If you want to know why so many people hate capitalism even though the capitalist system of economic management has allowed humanity to raise it’s standard of living by leaps and bounds since it was first implemented read The Anti-Capitalistic Mentality by Ludwig von Mises.[1]
von Mises was an influential Austrian economist of the 20th century who emigrated to the United States in 1940.[2]
In this book he argues that people hate capitalism because deep down they know capitalism has given them the opportunity to be as successful as they desire (who’s stopping you from starting the next Google?) but they either didn’t or couldn’t make it happen.
“What makes people feel unhappy under capitalism is the fact that capitalism grants to each the opportunity to attain the most desirable positions which, of course, can only be attained by a few. Whatever a man may have gained for himself, it is mostly a mere fraction of what his ambition has impelled him to win. There are always before his eyes people who have succeeded where he has failed. There are fellows who have outstripped him and against whom he nurtures, in his subconsciousness, inferiority complexes. Such is the attitude of the tramp against the man with a regular job, the factory hand against the foreman, the executive against the vice-president, the vice-president against the company’s president, the man who is worth three hundred thousand dollars against the millionaire and so on. Everybody’s self-reliance and moral equilibrium are undermined by the spectacle of those who have given proof of greater abilities and capacities. Everybody is aware of his own defeat and insufficiency.”[3]
In a pre-capitalist “status” society nobility, rank, and birth determined where you stood in the social hierarchy. Your “place” in the world was static and you could feel better about yourself: you weren’t the king because you weren’t born a king and it wasn’t your fault.
But in a capitalist economy operating in a free society you don’t have that excuse.
Why?
Because with capitalism a person is not rewarded economically because of their birth rank but in accordance “to his contribution to the well-being of his fellow men and where thus everybody is the founder of his own fortune.”[4]
The consumer is king.
The person able to meet the unsatisfied demands of the most consumers in the cheapest and best way possible gets the most “status points” (money).
More importantly, everyone is free to try to “de-throne” the existing economic order at any time and make a fortune of their own by appealing to the “sovereign consumer.”
It may be hard, but if you want to dis-lodge Coke as the global soft-drink powerhouse make a better soft drink more people want to drink.
Can’t? Don’t know how?
Then it’s your lack of knowledge, will, and/or ability that is the cause of your frustrated ambition, not capitalism.
“It is-in a market not sabotaged by government-imposed restrictions, exclusively your fault if you do not outstrip the chocolate king, the movie star and the boxing champion.”[5]
von Mises argues it is this knowledge of one’s limitations, revealed by capitalism, that breeds a deep resentment among people who have failed to achieve the level of success they want but who are also unable to admit they are the cause of their failure.
It’s much easier and psychologically more satisfying to blame capitalism for your failures:
“In order to console himself and to restore his self-assertion, such a man is in search of a scapegoat. He tries to persuade himself that he failed through no fault of his own. He is at least as brilliant, efficient, and industrious as those who outshine him. Unfortunately, this nefarious social order of ours does not accord the prizes to the most meritorious men; it crowns the dishonest unscrupulous scoundrel, the swindler, the exploiter, the ‘rugged individualist.’ What made himself fail was his honesty. He was too decent to resort to the base tricks to which his successful rivals owe their ascendancy. As conditions are under capitalism, a man is forced to choose between virtue and poverty on the one hand, and vices and riches on the other. He, himself, thank God, chose the former alternative and rejected the latter.”[6]
Sound familiar?
Does this mean capitalism gives us total control over our destiny?
Of course not:
“It cannot remove or alleviate the innate handicaps with which nature has discriminated against many people. It cannot change the fact that many are born sick or become disabled in later life.”[7]
But it can give you a chance to earn the wealth you want through your own efforts.
If you choose to pursue work in a field that serves less consumers and therefore receives less “economic votes” (money), writing philosophy as opposed to making Coke for example, you’re free to do so and enjoy the rewards that come from that line of work.
Just don’t get angry at “the system” because you’re getting less money than the person who satisfies the wants and needs of more people successfully.
That’s how it’s supposed to work and it’s a fair system: if you want to be economically rich you’re free to do so right after you finish reading this post.
All you have to do is figure out a way to satisfy the wants and needs of more “sovereign consumers” and take Winston Churchill’s advice literally: “Never, never, never, never give up.”
[1]Ludwig Von Mises. The Anti-Capitalistic Mentality. (New York: D. Van Nostrand Company, 1956).
[2] http://en.wikipedia.org/wiki/Ludwig_von_Mises
[3]von Mises, 12-13.
[4] Ibid, 15.
[5] Ibid, 10.
[6] Ibid, 14.
[7] Ibid, 10.
{ 7 comments… read them below or add one }
I would like to point you to a review of Mises’ aforementioned book on Amazon which pretty much rebuts your article: http://www.amazon.com/review/R24G7E0RJNGV3/ref=cm_cr_pr_cmt?%5Fencoding=UTF8&ASIN=0865976716
Well Mike, I wouldn’t use the word “rebut” but it does lay out the other side of the argument. What it comes down to, from my point of view, are these points: is there a difference between earned and unearned wealth?; even if some people make their money without earning it in our system of capitalism because of government favors etc, does that negate the fundamental argument von Mises is making? If you read the whole book you will see he is quite aware of the impact of government intereference, inheritance, and other wealth “delivering” factors that have nothing to do with ability. Yet, his point is, those are the exceptions and not the rule in a capitalist economy. Moreover, the people who get their money that way, as long as they are not protected generation after generation by some government power, will eventually lose that wealth because they do not know how it was produced in the first place. Thanks for the link to the review and your comment.
The von Mises argument is simply petty. I think the obvious failure of capitalism is that in the end it is a criminal enterprise all together. Taken to its logical ends, it can only end with human abuse and destruction of nature. There is no other possible endpoint. When I say “criminal” I mean that it fails to deliver any natural justice because it wall always follow the path of least resistance – a path which devalues Man (because it is cheaper and possible to do so) and destroys nature, the ultimate source of the wealth.
Following the path of least resistance is the essential part of the profit algorithm. i.e. Far easier (profitable) to dump waste in the river than to reprocess it safely. Far more profitable to drive labor costs down, than to pay for the long term well-being of employees, and so on.
I think most who worship capitalism start from a false premise that the Divine Purpose of Man is to be an actor or cog in some machinery of economics.
There is one big problem here… Let’s use as an example the Coke scenario. Suppose you do come up with a soft-drink that is better than the classic Coke. People love it, pay you for it, and slowly but surely your product shows promise of becoming a worldwide phenomenon. Will the Coca-Cola company stand idly by and just let this happen? Would Pepsi do the same? Of course not. They would use all means (legal or illegal) to stay on top. It’s always more difficult to gain ground than to defend it. And that is a result of the system, not the person’s ability to offer a quality product.
I’m coming into this discussion about a year late, but I just read you article a few minutes ago, and, I’m sorry, but it has more holes in it than swiss cheese. First off, you say that captailism has allowed us to improve the standard of living of leaps and bounds. Really? You’re forgetting the fact that we have technology for solar and wind power, electric cars, yet we still use electricity and gasoline for everything. Why? It’s more profitable than solar, wind, and electricity. MUCH more. Capitalism raises the standard of living as long as someone gets rich off of it. Until someone finds a way to heavily profit off of solar or wind power, we will never see it as a primary energy source. The guy above with the Coke analogy hit the nail on the head.
What’s stopping me from creating the next Google? A lot! Creating something like that takes technical skill. You can get such skills at college. How do you get into college? Student loans. How do you get student loans? Amazing credit (honestly, how many college students have super high credit scores?), or a co-signed. What if you don’t have a co-signer? You’re SOL. And don’t try to tell me otehrwise because I am living proof. My friend and I tried to go to the same college. He got it. I didn’t. Why? He got a co-signed, and I couldn’t. His grandmother has a lot of money, and she gave him what he needed to succeed, but I never had such luck. Capitalism is supposed to work on the theory that whoever works the hardest, succeeds. You tell me how my friend worked harder than I did.
Speaking of co-signers, you said “In a pre-capitalist “status” society nobility, rank, and birth determined where you stood in the social hierarchy. Your “place” in the world was static and you could feel better about yourself: you weren’t the king because you weren’t born a king and it’s not your fault.” All I can say is bull crap. People are born to rich parents everyday, while others are born to poor parents. The rich kid is gonna go to Yale. All the poor kid can hope for is maybe a junior or state college, with a co-signed loan of course. Oh wait, his family is poor, nevermind… Basically, we still like in a world where birth has a lot to do with your status in life. The son of the guy who owns the company I work for was born a millionaire, even though he’s never worked a day in his life. Don’t try and tell me birth has nothing to do with social hierarchy, when proof of the contrary can be seen all around you.
You said “If you choose to pursue work in a field that serves less consumers and therefore receives less “economic votes” (money), writing philosophy as opposed to making Coke for example, you’re free to do so and enjoy the rewards that come from writing philosophy.
Just don’t get angry at “the system” because you’re getting less money than the person who satisfies the wants and needs of more people successfully.” I still think you’re missing the point here. Not everybody has the same aptitude and skills. I can train to be a boxer (for example) all I want, but there are those few people out there born with the personality and natural ability who will always be better than me, even if I train harder than then. I’ve played hockey for 8 years, I see examples of this everyday. The guy who has the skill to throw a football is gonna make more money than the guy who has the skill to teach a child to read. Pathetically enough, the football chucker will make more money. People do what they’re good at. It’s not their fault that their skill isn’t valued enough in society.
It’s not a fair system. It’s corrupt and rotten to the core. On paper, your arguments for capitalism are solid, but I don’t think you’re digging deep enough into the issue here. Hopefully my comments will help.
I see your points Sam but that’s just a brutal reality: not everyone has the same talents and skills. So what are we to do? Bring everyone down to the lowest common denominator or let people rise to where their abilities will take? You must remember, without a market (people to sell to) no one can ever get rich. We benefit from the new goods and services business people bring to market and they make money. If it’s not profitable that doesn’t mean its’ time has not come yet. When green energy is made better it will overthrow older forms of energy without doubt. It took a while before railroads overtook barge traffic and horses. There are times when markets fail and government does need to get involved. The more orthodox free market folks will say that even in matters like public defense or building a road there are free market solutions but I don’t take it that far. Also, you don’t need to go to school to pick up technical skills. Yes it would help but, especially with the internet, there are alot of opportunities for self-study. If you really made it your mission in life to make a better search engine there are ways to do it right now. I’m not saying it would be easy but you could do it. I’m also not saying the system is perfect but it’s better than any other system, especially one where a couple of people with all the guns decide what is worthwhile for everyone (Soviet Union; Iran; China). Next, if people pay to watch football so what? It’s their money. Who are you to say they can’t or shouldn’t? You don’t have to do it but we live in a free society: people have the right to do what they want as long as they don’t violate anyone else’s ability to do the same. Lord I could go on forever. Have you ever read “Atlas Shrugged?” Try it out. I don’t come from a wealthy family or have a lot of money right now but I don’t blame anyone else for my situation. In the end I believe talent does prevail and life can be very humbling: not all of us can be the best or on top. But do NOT give up on school if that is what you want. It will work out eventually. Yes your road may be tougher but you can still get there. Good luck.
AK, I love this post. Every word of it.
Sam, you just pointed out that it’s your own struggle that will earn you a living and that others may or may not struggle more or less than you do. Welcome to capitalism. Bill Gates makes millions, so sue him for being richer than you or me. If I got a job, I’d me making more money than an unemployed bum, who complains that the world owes them, in an hour, than he would in his entire life, because I work for my pay and he complains.
Cuervo, if Coka Cola and Pepsi are really evil enough to stop you from … selling a better brand of soda than them (?) then why do we still have Cola and Pepsi? They’re competitive brands, along with any number of generic brand sodas that sell cheaper because they’re cheaper to make. I can get a can of Cola for fifty cents, but there’s a generic brand that’s only 35 cents because Cola costs more money to make, so they have to sell it more to make up for it. It’s called profit and if they didn’t make a profit, their workers would quit, the company would collapse, and the company would cease to exist.
Mark, if all capitalists are criminals, why isn’t Oprah Winfrey in jail? Or Bill Gates? Or the CEO of Disney, McDonalds, Burger King, CostCo, Barns & Nobles or Dell? Theft is illegal. Creating jobs, meeting a payroll, creating wealth, and being paid are what good people do to live. If they just didn’t do any of these things, they’d die. They would stop making money, they wouldn’t be able to buy food, shelter, or water, and they’d starve in the streets till they day they died. They’re not stealing your money, you’re paying for a good or service, like a car, a burger, a back massage, or home repairs. If you want to keep your money, don’t pay for anything and see how legal that is to not pay for anything. If you really think these people are criminal for making money, don’t give it to them.
Me? I don’t have a job. I’ve never been employed. I don’t make money. I’m taking classes at the local Jr. Collage. My great-grandmother next door to us is helping to pay for it along with my parents. I would like to get a job and move out on my own but I can’t. I can’t get a job because ‘big businesses’, that people think are so evil, don’t have the money to hire people. They don’t have the money because ‘big government’, which people think is so helpful for some reason, is taxing them too much because they promised the voters to ‘redistribute the wealth’ which is short for ‘taking money from people who earn it and giving it to unemployed bums who don’t want to make their own money because big government gives it to them anyway from the pockets of people who make their own money’.
Thanks for posting this, AK.