market, unless you are a destitute beggar, you are probably a capitalist. Even if you sell your labor and production to another capitalist, the money you earn can be thought of as capital until you decide to use it for consumption. When it is consumed, it is obviously not your capital anymore. Consumption is the destruction of wealth, or capital. If the money is invested, whether in a bank account, a building, a business, or any other productive use, that investment can increase your capital if it earns a positive return. Capitalism has gotten a bad name by being portrayed as the cause of miserable conditions in the early days of the industrial revolution. Those factories did have poor conditions. There was child labor. Women had to work at the factories. Even working men had a difficult time, getting paid little for their hard work. Most people don’t stop to consider the implications, however, and simply accept the idea that those people were being abused. The reason that those people chose, by their own free will, to work in the factories is because that was a lot better than the alternative. Before the industrial revolution, most families were destitute, living hand to mouth, as they are in third world countries today. Over time, it was capitalism and laissez faire policies that lifted people out of misery and made modern developed counties wealthy. Lack of capitalism and free markets in many present day countries is the reason they are still in poverty and misery. Capitalism also got a bad rap because it has been mistakenly connected with the bad behavior of particular business people. Some businessmen have used the strong arm of government to give themselves an advantage. Protectionism, tariffs, “voluntary” sales restraints, quotas, subsidies, price supports and other interventions by government give the business or industry an advantage over domestic or foreign competitors. This behavior is no more equivalent to capitalism than robbery is equivalent to trading. The use of government coercion in any form for the benefit of business is not capitalism, but more correctly identified with mercantilism, which plagued economies since well before capitalism took hold. It is a flaw in the nature of unrestricted government, and not an inherent evil of capitalism. It is usually assumed that big business is antagonistic to big government, that business wants government to stay out of the economy, to provide a free, unfettered market. Nothing could be further from the truth. Big business and government have become partners in manipulating the market. Many businesses couldn’t survive without the protection of government. Their economies of scale are often offset by the diseconomy of bureaucracy. Sometimes, stodgy old established businesses can’t compete with more nimble, better run companies without the help of the G-men. Business organizations and large trade associations are typically the ones to encourage government price fixing schemes, government cartel plans, heavy regulation and protected monopolies, in order to squelch competition. Anti-trust lawsuits have typically been instigated by competitors complaining that they could not compete, rather than customers they say are hurt by the company. In nearly all cases, the accused monopolizer was much more efficient, provided better products to consumers at lower prices, with better distribution systems and better service. It was claimed that they were selling at below cost to drive competitors out of business. At the same time, many of those companies were making profits that some people saw as obscene. Selling at a loss while making huge profits. Go figure. Interventionist government is at odds with capitalism and freedom. To the extent that markets are fettered, bridled and restricted, capitalism cannot be held accountable for the results. With limited government power, there is little advantage for pressure groups to bribe public officials or officeholders to blackmail businesses. Interventionist government, on the other hand, encourages conflict, corruption and abuse. Jack Abramov was not a capitalist. He was a crook and opportunist, along with the politicians he dealt with. Crooked actions of big business are to be expected in interventionist government because crookedness is likely to have a big pay off. Big business does not represent capitalism, and is often it’s greatest enemy.
Contact us Privacy Policy Comments
Daniel Mclaughlin Copyright © 2006 [Daniel McLaughlin]. All rights reserved. Revised: 03/18/08

Voices For Freedom

Read Columns

Daniel McLaughlin

To Home Page

Latest Newsletter

Column Archives

Click to get these columns for your local paper

Big Business Versus Capitalism

Many people equate capitalism with business, especially big business. Everything bad with the economy is seen as due to “unrestricted capitalism”, “unbridled laissez faire”, and the greed of the businessmen. Capitalism, however, is not necessarily about business.

Capitalism is about ownership of property and the rights to the benefits of that property. In a free market, unless you are a destitute beggar, you are probably a capitalist. Even if you sell your labor and production to another capitalist, the money you earn can be thought of as capital until you decide to use it for consumption. When it is consumed, it is obviously not your capital anymore. Consumption is the destruction of wealth, or capital. If the money is invested, whether in a bank account, a building, a business, or any other productive use, that investment can increase your capital if it earns a positive return.

Capitalism has gotten a bad name by being portrayed as the cause of miserable conditions in the early days of the industrial revolution. Those factories did have poor conditions. There was child labor. Women had to work at the factories. Even working men had a difficult time, getting paid little for their hard work. Most people don’t stop to consider the implications, however, and simply accept the idea that those people were being abused. The reason that those people chose, by their own free will, to work in the factories is because that was a lot better than the alternative. Before the industrial revolution, most families were destitute, living hand to mouth, as they are in third world countries today. Over time, it was capitalism and laissez faire policies that lifted people out of misery and made modern developed counties wealthy. Lack of capitalism and free markets in many present day countries is the reason they are still in poverty and misery.

Capitalism also got a bad rap because it has been mistakenly connected with the bad behavior of particular business people. Some businessmen have used the strong arm of government to give themselves an advantage. Protectionism, tariffs, “voluntary” sales restraints, quotas, subsidies, price supports and other interventions by government give the business or industry an advantage over domestic or foreign competitors. This behavior is no more equivalent to capitalism than robbery is equivalent to trading. The use of government coercion in any form for the benefit of business is not capitalism, but more correctly identified with mercantilism, which plagued economies since well before capitalism took hold. It is a flaw in the nature of unrestricted government, and not an inherent evil of capitalism.

It is usually assumed that big business is antagonistic to big government, that business wants government to stay out of the economy, to provide a free, unfettered market. Nothing could be further from the truth. Big business and government have become partners in manipulating the market. Many businesses couldn’t survive without the protection of government. Their economies of scale are often offset by the diseconomy of bureaucracy.

Sometimes, stodgy old established businesses can’t compete with more nimble, better run companies without the help of the G-men. Business organizations and large trade associations are typically the ones to encourage government price fixing schemes, government cartel plans, heavy regulation and protected monopolies, in order to squelch competition. Anti-trust lawsuits have typically been instigated by competitors complaining that they could not compete, rather than customers they say are hurt by the company. In nearly all cases, the accused monopolizer was much more efficient, provided better products to consumers at lower prices, with better distribution systems and better service. It was claimed that they were selling at below cost to drive competitors out of business. At the same time, many of those companies were making profits that some people saw as obscene. Selling at a loss while making huge profits. Go figure.

Interventionist government is at odds with capitalism and freedom. To the extent that markets are fettered, bridled and restricted, capitalism cannot be held accountable for the results. With limited government power, there is little advantage for pressure groups to bribe public officials or officeholders to blackmail businesses. Interventionist government, on the other hand, encourages conflict, corruption and abuse. Jack Abramov was not a capitalist. He was a crook and opportunist, along with the politicians he dealt with. Crooked actions of big business are to be expected in interventionist government because crookedness is likely to have a big pay off. Big business does not represent capitalism, and is often it’s greatest enemy.

Hit Counter