Dan McLaughlin

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To Home Page Latest Newsletter Column Archives Click to get these columns for your local paper	© 2006 Daniel J. McLaughlin Don’t Blame Capitalism Capitalism was originally a derogatory term coined by Karl Marx, the father of communism. He invented the word to smear the system of accumulation of private capital. Ironically, there is no better word than capitalism to describe the very reason that economic freedom and free markets are the only way to improve the welfare of any society. No two people are exactly alike, out of all of the billions of human inhabitants on this earth. Everyone has different aptitudes, interests and goals. Each person is better at some things than others. By concentrating on what they are good at, individuals can be more productive than they would be if they had to do everything for themselves. That is the benefit of the division of labor. Everyone doesn’t have to do plumbing or doctoring or farming. People choose what they like or what they are best at and focus their skills where they are most effective. They can choose to maximize their own productivity. As people enhance their level of skill in their chosen line of work, they can spend less time on subsistence and more time with other things. If the time left over beyond subsistence is spent on leisure, then the benefits of leisure are received. If the time is spent on earning more for the purpose of saving, the benefits are an accumulation of capital. Saving and capital enables one to invest in training and technologies which can leverage the skills of an individual and enhance earning power. The people who accumulate a great deal of capital are generally the ones who have benefited society the most. They are the ones that allow leisure seekers to leverage their work time for increased productivity. By spending less time earning their living by using the tools of the capitalists, people are able to choose leisure or capital accumulation of their own. America was, at one time, a primitive, developing, third world country. The choice was made at the beginning to pursue free market principals and property rights. Because of that choice, this society took off like a rocket, surpassing all of the old regimes that were mired in the remnants of feudalism and the ravages of mercantilism. Capitalism is the reason that America became one of the most prosperous nations in the world. Statistically, those nations with a high level of economic freedom and property rights, or capitalism, are the ones that thrive. The backward countries, those that never shed, or fall back into, the “developing” status, are those that shun individual economic freedom and property rights. Capitalism is the accumulation of capital by individuals, whether it is a savings account, a stock investment, a family business or the home they live in. In a society where property rights are protected, everyone is a capitalist to a greater or lesser extent, whether they like it or not. They freely trade the fruits of their actions with others and, thus, help improve society. Many economies, like the United States, are capitalist to a significant extent, and to the degree in which genuine capitalism is practiced, the people reap the benefits. For many decades, America’s economy, and many others, have been steadily slipping from capitalism back into the evils of mercantilism that plagued most economies for centuries. Mercantilism is an alliance between significant business interests and the government to use the coercive force of government for profit or benefit at the expense of the rest of the citizens. These powerful interests can be seen in the form of gigantic corporations, labor unions, massive foundations and “non-profit“ pressure groups. Rather than enhancing the general welfare of the population, the special interests seek to use government for their own benefit to the detriment of all others. A major error in modern economic analysis is attributing the massive problems of the mercantilist, big government monster to capitalism. By disguising the true origin of the difficulties, the real source of prosperity is vilified as the cause of social woes. The solutions proposed, therefore, are often worse than ineffective. They intensify the problems. Genuine capitalism is good for our country and will continue to provide it’s benefits to the extent that it is allowed to flourish. The government-special interest coalitions reduce the effectiveness of capitalism, and benefit favored groups and individuals while hurting everyone else. The next time you hear an attack on free markets or capitalism, or promotion of market intervention, ask yourself “what special interest is being advanced?” You will probably find it very enlightening.
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Daniel Mclaughlin Copyright © 2006 [Daniel McLaughlin]. All rights reserved. Revised: 03/18/08

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Don’t Blame Capitalism

Capitalism was originally a derogatory term coined by Karl Marx, the father of communism. He invented the word to smear the system of accumulation of private capital. Ironically, there is no better word than capitalism to describe the very reason that economic freedom and free markets are the only way to improve the welfare of any society.

No two people are exactly alike, out of all of the billions of human inhabitants on this earth. Everyone has different aptitudes, interests and goals. Each person is better at some things than others. By concentrating on what they are good at, individuals can be more productive than they would be if they had to do everything for themselves. That is the benefit of the division of labor.

Everyone doesn’t have to do plumbing or doctoring or farming. People choose what they like or what they are best at and focus their skills where they are most effective. They can choose to maximize their own productivity.

As people enhance their level of skill in their chosen line of work, they can spend less time on subsistence and more time with other things. If the time left over beyond subsistence is spent on leisure, then the benefits of leisure are received. If the time is spent on earning more for the purpose of saving, the benefits are an accumulation of capital.

Saving and capital enables one to invest in training and technologies which can leverage the skills of an individual and enhance earning power. The people who accumulate a great deal of capital are generally the ones who have benefited society the most. They are the ones that allow leisure seekers to leverage their work time for increased productivity. By spending less time earning their living by using the tools of the capitalists, people are able to choose leisure or capital accumulation of their own.

America was, at one time, a primitive, developing, third world country. The choice was made at the beginning to pursue free market principals and property rights. Because of that choice, this society took off like a rocket, surpassing all of the old regimes that were mired in the remnants of feudalism and the ravages of mercantilism.

Capitalism is the reason that America became one of the most prosperous nations in the world. Statistically, those nations with a high level of economic freedom and property rights, or capitalism, are the ones that thrive. The backward countries, those that never shed, or fall back into, the “developing” status, are those that shun individual economic freedom and property rights.

Capitalism is the accumulation of capital by individuals, whether it is a savings account, a stock investment, a family business or the home they live in. In a society where property rights are protected, everyone is a capitalist to a greater or lesser extent, whether they like it or not. They freely trade the fruits of their actions with others and, thus, help improve society.

Many economies, like the United States, are capitalist to a significant extent, and to the degree in which genuine capitalism is practiced, the people reap the benefits. For many decades, America’s economy, and many others, have been steadily slipping from capitalism back into the evils of mercantilism that plagued most economies for centuries.

Mercantilism is an alliance between significant business interests and the government to use the coercive force of government for profit or benefit at the expense of the rest of the citizens. These powerful interests can be seen in the form of gigantic corporations, labor unions, massive foundations and “non-profit“ pressure groups. Rather than enhancing the general welfare of the population, the special interests seek to use government for their own benefit to the detriment of all others.

A major error in modern economic analysis is attributing the massive problems of the mercantilist, big government monster to capitalism. By disguising the true origin of the difficulties, the real source of prosperity is vilified as the cause of social woes. The solutions proposed, therefore, are often worse than ineffective. They intensify the problems.

Genuine capitalism is good for our country and will continue to provide it’s benefits to the extent that it is allowed to flourish. The government-special interest coalitions reduce the effectiveness of capitalism, and benefit favored groups and individuals while hurting everyone else. The next time you hear an attack on free markets or capitalism, or promotion of market intervention, ask yourself “what special interest is being advanced?” You will probably find it very enlightening.

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