It’s quite a simple lesson you see.
Free-market capitalism is simply too truthful. When people freely exchange goods and services, with the rights to persons and property protected, then exchange values are predicated on public evaluations of the values provided by such goods and services. There are no intrinsic values stating that you are worth $50 per hour merely by virtue of you being you, or that your invention is worth $2.5 million merely by virtue of you creating it. And people hate the truth – just examine the fiscal cliff debates and outcome to see how far from reality people have convinced themselves to locate.
I tell people all the time that I don’t exactly love what I do for a living. And that’s true. But many people are willing to pay to learn economics, and I am not good at much else, so I continue to do it. I’d much prefer to coach youth sports, or to run hiking and camping trips for young people, or to brew my own beer, or myriad other things. But the plain fact is that others do not value the output I produce in those areas and hence I cannot make a living in those areas. Does my inability to get rich backpacking around the Adirondacks mean I should curse capitalism? Do we think the same people who are unwilling to pay me in my entrepreneurial endeavors, once we convert to some more communitarian-democratic economic system, will suddenly change their minds and vote to support my way of life? Really? If they were not willing to pay freely to support me, I can’t see how they’d vote to pay to support me. Unless of course their voting to support me means the money comes from other people. Would that be a reason to celebrate? No one voluntarily finds my idea valuable, and only when using the coercive power of the state to extract funds from people other than themselves would folks in a political process support me – that doesn’t sound like much to be proud of.
Finally, people cannot help but think that capitalism is a “system” that somehow has been imposed on us from the elites. But this is ludicrous. The elites did much better for themselves under mercantilistic monarchy – go compute some Gini coefficients prior to the Industrial Revolution and compare them to the “shocking” inequality of today. A system of free exchange emerged from the billions of self-interested actions of people through history. There was never a roundtable of elites selecting it. There was never a capitalism convention whereupon this system was chosen as the one we operate under. And there isn’t an annual evaluation of such a system today. Capitalism is simply what we do when we are doing. And this is further reason for the animosity toward it. Capitalism is us. When folks drive down a crowded street, whether it be Northern Boulevard in New York City or Monroe Avenue in Rochester and see strip mall after strip mall, or see smoke shop after smoke shop, or see gas station after gas station, it sure does feel good to say, “those corporations are destroying the environment and the fabric of our community!” And it sure sounds a lot better than, “I, and the people in my community who have similar preferences, are destroying the environment and the fabric of our community.”
Strip malls would not exist if millions of people did not like them and want them and in fact value them more than additional open space and environmental preservation. And we don’t like this about ourselves. It’s a rare person who is honest enough with themselves to admit such things. We like to blame our parents for some of the faults that are clearly our own. We like to blame our spouses for mistakes that we make. We like to blame the lie when we hit a poor golf shot. And so on. We treat capitalism the same way. The problem with this little analogy of course is that when people hate and blame capitalism for their inability to produce things of value or for their propensity to like strip malls, we end up getting very destructive and very unfair policies put in place in response. We don’t quite see the same thing happen in golf.