UNDERSTANDING CAPITALISM – PART 1 by T. Edwin Perry
GONE FISHING
Let me start off with a simple statement: most people think that what we have in the United States today is a CAPITALIST economy, a system based upon the Fundamental Principles of Capitalism. WE DON’T. Our economic system today is about as close to Free Market Capitalism as a SOYBEAN BURGER is to a SIRLOIN STEAK! The “Red Meat” of Capitalism has been lost in the name of “Consumer Protection” and “Compassion.” It has been muddied by Government Regulation, Licensing, Taxation and Welfare, all of which could be argued as being “Responsible” or “Compassionate,” but really aren’t. So instead of having an economy based on Capitalism, we have a system based on “Capitalism,” in quotes because the word has been corrupted to mean something completely different from its intent.
But before we can get into what Free Market Capitalism really is, we need to have a basis for why it is important to have an economy at all. Why isn’t everything just free? Well, there’s a clichéd “Proverb,” the source of which is disputed, but everyone knows by now: “Give a man a fish and you feed him for a day. Teach the man to fish and you will feed him for a lifetime.” (Minor variations of the quote exist, but you get the point.) The “Proverb” is about choosing the best way to help your “Fellow Man,” and it makes a valid point. Giving a hungry person a fish is a one-time, short-term solution to a one-time, short-term problem, and if it is done freely and without pressure from a third-party (like, perhaps, the Government), then it is “Charity,” and there is absolutely nothing wrong with being Charitable. However, if you assume that the Man will be hungry again tomorrow, then simply giving him a fish doesn’t really alleviate his problems in the long run. Instead, if you continue to be “charitable” and give him another fish tomorrow, you will actually make him dependent on you. That’s not really charity: that’s slavery! The Proverb suggests that the better solution then would be to teach him to catch his own fish. Of course, this also assumes that the Man is WILLING to do the work necessary to catch the fish for himself, and that if he catches his own fish, it won’t get in the way of you catching YOUR OWN fish, but if these assumptions are true, then teaching the Man to catch a fish for himself is ALSO charitable, so long as it is done solely to help your “Fellow Man.”
But the Fishing Proverb also assumes that all you really need is fish. (Sounds like a really bad Beatles song: “All You Need is Fish…Sing Along! All You Need is Fish…Everybody!”) If we stop the lesson with this Proverb, then the logical conclusion must be a shoreline crowded shoulder to shoulder with individuals catching their own fish. This would also mean, however, that you could ONLY eat fish. What about some rice, or a potato, or some mixed vegetables? How will you cook it, or are you going to eat it raw? And where will you eat it? If you spend your days catching & eating fish, where will you live? And are you just running around naked? “Markets” exist because people need many things in life, and obtaining most of the things that we need is not as simple as dropping a line in the water and pulling out a fish. This brings us to what I think should be the third line of the Proverb: “Sell a Man a Fish and EVERYBODY eats.”
Long before we ever had currency (Dollars, Yen, Euros, etc), we had MARKETS, where people would Barter (TRADE) one product for another. Want to cook your fish? You might have to trade a fish for a piece of firewood, meaning that now you had to catch two fish each day. Want some veggies to go with that fish? Catch another fish for trading. Maybe some oil, or seasonings, or even a plate? Catch more fish! This is the basis for BUSINESS. By producing more than you need for yourself to consume, or even by producing something you don’t need for yourself at all, you have a COMMODITY that you can trade for something else that you need or want, but cannot produce for yourself, either due to a lack of time or ability. How simple or difficult it is to produce something, how much time it takes, and how much of it is available, all influence two terms that we’ll be defining more clearly later on: PRICE (how much something costs) and VALUE (how much something is worth).
Perhaps the most important thing to take away from this First Part to Understanding Capitalism is this: MOTIVATION is a major component of all Economics. With the Fishing Proverb, we make certain assumptions about the motivations of the participants. We assume that the man you give the fish to is actually hungry. What if he’s not? What if he’s got a full belly from eating carrots or celery? Sure, you’ve given him a fish, but what value does it really hold for him? He didn’t have to work for it, so if he’s not hungry, there’s a good chance that the fish will be tossed in the trash, thus wasting the commodity. We also assume that the motivation of the Giver is to alleviate the suffering of the “Hungry Man” as a simple act of kindness, but what if it’s not? What if the “Giver” is actually motivated by some other desire than to just “Feel Good About Himself?” What if the “Giver” actually expects something in return? One of the most fundamental components of Capitalism is the assumption that individuals will always act in accordance with their own “BEST SELF INTEREST.” If the “Giver” only has one fish and is hungry himself, then it is unlikely that he would give that fish to someone else unless he would receive something of greater value in exchange for that fish. Most people assume that being “Selfish” is a bad thing, but the simplest fact of all remains true: you can’t take care of someone else if you don’t take care of yourself first. Think I’m wrong about that? Read the emergency instructions the next time you go on an airplane. You put your own oxygen mask on FIRST before trying to help others!
So as we continue this series on Understanding Capitalism, try to keep this lesson in mind:
GIVE a Man a Fish, You Feed Him for a Day, but You Could Go Hungry.
TEACH a Man to Fish, You Feed Him for a Lifetime, but You Also Create Competition for Yourself.
SELL a Man a Fish, and You Will Support One Another FOREVER.
This is how CAPITALISM works!
You make some valid and good points concerning capitalism. Motivation is key to sucess, and then liberals will want “social justice” and take more than their share from the motivated man to keep people dependant (slavery).
Very true, Aaron. Come back tomorrow…I think you’ll be pleased with the way that the series progresses.