Category: Wealth

What is Capitalism?

Before defining what is Capitalism I have decided to provide you with five videos that explain the philosophical foundations of Capitalism as a social system. By listening to these videos, you’ll get a wonderfully elaborated explanation of What Capitalism is and of what it consists of.

Video – What Is Capitalism (1/5)

“Capitalism is the only social system based on the recognition of individual rights and, therefore, the only system that bans force from social relationships.”1

Published in 1966 this abstract from Ayn Rand‘s work on Capitalism explains in a clear and unequivocal way the true concept and definition of a system based on reason and in the recognition of the rights of free and responsible men.

Capitalism in the previous quote means a full, pure, uncontrolled, unregulated social system known as “Capitalism Laissez-faire“. It is a system that works as a set of interacting or interdependent moral, political and economical principles that are incorporated into legal systems, institutions and governments. This moral, economical and political principles are contingent to the identification that the members of the system do in order to understand the nature of man and are applied to the rational understanding of man’s psycho-epistemology (man’s mode of functioning in acquiring knowledge).

In human history there hasn’t yet existed a capitalist laissez-faire social system that fulfills the previous requirements; and only glimpses of its potentiality have been achieved through history. However, since the 15th Century “economies organizing themselves on capitalist lines have experienced greater economic dynamism: increasing productivity, increasing employment, and generating more rapid advances in economic wealth, living standards, and improved health of the population.”2  It is because of many of the principles of Capitalism Laissez-faire that Globalization and all the different forms of Capitalism have managed to benefit humanity and achieved our current conditions. Unfortunately, it has been because of the philosophical contradictions and irrational actions of man that also many adverse results have come into being from these mixed forms of capitalism and economic crisis, inequalities in the distribution of wealth and environmental degradation are still existing.

The Board of the Center for the Study of Capitalism at Wake Forest University explains what are some of these forms of Capitalism that currently exist and also explain which are some of its capitalist characteristics,

In the 21st century capitalism exists in several forms. These include 1) free market or market-led capitalism such as we are accustomed to in the U.S.; 2) corporatist or state-led capitalism where the government exerts significant guidance, leadership, and influence over the deployment of private capital (e.g. France, Japan in the 1980s); and 3) managed capitalism, in which worker groups and broad social welfare issues exert significant influence on private corporate behavior (e.g. Sweden, Germany).3 Whereas some evidence suggests that market-led capitalist economies experience greater economic dynamism and higher rates of per capita income growth than economies with other forms of capitalism,4 other evidence points to less volatility and fewer inequities in other forms of capitalism than in market-led economies.5

This blog was created to study how and when Capitalism and its philosophical principles played a role in Global History.  It is my goal to demonstrate with a narration of past events how the roots of Wealth enabled for the interconnection of the World and how we could learn from the past to build more rational and objective societies.

Sources:

1 Rand, Ayn. Capitalism: The Unknown Ideal. Signet; Fitst Signet Printing, 1967 edition (July 15, 1986)

2 About Capitalism. BB&T Center for The Study of Capitalism. http://capitalism.wfu.edu/about/capitalism/

3 D. Coates, 2000, Models of Capitalism, Blackwell: Malden MA.

4 R. L. Heilbroner & W. Milberg, 2006, The Making of Economic Society, Prentice-Hall: Upper Saddle River NJ; E. Phelps, 1999, “Lessons from the Corporatist Crisis in Some Asian Nations”, Journal of Policy Modeling, 21 (3), 331-339. E. Phelps, 2007, “The Economic Performance of Nations: Prosperity Depends on Dynamism, Dynamism on Institutions”, in E. Sheshinski, et al, ed., Entrepreneurship, Innovation, and the Growth Mechanism of Free Enterprise Economies, 342-356, Princeton University Press: Princeton NJ.

5 M. Walker & R. Thurow, 2009, “U.S., Europe are an Oceans Apart on Human Toll of Joblessness”, Wall Street Journal, May 7, A1.

Monday book: History of Money and Banking.

The master teacher of American economic history covers money and banking in the whole of American history, to show that the meltdown of our times is hardly the first. And guess what caused them in the past? Paper money, loose credit, reckless lending standards, government profligacy, and central banking. Buy it in Amazon.com! (Kindle version available)

Columbus Day

“Columbus was searching for hardware — precious metals, silk, and spices — the sources of wealth in his day. I was searching for software, brainpower, complex algorithms, knowledge workers, call centers, transmission protocols, breakthroughs in optical engineering — the sources of wealth in our day.”
–Thomas Friedman, The World Is Flat

Choosing the right topic to start a blog is difficult. As a previous owner and contributor of blogs (Homo Homini Lupus RIP, Libro Libertate and Capitalismo) I’ve found that my interests were always linked to one idea: Wealth.  Indeed, Wealth has played a role in every single decision I’ve made. From choosing which book to read, starting a business or planning for my career development I’ve always been interested in a difficult topic: Wealth creation.

As such, I have decided to start my last blog in the celebration of Columbus Day.  A day like today on October 12th, 1492 the three ships leaded by the Italian sailor Christopher Columbus “discovered” America.  It is important to note that America was not discovered by Columbus, the Continent was already inhabited by millions of humans that had developed some of the richest and most educated civilizations on Earth.  However, the impact of his discovery amounted less than 50 years later to one of the major transfers of technology, institutions, crops, diseases and commerce than the world had ever seen.

The effects of Columbus discovery are still now evident and engineered one of the largest path-dependencies on history.  American soil (it started to be recognized as America until 15 years later) and its biological life was to transform forever.  Millions of humans were conquered and ruled by the Spanish, English, Dutch and French Crowns and millions of them died because of diseases transferred from Europe, Africa and Asia. Hundreds of different plants and animals were introduced and exported to and from the continent modifying forever the ecosystems of a large part of the planet.

Today, Columbus Day should represent for us that singular moment of globalization in which an infinite amount of transfers occurred.  These transfers reshaped the globe into a realm of interconnectedness never seen before.  Finally, in 1492 the six continents of the world were connected for the first time.  Today, we have benefited and suffered many changes that resulted from that historical moment.

It shall be the aim of this blog to study, discuss and identify those events that modified the course of history and emphasize which were those principles, decisions and achievements that enabled for more men to pursue happiness.  Lets us learn from the past!