The emergence of life on planet Earth took place over 3.5 billion years ago and will have to go down as one of the most fascinating events that have ever happened anywhere in the universe, period. The simplest life forms you can imagine have an array of characteristics that are aimed at achieving one ultimate outcome - SURVIVAL.
The development from microscopic single-celled organisms to 13-metre dinosaurs and 6-tonne mammoths was relatively fast when you consider that this timeline began roughly 1 billion years after the Earth itself was formed and culminated in 3 billion years or thereabouts. This is assuming an Earth that is 4.5 billion years old. If these numbers make your head hurt, Louie Giglio’s greatest sermon of all time puts some of this into perspective (strong recommendation).
Human beings as we know them today enter the story of life a little later, about 200 thousand years ago. We are the most complex life form that we know about. When we arrived on the scene, we changed everything. Never has there existed an animal that is as powerful as the homo sapiens. We have altered at least 70% of the Earth’s land. We have destroyed countless ecosystems, responsible for at least 33% of global deforestation and almost all of pollution. We are behind the majority of loss in biodiversity and we are on course to altering the Earth’s climate to such a degree that it will become inhabitable for life, even the cockroach. Cockroaches survived the asteroid that wiped out dinosaurs and atomic bombings at Hiroshima but they won’t survive the human race. We are the only life form that has come this close to killing all of life. We are like a disease. As gloomy as this picture might be, one thing remains. We, like every other living thing, are just trying to survive.
Enter Economics, the study of one aspect of our heuristics in survival. It is formally categorised as a social science that attempts to organise knowledge on how human beings use resources to satisfy their needs. We can have a conversation that endures for the rest of the year about what is a “resource” and what is a “need”. It’s not absolutely crucial for this particular discussion. At least, I don’t think it is.
Capitalism is just one of many ways by which we can organise resources to achieve certain ends. A capitalist system is centred on private individuals seeking to make a profit for themselves. The allocation of this profit has to follow some sort of rule and here it is. Profit accrues to the owner of the resources employed. Capitalist tenets recognise the individual and reward her for her enterprise.
Ayn Rand, by far the most important author that I ever read, once said that it is a cognitive dissonance to proclaim to protect the rights of minorities when you deny the rights of the individual as the individual is the smallest minority on earth. Only by valuing the individual can we truly value the collective.
It is individuals that employ their resources to produce goods and services and it is to individuals that benefits must accrue. I think this is the most realistic starting point. If we consider human nature, and consider as well that an economy, i.e. a specified arrangement of resources and benefits, exists to serve humans, then it becomes necessary to model said economy after human idiosyncrasies. Humans are self-interested. Any system that leverages that is designed beautifully in my opinion. The opposite, i.e. modelling against human character, is a horror show. If you try to teach a fish to climb a tree, you’re in for an upset.
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Adam Smith, the father of economics.
You act out self-interest when you buy new sneakers. (Speaking of sneakers, if you love me, do it properly, Nike SB Nyjah Free 2s, I’m a size 9). On the other hand, Phil Knight didn’t establish Nike to make sure you never get blisters on your precious toes. He pursued a shoe business because it was profitable. The transaction between yourself and Nike shareholders is a voluntary exchange of value that is mutually beneficial. You get your drip, they get their money. Neither you nor Nike can obtain what they seek without addressing what the other wants. It is this rational self-interest that characterises capitalism.
Capitalism is not a moral code. It is a mistake to ask capitalism to distinguish between right and wrong. That is the realm of religion and ethics, not economics. I’m often uncomfortable when I see, in media, capitalism being described using language that should be reserved for spiritual pursuits. Also, some of this criticism to which I’ve referred is misdirected at capitalism when it should be brought to the door of the government. Of course, a government is itself an economic agent but you would be wise to realise that a government’s economic interests are subservient to its political interests.
Capitalism has been a wild success. I want to place a restriction on this statement. It has been a success for humans, not necessarily the planet (refer to paragraph 3). Extreme poverty has fallen dramatically, life expectancy is always rising and the general standard of living is trending upwards as well to mention a few things. Capitalism only emerged in the 19th century but has annihilated competing schools of thought like feudalism and socialism almost to extinction. There are literally only a handful of countries that officially denounce capitalism and they are not doing so well. North Korea and Laos come to mind. I didn’t mean to name and shame but, oh well.
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