Issue Date: June 1, 2009
Thoughts On Capitalism
IN HIS EDITORIAL, Rudy Baum ponders whether capitalism is "a viable organizing principle for society in the 21st century and beyond" (C&EN, Feb. 23, page 3). Inherent in this question is the thought: if not capitalism, then what?
When it gets down to basics, there are only two types of socioeconomic systems: capitalism and socialism. Capitalism means free-market competition, private or corporate ownership of production and distribution, and personal responsibility. Capitalism produces innovation and variety in the marketplace with high-quality goods and services at reasonable prices. Socialism means that a few people, those with political and economic power, are in control of production and distribution. Socialism results in stagnation, limited goods and services, low quality, fixed prices, and dependence on the government.
Baum goes further to suggest that "capitalism is as compatible with authoritarian political systems as it is with democratic ones." This, in my opinion, is a self-contradicting statement. Capitalism requires a limited government that places liberty and responsibility in the hands of the people, and this implies a republic or democracy. Socialism requires an autocratic central government that controls the economy and the people, and this implies a monarchy or dictatorship.
So does Baum want to trade capitalism for socialism? I doubt it, but those are the two alternatives. The U.S. was founded as a constitutional republic. However, recent government "stimulus" and "bailout" packages are moving us closer to socialism and away from capitalism. That is, Uncle Sam is centralizing control while we the people are losing our freedoms. Is this the future we want? I don't think so!
Robert P. Lattimer
RUDY BAUM SUGGESTS that this country may be better off with an alternative structure of government. Quite the contrary if you want to preserve the environment. All countries that have less freedom and less self-determination have much worse environments.
Environmental regulations in this country have cleaned up hazardous waste, stopped leaks from underground storage tanks, preserved wetlands, and made all these strides without leadership of other nations. Other countries looked to the U.S. to set the standards for environmental protection. At some point there is a diminishing return, and we've made it to that level. If saving the environment is the goal, why not look at nuclear power to fuel the U.S.'s energy needs? We won't even consider it.
WE CAN ARGUE at length about the origins of the present economic problem—whether it was caused by the free market or by greed or by government or by all of these. It serves no purpose. The fundamental argument is whether the economic decisions people have to make are best made by people directly involved in the economy or by people not so involved, as those in government.
The former have better information and, more important, skin in the game: Their economic well-being springs directly from the decisions they make. Ultimately, there is no way of predicting with any sort of confidence the result of their actions, whether they are in government or in the private sector.
President Barack Obama may be confident that the measures taken by his Administration will lead to the desired result, but President Franklin Delano Roosevelt did much the same in similar circumstances and it did not. The law of unintended consequences plays a big role here, and all actors, public and private, are very much subject to it.
Granted this, we still must decide how to allocate decision-making between the two sectors. To the extent that we opt for free-market capitalism, we must keep in mind its shortfalls, in particular the apparent inevitability of this system being subject to business cycles that are autocatalytic; that is, they feed on themselves and can produce wild and painful swings, as at present.
We can rant and rave against capitalism all we want, but until we come up with a better system, it's all a waste of printer's ink. The free-market economy has this in common with democracy in that both are terrible systems and that there are none better. We did not make this world and have to accept it as it is.
The clinching argument in this debate was made by Friedrich Hayek. Capitalism may be as compatible with authoritarian political systems as it is with democratic ones, but directed economies lead to serfdom, as he so sagely pointed out.
A. E. Lippman
RUDY BAUM, you treasonous tightwad! You don't need more stuff? So what? Uncle Sam needs you. Think about that recruiting poster. Duty calls. The employment of your audience depends heavily on final consumption. We may wish it otherwise, but that doesn't change the facts.
Dubya reminded us (was it on 9/11?) that our duty was to SHOP. Get with the program, Rudy, before your readership becomes totally unemployed.
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