Why Blame Capitalism?

At my previous job, my immediate supervisor, his immediate supervisor, as well as several other individuals were active outdoors men, hunters, and general gun enthusiasts. We (actually they as I typically remained a quiet participant) would routinely discuss their most firearms purchases, favorite places to hunt or shoot, and the various accouterments associated with their hobby that included clothing, safes and the like. On one occasion, I actually rode with my supervisor as he transported several weapons that had been loaded into the back of his truck to a friend’s house for storage. Not during that ride, nor during any other time I have come in contact with a firearm, nor during any of the hundreds of stories I have heard did one of those guns suddenly come to life and cause harm to someone. Why? Because a gun is an inanimate object. To inflict damage, it requires a human to either use it incorrectly or with malice. Invariably, because these individuals with whom I worked (and countless others) were experienced, trained, and careful no harm came from what may appear to many a very dangerous situation.

The same can be said for many other inanimate objects like a knife, a car, or a baseball bat.

The same can be said for our economic system, Capitalism.

I have read countless articles over the past few months denigrating the economic system under which the United States has thrived for over 200 years, and what is the primary issue that so many of these writers call out? Greed. But can a non-human entity exhibit greed any more so than a gun can load, aim, target, and fire without human intervention? Of course not. As logical as that sounds, detractors of Capitalism will simply point out that the system is driven by and shamelessly encourages greed. I think those people have seen too many clips of Gordon Gekko castigating the executives of Teldar Paper.

Greed is not unique to Capitalism. Greed crops up anywhere humans exist. Whether it was the biggest and strongest caveman, the pernicious monarch, or a predatory lender, there will always be some subset of people that seek to exploit the system for their own personal gain, regardless of the system or institution. Capitalism, however, is not the problem. In fact, Capitalism provides the most inherent obstacles to these insidious forces, especially when the Government provides a fertile basis for doing business and does not exert excessive authority over the markets.

For a perfect example of the positive impact Capitalism can have on a civilization, just look at the growth of the Untied States between 1875 and 1900. So many of us have been taught about the “Robber Barons”, Rockefeller, Carnegie, Vanderbilt, ruthlessly acquiring wealth at the expense of the general populace. Yes. these men, and many others, acquired great fortunes. Yes, in the case of Rockefeller and Carnegie, they became the wealthiest non-monarchs in the world. And yes, these men, and the companies they built, provided goods and services that advanced this country as well as the world, in a way that would not have been possible without Capitalism and the profit motive.

Prior to Rockefeller, how did people light their homes? Sunlight. Wax candles. Oil lamps powered by hunted whales. Due to production costs (it isn’t cheap to hunt and process a whale) and scarcity of raw materials, the latter two were nearly out of reach for anyone but the wealthiest of households, so most people lived in the dark once the sun went down. Rockefeller changed all of that. His ability to refine crude oil provided a new option for powering a lamp and completely changed the energy market. Once established, he then set out to drive efficiency to increase production and reduce costs. He used byproducts of the kerosene refining process to power his plant rather than coal. He developed the oil pipeline to provide raw material to his production facility rather than pay expensive train freights for delivery. These in addition to other improvements simultaneously increased production, lowered overall production costs, which allowed for more kerosene to be purchased by more people. Today, people would say he “disrupted” the market. Traditionally, this would be called “creative destruction.”

So while an entire industry was eventually destroyed (whale hunting) or greatly reduced (wax candles, train freight), new businesses were either created or enhanced (oil drilling, oil refining, pipe making and fitting) which provided a net increase to our civilization through both wealth creation and a higher standard of living.

Just one generation later, in another act of “creative destruction”, the creation of electric light destroyed the need for kerosene fueled lamps. However, through that destruction, Rockefeller shifted his company and created the means to produce fuel for the gasoline engine. This “creative destructive” cycle, while scary to some, drives human progress. Creativity leads to competition of old and new, possibly even two new ideas. Eventually, one will win out as it better meets the needs and or desires of the people at that given time.

Thank you to Capitalism for allowing, promoting, even encouraging, both this creativity and destruction that drove scientific progress and lifted the overall standard of living for all people throughout this great civilization. Yes, it can appear to be ruthless. Yes, it will have adverse consequences on some. But over the course of time, and without too much outside interference, this process brings incredible and unparalleled advancement to civilization and it acts as the rising tide that lifts all boats.