Capitalism is misunderstood. It is not so much a system; it's the anti-system, it is what happens when there is no system.
With so much emphasis on the term “Inequality” these days, it’s time to clarify a bit the issues at stake and the lies or inaccuracies behind the movement. Oh I know. For all those friends and foes out there who have always seen me as a closet democrat or at least liberal to some degree, the following may come a bit as a surprise. The following is purely based however on historical facts anyone with a keen interest in economic history can detect; the real history that is, not the crap they feed you in school. Capitalism has successfully put under pressure by a global trend towards socialism, even though capitalism is the only truly open road to the future.
Over the years I have added some salt and pepper to the glamour stories presented to us by the ‘winners’ and mixed and matched real facts with close observations of human behavior. My end conclusion about human history so far can be broken down in two distinct episodes: The time Before and after Civilization; civilization to be defined as the moment somebody “mumbled” an insulting word instead of throwing a rock to settle a dispute.
The Before represents 200,000 years of pure survival in nasty, brutishly barbarian circumstances while the After gave way to a somewhat civilized evolution (albeit with regular global and regional relapses into barbarian behavior).
Even though we can piece large parts of the puzzle together, concerning the real early days of human evolution, we don’t really know since we weren’t there. So let’s take a more or less educated guess based on human nature to look at what happened many thousands of years before “civilization” first appeared in India and China, Egypt, Ethiopia and Kenya, Turkey (Gobekli Tepe), and Mesopotamia.
The Quest for Prominence is an Essence in the Human Nature
Everybody wants to get ahead – by getting more wealth, more power and more status than his “neighbors”. In today’s world, you develop the software for a killer online game or phone app! Or you set up a hedge fund. Or you write a best-selling novel or excel in a popular sport. You can compete by trying to achieve something important or if you lack those talents, you can run for Political Office and hope for the best.
But how could you get ahead in the days before agriculture, the industrial revolution and Facebook? What could you invent? A sharply pointed rock or twig, bow and arrow, a spear? Nothing was really scalable into large numbers. There was so little old technology in use that there was almost no room for new technology. No wheels. No power. No electronics or mechanics. Daytime was consumed by finding food (hunting), eating, finding safe shelter and sex. The progression from hunting to farming took thousands of years. But before farming there was no social structure, no settlement however temporary, no hierarchy of power. The strongest, quickest and smartest one was the survivor, until he faced a better one.
Success in business or investment? Forget it. Entrepreneurship was non-existent and Capitalism was not even embryonic.
Art? Music? From what we’ve seen on the walls of caves, art reflected life but was very primitive and mostly lacked a medium for durability. For most of the time on earth – about 200,000 years – man lived so on the edge of survival that there was little surplus available to support the arts or an elaborate culture. Until after the last ice age, there were no known musical instruments, unless you consider a conquered victim’s skull a rhythm instrument; there was no writing of any sort either, and no sophisticated tools.
How then did men compete for the spoils of life?
How did they show each other who was boss? Again, even though we don’t really know, it seems most likely that in tribal format they competed at hunting… and ceremonial fighting. A primitive man could really only gain an advantage by killing something – just like any predator in the animal kingdom.
I have to interject here that I think that many interpretations of Jean Jacques Rousseau’s idea of the noble savage were self serving illusions.
Rousseau, a deteriorationist, proposed that, except perhaps for brief moments of balance at or near inception when a relative equality among men prevailed, human civilization has always been artificial, creating inequality, envy and unnatural desires.
Studies of pre-civilized tribes suggest that a man gained the most status by killing another man. Tribes living on the American plains, the Australian Outback or removed islands continued this custom until only about 150 years ago, taking the scalps of their slain enemies as proof of their “achievement” or using enemy bones as decorative trophies. Besides that, they practiced or at least experimented with polyandry models of multiple wives as war trophies.
Remember that even in the time of the Roman Empire’s civilization, the highest honor a Roman general could receive was for killing an opposing general in personal combat! Those who possessed superior intelligence combined with great strength and physical ability, would be placed on a pedestal or throne and handed the key to the kingdom. That’s how every ancient kingdom arose.
How to Get Rich, Influential, Powerful
With some important exceptions of discovery or birth right, there was no way to get rich in the ancient world, except by taking someone else’s property. This is what people did… or died trying to do.
Until the advent of capitalism, it was the only way to get ahead materially. You took someone else’s land, his wives and his family – turning as many as possible into slaves or servants. In North and South America, for example, until deep into the 19th century, native tribes typically killed their male enemies… and took their women and children into captivity.
In supposedly civilized communities, too, slavery was popular. Owning slaves was not only acceptable, it was a mark of superiority.
The more slaves you had, the higher your social rank. Slave-holding was so much a part of life that even Christ – who preached “love thy neighbor” – made no mention of it, let alone discouraged it.
And the US Constitution – truly a blueprint for the most civilized political system yet designed – also “tolerated” slavery by omission.
Today, the pay-off from slavery and murder is questioned even though we still put deer heads on our walls and award medals to particularly good soldiers.
But… we now live in a society that has at least embraced basic elements of civilization.
And in a civilized world, killing other people is generally frowned upon, if not censured, proscribed and punished. Slavery has been abolished in most of the world. We still have wage slaves… and tax slaves. But chattel slavery has largely disappeared in western and eastern societies. But we need to realize that this was the result of not needing slavery for wealth any longer, because Wealth was no longer a zero-sum game. Capitalism had given it a win-win option.
Today, we channel our competitive urges into many different activities. Some people drive expensive cars. Some build mega-mansions. Some buy islands to form their own kingdoms. We have team sports such as Rugby or American football, in which one team acts as though it were trying to kill the other. Brutal, but not nearly as brutal as the historic form of modern day soccer called Calcio Storico, that was prominent during the Greek and Roman empires, when kings and emperors came up with violent sports for their enjoyment and to calm the population. Gladiators in Rome and La Pelota in Mayan Central America. France’s Henry III said of Calcio Strico: “Too small to be a real war and too cruel to be a game”
Keen observation shows these days that TV now puts a claim on an entire weekend by broadcasting high school football on Friday Night, College Football on Saturday and Pro-football on Sunday and Monday Night. That is 4 out of 7 days a week!!! Our society is starting to resemble the old Roman Empire more and more as each year passes. But that’s for another story and another day.
The good thing is these days that it is in business, careers and investment that the majority of people find competition most rewarding. Artificially tanned traders on Wall Street talk about “ripping the faces off” their rivals. Ambitious entrepreneurs read the works of military strategists Sun Tzu and Carl von Clausewitz for hints on how to come out on top every time a campaign goes to the battlefield.
In terms of civilization however, thanks to modern capitalism, you actually can get wealthy without taking anything away from others. Wealth is no longer a zero-sum game. The world’s wealth can be increased by hard work, saving, innovation and investment. Because of the US Constitution, the country became the attraction point for anyone in the world, who had the ambition to make it. Supported by the Constitution it became obvious that capitalism gave the opportunity to gain wealth without needing to demolish someone else.
People who succeed at capitalism gain wealth and status. They not only make themselves rich… they enrich their neighbors in the process as well.
It’s not (yet) a perfect system which is why inequality is these days “buzz word”. But it works remarkably well … if left alone or at least with a minimal amount of supervision. But of course that’s where the world breaks into two squarely opposing fractions.
That’s why the word INEQUALITY is now used as the battle cry in our seemingly inevitable global trending toward socialism.
Pope Francis in the Eternal City… Bill De Blasio in the Big Apple… President Obama in the White House…
From the pulpit to the Oval Office to City Hall – capitalism is coming under attack in 2014.
And frankly in the present circumstances, the inequally poor have a legitimate beef. Unfortunately what they don’t understand is that this is in no small part a result of the manipulation initiated by Washington, the financial policies of the Federal Reserve and the media portraying of the stock market. It is not advanced economics to realize that at a rate of GDP growth of 2% a year, the US economy adds in reality about $350 billion in wealth in 2013. US stockholders however gained $3.7 trillion compared to the beginning of the year. Money provided to them by the Feds’ easing policies. They gained $3.35 trillion more than GDP growth in 2013.
But the rich are not only ahead in capital gains, they are also kicking butt in every other income category.
Only the top 10% of households made any real income gains over the last 10 years. All the rest lost ground. And the top 1% has done even better – thanks largely to the big increases in stock and real estate prices.
So what? What’s wrong with that?
Nothing in my opinion. Except when it happens through underhanded conniving by the feds giving tax payers money to its Wall Street cronies. That is giving capitalism a bad name. It’s not the capitalists who have gotten the most loot from the feds’ bailouts, ZIRP and QE. It’s the cronies.
Too bad, but people think the rich are capitalists and that capitalists are rich. Not so. A real capitalist takes losses as well as gains. He makes mistakes… and pays for them himself. He is also the one who creates jobs.
Often it’s not even about the money. Often, he doesn’t know how much he’s got… and doesn’t care. It’s the journey he likes, the destination he often finds boring.
Capitalism is misunderstood. It is not so much a system; it’s the anti-system, it is what happens when there is no system. It is what people get up to when they are left to their own devices. It’s what pushes us forward in technology, medical progress, social acceptance and ultimately quality of life.
Good or Bad?
I don’t know… but it’s better than being told what to do by some jackasses with their own agenda.