Two views of capitalism 4

At Townhall, John C. Goodman presents and discusses two views of capitalism as expounded by Professor Johnathan Haidt.

The two views are summed up by these videos, made by Professor Haidt.

Capitalism as Exploitation

Capitalism as Liberation

John Goodman comments:

Now I would argue that one of these views of capitalism is factually incorrect. It’s not just a matter of “political and moral values” [as Haidt asserts]. In fact, in a video presentation of his theory, Haidt shows a chart mapping per capita income throughout all of human history. The chart shows (and this should be well known to all economists) that up until the last few hundred years the average human lived on about a dollar a day – in modern terms. At times and places, they might have enjoyed two dollars a day. If they were really, really lucky they might have hit three dollars a day. But that was it.

In other words, for 100,000 years our ancestors lived at the subsistence level. And then [with the advent of the Industrial Revolution – ed] we got capitalism. By that I mean not just free exchange, but also the institutions of capitalism, including enforceable property rights …

In all its guises the exploitation theory has one central message: the reason why some people are poor is because other people are rich. Here is Paul Krugman explaining why middle income families don’t have higher incomes. …

Soaring incomes at the top were achieved, in large part, by squeezing those below: by cutting wages, slashing benefits, crushing unions, and diverting a rising share of national resources to financial wheeling and dealing. Perhaps more important still, the wealthy exert a vastly disproportionate effect on policy. And elite priorities — obsessive concern with budget deficits, with the supposed need to slash social programs — have done a lot to deepen the valley of despond.

Really? J K Rowling (author of the Harry Potter series) is the richest woman in the world. Did she get rich by “cutting wages, slashing benefits, crushing unions,” etc.? I thought she got rich by writing books. How about Oprah? Has she “slashed” any benefits lately? What about Bill Gates and Warren Buffett? When is the last time they were out there encouraging scabs to cross a picket line?

Krugman’s point about political influence is almost as silly as his view of the economy. Earth to Krugman: the real base of the Democratic Party (the party of the left) has become the ultra-wealthy. And their political goals are harmful to the middle class, but not in the way that Krugman imagines. …

The problem for Democrats is that the party is increasingly ruled by the “new oligarchs”  … [who]  are basically anti-job creation and anti-economic growth – which they see … as a threat to their life style. This puts them squarely at odds with the working class voters who used to be the backbone of the Democratic Party. …

The Democratic Party is [now] the party of the poor and the rich. It’s the middle class that is bolting and voting Republican. And what do the rich want from Democrats? Contra Krugman, they’re not demanding smaller deficits or smaller social programs or even lower taxes. What they want – in addition to looney environmentalism – is for government to protect their life style.

Once the plutocrats settle in a community they become fiercely anti-development and shape their communities in ways that price the middle class out of the housing market. As a result, wherever wealthy liberals tend to congregate, housing is more expensive …

Limousine liberals are a threat to the average worker. But not because they are wage-suppressing, union-busting, exploiters. It’s because their anti-capitalist goals are at odds with the aspirations of ordinary Americans.

It seems to be the case that most – probably all – of the successful entrepreneurs who live in Silicon Valley vote Democratic. Having achieved their own riches in the freedom of opportunity for the individual that the capitalist system gave them, they vote for socialism and the removal of individual freedom that it ensures, so others cannot do what they did.

  • Don L

    The first video is absolute and total hogwash. Pure emotional-driven propaganda. This video begins with the fairy taleish notion that everybody was self-suficient and life was easy and simple…near ideal. Then, the fabrication continues, came horrible factories that destryed the ideal world. But wait…why would people leave their idealic lives to work in factories. Were they forced? Did thugs and guns drive them into the hell holes of mass production?

    Of course not. People did not have ideal, self-sufficient lives. Living was a nightmare…death was at every turn. As bad as the birth of industrilization might have been,…it was better than not having the opportunity to earn a living. And, what, by the way were these plants and factories making? Goods that the workers could buy at reasonable prices…Neither Marx or any socialist ever addresses these truths.

    The shame of it is most people hear Marx’s stupidity of the workers being exploited and think he was meaning horrid working conditions and theft of wages. This is n ot what Marx meant by use of the word exploitation. Marx couldn’t grasp that workers are paid in advance of entreprenuers and their capitalist investors ever being paid or receiving the time earnings on the use of capital (interest). Marx thought this income difference should go to the workers…that it didn’t he thought was exploitation. Now, had workers elected to not take pay until breakeven points were attained, they too could have been considered capital investors and shared in that time differential income. But, how many workers don’t want a steady payday? (for a full detailed destruction of Marx’s theories [FREE eBook or PDF file]: “Requiem for Marx” by Yuri N. Maltsev — ).

    The another truth leftists don’t grasp is how wealth is created. Here’s a short commentary by Murrar Rothbard on wealth creation:


    The Two Means To Wealth

    Commentary by Murray N Rothbard

    The great German sociologist Franz Oppenheimer (1864-1943), who wrote this magnificent little book called The State (1914), put the case brilliantly.

    In essence, he said, there are only two ways for men to acquire wealth. The first method is by producing a good or a service and voluntarily exchanging that good for the product of somebody else. This is the method of exchange, the method of the free market; it’s creative and expands production; it is not a zero-sum game because production expands and both parties to the exchange benefit. Oppenheimer called this method the “economic means” for the acquisition of wealth.

    The second method is seizing another person’s property without his consent, i.e., by robbery, exploitation, looting. When you seize someone’s property without his consent, then you are benefiting at his expense, at the expense of the producer; here is truly a zero-sum “game”, not much of a “game,” by the way, from the point of view of the victim. Instead of expanding production, this method of robbery clearly hobbles and restricts production. So in addition to being immoral while peaceful exchange is moral, the method of robbery hobbles production because it is parasitic upon the effort of the producers.

    With brilliant astuteness, Oppenheimer called this method of obtaining wealth “the political means.” And then he went on to define the state, or government, as “the organization of the political means,” i.e., the regularization, legitimization, and permanent establishment of the political means for the acquisition of wealth.

    In other words, the state is organized theft, organized robbery, organized exploitation. And this essential nature of the state is highlighted by the fact that the state ever rests upon the crucial instrument of taxation.


    Additionally, lefties always think of wealth as being a pie: only so many pieces so if you have some someone else can’t. Wrong again. Their is absolutely no limit to the amount of wealth that can be created. The problem is always government manipulation of money. In today’s world money, the medium of exchange, as created over thousands of years by buyers and sellers – gold & silver, doesn’t exist. Government pretend paper has been surreptitiously been substituted. Here is a very simple book that explains all one needs to know about wealth creation and the economy…it’s free and a fun read: “How an Economy Grows and Why It Doesn’t” by Irwin A. Schiff — — his son’s updated version is available at Amazon] “How an Economy Grows and Why It Crashes” by Peter D. Schiff —

    I don’t think ALL the wealthy seek cronyism or are antiliberty. Candidly, I don’t think they know the difference. When fellas like Krauthammer don’t grasp how utterly wrong they are about the FED, when all most CEOs of the day only know about economics from their college Keynesian days…rely on Keynsian trained Pro economists (gag)…they, like most people, are emotionally-driven because they don’t know what Free-Market Capuitalism actually is. And, if you don’t know…you can believe the first video!

    Fortunately, the Ludwig von Mises Institute is gainig wider and wider notice. I just hope their affiliation, of late, with pacifist libertarians, doesn’t preclude the good of just plain ‘ol Austrian Economics. Enjoy…De-Career DC – Repeal 17 – Term Limits – END the FED!!!

    • Enjoyed every sentence.

      Hoped you would comment as you have.

      Thanks for all of it, including the valuable inks.

      • Don L

        Thank you. You’re Welcome. And, my pleasure

  • liz

    The problem is not in the rich being rich, it’s when they use their money and influence to “crony” with politicians to subsidise their businesses and destroy the competition with regulations. “Power corrupts”. And “money is power”. To choose which is the culprit, big business or big government, is like which came first, the chicken or the egg?
    Constitutional government and capitalism are great when uncorrupted, but fat chance of “un”corrupting them! That depends on the character of the people running them, so…
    Socialism, on the other hand, starts off without even a chance of success for anyone except the political elites. Equality of misery for everyone else (for the common good).
    Either way, you end up with a bloated parasite ruling class in power, regulating your life into oblivion.