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How Moral Is Capitalism?
Forbes ^ | 12 February 2007 | Rich Karlgaard

Posted on 02/02/2007 5:37:44 PM PST by shrinkermd

A writer calling himself "Adam Smith"--you'll see the irony in a moment--nuked me recently on my Forbes.com daily blog. He wrote: "You are too much of a materialistic person to understand the purpose of life. [You big mouths at magazines] find followers who want nothing but money, which they think buys happiness. It's not too late for you to drop your crap and look for the meaning of life--it is certainly not in making money. I wish you luck."

Sorry, Mr. Smith. I do not consider moneygrubbing the purpose of life. Never have. The use of God's gifts comes closer for me.

Still, moneygrubbing--a.k.a. the search for profit--has its purpose. Money (profit) is a tool. It is capital. Without capital there is no capitalism. Innovation starves. Prosperity weakens. Societies stagnate. God-given gifts wither. This is especially true for humanity's wonderfully zany outliers: artists, inventors, entrepreneurs. They need capitalism more than anyone.

Money is good, therefore, because capitalism is good. It delivers the goods, literally, and better--broadly and individually--than does any other system. Hugo Chávez would argue that point, but he's nuts.

Can we go even further and say that capitalism is good because it is moral? Following that logic, can we say: The purer the form of capitalism, the more moral it is? Is capitalism perfectly moral--enough to sustain itself over many generations?

Yes, say Ayn Rand's followers. But most of us would not go that far. We think a capitalism that lacks outside moral influences and pressures, restraints and safety nets would, sooner or later, fail.

Bill Ziff, a successful magazine capitalist who died last year, spoke for most of us: "[Capitalism] is not in itself sufficient to create values. It depends on what human and religious values we, ourselves, bring to our affairs. Insofar as those values fail, we would all descend toward a lawless, inhumane, cutthroat society that will no longer harbor our civilization."

Good Works or Redistribution?

Conservatives and liberals agree on little these days. But most agree on this: Capitalism works, but it is insufficiently moral. Conservatives--allow me to paint them with a broad brush--believe capitalism works best when it is spun with golden moral threads, when it weaves in those old values learned in church, charities, service clubs and the like.

Liberals are more skeptical. They know capitalism will produce losers as well as winners. They feel the winners must be forced into helping the losers. Forced help hurts everyone, say conservatives. Redistribution discourages winners from producing and losers from trying. It leaves everyone bitter.

Such is the national debate we find ourselves engaged in as the Democrats take power in the Senate and House. The minimum wage is a form of redistribution. It forces employers to pay workers more than their productivity merits, puny as those paychecks may be. Higher payroll taxes are also redistribution. Who believes higher payroll taxes will show up as higher monthly payments for the employee's retirement?

Restrictions on free trade are yet another form of redistribution, although you may not think of them as such. Tariffs imposed by the U.S. are usually countered by tariffs from other countries. That's what trade wars are all about--retaliation. Trade wars force American companies that are winners in the global economy--the IBMs, FedExes and Citigroups--to give up some of their winnings so that struggling domestic tool and textile manufacturers can stay in business. Trade protectionism asks California to subsidize Ohio and South Carolina.

Generally, Democrats favor forced redistribution more than Republicans do. Republicans--again, in general--would prefer to fix capitalism's shortcomings through good works and giving. This forces Republicans to higher standards of conduct, by the way. Bad people, in power, can redistribute as easily as good people. Only good people can inspire us to good works and giving.

Have Republicans succeeded in holding themselves to this higher standard? Hah! The top two Republicans in the House, John Boehner (Ohio) and Roy Blunt (Missouri), can't summon enough moral courage to say no to "earmarks"--a sneaky form of redistribution. Demo-crats are proud of redistribution. They have no need to be sneaky about it. Democrats will always play the redistribution game better.

Paging Adam Smith

What did Adam Smith--not my blogger critic but the real one--say about capitalism and morality?

The great Scotsman seemed to say two contradictory things. In The Wealth of Nations (1776) he wrote these famous words about self-interest: "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages." This sounds like selfishness: Greed is good.

But Smith never believed that. In his earlier book, The Theory of Moral Sentiments (1759), Smith defined self-interest not as selfishness or greed but as a psychological need to win favor within one's society. Smith revised The Theory of Moral Sentiments after he wrote The Wealth of Nations. He did not change his belief that moral sentiments and self-interest are the same thing.

Let's not forget our Adam Smith. When we do, capitalism loses its moral authority, and the redistributionists win.


TOPICS: Business/Economy; Culture/Society; Editorial
KEYWORDS: capitalism; morality
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To: Hank Kerchief
I become very impatient by those who presume to defend Capitalism as thought it needed some other "moral" basis; this kind of defense is worse than a direct attack. The American Capitalist system is the most moral system in history and all its faults are in those aspects which have compromises the principles of individual liberty and property rights on which it is based.

Worth repeating.

L

61 posted on 02/02/2007 10:52:50 PM PST by Lurker (Europeans killed 6 million Jews. As a reward they got 40 million Moslems. Karma's a bitch.)
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To: Hardastarboard
What money IS is a way of achieving what you want out of life.

Money is certainly that, but it's also a whole lot more.

As the incredibly prescient Miss Rand put it:

Money is a tool of exchange, which can't exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value.

Without goods and services produced which people desire money is nothing but prettily colored bits of paper with absolutely no intrinsic value of its own.

Rand continues:

"When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others."

Money is the ultimate symbol of the trust a society places in its members. Without that trust money once again becomes nothing more than worthless paper. We use money as a store for the excess value of our time. The more valuable our time is to the other members of our society, the more money we earn with which to store that value.

When a society ceases to trust its own, money becomes worthless and one is back to barter. For proof of this one need look no farther than a country like Zimbabwe where 'inflation' is running something like 100% a week IIRC.

It's not that the actual value of the goods in Zimbabwe is rising. A loaf of bread is, after all, still the same on Friday as it was the previous Monday.

What's happened is that that bond of trust between the members of Zim society is gone so they no longer have a medium of exchange worthy of trust. Zim government doesn't trust its citizens and vice versa, and the citizens no longer trust each other. Therefore what they use to trade with one another, money, has become worthless.

What money allows you to do is take care of the top level of Maslow's hierarchy of needs - self-actualization

This is absolutely correct and it's one of the best short explanations I've ever seen as to what the power of money actually is. It's not that it can buy pretty baubles, fancy cars, or attract the attention of attractive members of the opposite sex (although that is a nice side-benefit to having money...LOL)

Anyone who would deny me the fruits of my labors, driven by my intense desire to be self-acutalize, is nothing more than a petty dictator who believes they know more what's good for me than I do.

Once again you show why I consider you to be one of the finer posters on the forum. This is an incredibly important point which even most conservatives are unable to articulate. You are to be congratulated for making the point so succinctly.

Rand said it a bit differently, but the idea is the same:

"Run for your life from any man who tells you that money is evil. That sentence is the leper's bell of an approaching looter. So long as men live together on earth and need means to deal with one another--their only substitute, if they abandon money, is the muzzle of a gun.

There are only two ways for people to deal with each other in this world. We can freely and voluntarily trade with each other with absolutely the bare minimum of interference from Government which should take only that amount it absolutely requires in order to do some very basic and clearly defined tasks. Our Founders understood this and laid out those tasks very clearly in our Constitution.

Or we can devalue our fellow citizens by implying that they somehow obtained their money fraudulently and then force them to our will with the muzzles of guns. There are no other ways no matter what anyone tells you, although Hillary and her ilk will try. They'll usually do it by mouthing platitudes about 'the common good' when we both know there really is no such thing.

Finally Miss Rand left us with a warning which we ignore to our mortal peril:

When you see that trading is done, not by consent, but by compulsion--when you see that in order to produce, you need to obtain permission from men who produce nothing--when you see that money is flowing to those who deal, not in goods, but in favors--when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you--when you see corruption being rewarded and honesty becoming a self-sacrifice--you may know that your society is doomed. Money is so noble a medium that is does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.

This last line is why the Zim 'dollar, the Cuban peso, the Russian Ruble, and the ChiCom yuan are not used internationally and most likely never will be. Money will not permit itself to be debased like that. It can't. Rational people won't trust a 'currency' which isn't based on the idea that people own themselves, even if they can't articulate that idea aloud.

Lastly there is this:

"Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to be the tool by which men deal with one another, then men become the tools of men. Blood, whips and guns--or dollars. Take your choice--there is no other--and your time is running out."

Time is indeed running out. Just today we had a 'serious' Presidential candidate utter out loud on national television the idea that she wants to 'take those profits' from a lawful industry. The mere fact that she felt safe saying such a thing should chill sane people down to their very bones.

After all, if she can take it from them she can take it from anyone. And once that process starts (we're already long past that start, but you know what I mean) the end result is an utterly predictable foregone conclusion.

And it's never pretty.

L

62 posted on 02/02/2007 11:33:50 PM PST by Lurker (Europeans killed 6 million Jews. As a reward they got 40 million Moslems. Karma's a bitch.)
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To: mbraynard
Morality is rooted in objective reality. Morality is causal and is defined by results.

No.

Morality is rooted entirely in the presupposition some higher power defines what is correct for human behavior.

A greater number of "atheists" and "pagans" adopt the same hackneyed tenets of a faux Judaic-Christian ideal (golden calf). They also subscribe to the Judaic fetishism of "sin," but will fight to their death in denial of it. Most of them are so wrapped up in their own polemics that they have become nothing more than pathetic anti-Christians with the same false hypocritical philosophy.

They just slap a new label on it hoping nobody will notice - - they replace the idea of "avoiding sin" with "morals."

But, since we are all properly obeying the * modern interpretation * of the First Amendment, good & evil isn't the question... Good & bad, right & wrong, etc., etc., ad nausea; are all inherently religious ideals.

The modern interpretation of the First Amendment (according to the liberal-tarians) says government must exorcise all traces of religion and theism from itself. Therefore, government must never consider issues of morality and right and wrong...

So, it becomes a question of benefits versus costs.

Fetus killing has its benefits to society, especially if you like to sleep late on Saturdays. But it also has its costs as well. Society (by which I mean, whoever manages to seize power) needs to evaluate these costs and decide accordingly.

The mythical rights of men and women are also meaningless. The very concept of rights is also founded in religion. Since the enlightened person is freed from any superstitions about some "God," they are free from having to worry about "rights." Only raw power counts and humans are just meat puppets for the powerful...


However, the third way is through nature. And this nature and the consequences of decision of nature dictate what is moral.

Might makes right. See above...

63 posted on 02/03/2007 3:40:16 AM PST by Sir Francis Dashwood (LET'S ROLL!)
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To: Lurker
"Run for your life from any man who tells you that money is evil. That sentence is the leper's bell of an approaching looter.

I'm still laughing out loud at this one. I thought this post started off strong, then realized from the style who it was.

If all those quotes are from Ayn Rand (whom I've unfortunately never read), there should be a radio and a TV station both devoted 24 hours a day to broadcasting readings of her work. Fantastic stuff, and clear enough for even idiot Dems to understand (at least I'd like to think).

64 posted on 02/03/2007 4:44:54 AM PST by Hardastarboard (DemocraticUnderground.com is an internet hate site.)
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To: Hardastarboard
That little snip is from a section of Rands "Atlas Shrugged" known as 'Francisco's Money Speech'.

Like most Rand works it runs long.

The entire 'speech', which the character Francisco gives to a couple of old biddies at a dinner party after he hears them say 'money is the root of all evil' can be found here.

Reading the entire book is worth it just to get to that part IMO.

If it's true you've never read Rand then I recommend strongly that you do. Yea, the settings are a bit dated but the concepts ring dead true because they are.

She also wrote quite a bit of non-fiction. IMO one of her best is "Capitalism, the Unknown Ideal."

It is indeed great stuff.

there should be a radio and a TV station both devoted 24 hours a day to broadcasting readings of her work.

One of her associates, Leonard Piekoff, had a radio show a few years back I think. There were some recordings of it posted on the 'net but I don't remember where.

L

65 posted on 02/03/2007 5:04:16 AM PST by Lurker (Europeans killed 6 million Jews. As a reward they got 40 million Moslems. Karma's a bitch.)
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To: Sir Francis Dashwood
The mythical rights of men and women are also meaningless

Like hell they are.

The very concept of rights is also founded in religion.

When exactly did Jesus give a sermon on 4th or 5th Amendment rights? I must have missed that Book in my Bible.

L

66 posted on 02/03/2007 5:19:02 AM PST by Lurker (Europeans killed 6 million Jews. As a reward they got 40 million Moslems. Karma's a bitch.)
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To: Lurker
She also wrote quite a bit of non-fiction. IMO one of her best is "Capitalism, the Unknown Ideal."

The Ayn Rand Lexicon, edited by Harry Binswanger is a must have.

She had some insightful stuff, but her myopic hostility to the religionists was a fatal flaw of her philosophy.

Rand got most of her philosophical egotism directly from John Locke and Thomas Hobbes before him.

67 posted on 02/03/2007 5:19:58 AM PST by Sir Francis Dashwood (LET'S ROLL!)
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To: Lurker
You don't recognize sarcasm when you see it?


When exactly did Jesus give a sermon on 4th or 5th Amendment rights? I must have missed that Book in my Bible.

From where are those rights enumerated in the Constitution derived???

Answer: Declaration of Independence.

Let's clarify that...

"...to which the Laws of Nature and of Nature's God entitle them... that all men are created... Assembled, appealing to the Supreme Judge of the world... with a firm reliance on the protection of Divine Providence..."

The very idea that human beings have individual rights not subject to the whims of an earthly monarch, but subject to the laws of Yahweh, is directly from Moses.

It is not a matter of Yeshua giving a sermon on the 4th or 5th Amendments, it is a matter of the philosophical basis from Moses.

Clue: Moses was not a Christian...

68 posted on 02/03/2007 5:27:06 AM PST by Sir Francis Dashwood (LET'S ROLL!)
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To: Hardastarboard
Here's one more little piece from that 'speech' Tell me if it isn't just as valid today as it was when it was written in 1957.

"Then you will see the rise of the men of the double standard--the men who live by force, yet count on those who live by trade to create the value of their looted money--the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law--men who use force to seize the wealth of disarmed victims--then money becomes its creators' avenger. Such looters believe it safe to rob defenseless men, once they've passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter."

See any parallels?

Have a pleasant day my friend.

L

69 posted on 02/03/2007 5:31:43 AM PST by Lurker (Europeans killed 6 million Jews. As a reward they got 40 million Moslems. Karma's a bitch.)
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To: Sir Francis Dashwood
You don't recognize sarcasm when you see it?

Sorry. I'm coming off a very long shift and am literally having trouble keeping my eyes open. You have my apologies, sir.

L

70 posted on 02/03/2007 5:33:13 AM PST by Lurker (Europeans killed 6 million Jews. As a reward they got 40 million Moslems. Karma's a bitch.)
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To: Sir Francis Dashwood
The Ayn Rand Lexicon, edited by Harry Binswanger is a must have.

I'll have to pick that up.

She had some insightful stuff, but her myopic hostility to the religionists was a fatal flaw of her philosophy.

I would largely agree with you on this point.

Rand got most of her philosophical egotism directly from John Locke and Thomas Hobbes before him.

Goody. More books to buy....

L

71 posted on 02/03/2007 5:34:39 AM PST by Lurker (Europeans killed 6 million Jews. As a reward they got 40 million Moslems. Karma's a bitch.)
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To: shrinkermd

Bookmarking great article


72 posted on 02/03/2007 5:39:03 AM PST by Toadman (molon labe)
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To: Lurker
Sorry. I'm coming off a very long shift and am literally having trouble keeping my eyes open. You have my apologies, sir.

No harm done...

My point is that the Judaic basis American jurisprudence is where our "rights" are philosophically derived from.

Rand had a lot of trouble with that. She was an unobservant Russian Jew.

73 posted on 02/03/2007 5:39:19 AM PST by Sir Francis Dashwood (LET'S ROLL!)
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To: Lurker
"When you see that trading is done, not by consent, but by compulsion--when you see that in order to produce, you need to obtain permission from men who produce nothing--when you see that money is flowing to those who deal, not in goods, but in favors--when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you--when you see corruption being rewarded and honesty becoming a self-sacrifice--you may know that your society is doomed."

That should be compulsory reading. I've read most of Rand's works, but that single passage really brought things into focus for me.

74 posted on 02/03/2007 5:40:28 AM PST by NittanyLion
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To: Sir Francis Dashwood
Rand had a lot of trouble with that. She was an unobservant Russian Jew.

I sometimes wonder how powerful of a proponent for religion she could have been if she had only had her eyes opened to the Truth.

It's a pity it appears not to have happened.

L

75 posted on 02/03/2007 5:44:10 AM PST by Lurker (Europeans killed 6 million Jews. As a reward they got 40 million Moslems. Karma's a bitch.)
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To: shrinkermd
Conservatives and liberals agree on little these days. But most agree on this: Capitalism works, but it is insufficiently moral. Conservatives--allow me to paint them with a broad brush--believe capitalism works best when it is spun with golden moral threads, when it weaves in those old values learned in church, charities, service clubs and the like.

Liberals are more skeptical. They know capitalism will produce losers as well as winners. They feel the winners must be forced into helping the losers. Forced help hurts everyone, say conservatives. Redistribution discourages winners from producing and losers from trying. It leaves everyone bitter.

''''''''''''''''''''''''''''''''''''''''''''

The above statements are are prime examples of the absolutely absurd thinking that passes for theoretical economic analysis going on in this country today. We are all products of the social welfare state that has deteriorated and nearly destroyed the capitalist system. We are on the verge of implementing world socialism democratically here in America, and this kind of analysis is exactly why. Morality has nothing to do with the attack on capitalism. Morality is being used as a means to secure power for the socialist world order. Blaming capitalism for things like poverty, and pollution, and global warming is totally wrong. Those conditions spring from the political process, not the economic system. In China there are massive examples of poverty, pollution and inequality, yet it is the prime example of communist economic system in the world. Where is the "morality" in their economic system. Interestingly the chines are moving towards capitalistic economics to provide for the needs of their people.
76 posted on 02/03/2007 5:47:40 AM PST by photodawg
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To: Lurker
Thomas Hobbes' Leviathan is a huge book. If you can sort through the 800 pages of overt Biblical notation, there is a lot of gold. (Get the version with the Latin variants.)

Hobbes was intensely and neurotically anti-war. But that does not inherently make his ideas irrelevant. He was a monarchist, what else could you be in the 1600's? (Both Yeshua and Yahweh are Zionist monarchs in the Bible.) He skewers the Left from the grave.

77 posted on 02/03/2007 5:47:51 AM PST by Sir Francis Dashwood (LET'S ROLL!)
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To: jcmfreedom
Interesting article. I have something further to add. Today, Hillary Clinton professed that the oil company profits need to be taken away and given to the little companies. I say: if you believe in redistribution of wealth, then why don't you take away the profit from Comcast corporation for their record 3rd quarter profit (today's paper alongside the Exxon article...Star and Trib.). If you further have disdain for capitalism, then take away Bill Clinton's profits from his speeches.

I have come to the conclusion that the libs don't know diddly squat about economics!

'''''''''''''''''''''''''''''''''''''''''''''''''''''''

Agreed. This is a prime example of what happens when you try to inject morality into economics. I would add also that libs don't no diddly squat about morality either.
78 posted on 02/03/2007 5:51:05 AM PST by photodawg
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To: BenLurkin

"But most agree on this: Capitalism works, but it is insufficiently moral."
NONSENSE.

But even if so capitalism is certainly more moral than big government socialism.

Taking from those who produce at the point of a gun to give to the nonproductive is patently immoral.


''''''''''''''''''''''''''''''''''''''''''''''''''''''

The author is really talking about politics, not economics. He is just is too stupid to understand the difference.


79 posted on 02/03/2007 5:55:00 AM PST by photodawg
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To: NewLand
They know capitalism will produce losers as well as winners

'''''''''''''''''''''''''''''''''''''''''''''''''''''''''

Losers and winners is a political value judgment, not a description of how capitalism functions. Losers in the capitalist system are inefficient producers as defined by the free market system. As such, they are free to become more productive or move to a different market as their capital allows. Capitalism does not produce losers as well as winners. It is possible for all producers within a given industry to be profitable if they are all productive, as occurs in the Distilling business (smile).
80 posted on 02/03/2007 6:05:41 AM PST by photodawg
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