Tag: Wall Street

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.

Occupying Wall Street for the wrong reasons

The group “The 99 percenters” (also known as the 99%) assembled in Wall Street to protest against the corporations of the United States that have benefited from the privileges granted from government through lobbying. They say to be tired of the social and economic inequality in their country.  Somehow, they consider Corporations to be the one’s to blame for this inequalities.

Now, lets hold on for a second and consider what are they protesting against and who’s to blame. Then, lets try to explain what and whom should be really blamed before continuing this protests.

What they say to be protesting against:

What are the really protesting against:

  • Social inequality: Is in fact the cultural and educational differences of those who know more than others.
  • Economic inequality: Is the result of those men who earn a salary that is higher than others; or of those who own a business and make more earnings than others.
  • Lobbying: Is the act of influencing decisions made by officials in the government in favor of some industries, unions, or groups of society.
  • Corporate greed: Is not to be confused with the profit that an entrepreneur earns in his ventures.  Greed should better be understood as the result of living and satisfying one’s wants wants by seizing and consuming the products of the labor of others. Corporations that profit with the privileges granted by government are the only ones to be attacked and denounced; not those entrepreneurs who took risks and invest their savings.

These “99 percenters” are confused.  They think that Corporations are to be blamed for the economic and financial crisis that started in 2008 in the U.S.  However, it is their government and their bureaucrats that through Congress ad the FED enabled for the crisis to happen.  This protests should have been taking place in front of the White House and the Senate instead of Wall Street. (Check this video of some of the protests in Wall Street agains the FED)

It is not all the rich and wealthy who benefit from government privileges.  The ones who did are to be blamed. But more so, the one’s to be blamed and taken to justice are the the government officials who created the legislation that ensures that corruption and impunity continue without being punished.

As Fréderic Bastiat, the journalist and philosopher from the 19th. Century, once said:

The law has placed the collective force at the disposal of the unscrupulous who wish, without risk, to exploit the person, liberty, and property of others. It has converted plunder into a right, in order to protect plunder. And it has converted lawful defense into a crime, in order to punish lawful defense.

How has this perversion of the law been accomplished? And what have been the results?

The law has been perverted by the influence of two entirely different causes: stupid greed and false philanthropy. (…)

But, generally, the law is made by one man or one class of men. And since law cannot operate without the sanction and support of a dominating force, this force must be entrusted to those who make the laws.

This fact, combined with the fatal tendency that exists in the heart of man to satisfy his wants with the least possible effort, explains the almost universal perversion of the law. Thus it is easy to understand how law, instead of checking injustice, becomes the invincible weapon of injustice. It is easy to understand why the law is used by the legislator to destroy in varying degrees among the rest of the people, their personal independence by slavery, their liberty by oppression, and their property by plunder. This is done for the benefit of the person who makes the law, and in proportion to the power that he holds.

I invite you to continue reading Bastiat’s wonderful book “The Law” online. I am myself, have read it for dozens of times and consider it one of the most enlightening works ever written. Spanish versión: La ley por Frédéric Bastiat [PDF¨]