Thoughts on capitalism (part 1)

It’s popular to dump on capitalism these days, but I’ve got a few positive thoughts to share here. Many of these ideas stem from reading John Addison Teevan’s Integrated Justice and Equality, which I highly recommended.

1: Capitalism is a growing pie.

One of the awesome things (maybe the most awesome thing) about capitalism is that it’s not a zero-sum game. It’s not like there’s a certain limited amount of wealth to go around where some lucky people get more and some victimized people get less, like the best apple pie at Thanksgiving. Instead, it’s a growing pie, which means capitalism literally creates more wealth through entrepreneurs and investing. This is in contrast to most of the history of the world which existed under the old agrarian economic model. Under the agrarian system wealth was a fixed pie, it couldn’t grow. Wealth couldn’t grow because wealth was land and there’s only a fixed amount of land to go around. Since there was very little freedom and essentially no industry, land was the only thing that was really worth something. So while the wealthy inherited land and hoarded more and more, the poor were left to work the land and forfeit whatever they had left. It was a flawed system. Not only was the amount of wealth fixed, but the status or wealth of people was also essentially fixed. There was no way for a poor person to gain wealth, you could call it fatalistic. In a fixed pie economic system, redistribution of wealth from the crony rich to the helpless poor, even if it involves stealing (think Robin Hood), makes some sense. In a capitalist system where wealth is created (not merely inherited or taken) and growing (not static) coerced redistribution doesn’t make any sense. Some people still have more and some people still have less relative to each other in a capitalist system, but overall everyone has more as the pie grows. You can argue about the virtues or vices of an income gap (here’s an interesting argument), but you can’t say that capitalism fails to create wealth for everyone.

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