Objections to Capitalism

Objections to Capitalism
by Elliot Temple
Originally posted on the Beginning of Infinity Discussion List
September 13, 2011 9:50:03 PM PDT

FAVORS THE RICH?

One objection to capitalism is that it only helps the rich.

As Ludwig von Mises explained at length, this is false. Under modern capitalism, large profits go especially to *mass production*, because mass production has *efficiencies of scale*. Mass production requires a large group of potential buyers, and targets what it makes to appeal to lots of people. In other words, capitalism focusses most on making what the most peoples want, not the rich minority.

Rich people actually have a lot of possessions which *everyone has*. There are special rich versions of some things, but plenty of times they just use normal stuff. And there would be special rich versions of some stuff under most other systems too. What's the harm?

Capitalism helps *everyone* (including the rich). The biggest groups it helps are:

1) All big groups because capitalism fails to offer special benefits and privileges to minorities and allows big groups to naturally get attention. The alternative offered by some rival systems is to use force in the interests of a small number of favored minorities. Capitalism lets minorities be free to grow in size (e.g. it has niche products, e.g. Apple survived for a long time at low market share before getting big) if more people are persuaded but doesn't force it.

2) Unpopular minorities, by treating them impersonally as customers. Your money is good at pretty much any store even if you believe induction is false or that drug addiction is pseudo-science. Any company which rejects customers due to bias will simply do worse in the market place relative to rivals. And also capitalism allows variety. There isn't just one single shoe company. If you don't get along with 5 shoe companies it's no big deal. There are other ones. If a whole group of people gets excluded then someone else can serve them.

FREEDOM IS SLAVERY?

Another objection to capitalism is that it means economic freedom, and freedom is bad. Why is freedom claimed to be bad? Because freedom means the freedom to make mistakes, to suffer, to create one's own personal hell. Freedom doesn't guarantee a good outcome but simply gives people control over their own lives.

So capitalism is objected to because it allows people to make poor purchasing decisions -- or disapproved of decisions. This is a bad attitude. Mistakes are inevitable whoever makes the decisions. If two people disagree about someone's purchasing decisions, the only thing to do is try to persuade each other (to the extent people want to) and, failing that, to let each person run his own life so at least he won't have to suffer for other people's mistakes.

Similarly, the same kind of attitude is one of the main objections to Szasz: some people don't like freedom when they realize it means the freedom for other people to use drugs they disapprove of, speak in metaphors they disapprove of, act unconventionally, and so on.

MARXISM

Another objection to capitalism is that wages are driven to zero due to competition between workers for jobs. This is false. There is also competition among employers for workers, so wages do not trend to zero.

Labor is a good that can be sold like others. By exactly the same logic, one could claim the price of cookies will go to infinity due to competition among cookie buyers driving the price up. But that doesn't happen because there is also competition among cookie sellers for customers. The mistake here is selective focus on competition among one group and not another.

SOCIALISM

Another objection to capitalism is that socialist planners can do better and we don't need market prices. This is false. Without a price system, planners would not be able to figure out what to do (as soon as things change, so they can't just go by the prices that existed before the market was abolished). For details, see: http://mises.org/pdf/econcalc.pdf and http://answers.yahoo.com/question/index?qid=20101223224219AAMrAuh