Financial History Issue 125 (Spring 2018) - Page 12

EDUCATORS ’ PERSPECTIVE

In Defense of Capitalism Part II : The Temporal Nature of Capitalism

By Brian Grinder and Dan Cooper
In the last “ Educators ’ Perspective ” column , we noted increasingly negative attitudes towards capitalism , especially among young people , and argued that such attitudes cannot be ignored . Those who disparage capitalism need to be heard , but they also need to see the entire picture . Mere propagandistic platitudes will not do . Our younger generations , who often have a rather vague understanding of the workings of the capitalist system , deserve better . We started by defining capitalism as a privately-owned , minimally regulated economic system that seeks production efficiencies , generates profits , seeks to expand markets and encourages innovation . A relatively stable environment where long-term investments can be made is also essential to capitalism ’ s success . In this column , we want to address the commonly held idea that capitalism is merely a stop-gap measure on the road to a superior economic system .
Marxism , socialism and progressivism all recognize the flaws in humanity , and all seek to remedy those flaws at some point in the future by economic means . Capitalism also admits to human failings but makes no such claim to a future economic remedy . The proponents of these alternate economic systems see capitalism ’ s failure to envision a future heaven on earth as a fatal weakness . This leads most of them to conclude that since capitalism is merely transitory and inherently evil , it must eventually be replaced by whatever economic system they favor .
In The Communist Manifesto , Karl Marx argued that capitalism would soon undercut itself because the fierce competition among capitalists would reduce the number of capitalists . The few surviving bourgeois capitalists in their weakened and bloody state would be easy pickings for the proletariat . According to Marx , “ What the bourgeoisie , therefore , produces , above all , is its own grave-diggers .
“ The rootedness of insatiability in human nature leads to a very simple but fundamental insight : the economic problem cannot be solved by economic means alone , not even in a hundred years …”
Its fall and the victory of the proletariat are equally inevitable .”
Marx envisioned a revolutionary movement from capitalism to communism that was apocalyptic in nature . The revolution , he predicted , would occur in the most advanced capitalist nations — Germany and the United Kingdom — where the economic disparities between the bourgeois and the proletariat were the greatest . Once the proletariat controlled the means of production , a great improvement would mysteriously arise in human nature , and there would be no more need for government .
Unfortunately , Marx ’ s revolution began in 1917 in Russia , an agrarian economic backwater . By any standard , the Russian Revolution was a great failure . Journalist Ian Frazier writes :
The worldwide Socialist revolution that the Bolsheviks predicted within months of their takeover proved a disappointment . In fact , no other country immediately followed Russia ’ s lead … Other countries eventually did go through their own revolutions , and of those , China ’ s made by far the largest addition to the number of people under communist rule . This remains the most significant long-term result of Lenin ’ s dream of global proletarian uprising .
Fifty years after the Russian Revolution , one-third of the world ’ s population lived under some version of communism . That number has shrunk significantly , as one formerly communist state after another converted to a market-based economy ; today even Cuba welcomes capitalist enterprises
— Miroslav Volf
from America . The supposed onward march of communism , so frightening to America in the ’ 60s — first Vietnam , then all of Southeast Asia , then somehow my own hometown in Ohio — scares nobody nowadays . The great communist experiment instigated by V . I . Lenin terminated abruptly . Instead of replacing capitalism , the communist revolution ran its tragic , unsuccessful course and died in 1991 . The centennial anniversary of the Bolshevik Revolution occurred in 2017 more than a quarter of a century after the demise of the Soviet Union . Capitalism , ironically , lives on .
Progressives of the late 19th and early 20th century were less apocalyptic than the communists , advocating a movement that would gradually lead to the alleviation of economic disparity . This millennialist approach optimistically believed that economics held the key to solving the problems of mankind and bringing heaven to earth .
In 1930 , during the Great Depression , John Maynard Keynes penned a famous essay entitled “ Economic Possibilities for Our Grandchildren ,” in which he clearly expounded the hopes of the progressive movement . According to Keynes , “… assuming no important wars and no important increase in population , the economic problem may be solved , or be at least within sight of solution , within a hundred years .”
He foresaw a situation where “ for the first time since his creation man will be faced with his real , his permanent problem — how to use his freedom from
10 FINANCIAL HISTORY | Spring 2018 | www . MoAF . org
EDUCATORS’ PERSPECTIVE In Defense of Capitalism Part II: The Temporal Nature of Capitalism By Brian Grinder and Dan Cooper In the last “Educators’ Perspective” column, we noted increasingly negative attitudes towards capitalism, especially among young people, and argued that such attitudes cannot be ignored. Those who disparage capitalism need to be heard, but they also need to see the entire picture. Mere propagandistic platitudes will not do. Our younger generations, who often have a rather vague understanding of the workings of the capitalist system, deserve better. We started by defining cap- italism as a privately-owned, minimally regulated economic system that seeks production efficiencies, generates profits, seeks to expand markets and encourages innovation. A relatively stable environ- ment where long-term investments can be made is also essential to capitalism’s suc- cess. In this column, we want to address the commonly held idea that capitalism is merely a stop-gap measure on the road to a superior economic system. Marxism, socialism and progressivism all recognize the flaws in humanity, and all seek to remedy those flaws at some point in the future by economic means. Capi- talism also admits to human failings but makes no such claim to a future economic remedy. The proponents of these alternate economic systems see capitalism’s failure to envision a future heaven on earth as a fatal weakness. This leads most of them to conclude that since capitalism is merely transitory and inherently evil, it must eventually be replaced by whatever eco- nomic system they favor. In The Communist Manifesto, Karl Marx argued that capitalism would soon undercut itself because the fierce competi- tion among capitalists would reduce the number of capitalists. The few surviving bourgeois capitalists in their weakened and bloody state would be easy pickings for the proletariat. According to Marx, “What the bourgeoisie, therefore, pro- duces, above all, is its own grave-diggers. “The rootedness of insatiability in human nature leads to a very simple but fundamental insight: the economic problem cannot be solved by economic means alone, not even in a hundred years…” — Miroslav Volf Its fall and the victory of the proletariat are equally inevitable.” Marx envisioned a revolutionary move- ment from capitalism to communism that was apocalyptic in nature. The revolution, he predicte ݽձȁѡ)مхЁѥϊ'S%ɵ)ѡUѕ-'S%ݡɔѡ)ɥѥ́ݕѡɝ)ѡɽхɥЁݕɔѡɕѕи=)ѡɽхɥЁɽѡ́ɼ)ՍѥɕЁɽٕЁݽձ̴)ѕɥͱ䁅ɥ͔յɔѡɔ)ݽձɔȁٕɹи)Uչѕ䰁5éɕٽѥ)܁IͥɅɥ)݅ѕȸ 䁅хɐѡIͥ)Iٽѥ݅́ɕЁɔ)ɹ)%Ʌ饕ȁɥѕ)QݽɱݥMЁɕٽѥѡ)ѡ ͡٥́ɕѕݥѡѡ)ѡȁхٕȁɽٕͅд)и%аѡȁչ䁥)ѕ䁙ݕIͥé=ѡ)չɥٕ́Յ䁑ѡɽ՝)ѡȁݸɕٽѥ̰ѡ͔) é䁙ȁѡɝЁ)ѥѼѡյȁչ)չЁձQ́ɕ́ѡ)ͥЁѕɴɕձЁ1e)ɕɽхɥɥͥ)啅́ѕȁѡIͥIٽԴ)ѥѡɐѡݽɱéԴ)ѥٕչȁͽٕͥ)չʹQЁյȁ́͡չ)ͥѱ䰁́ɵɱ䁍Դ)ЁхєѕȁѡȁٕѕѼ)ɭе͕ѽ䁕ٕ) Չݕ́хЁѕɥ͕(Ê %99 %0!%MQ=IgMɥ ܹ5ɜ)ɽɥQ͕݅ɐ)ɍչʹͼɥѕ)Ѽɥѡdϊ'S%)YѹѡMѡЁͥ)ѡͽ܁䁽ݸѽݸ)='S%͍ɕ́䁹̸݅)QɕЁչЁɥЁѤ)ѕX$1ѕɵѕѱ)%ѕɕхʹѡ)չЁɕٽѥɅ́ɅչՌ)͙հ͔ĸQ)ѕٕͅ䁽ѡ ͡٥)Iٽѥɕ܁ɔѡ)Յѕȁ䁅ѕȁѡ͔)ѡM٥ЁU хʹɽ)ٕ́)Aɽɕٕͥ́ѡєѠɱ(Ѡݕɔ́ѥѡ)ѡչ̰ٽѥٕ)ѡЁݽձɅՅ䁱Ѽѡ٥ѥ)ɥ丁Q́)ɽѥѥ䁉ٕѡЁ)́ѡѼͽ٥ѡɽ)́ɥٕѼ)Ѡ)%ɥѡɕЁɕͥ))5幅ɐ-幕́)ͅ䁕ѥѱqAͥѥ́)=ȁɅɕtݡɱ)չѡ́ѡɽɕ̴)ٕͥٔиɑѼ-幕̰+sյхЁ݅́)хЁɕ͔ձѥѡ)ɽ䁉ͽٕȁ)ЁݥѡͥЁͽѥݥѡ)չɕ啅̻t)!ɕͅ܁ͥՅѥݡɔqȁѡ)Ёѥͥ́ɕѥݥ)ݥѠ́ɕ́ɵ)ɽ'S%܁Ѽ͔́ɕɽ