This first post will just be a quick brain-dump in outline form, intended to serve as a jumping-off point for discussion. Feel free to discuss any points raised here, or to raise new ones.
Is capitalism good or bad?
Wikipedia provides an excellent one-sentence description of capitalism: "Capitalism is an economic system based on the private ownership of the means of production and their operation for profit." In a capitalist society, most property, including most business assets, are privately owned. Supply and demand interact to generate prices that help everyone coordinate what to produce, how, and how much, so that people can have access to stuff they want, like houses, cars, and trousers. There are no purely capitalist countries. In the United States, for example, the federal government controls the means of producing mail delivery. But we're more capitalist than not.
Some initial questions.
1. Is capitalism good or bad ... compared to what? Compared to hunting and gathering, subsistence agriculture, feudalism, mercantilism, socialism...? Should we be comparing it mainly to other economic systems that have already been tried, or also to idealized systems that have not yet been tried?
2. How do we measure the goodness or badness of an economic system? What should a society be trying to maximize -- happiness, standard of living, freedom, national security, economic equality, other stuff?
Why capitalism seems good.
Historically, compared to non-capitalist societies, capitalist societies appear to be great at (a) generating material wealth and high standards of living, and (b) at least in the context of democracies, preserving personal freedoms. Compare North Korea to South Korea. Compare former East Germany to former West Germany (or more broadly, Eastern Europe to Western Europe during the Soviet era). Compare Hong Kong to mainland China. Etc.
Capitalism seems to excel at wealth and freedom because it emphasizes voluntary relationships. Generating wealth depends on allowing people to seek out positive-sum transactions, and voluntariness is a sign of positive-sumness. Voluntariness and freedom also go hand-in-hand.
Material wealth isn't important only because yachts are awesome. It also funds and incentivizes scientific progress. (There's a positive feedback loop here: wealth drives scientific progress, and scientific progress promotes wealth.) Ultimately, wealth and scientific progress are what allow for a strong national defense, which is absolutely essential to ... basically everything.
Why capitalism seems bad.
Some people think capitalism is bad because it results in economic inequality. I mostly think that criticism is misguided. (For one thing, poverty is a bigger problem than inequality per se, and capitalist countries generally have less poverty than non-capitalist countries. For another thing, it's poverty or inequality after taxation and redistribution that matter, and there's no contradiction between capitalism and ample redistribution.) But there's a sense in which this criticism can be valid if wealth results in political power (through lobbying, etc.), and political power results in the ability to veto redistributive programs. In that situation, capitalism can allow inequality to perpetuate itself.
Moreover, capitalism provides incentives for businesses to rig the political system to their advantage in other ways as well. The denial of climate science by a major political party in the United States, for example, is driven by an industry motivated by profit.
Another criticism is that capitalism doesn't necessarily seem to make people all that happy. Capitalism can rope people into stressful jobs and contribute to a preoccupation with wealth-based status. I suspect that the median hunter-gatherer may have been happier, in many ways, than the median 21st-century American. We're materially better off, but we smile less (and commit suicide a lot more).
On a related note, while capitalism is good at providing people with what they want, what we want is often bad for us. Capitalism is great at producing and marketing guns, cigarettes, alcohol, fried food, and cake, and it's great at empowering us to sit around all day in comfortable chairs. As a result, modern Americans have significant chronic health problems. (Physical and mental.)
In addition, as a powerful tool, capitalism can exacerbate wrongs the same way any other powerful tool can. Physics and chemistry made warfare more terrible. In the same vein, capitalism made the slave trade more terrible.
Finally, in capitalism, there's no all-powerful czar, so when markets fail to successfully coordinate some beneficial activity, we get stuck. This has probably contributed to a pretty screwed up university system and a pretty screwed up healthcare system in the U.S.
Where I stand.
An important aspect of happiness is avoiding misery. Worldwide, the two leading bearers of misery have been poverty and tyranny. The greatest defense against poverty has been capitalism. The greatest defense against domestic tyranny has been self-government -- that is, something like a constitutional democracy. Combining capitalism with democracy seems to work pretty well compared to the alternatives.
Perhaps more important than the threat of domestic tyranny is the threat of foreign tyranny. Maybe the two most important things the United States has ever done were defeating the Nazis in WW2 and defeating the Commies in the Cold War. We pulled it off because we were rich enough to fund lots of awesome scientific research and to build up a super-elite upper-tier military.
Maybe we'd be happier as hunter-gatherers, but only for about five minutes until a foreign dictator conquers and persecutes us.
Is capitalism good or bad?
Wikipedia provides an excellent one-sentence description of capitalism: "Capitalism is an economic system based on the private ownership of the means of production and their operation for profit." In a capitalist society, most property, including most business assets, are privately owned. Supply and demand interact to generate prices that help everyone coordinate what to produce, how, and how much, so that people can have access to stuff they want, like houses, cars, and trousers. There are no purely capitalist countries. In the United States, for example, the federal government controls the means of producing mail delivery. But we're more capitalist than not.
Some initial questions.
1. Is capitalism good or bad ... compared to what? Compared to hunting and gathering, subsistence agriculture, feudalism, mercantilism, socialism...? Should we be comparing it mainly to other economic systems that have already been tried, or also to idealized systems that have not yet been tried?
2. How do we measure the goodness or badness of an economic system? What should a society be trying to maximize -- happiness, standard of living, freedom, national security, economic equality, other stuff?
Why capitalism seems good.
Historically, compared to non-capitalist societies, capitalist societies appear to be great at (a) generating material wealth and high standards of living, and (b) at least in the context of democracies, preserving personal freedoms. Compare North Korea to South Korea. Compare former East Germany to former West Germany (or more broadly, Eastern Europe to Western Europe during the Soviet era). Compare Hong Kong to mainland China. Etc.
Capitalism seems to excel at wealth and freedom because it emphasizes voluntary relationships. Generating wealth depends on allowing people to seek out positive-sum transactions, and voluntariness is a sign of positive-sumness. Voluntariness and freedom also go hand-in-hand.
Material wealth isn't important only because yachts are awesome. It also funds and incentivizes scientific progress. (There's a positive feedback loop here: wealth drives scientific progress, and scientific progress promotes wealth.) Ultimately, wealth and scientific progress are what allow for a strong national defense, which is absolutely essential to ... basically everything.
Why capitalism seems bad.
Some people think capitalism is bad because it results in economic inequality. I mostly think that criticism is misguided. (For one thing, poverty is a bigger problem than inequality per se, and capitalist countries generally have less poverty than non-capitalist countries. For another thing, it's poverty or inequality after taxation and redistribution that matter, and there's no contradiction between capitalism and ample redistribution.) But there's a sense in which this criticism can be valid if wealth results in political power (through lobbying, etc.), and political power results in the ability to veto redistributive programs. In that situation, capitalism can allow inequality to perpetuate itself.
Moreover, capitalism provides incentives for businesses to rig the political system to their advantage in other ways as well. The denial of climate science by a major political party in the United States, for example, is driven by an industry motivated by profit.
Another criticism is that capitalism doesn't necessarily seem to make people all that happy. Capitalism can rope people into stressful jobs and contribute to a preoccupation with wealth-based status. I suspect that the median hunter-gatherer may have been happier, in many ways, than the median 21st-century American. We're materially better off, but we smile less (and commit suicide a lot more).
On a related note, while capitalism is good at providing people with what they want, what we want is often bad for us. Capitalism is great at producing and marketing guns, cigarettes, alcohol, fried food, and cake, and it's great at empowering us to sit around all day in comfortable chairs. As a result, modern Americans have significant chronic health problems. (Physical and mental.)
In addition, as a powerful tool, capitalism can exacerbate wrongs the same way any other powerful tool can. Physics and chemistry made warfare more terrible. In the same vein, capitalism made the slave trade more terrible.
Finally, in capitalism, there's no all-powerful czar, so when markets fail to successfully coordinate some beneficial activity, we get stuck. This has probably contributed to a pretty screwed up university system and a pretty screwed up healthcare system in the U.S.
Where I stand.
An important aspect of happiness is avoiding misery. Worldwide, the two leading bearers of misery have been poverty and tyranny. The greatest defense against poverty has been capitalism. The greatest defense against domestic tyranny has been self-government -- that is, something like a constitutional democracy. Combining capitalism with democracy seems to work pretty well compared to the alternatives.
Perhaps more important than the threat of domestic tyranny is the threat of foreign tyranny. Maybe the two most important things the United States has ever done were defeating the Nazis in WW2 and defeating the Commies in the Cold War. We pulled it off because we were rich enough to fund lots of awesome scientific research and to build up a super-elite upper-tier military.
Maybe we'd be happier as hunter-gatherers, but only for about five minutes until a foreign dictator conquers and persecutes us.
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