'Results are obtained by exploiting opportunities, not by solving problems.' -Peter F. Drucker

5 Answers to 5 Arguments against Capitalism

by Ethan Glover, Mon, Jan 19, 2015 - (Edited) Fri, Sep 15, 2017

Capitalism Causes a 1%/99% Pie Problem

The wealth pie doesn't exist. People create wealth through trade. A voluntary trade, in a free market with no taxes, is always win-win. You pay for things because you value that something more than what you paid. On the other side, the seller values what you paid more than that something.

Every trade you make, including for labor, makes you better off. You could talk about people making bad decisions, but it's irrelevant. The point is that with every single trade both parties receive a greater value than they had before.

Marking gold as a currency, a miner trades his labor in return for a small part of what he mines. He can work by himself and get 100% of what he mines. But he's losing out on working with a company that knows where to mine. A company that has the capital investments for large-scale equipment. (Another trade.)

Second, the 1% thing is a bit of a fallacy. Because there is no 1% you can take, distribute, or share. (According to economic laws.) Also because with every passing year everyone is better off due to free trade.

In 1800, the average person made $3/day, in today's dollars. In the last 30 years, the percentage of people in the world who make that much has fallen by half. The average person in the U.S. now makes $130/day.

From the BC era to 1800, that average remained at $3/day. It was only after 1800 that it started to skyrocket. This has nothing to do with any rich class "exploiting" or stealing from anyone else. Otherwise, the average person wouldn't be as well off today. This has nothing to do with savings or investment either.

The spike came from the industrial revolution, but more importantly innovation. We're talking about a time in which the idea of economic liberty was brand new. Before England and Holland began to open up trade rather than to control it in the name of the state. Voluntary trade, in short, creates wealth.

Source Video / Book

I'm sure you've seen or heard of the "One Red Paperclip" project. In it, a guy starts with a red paperclip and continues to trade up, with no money transactions, and in the end, gets himself a house. He didn't steal from or exploit anybody. In fact, he helped many people. Every mutual trade made both parties richer.

As we mine resources, put new ideas into practice, and innovate, the world becomes wealthier. Just because there are some lucky ducks at the top, that doesn't stop any poor people from doing the same. Economic mobility, despite minimum wages, is still quite high in the U.S.. The lower the minimum wage, the greater mobility for those at the bottom.

(See my article on minimum wage.)

Most People Live Paycheck to Paycheck and Have Little Savings

This is not a reliable statistic to look at. A small minority earns a low amount. Most of them, as I've shown before, are not the primary earners of their household.

Wealthy People Have Control over Setting "Competitive Prices"

This doesn't make any sense. Before the AMA (American Medical Association) there was another "healthcare crisis." The complaint was that prices were too low, medical lobbyists said they were degrading to the profession. The AMA (every hospital has a charge master today) sets prices arbitrarily and socialistically.

Before, fraternal societies had to compete for their customers and prices. This is like modern day free marketplaces like Hong Kong. The average in Hong Kong is $12/year for full coverage.

Competition has never driven prices up. Even rich people want a good deal. When a business owner can sell to everyone (poor and rich), he makes more money.

Explaining this any further would also require me to explain why "tiers of medical services" aren't bad. About how hospitals in poor areas would work. If this brings up an image of hundreds of poor people dying in overcrowded hospitals, and the rich sipping champagne in private rooms, say the word. I'm always happy to expand the conversation.

Capitalism, As a System, Requires Intervention to be "Fair"

Capitalism isn't a system. It is synonymous with free trade. It is not something you can make happen. It is only the natural results of how humans think. If you like, capitalism is the absence of an economic system. It's like calling white a color even though it is not.

When you comment on this site or make counter points, we're trading argument for argument. Thus, we're both capitalists. That's all there is to it. Socialism is an enforced system that we know is impossible.

Yes, you can prop up socialism with a little bit of freedom here and there. You can play with perfect "balances" but it is ultimately unstable. The absence of socialism does not imply an absence of legal responsibility and law. It only implies the absence of theft and force.

Again, this is another subject. If you need to know how private law works, how it has worked in the past, and why we know it's more efficient and safer, say the word. The takeaway is that socialism can only make something worse off than it already is. From point one this should be clear. It implies (always) a taxation in which somebody, in fact usually the majority, is worse off. There is no win-win.

Design and Manufacturing Jobs Get "Slave Wages"

Slave wage is an oxymoron. Fry-cooks make little for sure. But most people make much more than they absolutely need to get by, especially people in design and manufacturing. I don't know why I would need to pull up statistics on this. Maybe the point was made accidentally.


Learn more about the economics anarchists don't want you to know.