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Educate Yourself About Capitalism
When the Founding Fathers signed the Declaration of Independence on July 4, 1776, they gave birth to the United States of America as a nation. Another seminal event occurred in 1776 that has proven to have a profound effect on our nation, viz., Scottish economist/philosopher Adam Smith published his timeless classic, The Wealth of Nations. This magnificent work examines the economic behavior of men who act freely in pursuit of their self interest. He demonstrated how much better an economy will perform if a free-enterprise system is adopted rather than, for example, the mercantile system that had prevailed in Europe from 1500 to 1800. Smith made his case by examining three critical issues: (1) how prices are determined; (2) how incomes are distributed; and (3) how the accumulation of capital affects these economic processes. This third issue, the accumulation of capital, is the foundation of the economic system that is known as capitalism.
Capitalism is the best economic system ever devised by man because it is consistent with human nature, rather than some "philosopher king's" vision of what man's nature ought to be. One of Smith's most famous concepts, for example, is that "firms and resource suppliers, seeking to further their own self-interest and operating within the framework of a highly competitive market system, will simultaneously, as though guided by an 'invisible hand,' promote the public or social interest." This is a remarkable notion whose lesson seems to be lost on liberals, i.e., that everyone can act in their own interests in a manner that makes everyone better off.
Capitalism is also the most ethical economic system ever devised by man because its "invisible hand" rewards ability, as opposed to socialism's Big Brother hand that rewards political pull. Capitalism is blind to racial and ethnic origin, for example. The most capable labor force is needed to compete effectively -- refusing to hire workers on the basis of anything other than ability works to the disadvantage of a business.
Nevertheless, many modern American liberals defile capitalism. They would prefer to set prices by the edicts of government commissars (through price controls), redistribute income from those of ability to those in need (through a graduated income tax), and act to prevent "too much" capital accumulation in a limited number of hands (through antitrust laws). Philosopher Ayn Rand succinctly summarized the results of 20th-century attempts at implementing socialism as follows.
"When you consider the global devastation perpetrated by socialism, the sea of blood and the millions of victims, remember that they were sacrificed, not for `the good of mankind' nor for any `noble ideal,' but for the festering vanity of some sacred brute or some pretentious mediocrity who craved a mantle of unearned `greatness'."
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To fully understand why a Renaissance of the Republican Party hinges on economic matters and preservation of America's capitalist economic system, you must understand capitalism. The muddled "mixed economy" mindset of most college textbooks on economics is unreliable and liberal-biased. What's missing in our college economic classrooms is the intimate connection between individual liberty and capitalism. The Law by Frederic Bastiat is an excellent starting point in educating yourself about capitalism because it underscores this intimate connection. The book is available at no cost in audio form. You can listen to the audio book by clicking on Bastiat's image to the left.
The following small selection of books provides an excellent starting point for discovering the true nature of capitalism.
When you fully understand capitalism, you will understand why it has worked everywhere it's ever been tried and why it is indispensable for preserving personal liberty. You will also understand why big government is a serious impediment to the operation of a capitalist economy. Best of all, you will be able to refute liberal objections with arguments such as the following.
- Liberal claim: Capitalism permits the strong to exploit the weak. Rational reply: If an employer exploits his employees, it is an open invitation for another employer to offer better treatment and compete the exploiter out of the market. But, what recourse is there when a government job provider exploits employees?
- Liberal claim: The profit motive is evil: Rational reply: America invented the phrase "to make money," meaning to create wealth. Is that evil? Government officials replace the profit motive with the power motive. That's evil with a capital E!
- Liberal claim: Cut-throat competition leads to monopolies: Rational reply: If the cut-throat competition leads to lower prices, society benefits by having more money to spend on things like their children and their leisure time. If the monopoly raises prices after competing everyone else out of the market, it invites new capital flow (high profits attract capital) into the industry to finance new competitors and must start a whole new cut-throat competition cycle -- an unstable, and unprofitable, process. A monopoly can keep competitors away as long as it maintains high worker productivity and is therefore non-oppressive. But, what about a government monopoly? It can be as oppressive as it's bureaucrats wish and face no competition.
- Liberal claim: Money-hungry unethical people rise to the top: Rational reply: The most talented rise to the top in a capitalist system through enterprise and hard work. Anyone who thinks unethical practices characterize capitalism is telling you how he would run a business if he tried. Laws ultimately deal with free-market cheats. But, the history of mankind is abundant with the common practice of power-hungry unethical people rising to the top of government. Why should government officials who have produced nothing have anything to do with the goods and services provided by businessmen who are their superiors?
- Liberal claim: A mixed economy has the benefits of capitalist efficiency and socialist altruism: Rational reply: A mixed economy has a constantly shifting center of gravity that always tends to ever-increasing government control. If the Constitution had an amendment to enforce a separation of commerce and state, the incentive for businessmen to bribe government officials or to make huge campaign contributions would disappear. And, the government's magnet for power-seeking officials would be instantly degaussed!
Seeking and developing an understanding of capitalism might just prove to be one of the most exciting learning experiences of your life!
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