Tuesday, May 08, 2007

Thoughts on Capitalism

A few months back, I came to the conscious conclusion that I had been skirting the edges of for years: I am not a capitalist. The really odd thing was that this was actually hard to come to terms with than my much earlier declaration of atheism; this was troubling. It even turns out that it's harder to talk about than atheism--reactions are weird and unpredictable. For the sake of my own clarity, I'm going to hash out the basic reasoning for my position in this public forum.

Smith's invisible hand is, I think, born out of a form of the naturalistic fallacy. I think that he was basically mistaking the movement of a dynamic system (the relationship between supply and demand, for instance) toward an attractor with what must have looked to a person of his time (the Enlightenment) a lot like intention. We now know that rapid convergence of complex systems on points of equilibrium is basically a consequence of mathematics.

To put it more simply, the fact that the math works in a free market doesn't mean that that math necessarily produces the best result for all individuals. This assumption is so embedded in our culture that it is difficult for people to conceive that it might be otherwise.

Another basic issue here is that I agree with the premise that people operate out of a place of self-interest (Matt Ridley's The Origins of Virtue captures my basic POV here), but this is, to some extent, an argument against systems that encourage capitalistic behavior. It's akin to legislating breathing or sexual attraction. People simply cannot be stopped from seeking their best advantage, and need no further incentives to do so. In fact, I would go even so far as to say that one of the most important functions of government is to mitigate the excesses and abuses that self-interest engenders. Capitalism becomes a problem when people start treating it like something that has to be defended or encouraged.

I was debating with an Alex-Keaton-like student of mine who loves to talk economics with me after my composition class. He's young, well read, and completely wrong in the way that a middle class straight white male is uniquely attracted to. I enjoy the discussions, even when they keep me from grading papers that are long overdue, and I hope that the perspective that I bring will eventually sink in. Anyway, I compared capitalism to fire in a kind of extended analogy today (and do let me know if I take this one further than is warranted). A fire is a good thing--it warms your house, cooks your food, and destroys your incriminating documents; however, there is a clear limit to its utility, and its growth must be checked and its fuel limited. If fire threatens to consume a house, we don't simply say "let's make an adjustment and only add half a log and see if that saves that house." We douse that fucker with all the water we've got until it's back where it belongs.


  1. Anonymous7:14 PM

    This is all well and good; however, what would you like to have in place of capitalism? While after doing a good amount of research in this matter I am not a big fan of capitalism, I do think it is better than the other systems available. I have lived with socialized medicine and I know that as nice as it may seem on the outside it is not a good thing. We do need to do something about the collusion between big insurance and big medicine. Switching to a socialist or communist will still have people abusing the system for their own self-interest. Just look at what the Soviet Union did with the party and friends of the party and everyone else standing on line for bread for 6 hours, not much of an alternative. I would be more for capitalism with a paradigm shift. We need to hold our representatives to following the rule of law there are to be held to. Notably follow their constitutional responsibilities, they have sworn to do this and yet they act solely on their best interest not in the interest of country. They have abused the commerce clause, how is limiting use of medical marijuana interstate commerce? It is grown transported and used all in California, where does the interstate part come in? Sorry this is a side issue, anywho lets hear you thoughts on a replacement for a capitalist system.

  2. I agree that there isn't really an obvious paradigm to replace capitalism, but we're currently dealing with a rigged game, where it's not even possible to try anything else.