Why Capitalism does not suck

The EFF march to the JSE stating that “Capitalism sucks” Recently, I have been observing a terrifying trend. Socialism and “Social Justice” has been on the rise, with people tending to forget that Socialism has already shown itself to be an abject failure, and more...

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The EFF march to the JSE stating that "Capitalism sucks"
The EFF march to the JSE stating that “Capitalism sucks”

Recently, I have been observing a terrifying trend. Socialism and “Social Justice” has been on the rise, with people tending to forget that Socialism has already shown itself to be an abject failure, and more and more people have been calling for an end to the Capitalist system. A recent march on the JSE by our resident Stalinists stated that “Capitalism sucks…Down with Capitalism!” and proceeded to make demands that the JSE give over 51% of their businesses to workers and that each JSE company must pay for this current free education idea.

We spend quite a lot of time refuting the claims of our opponents. We’ve dealt with the idea of expropriation and forcing businesses to do stuff. We’ve established time and time again why it’s a bad idea. For this article, I’d like to do something different and provide a little bit of positive matter. I’d like to address the claim that “Capitalism Sucks” and show that it, very much, does not suck.

Capitalism is Effective

The hasty industrialisation of the Soviet Union and the Asian Tigers are usually cited as reasons why Socialism is effective. Yet, the Soviet Union is no more and the Asian Tigers are either heavily Capitalist now or collapsing. The fact of the matter is that Capitalism is the most effective economic model. Growth is not a prime goal. While it is important, a successful economy needs to be stable and sustainable. It’s no use growing to be the largest economy in the world if a debt crisis or recession sends you back to the bottom again.

Look at Switzerland – it isn’t the largest economy on the planet and by far not the most industrialised. It has identified its comparative advantage and maintained its dominance over its chosen sector for centuries. And it’s no surprise that it repeatedly scores high on the Economic Freedom Index. When one thinks of prosperity,  one tends not to think of the giants like China. One thinks of Switzerland.

While China’s economy may be larger, it has to rely on its enormous population and repeated monetary manipulation to retain its position. Switzerland doesn’t care. It stays relative to the top and will do so as long as it retains its rational free market policies.

We can also look historically for the success of Capitalism. Capitalism oversaw the Industrial Revolution, which led to modern medicine, mega production, additional free time and the prerequisite for modern society that we take for granted today. While the Industrial Revolution is constantly characterised in the Oliver Twist style of exploitation, it was much preferable than the previous Malthusian Trap.

Workers found themselves genuinely able to be uplifted. Unions formed to protect worker rights, not as a function of Socialist regulation, but as voluntary organisations forming in a free market. Free markets are the tools of the employee and the employer as both are needed for the functioning of the economy.

Even countries which are not purely capitalist, but still maintain some semblance of success, are fruitful due to their slight Capitalist leanings: the United States for their property rights, Germany due to its business and trade freedom, China due to its reliance on Hong Kong and it basically acting as a corporation within a free global market.

Capitalism is Rational

In his seminal essay, ‘I, Pencil’ Leonard Read managed to formulate all the complexities of Capitalism into an easy to read and inspiring parable. The essay deals with the fact that every item and every product is the result of countless stages of production, all of which no entity could do alone. While the Soviet Union could produce, it relied on the idea of the Capitalist division of labour. True Communism wouldn’t rely on incentive or labour division. It would expect people to act righteously intrinsically. Capitalism recognises that that is impossible. A simple pencil requires an infinite cycle of production to produce, yet Capitalism makes it so easy. The fact that controlled economies are almost always out-produced by freer economies is a testament to the rationality of Capitalist production.

Capitalism allows competition to serve the masses. While Socialism expects the masses to serve themselves and the state, the Capitalist system of competition sees companies begging for the consumer to deal with them. Consumers are not the only kings, however. Companies want good workers, so compete with worker privileges. Companies want to be sustainable, so will look after the environment. Companies want order, so will aid the justice system in retaining order.

Competition drives innovation. We owe the Information era to Capitalism and the companies desperately shrinking and growing their phones and hardware capabilities in order to be the next big thing.

Capitalism is the only system which efficiently regards the price mechanism. Socialism tries to ignore it. Mixed economies try to manipulate it. Both result in failed economies such as pre-Reform West Germany and the late Soviet Union. Prices are symbols of human desire and need. There is nothing more complex made so simple by the virtue of a free market where individuals are allowed to conduct trade freely.

Capitalism is moral

In a free market, all actions are voluntary. While Marxists may call our reliance on currency exploitative and oppressive, this reliance is no different than our need to breathe or eat. Currency is just a means of showing the value we have inputted into the system.

In order to encourage value, Capitalism has the profit motive but that’s not the only motivation. Whole Foods CEO, John Mackey, argued that businesses can and do exist for more than just profit. They voluntarily commit to charity, for good PR or for their conscience. Bill Gates is an excellent example of a charitable businessman, using Capitalism to help the world.

The greatest aspect of Capitalism, however, is that it does not require coercion. People act because they want to, either due to a desire for the cause or a possible reward. Capitalism is simply a system which allows individuals to choose, work and cooperate in a manner in which they feel will benefit themselves and their desired recipients.

All in all, Capitalism is wonderful. It brings prosperity, it acts on reason and it is freedom.

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  1. Fred Webster Reply

    Well said my friend !

    Socialism is an intellectual laziness and an excuse to live in a perpetual state of grievance.

    This really is the elephant in the room; if history teaches us anything it’s that a liberal democracy, the free movement of capital and open and fair trading between nations and individuals is the path to prosperity and the betterment of society. We need a net to catch those who stumble, of course, but that can be solved, not by exclusion but by education.

    Socialists employ negative terms like ‘social justice, and ‘disenfranchisement’. Terms which might be better used are branded as politically incorrect. And here’s another thing. Those who come out in numbers and demonstrate are making use of the the very freedoms which a system they are so ready to condemn allows them.

    It’s our duty to make the case and ours is one with which most people agree but few are prepared to talk about at the risk of being shouted down.

    There’s one other word which ought to feature in these debates and one which most declared spokespersons of the left would not admit to. ‘Fashionable’ is the one I’m looking for. There. I’ve said it!

    Best wishes,

    Fred Webster.

  2. Karl Marx Reply

    This looks more like propaganda more than anything. Maybe you haven’t considered the negative facets of capitalism. With all political ideologies comes negativity, it’s impossible to create a perfect political system in which works for each individual. Capitalism lacks innate justice. An example of this is,’an author’s book is published in a bookstore, it is sold for £13.19 pounds ( approximately 20 dollars) and the person who created the original content, receives less than 10% profit.’

    Capitalism Only benefits the 1% of people who own more than half of the worlds wealth and life is not just about money, it is about living and having fun and showing charity and capitalism believes in money and being rich you are scared of communism because it will cause demolition of your capitalistic society and you will not be able to live in a world full of your own riches.

    The seven deadly sins:
    pride, covetousness, lust, anger, gluttony, envy, and sloth.

    That is the template of capitalism.

    Communism/socialism/leftism/Marxism/Leninism whatever you wish to name it communism is a primal, innovative movement that looks out for the people in society,creating firmer, stronger bonds between countries.

    Communism certainly isn’t a perfect solution, but if used correctly and carefully, it will raise and create a better, stronger society for everyone.

    We will keep the red flag flying here.

    1. Nicholas Woode-Smith Reply

      Propaganda is anything espousing something over another. Doesn’t make it false. It has icky connotations, but according to the actual definition of propaganda, this is propaganda – and I don’t mind saying so.

      I agree with you that it’s impossible to craft utopia. Where I disagree with you is that Communism is better than Capitalism. From reading your comment, it is obvious that your aversion to Capitalism comes from a deep seated ignorance of it. Forgive me for assumptions but I trust by your chosen pseudonym that you only read Marxist literature. As a result, your world view is pretty limited. Above that, your idea of Capitalism is flawed as you basically did the equivalent of learning about Jews from Mein Kampff.

      Your publishing allegory also suggests a complete ignorance of the production system and the publishing industry. I’m an author and receive a percentage of the royalties of my books. I don’t complain that they are less than 100% as I understand the costs involved in writing the book. The book has to be edited, formatted, printed, sewn together, marketed, sold, distributed and a myriad of other stages of development that would cost me a fortune if I did by myself.

      Your next paragraph is just rhetoric with no substance, so not worth responding to. The next is similar and odd, seeing that Marx was a debout Atheist and also guilty of all of those. All Communists are guility of Envy and covetousness as well. I’d also add sloth.

      And no, Communism and the other leftist ideologies are anything but primal and innovative. Its institutional looting which tries to shapeshift human nature into something disgusting. Capitalism utilises human nature to generate beauty, such as the products that you are using at this instant. Communism uses its vile rhetoric to slaughter those who add value to society.

      Luckily for us, no one has got past the Dictatorship of the Proletariat. It may be bad, but a complete Communist revolution would mean the end of human civilisation.

      But you can keep flying your red flag. I’m sure the Capitalist fabric company appreciates the business.

    2. Will Megenney Reply

      Saw Communism in action for 100 years and its a self evident economic disaster. Every country that embraces and adopts socialism/communism is an economic joke. Look at Cuba: Disaster. Soviet Union: Gone. Soviet China: Ditched Communism for authoritarian Capitalism. Vietnam: Ditching Communism. North Korea: Good lord what a hell hole. Yet some how you have deluded yourself into thinking Communism is the way forward, despite the OVERWHELMING EVIDENCE that communism is horrible.

  3. Fred Webster Reply

    Nicholas Woode-Smith

    I like that!

    But I’ve never liked the word ‘propoganda’; it’s too easily used by the lazy thinker without a knowledge of broad historical experience and a leaning towards logical debate. Used negatively it looks good on street posters and gets an uninformed rabble on it’s feet but that is no substitute for straight thinking.

    So far your analysis has the edge, no doubt about it, and one with which any reasonable commentator can have no argument, I being one!



  4. Henk V Reply

    How much will communism pay the author for his book? I suppose Stephen King’s application for immigration into Cuba is still being processed. For that matter all successful writers must be queuing at Cuba’s gates to enter and receive communism’s special brand of ” innate justice”.

  5. Henk V Reply

    How is it possible that this is still being discussed, are we in a time warp?

    1. Nicholas Woode-Smith Reply

      South Africa is ruled by a coalition of communist sympathisers. Capitalism is seen as a swearword. Socialism is still very much popular at universities.

      Capitalism and freedom still need to be defended.

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