Capitalism the Unknown Ideal
It is crucial that we become educated and informed so WE can take back our nation.
COME – HEAR – LEARN – ACT
MARCH 24, NOON, BEAR LAKES COUNTRY CLUB
BEGIN – by reading Dr. Albie Baltin’s article:
UNCOMMON COMMON SENSE
For People Who Think
CAPITALISM THE UNKNOWN IDEAL
Before one can decide logically whether to be either for or against Capitalism one must first examine and discover what capitalism really is.
One text book that has been in recent use, defines capitalism as an economic system based on “Laissez Faire” that came into being in the early 19th century and is based on, limited government, private property, free enterprise and a Free Market. It gives private property rights to individuals and entities (companies) and relies on self interest and market forces to coordinate economic activity. In principle, individuals decide how, what and for whom to produce. “The Dollar Votes”. Individuals are encouraged to follow their own self-interest, while market forces of supply and demand, profit and competition are relied upon to coordinate economic activity. Distribution is to each individual according to his own desires and his own ability, effort and savings to satisfy his desires. While Socialist, Communist, Marxist philosophy is “Each according to his need, not according to his deed” The big question becomes what is a need?
Most Economists tend to assume that human behavior can be accounted for by treating all individuals as rational profit-maximizers. A wrong assumption they ascribe to Adam Smith as they overlook his many departures and ignore his first book Theory of Moral Sentiments completely.
However all this is a much too simplistic an explanation of a system, that might best be described as a system based on NATURAL LAW and that in reality did not begin in the early 19th century but has actually evolved over time, since the first man made a voluntary trade of one of his own arrow-heads for a stone knife with another free man both of their own volition. The Torah in actuality describes capitalism whenever it describes how one is to act in dealing with other individuals both friend and stranger alike. In actual fact Capitalism is the Economics of the Bible and it begins describing it as soon as there are more than one Man. The first 3 men Cain, Abel and Adam each had different jobs (describing specialization and Trade)
The big danger in analyzing capitalism or anything else for that matter, is to take things out of context and misinterpret them.
Self-Interest is the most misunderstood, misinterpreted, concept relating to capitalism and is all to often used as a synonym , for Greed and Avarice , When in reality self-interest in relation to capitalism may actually amount to self restraint, or at least RATIONAL TEMPERING of the most common, if irrational, of all human impulses “self-interest“. ADAM SMITH referred to this as ‘informed self-interest’ while 200 years later AYN RAND labeled it as “enlightened self-interest“. The link of self-interest to the mutual concern for others expressed by a sales clerk “Can I help you?” or “Have a nice day” is most often overlooked or even scorned except by those who have had experience with any other economic systems, such as Fascism, Communism or experienced it in their dealings with a government agency. Yet the assumption that “each individual will always act in his own best self-interest “ is one of the cornerstones of all economic thought.
It is in the Enlightened, Informed, and intelligent pursuit of self-interest that Smith’s “Invisible Hands” comes into play. Whereby the individual in his pursuit of his own self-interest can’t help but benefit society even though that is the farthest thing from his mind at the time. Once the informed individual realizes that the best way to satisfy his own greed is to produce a better product, perform a better service, do a better job etc. and sell it at a better price, all of society can’t help but benefit.
Secondly, Once we take into account that monetary rewards are not the only form of remuneration that the individuals desire, then we can plainly see that the benefits to society are linked directly to the pursuit of self-interest by observing the plaques on the walls in every hospital, JCC or Andrew Carnegie Library etc. Upon examination we can see the even Ayn Rand was wrong when she stated that capitalism and altruism don’t mix.
Adam Smith in his “Wealth of Nations” published in 1776 also wrote “ The Theory of Moral Sentiments” the two together represent the most comprehensive description of what to day is commonly known as laissez- faire capitalism, even though he did not use either term and rather than call for the elimination of government actually predicated and called for the expansion of government.
The Wealth of Nations, focused on the analysis of the market process motivated by self-interest. It was written by one of the most admired philosophers of the enlightenment. A professor of Logic, rhetoric, jurisprudence and moral philosophy, sought to influence politicians and cause then to pursue the common good by appealing to their own self interest. Although he was concerned about the nature of moral excellence, he began by describing humanity as it really is. His project was to take man as he actually is and to make him more like what he should be, by discovering the institutions (Gov. the family, the church, the courts the community etc.) that make men tolerably decent and might make them more so, by concentrating on the social benefits of the individuals propensity towards self-love, egotism, self-interest and pride all properly channeled by social institutions to do the most GOOD for himself first which would then in turn extrapolate and expand to everybody else around him and eventually to the whole world..
Only A market economy is able to improve the standard of living, of the vast majority of the populace and can lead to universal opulence. Smith valued commercial society not only for the wealth it produced but for the character it fostered. It developed cooperative modes of behavior making men more gentle and self controlled and more likely to subordinate and temper their potentially anti-social passions to the needs of others. (In actuality Capitalism was the system that brought about and fostered the end of the 100 years war)
Smith did not even try to develop a science of economics free of moral judgments or ethical considerations. Rather He tried to bring about improvement, not through preaching, which is useless, but by designing institutions which would strengthen the incentives to act in a socially beneficial way, by bridging the gap between incentives and consequences. The best example of his philosophy is exemplified in our constitution and “The federalist Papers”, the most successful practitioners of psychological institutionalism; which pitted the passions against one another and channeled self-interest into serving the public good. Smith’s preference was for all public goods to be provided through the Market, even if government must supply the means, (vouchers) to its citizens, so that each citizen can purchase all goods and services they want through the market place.
EXPLAINING THE MARKET
The First Principle is “The Propensity To Truck, Barter and Trade” one thing for another which is innate in Human Nature. So each man in effect becomes a merchant and society itself grows to what is properly called a commercial society. (this is contrary to both Classical Republican [Aristotelian] and Church principles both of which were adamantly against commerce and money lending)
The second Principle is the Division of labor (FREE TRADE) which leads to specialization and increased human productivity and makes universal opulence possible. This systematic exchange of labor and the products of labor, Smith termed The “Market”., Self-interest – leads to market exchange – leads to division of labor – leads to specialization, expertise, dexterity, – leads to inventions, – leads to greater productivity resulting in greater total real wealth. It is the capacity to exchange that sets man uniquely apart from all other species and makes him uniquely capable of great progress.
SAVINGS. Without savings there can be NO progress. It is savings which allows men to make investments in tools to increase production, using the same land and labor. (Be careful not to confuse REAL SAVINGS with Fiat money)
There is also the Theory of Unintended and Unanticipated Consequences embodied in his Invisible Hands which plays a key role. Smith compares unintended socially positive outcomes of the market to the negative unintended consequences of government failed policies, which all too often substitute good intentions for sound policy. (God’s overall plan for man is incorporated in the Invisible hands)
Real Human progress could not develop until the production of food expanded to such an extent that hunger was no longer a problem of production and large amounts of people were released from the necessity of working only to get enough food to eat and feed their family.
Real Economic progress began in a community or country only after acquiring a basic minimum of food, clothing and shelter which became nearly a universal expectation. The impulse to acquire, the pursuit of gain, the pursuit of money and of untold wealth has in and of itself nothing to do with capitalism. These pursuits existed in people from all walks of life, from beggars to kings, in all times, in every land, under every conceivable economic system, wherever the objective possibilities of bettering ones lot in life has existed, since the dawning of time. The Naive conception of capitalism should be given up once and for all because of Unbridled avarice Which is not in the least bit the equivalent to capitalism and is even less so too its spirit.
This is the first of a series of missives on Capitalism “The Unknown Ideal”
UNCOMMON COMMON SENSE
Aubie Baltin CFA., CTA., CFP., Phd.
Palm Beach Gardens, Fl.
aubiebat@yahoo.com