Everything You Love You Owe to Capitalism

Here’s an excellent speech by Lew Rockwell, President and founder of the Ludwig von Mises Institute.

As he says, people who detest capitalism implicitly pay homage to it by clamouring to buy the products it turns out. Everything you love – art, TVs, music, computers and so on – you owe to capitalism. The only way to find out precisely how much you owe to capitalism is to go and live in North Korea.

Ideas have consequences. When people strongly advocate something without fully understanding the consequences, people can die. Millions can die. Take Marxism for example. To take a less extreme example — people are dying right now in the USA because of the Food and Drug Administration’s slow and inefficient drug approval process.

22 thoughts on “Everything You Love You Owe to Capitalism

  1. Everything you love – art, TVs, music, computers and so on – you owe to capitalism.

    I love my partner, that has nothing to do with capitalism. I love Beethoven’s symphonies and string quartets — no capitalism there. I love creating new, useful things — again no capitalism need be involved. I love sport, beer, wine, and a walk in the part — no capitalism necessary. I love education — in most places that’s provided in large part by public funds, not capitalism.

    I don’t love pollution and the trashing of the commons — ouch, that’s provided by capitalism. I don’t love advertising — oh, that’s part and parcel of capitalism too. I love GNU/Linux and hate Windows — the former comes from free cooperative effort and the latter from capitalism. I love the Internet — that arose from public funds, not capitalism. I love sanitation and public health initiatives — no capitalism there. And so on.

  2. I would prefer the term ‘Free Enterprise’ to capital, since I’m sure you’ll agree that your likes were the product of free enterprise. Those artists were not ordered by the state to make art, though they may have been commissioned or patronised by states. The Internet arose from private funds that were taxed by the state, and then called public funds, so some capitalists had to try to accumulate capital for the fund-users to be able to enjoy. The public moneys used to solve sanitation and public health issues were taken by taxes from people who had them (capitalists), but the knowledge that led to sanitation was discovered by scientists working without public funds, like Louis Pasteur. Plenty of capitalism all round, though it was the initial free enterprise impulse that led to that capital. And so on.

  3. You don’t love advertising, Trinifar, but how did you find out about those beers, and sports, unless they were advertising themselves? Did free samples just turn up on your door one day? (If so, where do you live? I’ll move there!)
    And it’s unlikely that you would have lived long enough to meet your partner, if our descendents hadn’t had the benefit of knowledge from earlier generations (capitalising on learning, you might say). Germs are contained thanks to capitalist pharmaceutical companies. The goods in your bathroom, and the stuff you eat to stay alive long enough to enjoy life, are all provided by capitalists.
    So I think we all have benefitted from capitalists, even in ways we never think much about.

  4. I’m sure you’ll agree that your likes were the product of free enterprise.

    Not really. My likes are the product of my experience. Having been raised in the US I ‘spose you can say that’s a result in some sense of free enterprise, but if I grew up in China or the Soviet Union I’d still have likes and dislikes. And if my home was the Soviet Union I’d likely fancy ballet and poetry more than I do since those are part of their culture. I was just lucky as an young American student to have publicly funded school with an orchestra and jazz band and a musical director that inspired kids. How would free markets have produced that?

    The Internet arose from private funds that were taxed by the state, and then called public funds, so some capitalists had to try to accumulate capital for the fund-users to be able to enjoy.

    That’s a pretty big reach. I don’t see how free markets would have ever created the Internet, anymore than I could see them creating the US Interstate Highway System. Even railroads and phone systems are, fundamentally, mostly public not private projects — by necessity. Just as are all public health projects and the current global positioning system (GPS).

    Free markets would never have addressed the ozone depletion problem that the Montreal Protocol fixes. In fact, that’s a global problem created by unrestricted free markets solved by worldwide government regulation (ouch, that’s really true!).

    This is why I think it’s silly to go overboard about free markets (i.e. to assume they are the best solution to everything). It’s also why I don’t want to go overboard about government solutions — they aren’t the best solution to everything either. Some sort of balance must be struck on a case by case basis, that is, a market by market basis. It’s about applying human reasoning intelligently to the situation at hand.

  5. I’m buying into this discussion with great reluctance.

    The Internet was initiated by public funds but it was not well patronised at the time. It took off when the private sector got involved. The fact that there is huge cross over between industry and academia and that the later is often publicly funded does not really prove much either way in my book. We have certainly never had pure capitalism anywhere. Nor have we had pure socialism in many places. What I will say is that we owe a lot to innovative individuals that persisted and succeeded in spite of the encombant heirachies around them. It is desirable that we make space for such activity.

  6. Why be so reluctant when you make so much sense Terje? We need both because pure research has little commercial interest but the technology derived from pure research requires mountains of money.

    It is obvious that the things I love result from capitalism because I live in a capitalist society. I find the whole argument rather circular and laughable.

  7. We need both because pure research has little commercial interest but the technology derived from pure research requires mountains of money.

    And because there is no mechanism in capitalism to provide for public health. As one CEO said, “We mustn’t kill our customers” but of course we may have put that sort of thing in motion before we’re aware of having done so.

  8. Freedom is good. Freedom allows you to do those things.

    Capitalism is simply the most popular economic paradigm in a free society, and the most productive. A free society will see capitalism tolerate other economic systems as long as they are voluntary. Capitalism can also be abused by dictatorships, even if the market system cannot work properly without freedom of expression, secure private property rights and dissent. We see capitalism abused in America with the Kelo decision.

    Rockwell has a point but he stuffs it up with bad syntax.

    Pure research has a derived demand. The more demand for applications, in turn, the higher the demand for pure research. The only way to disagree with this is to deny pure research is an input.

    Trinifar – health isn’t a public good – it isn’t non rival or non excludable. The private sector provides healthcare at a better quality than the public sector. Arguments over orphan drugs are flimsy as they require arbogation of markets such as patents and so on. Drugs like DCA are unavailable because of health regulations and are often bought on the black market. If a black market exists, it is unfair to assume market failure.

  9. Pure research has a derived demand.

    There was no demand for Darwin, Fisher, Haldane, relativity, QM, Seyle, Sapolsky, Goldman Rakic, Edelman …. Driven by curiousity.

    Be careful with DCA Mark, it hasn’t been subject to extensive testing and mitochondrial agonists can have serious downstream effects via elevated oxygen singlets, OH-, H2O2. I have an idea how to address this problem but that will require more reading.

  10. Mark: health isn’t a public good – it isn’t non rival or non excludable. The private sector provides healthcare at a better quality than the public sector.

    When I said public health I meant just that, not healthcare. You know, public health as in sewage systems, disease control, safe water systems, etc. http://en.wikipedia.org/wiki/Public_health

    And it is a public good in the best sense; you need to care if the people around you are spreading disease, fouling the water, ….

  11. Trinifar,

    If there is no incentive for the private sector to provide public health systems, then why did the NSW Government reject an offer from a private firm to recycle Sydney’s waste water? The firm was willing to build its own infrastructure. It is far enough to agree that the private sector can make the inputs (pipes, valves etc). Why is there no incentive for the private sector to provide these services? It is the kind of industry where you get large economies of scale. There is a service being offered in removing the waste and value in the water and the waste when it is processed further.

    There is no reason to say that water is “in the best sense” a public good or to make it a public good. You have only implied there should be rules. Can you name where nationalisation of a waterway has lead to good management and low incentives to pollution – Lake Erie was publicly owned and caught on fire.

  12. Lake Erie was publicly owned and caught on fire.

    Pretty funny if it wasn’t so tragic at the time.

  13. John H,

    I believe Maxwell did his thing on the electromagnetic spectrum before Planck et al., did their stuff on quantum mechanics.

    From what I understand about Einstein’s photoelectric effect, knowledge of quantum mechanics is an input to advancing a successful telecommunications firm/sector, which basically applies varying output of the EM spectra.

    Generally pure research will exist because there is a derived demand for it. But it doesn’t necessarily need a direct causal link. Private firms experiment with products and failures of a product can lead to future successes (take for example the Apple Lisa (a failure), then the success of the iMac and PowerBook). I don’t think it is too far a stretch to say that they can use pure, undirected research as a source of innovation for new products. The largest firms (like Bell for example) have had a good output of pure research in peer reviewed journals over the decades, often employing the best theoreticians and applied technologists.

    Typically there is an argument that the private sector doesn’t recognise pure research – I don’t think this is true. Quite a lot of pure research is subject of derived demand or the better firms recognise that the creation and diffusion of knowledge is non linear, and a way of remunerating some researchers is to allow them chase their own pursuits.

  14. From what I understand about Einstein’s photoelectric effect, knowledge of quantum mechanics is an input to advancing a successful telecommunications firm/sector, which basically applies varying output of the EM spectra.
    ——-
    That was not the motivation, that is the point. Pure research is often driven by the desire to understand, not the desire to create. Faraday expressed it beautifully. When he first demonstrated the electric motor he was asked, “but what use it?”Replied: what use is a newborn baby?

    I don’t doubt private enterprise is involved in pure research but a great bulk of pure research is built on work done in public institutions. Too simply dismiss this as irrelevant is an insult to all those scientists and technicians who have slaved away in public universities.

    ———–

    The Brisbane River was a mess 20 years but has been improving ever since.

    The Potomac once caught on fire but is being cleaned up.

    The Thames was an absolute disaster but has undergone massive improvement.

    Strange argument given that the business community has persistently fought against environmental initiatives. If you expect Joe and Jane public to place their faith in these same entities to improve or protect the environment you are mistaken. How on earth could I ever have such faith when even on this forum there are those who assert GM foods have never been found to have a risk, that there was no pollution at OK Tedi, that DDT has no known health risks? Right here, very clear examples of how ignorance about environmental issues leads to all sorts of nonsense.

  15. Something else to think about. The first public health measures were initiated by Prime Minister Gladstone, in Victorian Britain. The Victorian age was the height of Capitalism in Britain, which meant there was enough money that he felt some could be used for public projects, like sewerage, and clean water.
    This was in the most capitalist country on Earth, at that time.
    Seems as though public works needs capitalist societies to have enough wealth so that some can be taxed for other projects. As a minarchic libertarian (only dwarfs should be chiefs), I would dispute that it should tax, but the historic record shows that public works arise after capitalism, not before or alongside it.

  16. I would dispute that it should tax, but the historic record shows that public works arise after capitalism, not before or alongside it.

    So there were no public works in communist countries, Rome, ….

  17. Rome was a capitalist economy with a military infrastructure. The emperors went in for Fora, and the great Colossium, by taxing the rich. These were the public works of the day.
    By definition, all work in Communist countries was ‘public’, but Marx always said that Communism would arise from Capitalism, as an evolutionary step.
    However, I will broaden my argument here. You can have public works without capitalism, but only in a society with slaves. In slaveless societies, public works come after capitalism, when the state takes some private wealth for its own use.

  18. It’s true, right down to the idiots buying Che Guevara T-shirts in the ultimate display of irony.
    Capitalism rocks.

  19. Mark (#12),

    Lake Erie was publicly owned and caught on fire.

    Not the lake, but a river that runs into the lake. http://en.wikipedia.org/wiki/Cuyahoga_River It was the 1969 fire in the Cuyahoga River that was picked up by Time magazine and helped get the Clean Water Act enacted.

    It’s your reasoning that I find troubling though. You imply that if something bad happens to a public space then it ought to be privatized. Are you willing to use that same logic across the board? That is, if something bad happens to a private space it ought to be made public.

  20. Mark (#12, again),

    why did the NSW Government reject an offer from a private firm to recycle Sydney’s waste water?

    I’ve no idea, not familiar with the proposal or the circumstances. But I don’t see what point you’re trying to make.

    Why is there no incentive for the private sector to provide these services?

    At the end of a long chain of events there is an obvious role for the private sector. The beginning of the chain however consists of things like awareness of a threat to public health — like a disease outbreak, potential water shortages, or water quality issues. Where is the incentive for the private sector to do that kind of oversight and planning work?

    Look at the publicly funded project in LA http://www.grist.org/news/2008/05/15/pooWater/ If you can figure out a way for a private company to take on the risks of a project like that, I’m all ears. I wonder if that’s not part of the issues around the private proposal to recycle Sydney’s waste water. Was the proposal framed in a way that had the government assuming all the risk while the private firm reaped the profits?

  21. Capitalism is just ONE cog in the grand machinery of ideas and consequences that manufactures the lifestyle, culture, conveniences, sustenance, and joy of an individual. To assign blame for the world’s woes on Capitalism is as foolish and ignorant to thank it, and it alone, for the positive tangible and intangible in life.

    Narrow-mindedness is kin to fanaticism.

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