Category: Commentary, Critique, and Response

REVIEW OF “23 Things They Don’t Tell You About Capitalism (Paperback)”

This topic deserves better treatment.

Others have listed some of the glaring faults in the book.

1) The most obvious one which is a restatement of Marx’s patently false labor theory of value.

2) The next most obvious is the patently false argument that labor is a constant price independent of local costs.

3) The next most obvious is the false claim that advocates argue that free markets are frictionless – when they argue instead only that bureaucrats are even worse than the market is at making decisions.

Realistically, the MORAL complaints he raises about the social and political difficulties created by inequality, may have some merit, but his economic and philosophical arguments are, in a word, adolescent. Any third first year graduate student in economics should be able to refute most of the ‘points’ in this book. And it’s unfortunate that such criticisms of capitalism are made on absurd grounds, rather than those that would actually help lead us to a better understanding of what markets do for us, and how we can best make use of them.

CRITICISMS OF CAPITALISM

1) capitalism simply states that the market will do a less bad job than humans who try to control it. Despite our desires to the contrary, history has proven this, logic demands it, and mathematics confirms it.

2) The market does not provide sufficient protections against ‘cheating’, fraud, theft and violence. This is why we have regulations: to force people to use ONLY fully informed competition in the market as a means of fulfilling their interests and the interests of others. Furthermore, constant innovation in technology, products and services requires constant innovation in regulation against new means of cheating, fraud, theft and violence.

3) The market does not provide sufficient protections against the concentration of capital that allows large capital holders to circumvent the market by either temporary monopolistic practices, or abuse of the government to obtain regulatory privileges – including collective bargaining privileges.

4) The market does provide all people with declining prices, but it is arguable that this is an insufficient benefit, and that they are due redistribution of some sort, of the profits from the market that their government and taxes create.

HOWEVER

1) Democratic Governments demonstrably make the problem worse through corruption, privilege and abuse because the election process is so expensive and lobbyists and interest groups so effective.

2) Government employees are unjustly protected from lawsuits by citizens. And our laws do not articulate the limits on legislative action.

3) Redistribution schemes are not tied to profitability or the economy, and result in fixed costs, rather than proportional rewards – this provides everyone with the wrong incentives.

4) The commons is insufficiently converted to property and corporations with shares, so that it is too open to political exploitation, since regulation is too imprecise and expensive compared to the ease and permanence of shareholder agreements. The government instead creates either privileged monopolies (radio spectra), or corrupt exploitation of the commons (strip mines).

For these reasons and dozens more, governments are more often the source of the problem than the cure for it. It’s these failures of the government that must be addressed if we are to take advantage of the extraordinary benefits of the market, while preventing its abuses by both the private and public sectors. The market cannot be corrupt. It is like gravity. Only government can over, or under regulate it. The market is not natural. It was invented as we know it, and evolved like any other technology. And it is the most complicated technology man has invented. And he barely understands it.

5) If our courts allowed us to more easily sue companies for fraud and ‘cheating’ (profiting from asymmetry of information) or privatization of the commons the way that it did in the english common law, then regulation would not be necessary, and citizens wold be able to regulate company behavior through urgent dynamic legal action rather than slow bureaucratic and privilege seeking legislation. this is the argument conservatives and libertarians make: the that government pretends that it does good, when in fact, the regulatory process is only necessary because the government grants businesses legal protection to commit fraud and cheating. ie: government is the problem, not the solution. All any country needs is sufficiently articulated property rights and free access to courts, and the people will directly regulate businesses themselves — WITHOUT the need for legislation.

SUMMARY

I view this book as an EXAMPLE of the abuse of capitalism: personal profiteering by selling popular nonsense containing false claims, for the purpose of taking avantage of the emotional sentiments of those without the knowledge to defend themselves from such folly. In this sense, if the government did it’s job, this book would be prevented by regulation from being published. When, in fact, we tolerate in the market, and in our grant of free speech to one another, such abuses, because the attempt at eliminating these abuses would be more damaging than the abuses themselves. This is true of almost all attempts to regulate the market. We must tolerate some things we do not like (like ridiculous books) so that we may have things that we do not like but need (Darwin’s evolutionary treaties). This is the true conflict of both the market and its regulation: the market is a process of trial and error in constant motion and our attempts at regulation are

Curt Doolittle – The Propertarian Institute