The Merits of Capitalism

There’s a difference between capitalism and money.  Money is a tool, and capitalism is the catalyst of the middle class, the result of a strong democracy, and the backbone of American prosperity.

For starters, the words capitalist and middle class may as well be synonymous because you can’t have one without the other.  Our way of life allows a poor woman, with a good idea and strong work ethic, to take investment from the upper-class and pay it out, through a business model, to her employees and suppliers – eventually raising their (and her) standard of living to that of the middle class.  Capitalism doesn’t discriminate based on socioeconomic status, but will take ingenuity from any person and bring it into the market place for competition.

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Which brings me to my second point – capitalism lowers prices.  This is caused by the competitive nature of the model.  In pure capitalism, there are 20+ brands competing for share in a given market.  These companies try to do one thing: beat their competition for the market share.  They do this by reducing the cost of producing their product through research and development and creating new ways of delivering to their end user.  A brief example would be the movie distribution industry.  For a long time Blockbuster ruled a great deal of this market and competed with other brands like Hollywood Video, and even my local Piggly Wiggly.  Yet, along came Red Box – who could afford to charge less money by cutting overhead, and found a better medium of delivery.  Then came Netflix – mailing movies directly to a person’s door, and eventually creating the online subscription and live streaming service along with Hulu, Amazon, etc.  Movies are now more accessible and cheaper than they were under Blockbuster and that’s because of capitalism.

All this talk about price leads me into my next point: capitalism saves you more money than you might think at first.  When you look at a T-Shirt what do you see?  I see something I couldn’t make if my life depended on it.  What about things made of plastic or metal?  Could you fabricate either?  I couldn’t even bake my own bread from grain I’m that ignorant of the process.  Yet I can buy a loaf of bread for a couple dollars at Kroger, and I’m currently typing on a keyboard made of plastic that would cost me hundreds of thousands of dollars to build from scratch.  This is due to capitalism’s marketplace – where goods and services that one specializes in are exchanged for goods and services of another’s specialty.  Because I have a background in production I can produce a video for $1,200 that would cost you upwards of $12,000 to do yourself, and yours would probably not come out as good – likewise you’d be the owner of a lot of gear and knowledge that you’d hardly use.  The same is true of any specialty good or service.

On a philosophical scale we know that the next best type of government below a righteous ruler is a democracy – the public vote. Capitalism allows people to vote every day by spending their money on goods and services they deem superior to substitutes.  The only reason Blockbuster went under to Redbox and Netflix is because society voted them out – like a bad politician.  Capitalism affords us this freedom of democracy every single day – right down to who we buy our gas from (Remember the BP oil spill and all the boycotts? That was just voting with your dollar).

Finally, capitalism is the most aggressive economic machine we’ve ever seen.  After WWII, many people came back from the war to start families and start businesses – they ended up building the strongest economy in the world.  In fact, many would argue that the capitalist machine helped us win the war by providing, already in place, industrial might for the war effort.  Capitalism has helped shape America into a powerful nation, and it would be a shame if we ever lost it.

Photo by Denys Nevozhai on Unsplash

Written by James Thayer