Thursday, 21 June 2007

Common Fallacies about Capitalism II

There hasn't been a great deal to write about over the past few days, with life going on as usual. Because of that, I've decided to write a new "Common Fallacies about Capitalism". This one will consist of only 5 fallacies, but they'll be just as good as before. The original article can be viewed here. Also, it should be noted that this is the 100th post on my blog.

5) Capitalism is the Reason why the Third World is Starving, and why the Rest of Us are so Rich. 20% of the World's Population Consumes 80% of its Resources.
Two of the three arguments presented here are indeed correct: first, that Capitalism is the reason why the rest of us are so rich; and secondly, that 20% of the world consumes 80% of it's production, But there's a catch-22 here: 20% of the world (the people who have a free-market economy) PRODUCE 80% of its resources. Capitalism has been able to make use of resources-both natural and artifical-better, more efficiently and greater than any other system. The 20% of the world's population who consume 80% of the worlds (useable) resources do so because they have the means to do so, and are doing so more efficiently than at any other time in history.

The reason why the Third World is starving is because they have no freedom-and thus no incentive-to go out and produce for themselves. They have no property rights to protect what's rightfully theirs, and produce. However, it is correct when we say that the First World is a burden on the Third World, we have tarriffs and protection a plenty in the first world, wherever you go. Aid also has a negative effect on the Third World, by simply providing an incentive to rely on the First World. Observe that in the countries that have received the most aid, the economies have been shrinking.

4) Capitalism causes Excesses in Some Places and Depletion in Others.
Capitalism doe not cause excesses and depletion. Instead, there is a simple market mechanism to prevent this: if one man had a whole lot of computers he needed to sell to buy a helicopter he wanted, he would try and sell all his computers to people who want/need them at a low enough price that they'll be bought, but high enough to buy a helicopter (in which case it would be a boon to people who want computers for him to have more, so the market price would go down). If he sold enough computers to buy his helicopter, he would buy what he wanted, all the while diminishing his excess to people who want/need computers. The very fact that having one thing by itself is worth more than having two, three, 10,000 etc to any one person is how the market prevents excesses. If our man who wanted a helicopter made neither a profit nor a loss from selling computers and buying a helicopter, he would still have the same net worth after his enterprise, but there would be no more excess.

3) Capitalism is Responsible for Immoral Behaviour.
Capitalism is the system of non coercion, aka voluntary interaction between people. Because of this, Capitalism-in its proper meaning-can NOT be held responsible for people's decisions. Capitalism is an economic system that requires the seperation of economy and state. It does not force morality or a particular lifestyle upon people.

2) Capitalism Leads to the Depletion of sometimes Precious Natural Resources.
Many years ago, the developed nations were very much dependent on coal as their main source of energy. Oil was just some black liquid with no value that came up from the ground from time to time. But as time went on-as more and more coal was used-the devolped nations, and the developing nations also switched to oil, once useless, as their main source of energy. Coal didn't run out, as more and more competition meant that sources were hard to get hold of. Suddenly, uses were invented for oil, and low competition for the resource meant more companies extracting oil.

Nowadays, the same situation has happened for oil. High-tehc companies are developing more and more ways to use "alternative" fuels. Even the oil companies are looking into ways to develop these fuels. As with coal, oil will eventually take a back seat to new fuels and extraction methods.

1) Capitalism=Profits Before People.
There is a simple reason why, under Capitalism, this is a big lie: under Capitalism, all interaction is voluntary. To make a deal with someone else, you first must agree to their terms. Force is illegal, and any force is inherently anti-capitalist. The employee must agree, through a process of discrimination, to work for the employer. The employer must offer reasonable conditions if the employee agrees to work for him/her. Therefore, a business must consider the interests of their employees, as the employees can, as always, choose to leave if they want to.

Because of the fact that forced work-slavery-is inherently anti-capitalist, all work under capitalism is voluntary. Therefore, a company-or any organization-must offer whoever decides to work for them a good deal, or else fail and go under.

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