A Dollar? For This?

It would be refreshing to ground our political and economic discussions in terms that are well-defined–starting with capitalism.  Those who still believe that 2008 was a failure of capitalism are confused on the difference between a mixed economy and laissez-faire.  Ours is a mixed economy, characterized by elements of both free-market capitalism and central-planning socialism.  One works; the other doesn’t.

Take calculators.  This delightful contribution from Crossed Pond blog tells the story of a simple act, purchasing a calculator, that reflects the unsurpassed beauty and effectiveness of a system that harnesses the talent of human beings rather than stifling it.  Leonard Read, author of I, Pencil, made a similar case for an even more mundane creation, the wooden pencil, years before.

What is it about the free market that makes it superior?  Start with the fact that it honors the individual.  Capitalism is the economic embodiment of an ethical ideal.  I exist for myself.  No one has the right to take from me either my body or those things that exist in virtue of my effort as long as those same rights are recognized in others.  I may choose to keep it all or give it away, but that is my decision, not yours.

Tens of thousands of people were required to build that little calculator.  Not a single one knows that fellow who purchased his and then wrote a blog about it.  In fact, I doubt they give a rat’s rump about him.  They may have invented parts for it, put the thing together, marketed it, placed it on the shelf, or designed packaging for it, all for a paycheck.  Is that greed?

No, we save our condemnation for the capitalists who thought how to bring all those elements together into something useful that even the poorest among us can afford.  No amount of central-planning could have come up with that one-dollar calculator.  It arose from the spontaneous ordering of thousands upon thousands of decisions–freely made decisions.  At each step, capitalists took the diffuse efforts of many and made something wonderful happen for the rest of us.  Is that greed?

Of course not.  If the seller of that calculator can buy a Maserati because he/she figured out how to get you and me calculators or pencils or spatulas, it is his/her right to do so.  If I don’t like it, I can go invent something just as useful and do as I will with the returns.  And I can’t very well claim I haven’t had the “breaks” to be able to do such.  Neither have countless other people who have gifted humanity with these things.

The insistence by the Left that we must redistribute wealth for social justice not only violates individual rights; it results in less for all.  The insistence by the Right that we need to pick the winners in business and industry does the same.  Better to leave the wonder of capitalism alone and look to our own individual hearts for social justice.

About Terry Noel

I am an Associate Professor of Management and Quantitative Methods at Illinois State University. My specialty is entrepreneurship.
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